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Stocks for car dealerships took a hit on Nov 16, 2023, after Amazon revealed its plan to dive into the car-selling business. The announcement shook up the market, causing a dip in shares for major players like Carvana, Carmax, and Autonation, all experiencing a drop of up to 8% following Amazon’s news.
In this article, we’ll look at how Amazon’s recent announcement to begin offering online vehicle sales has impacted the car dealership industry. As Amazon enters this market, car dealership stocks have crashed, indicating a potential shift in the automotive sector. This move by Amazon is expected to significantly disrupt the traditional car buying experience, as consumers will have the convenience of purchasing a car from the comfort of their homes. With Amazon’s vast resources and expertise in the online marketplace, this new venture will likely be a success, further shaking up the car dealership landscape.
Amazon Disruptive Launching Online Vehicle Sales
Amazon’s bold move involves launching online car sales by 2024 in partnership with Hyundai. This venture marks a significant shift in the industry landscape. While Carvana, Carmax, and Autonation are bracing for heightened competition, Amazon’s initial partnership focuses on selling Hyundai’s new vehicle lineup.
Interestingly, despite the ripples Amazon created in the market, its stocks only saw a slight decrease of around half a percent during Thursday’s trading session.
Amazon’s plan involves creating a new digital platform for car sales, providing customers with an easy online purchasing experience. To enhance customer engagement, once purchased, customers can pick up their vehicle or have it delivered by their local dealership at their convenience, signalling a change in how people buy cars.
Amazon Online Vehicle Sales Tend to Increase
What makes Amazon’s approach stand out is its partnership model. Unlike companies such as Carvana and Carmax, which often own the vehicles they sell, Amazon will act as a mediator between customers and local car dealerships, essentially managing the sales process while relying on these dealerships to fulfil orders.
This isn’t the first time Amazon has made waves with industry-disrupting announcements. In the past, the company’s intentions to delve into auto parts retail, health insurance, and physical pharmacies immediately impacted related stocks, causing fluctuations in those sectors.
Redefining Customers’ Experience as Amazon Online Vehicle Sales
Amazon CEO Andy Jassy expressed, “Hyundai is an incredibly innovative company, sharing our commitment to enhancing customers’ daily lives.”
Under the new agreement, customers can purchase a car online and choose between picking it up or having it delivered by their local dealership. Amazon is a comprehensive search tool that allows buyers to explore available vehicles in their vicinity based on specifications like model, trim, colour, and more. This streamlined process mirrors the familiar online purchase experience on Amazon’s platform. Read more
As a part of this collaboration, Hyundai is set to integrate the hands-free Alexa service into its vehicles. In 2025, new Hyundai models will feature Alexa, enabling users to enjoy audio listening, podcasts, and audiobooks and access various functionalities, including real-time traffic updates, navigation assistance, and weather forecasts. Additionally, Hyundai drivers can control smart home devices using Alexa directly from their cars, managing home lighting, locks, and temperature settings remotely.
Strategic Partnership between Hyundai and Amazon
The collaboration between Hyundai and Amazon goes beyond just selling cars. Hyundai’s plans include using Amazon Web Services as its primary cloud provider and integrating Amazon’s AI, Alexa, into their car models, a move set to commence in 2025.
Rival and conventional car dealerships witnessed a decline in stock prices after the announcement. On Thursday, Carvana, renowned for its online used-car retailing, experienced a drop of up to 9%. Simultaneously, CarMax, AutoNation, and Asbury Automotive Group also saw a decrease in their share values.
The move towards online vehicle purchases gained momentum during the Covid lockdowns, propelling carmakers to view the electric vehicle revolution as a chance to digitize the car retail sector. Analysts foresee a significant surge in online sales, anticipating it to become a substantial segment of the market in the near future.
Buying and Connectivity in Amazon Online Vehicle Sales
The recent agreement marks an extension of a prior deal announced two years ago, wherein Hyundai and Amazon unveiled Hyundai’s digital showroom on Amazon.com in 2018. Under this expanded partnership, buyers of new Hyundai vehicles slated for release in 2025 will have access to Amazon’s Alexa voice assistant directly from their cars.
In a joint statement, both companies expressed that this innovative shopping experience will provide dealers with an additional avenue to showcase their inventory and offer added convenience to customers.
Amazon’s continuous efforts to attract potential car buyers and aid with automotive needs have led to features like “Your Garage,” simplifying the process of finding parts and accessories by saving customers’ car details. Additionally, Amazon facilitates the purchase of tires, connecting shoppers with local installation services for added convenience.
Amazon’s Online Vehicle Sales: Shifting Automotive Landscape
Amazon’s recent announcement to begin offering online vehicle sales in 2024 has sent shockwaves through the automotive industry. The move is expected to disrupt the traditional car buying experience significantly and have a major impact on car dealerships.
Amazon’s foray into vehicle sales is a significant move that could transform the automotive industry. The company’s vast resources and expertise in the online marketplace could give it a major advantage over traditional car dealerships. As a result, car dealership stocks have crashed in recent weeks as investors anticipate the potential impact of Amazon’s entry into this market.
Amazon’s Online Vehicle Sales Plan Sparks Car Dealership Stock Plunge
As mentioned above, car dealership stocks have already begun to plummet in recent weeks as investors anticipate the potential impact of Amazon’s move. This indicates that investors believe Amazon’s entry into the vehicle sales market could significantly impact the industry.
Amazon’s entry into the vehicle sales market will lead to a boom in online vehicle sales. Consumers are increasingly comfortable making large purchases online, and Amazon’s reputation for trust and convenience will likely attract many customers.
Car dealerships have long been the dominant force in the automotive sales industry, but they may now face an existential threat from Amazon. Only time will tell whether Amazon can disrupt the car buying experience and transform the automotive sector as it has disrupted other industries.
Conclusion
Overall, Amazon’s entrance into the car-selling arena, backed by partnerships with major automakers like Hyundai, can redefine how vehicles are purchased, stirring up traditional dealership models and setting a new direction for the automotive industry.
Amazon’s entry into the vehicle sales market is a major development that could significantly impact the automotive industry. The company’s vast resources and expertise in the online marketplace give it a major advantage over traditional car dealerships, and this move will likely lead to a boom in online vehicle sales.
