Amazon caused a spark in the car industry Thursday, announcing a new deal with Hyundai to let customers buy cars on the tech giant’s online marketplace for the first time.
The news sent shares of other car dealers down amid questions about Amazon’s strategy and ambition as it enters a huge and competitive market.
Tom Voelk, an automotive writer and host of the YouTube channel Driven, said the move “just makes sense.”
“It’s what the consumer wants, right?” he said, speaking to GeekWire from the Seattle International Auto Show floor on Thursday. “They want an easy experience. They just want the car that they want, at a fair price.”
Amazon is acting as a middleman between car manufacturers, dealerships, and customers. Car manufacturers typically can’t sell directly to customers and work with dealerships (Tesla is an exception).
Voelk likened Amazon’s new deal to Costco, which also sells cars.
Amazon says customers who buy a Hyundai vehicle through its platform can pick it up at a local dealership or have the car delivered.
“The fact that you can just order the car and the dealership will drop it off — that should sell a few cars,” Voelk said.
Avoiding the dealership can be appealing, but it remains to be seen how comfortable people will be with buying a car off Amazon. Voelk said forgoing a test drive in-person can be a bad idea.
“It’s a lot of money,” he said. “And it’s the most complex consumer product on the planet.”
Amazon customers can search for cars based on preferences such as model, trim, color, and other features. They check out and pick payment and financing options just like they would buy a bottle of toothpaste or paper towels on the e-commerce platform.
As part of the deal with Hyundai, Amazon is now the company’s preferred cloud provider and will install its Alexa technology into Hyundai vehicles starting in 2025.
So making car sales available on its marketplace could be Amazon’s way of inking potentially more lucrative deals for Amazon Web Services and other business arms.
“Will be part of our strategic partnership with them to help make the buying experience easier, add the Alexa experience into their next-gen vehicles, and help them transform their customer experiences and business operations through their move to AWS,” Amazon CEO Andy Jassy said in a post announcing the news.
