When Amazon and Hyundai announced at the LA Auto Show that buyers would soon be able to purchase cars on the popular digital marketplace, you may have thought they were simplifying the car-buying process with a one-click, all-online, fixed-price transaction—eliminating dealer hassle. However, the pilot program is far from achieving this vision.
CNBC explains in a new video that Amazon’s current pilot program with Hyundai is only available in a few states and is exclusive to Amazon employees. Most importantly, the buyers still need to complete the paperwork in person at the dealership.
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Amazon’s Car-Selling Aspirations
Hyundai first offered a “digital showroom” for buyers to learn about its vehicles on Amazon back in 2018. Then, at the LA Auto Show in 2023, the company said it’d be the first brand to sell cars through the digital retailer.
According to Jim Appleton, President of the New Jersey Coalition of Automotive Retailers, in a CNBC interview: “I’m really hard-pressed to understand how this is anything more than just a new lead-generator type program, no different than Autotrader or Cars.com that are well-known to consumers.”
Considering the challenges, it is clear that Amazon needs to address multiple issues to meet consumer expectations — speed, fixed pricing, and a seamless process without dealer hard-sales tactics. Achieving this will require overcoming several complex obstacles.
Firstly, Amazon is not a licensed new-car dealership. There are state franchise laws that often require new-car transactions to be processed by a dealer under restrictions set by automakers. Amazon is collaborating with Hyundai dealers to provide the cars and finalize the legal part of the transaction, reinforcing the dominance of the dealer model.
Moreover, many states require “wet signatures” on new-car transactions, which necessitates an in-person visit to the dealer’s finance office. This is where add-ons and upselling tactics often occur, a process that Amazon wants to avoid in the long term by offering a fully online, fixed-price transaction with vehicle pick-up at special Amazon-branded sections of participating dealerships.
While these efforts are commendable, it is crystal clear that dealers are unlikely to relinquish their hard-sales and negotiation tactics easily. The pilot program has not yet addressed the structural issues with selling cars online, but Amazon’s determination to modernize the process could eventually lead to significant changes.
For now, if you seek fixed pricing, freedom from high-pressure sales, and a transparent buying experience, you are better off choosing companies like Tesla or Rivian, where online sales are an integral part of their business model. Until then, future attempts at modernizing the dealer experience could be met with similar roadblocks.