The recent announcement of Amazon’s new Vehicles automotive research feature left many — including our newsroom here at GeekWire — wondering when the online retail giant would make the leap into actual vehicle sales. A note from Morgan Stanley prognosticates that Amazon may be heading in that direction, but new car sales are probably a long way down the line.
Dealer franchise laws preventing direct new car sales over the internet should force Amazon to pump the brakes on any plans to get into the new car business for now, according to the note published last week. One way Amazon can impact the new car business is through partnerships with dealers like its recent “Prime Now. Drive Now” promotion, which lets L.A. and Orange County members of Amazon’s $99 per year Prime program book 45-to-60-minute rides in the 2017 Hyundai Elantra.
The Amazon Vehicles announcement, the Hyundai partnership and recent deals to integrate the company’s digital assistant Alexa into various car brands points to the possibility that “Amazon is increasing its focus on the $1.2 trillion in annual new/used car sales,” the Morgan Stanley note says.
Amazon Vehicles includes specifications, prices, images, videos, and customer reviews for thousands of new and classic cars. In addition, perspective buyers can ask owners questions about their cars.
Another feature called Amazon Automotive allows users to upload information about their vehicles and find the right parts to keep them up to speed. Amazon says more than 35 million people have saved their cars on the site. Parts are eligible for Prime shipping, and in 27 markets gearheads can get parts the same day.
Auto parts represent a huge untapped online marketplace. Morgan Stanley estimates that auto parts represent $67 billion in spending in the U.S. annually, but only 5 percent of those transactions happen online.
Amazon has a better chance of getting into used car sales, where it won’t be burdened by legal barriers, Morgan Stanley writes. Partnerships with small local dealers could be helpful because they don’t always have the same resources to build a robust online footprint like larger dealers do. Or Amazon could go ahead and sell used cars on its own.
“With used vehicles, you don’t have franchise laws that prevent you from selling just used cars. As such, one cannot rule out the possibility of Amazon selling used cars directly to customers one day, especially given their expertise with warehouse management and logistics.”
It’s not just vehicle sales that Amazon is interested in. Amazon Prime will begin airing a new series called Grand Tour from ex-Top Gear hosts Jeremy Clarkson, Richard Hammond and James May.