Amazon, the global e-commerce giant, announced on Thursday that it will be expanding its services into the automobile industry, allowing car dealerships to sell vehicles through its platform starting in 2024.
The first automaker to join this venture will be South Korea's Hyundai.
Over the years, Amazon has been gradually infiltrating the car-buying industry. It has established digital showrooms on its platform, enabling customers to research and compare vehicles. However, until now, direct car purchases through Amazon have not been possible. The company also offers automotive products, including replacement parts.
From 2024, Amazon will facilitate the online purchase of new cars. Customers will be able to search for available vehicles in their vicinity, select their preferred option, and complete the transaction on Amazon. The vehicle can then be picked up or delivered by the local dealership. Amazon believes this new feature will provide dealers with an additional avenue to increase awareness of their inventory and enhance customer convenience.
Andy Jassy, CEO of Amazon, expressed his belief that the collaboration with Hyundai will revolutionize "the ease with which customers can buy vehicles online." As part of the agreement, Hyundai will integrate Amazon's Alexa voice assistant into its cars from 2025 onwards.
The announcement led to a decline in the shares of online used car retailers Carvana and Carmax, which fell by over 7% and 6% respectively.
Despite the new development, the dealership will remain the final seller in the transaction. Traditional automakers like Hyundai have intricate relationships with dealers, often protected by state laws that prohibit or complicate the direct sale of new vehicles to consumers.
Electric vehicle manufacturers such as Tesla and Rivian have found ways to circumvent these laws in several states, enabling them to sell vehicles directly to consumers online. These methods include initiating the sale in states where direct selling is not illegal or challenging such laws legally, as seen in Michigan.
The laws regarding used vehicle sales are less stringent, making it easier for companies like Carvana to sell pre-owned vehicles online directly to consumers.
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