Amazon Drives Into Retail Auto Business

Hyundai’s announcement that its dealers sell vehicles on Amazon made big news during the recent Los Angeles auto show. While details of that partnership are still thin, it is expected to expedite an already-occurring evolution in auto retailing.

“The collaboration between Hyundai and Amazon underscores the importance of adapting to changing consumer preferences and embracing digital platforms to enhance accessibility and convenience in the car buying process,” Paul Waatti, manager, industry analysis at AutoPacific, tells Wards of the partnerships that will begin with U.S. dealers in 2024. “Expect other automakers and dealers to pursue similarly innovative initiatives in the coming years.”

Partnerships between huge retailers and dealerships are not new. The Costco Auto Program has been working with dealerships for more than three decades to help them move more metal, and it continues to evolve, representatives say.

The Amazon Deal

Amazon’s partnership with Hyundai allows its dealers to sell vehicles to Amazon’s some 250 million daily shoppers directly through the online retailer’s site. But both Amazon and Hyundai emphasize that the dealer, not Amazon, is the actual retailer.

“The local dealer is the seller of record,” an Amazon spokesperson tells Wards.

The collaboration “will allow shoppers to find and purchase dealer inventory directly on the Amazon platform, then work with our dealers and their teams to finalize the transaction,” Jose Munoz, Hyundai North America president and chief operating officer, wrote on LinkedIn.

The program is designed to allow shoppers to search for available vehicles in their area based on model, trim, color and features and, after selecting a vehicle, will be able to check out online with their chosen payment and financing options.

Amazon will not ship vehicles to buyers. Some dealers may offer delivery options but “this experience is about affording people the ease of online purchase they enjoy and enabling them to pick up the keys to their new vehicle at their local dealer at a time that is convenient for them, says the Amazon spokesperson.

 When the program begins it will include a pilot group of 18 of Hyundai’s U.S. 830 dealers, but the aim is to “make it available to all dealers around the first half of next year,” said Munoz.

Amazon says it will make other auto brands available in the future.

Costco Auto Program Exclusivity

While the Costco Auto Program and the Amazon/Hyundai cooperation are similar in that each works with dealers to sell their available inventory rather than directly sell vehicles, there are many differences, Rick Borg, general manager of the Costco Auto Program, tells Wards.

“The biggest difference is, we provide a saving, prearranged pricing through our exclusive network,” he says. “What we bring to the dealership and our members is a transparent process and value in pricing and process.”

The Costco Auto Program has specific approved dealers it partners with, and it sells new and certified pre-owned vehicles exclusively to Costco members, says Borg.  

The Costco Auto Program’s prearranged pricing offer is available only to U.S. and U.K. members and it offers limited promotions with manufacturers in Canada. Costco has some 250 million members worldwide including between 55 million to 60 million in the U.S. members. 

Dealers are selected based on their ability to provide a great customer experience, including customer satisfaction index scores and reputation. “We have certain value standards we want the dealership to meet,” Borg says.

Costco will have close to 2,600 approved dealerships by the end of 2023, he says.

Costco trains a person at each dealership to handle transactions through the Auto Program. Costco field representatives visit those dealers to provide training and best practices, and the dealerships have online resources and email and phone support.

Members also can call Costco if they have questions about the transaction

Costco does not sell F&I products. It does assist in marketing parts and service and accessories by offering members a 15% discount at dealership partners, Borg says, adding, “We have seen exceptional growth in that area over the last few years.”

The Costco Auto Program also works directly with manufacturers on special promotions. For example, currently Costco members can receive $1,000 off on select Chevrolet, GMC, Buick, Volvo and Polestar models.

As AutoPacific’s Waatti notes, Hyundai’s cooperation with Amazon underscores the importance of “embracing digital platforms.”

So, while Costco members can’t actually purchase from approved dealerships through the Costco website, more online services are coming, says Borg.

“We are currently having conversations with multiple companies about building the right online experience,” he says.

That would include searching inventory and options, prearranging financing, trade valuation and other parts of the transaction that historically have taken place at the dealership.

“Any online solution is designed to do a lot of that without having to go to a dealership for some or all of it,” says Borg.