Many tech giants have tried entering the automotive space. Google, most notably, has made attempts to disrupt the car-buying experience. Yahoo began fading out Yahoo Autos this past February — a little more than four years after scrapping its exclusive relationship with TrueCar. Even Facebook took a stab at adding an automotive vertical. Now Amazon appears to be cozying up to car buyers, although it has yet to reveal its plans in the automotive retail space.
Some industry experts are skeptical that Amazon wants to go “all in” with the auto industry, mainly because it’s a tricky industry to navigate for any newcomer. There’s no question the company has something in the works, and it’s in the enviable position of having enough financial freedom to test the automotive waters.
Whatever the Seattle-based ecommerce company has up its sleeve, market watchers believe dealers will likely be impacted one way or another.
Amazon launched Amazon Vehicles in late August, billing its new portal as a “car research destination and automotive community” for car shoppers to view vehicle specs, images, videos, and customer reviews for thousands of vehicles. Customers can also ask owners questions about their vehicles and quickly find parts and accessories, including tires, oil filters and brake pads, through Amazon’s existing automotive store.
With the new research page, Amazon’s “goal is to support customers during one of the most important, research-intensive purchases in their lives by helping them make informed decisions every step of the way,” said Adam Goetsch, Amazon’s director of automotive, in a statement.
“Amazon Vehicles is a great resource for customers who are interested in car information or looking for a broad selection of parts and accessories — all enhanced by the ability to tap into the knowledge, opinions and experience of other car owners within the Amazon customer community,” he added.
Amazon did not respond to requests for comment for this article, but observers believe its new research tools function much like Autotrader or Cars.com — minus the lead portion of their services. During an online press conference in November, however, an executive with Fiat Chrysler Automobiles (FCA) in Italy announced that the automaker was teaming with Amazon to sell three models — the 500, the Panda, Italy’s best seller, and the 500L — to buyers there at a discount, according to a Reuters report.
Here in the U.S., Amazon claims more than 95 million monthly unique visitors and 65 million subscribers to its Prime program, although there’s no guarantee Amazon shoppers will use the site for car shopping. As for its potential competitors, Cars.com claims more than 30 million monthly visitors, while Autotrader boasts more than 14 million qualified buyers each month. In the third quarter, TrueCar reported having 7.6 million average unique visitors, while Edmunds claims to attract 18 million unique monthly car shoppers.
For now, it appears Amazon is quietly collecting data about customers who do use Amazon Vehicles — data that could be used to Amazon’s advantage at some point. (Many have guessed the likeliest of options is in the advertising space.)
As for Amazon’s automotive parts marketplace, industry veteran and CarHub.com Founder and CEO Jesse Toprak doesn’t view it as something that will interfere too much with dealers’ service operations. “Those types of products being sold there are really for do-it-yourself customers, which is a minority of people,” he says. “With the technology in today’s cars, it’s hard to even change oil yourself.”
A Big Hurdle
Toprak doubts Amazon intends to get into the business of selling cars, noting that U.S. franchise laws would prevent such a move. “Dealers and manufacturers are very much committed to the franchise system,” Toprak notes. “If it tried to change that model, there would be a revolt from dealers.”
The more likely scenario is what Amazon is doing with FCA in Italy, where vehicle delivery, contracting and financing are all handled by an FCA dealership after the buyer selects a vehicle from the site. If that’s the case, Amazon will have the benefit of being able to learn from the missteps of other third-party lead services.
“Of course they won’t want to do what TrueCar did,” says Toprak, who worked as an executive with TrueCar from 2009 to 2012. “They didn’t realize soon enough that it was a balance of working with the dealers and consumers. TrueCar went through a tumultuous time after it started leaning too far toward the consumer. It had to take a step back and press the reset button.”
Automotive expert Lauren Fix says Amazon’s involvement in car sales all depends on how it structures its business model. She says one approach would be to partner with franchises the way Costco, another Seattle-based retail giant, does. If that’s the case, Amazon will likely partner with one brand in each city, which could shortchange some dealers, she says.
Fix adds that the Costco approach is more likely since Amazon wouldn’t be able to offer leasing, which “has to be done through a dealership.” Regardless, Amazon shouldn’t tiptoe into the industry without putting the manpower behind what consumers need, she says.
“Consumers will be expecting articles, reviews, cost of ownership,” Fix notes. “[Amazon] may have the funds to do this, but will it put the budgets and get the quality content to back it up? If customers go there and they are not finding this type of information they require or Amazon mirrors information from manufacturers’ websites, customers will not return to Amazon for automotive information.”
Trucks.com CEO and industry veteran Jeremy Anwyl tends to agree that dealers aren’t the ones who need to be worried about Amazon entering the market. He says it’s car-shopping sites like Cars.com and Edmunds.com that need to be concerned. If anything, he adds, dealers could potentially be presented a cheaper option for lead generation. For example, Amazon started selling its Echo Dot home automation hub for cheaper prices than competing devices, Anwyl notes. He thinks it’s possible Amazon will do the same to entice dealers.
Edmunds, Anwyl’s former employer, declined to comment on Amazon, as did Cars.com. Kelley Blue Book and Autotrader are operating as normal, according to a spokesperson for parent company Cox Automotive.
“Kelley Blue Book and Autotrader remain the most trusted and visited car research and shopping websites, with nearly 36 million unique monthly visitors and reaching nearly three-quarters of all car shoppers,” Steve Lind, an executive of media solutions for Cox Automotive, tells F&I and Showroom in an email. “No other resource drives more ready-to-buy consumers to dealers. This is the direct result of the more than 100 years of combined experience we have helping car buyers and sellers navigate the new- and used-car shopping process with ease.”
In some ways, dealers are already welcoming a relationship with Amazon — or at least some brands are. Hyundai is working with the e-tail giant on its voice technology, Alexa, which powers Amazon’s Echo and Echo Dot. A partnership with Hyundai’s luxury marque, Genesis, was also announced one week before Amazon Vehicles launched in August.
In November, the OEM announced during the Los Angeles Auto Show that its new vehicles will soon be equipped with Alexa. The voice assistant will allow Hyundai owners to remotely start and stop their cars, set climate control, lock or unlock the doors, and set off the horn. Ford also announced earlier this year that it is looking to partner with Amazon on its Alexa technology, but the deal doesn’t appear to have come to light just yet.
And as Amazon continues to build out its automotive marketplace, it’s a good bet the site will start offering dealers the ability to merchandize their vehicle inventories on its portal. If that’s the case, CarHub’s Toprak is confident dealers will oblige. “Dealers and manufacturers are willing to try just about anything that looks like a legitimate advertising opportunity,” he says. “And if it works, they’ll double down on it.”
Trucks.com’s Anwyl says Amazon likely won’t venture much deeper into the car-buying process if that’s the case. “Amazon is known for efficiency, and I don’t see that happening [with car sales on Amazon],” he says, noting the difficulties that would come with the paperwork and F&I sales. He adds that just because Amazon has brand recognition doesn’t guarantee it will be an overnight success in the automotive space.
“It doesn’t work that way,” Anwyl says. “If it did, Yahoo Autos would be a bigger player.”