During the
2023 Los Angeles Auto Show, Amazon, the e-commerce giant, in collaboration with its new partner, Hyundai, announced its intention to begin vehicle sales on its website in the second half of 2024. Hyundai vehicles will be the first cars available on Amazon's platform, with other brands set to follow later in the year. Customers will then have the option either to collect their vehicles from nearby dealerships or have them delivered to their doorsteps at their convenience.
It's worth noting that the ultimate seller of the vehicle remains the dealership itself for the moment; Amazon's platform will act as an intermediary between the customer and the dealership.
“This new shopping experience will create another way for dealers to build awareness of their selection and offer convenience to their customers,” Amazon wrote in a
post.
Amazon has gradually ventured into the automotive realm, offering virtual showrooms for specific brands and price comparison tools. Additionally, the platform also facilitates the purchase of certain car parts and accessories.
In 48 states, there are laws in place that either restrict or prohibit manufacturers from selling vehicles directly to consumers. However, this landscape has begun to change recently, primarily due to Tesla's popularity. Tesla does not rely on independent dealerships. Instead, it sells directly to consumers. Dealership associations in multiple states have initiated numerous legal actions against Tesla to prevent the company from selling cars directly, but they have failed.
Mike Sullivan, who owns several dealerships in the Los Angeles area, including the Hyundai Santa Monica location, openly endorsed the news during his appearance at the LA Auto Show.
“We’re now partnering with one of the world’s leading digital retailers,” Sullivan said. “They’ve led the way in delivering customer convenience, and now they’re going to help us take our customer experience to the next level. Amazon also brings massive reach and marketing power to connect to more customers. We can’t wait to get started.”
This news means that Amazon is entering another business sector, and while it seems the company wants to play nice with the dealers, there’s no reason it might not suddenly decide to undercut them and reshape car sales.
Car dealerships have become a prominent influence within American politics, exerting significant control over a substantial portion of the political landscape. In 2022, they
distributed an unprecedented $7 million toward federal lobbying efforts, surpassing even the National Rifle Association in financial contributions. Furthermore, during the 2020 federal elections, car dealerships dedicated a staggering $25 million, primarily supporting Republican candidates. In addition to these contributions, the NADA PAC added another $5 million to their political endeavors.
However, these financial contributions are just one facet of their involvement. Car dealerships extend their influence to the state and local levels as well. They play a substantial role within their communities by investing in local advertising, sponsoring local sports teams, and nurturing a social network that can be advantageous for political campaigns.
Politicians rely on their financial support and extensive networks, while car dealerships depend on politicians to safeguard the laws that ensure a steady flow of revenue. It's important to note that car dealerships are dispersed nationwide, with a presence in every district, making their influence widespread and diffuse. They lobby to ensure no rival dealerships can be built by controlling zoning and vehicle sales licenses.
The dealership model ensures that Americans are charged an inflated rate to buy a new car and is emblematic of a form of modern capitalism that is not a free market. Whether Amazon uses Tesla’s model and sells directly to consumers remains to be seen.
