How Amazon Could Disrupt The Dealership Industry
And What Dealers Can Do To Prepare For Amazon's Presence
By Terry Schwer
Amazon announced at the end of November 2023 that they will be partnering with Hyundai to revolutionize the way cars are sold. The worldwide company is no stranger to completely shaking up supply chains and redetermining customer expectations, so those in the auto industry eagerly await to see the results of this partnership.
So how will the Amazon-Hyundai partnership impact dealerships?
Amazon-Hyundai Deal: Changing Dealerships
As part of this collaboration, Amazon Alexa technology will be integrated into Hyundai vehicles starting in 2025. Prospective customers can explore dealers’ inventories on Amazon’s platform and seamlessly finalize their purchases using their preferred payment methods. Notably, all transactions will still involve the customer’s chosen dealership.
While the initial participation of dealers is limited to 10-15, Hyundai envisions a significant expansion by the end of the next year.
Amazon’s Impact on Traditional Dealerships
This strategic partnership poses a challenge to the conventional sales model that dealerships and customers have followed for decades. Amazon’s unparalleled retail influence opens doors to increased exposure for dealership inventories, potentially translating into more sales opportunities.
This collaboration might be a precursor to direct-to-consumer sales, bypassing franchised dealers and undermining their substantial investments in both business and community.
Adapting to Change: What Dealers Should Do
The evolving landscape demands that dealerships proactively prepare for potential changes. Similarly, the COVID-19 pandemic has accelerated the adoption of digital transactions, prompting dealers to implement procedures that cater to customers preferring online interactions.
Dealerships must refine their processes for remote trade-in appraisals, online financing, and home deliveries. While these steps enhance transactional convenience, it’s crucial to acknowledge that the bedrock of a dealership’s success lies in the relationship between the dealer and the customer.
Navigating the Shift with a Personal Touch
Simply put, people buy from people they like, and dealership management should prioritize training staff to seamlessly integrate digital tools while maintaining a customer-centric approach. The first transaction may be digital, but fostering a friendly and accommodating environment ensures that customers remain open to in-person visits in the future.
A holistic approach, combining digital convenience with personalized service, allows dealerships to maximize each opportunity, providing an experience that not only meets but exceeds customer expectations. In a world where consumers approach from various directions, adapting to change while preserving the essence of human connection ensures the longevity and success of dealerships.
Advising During Uncertain Times
As a dealer, you’re already used to constant change. Having an extra set of eyes and hands on your team that specializes in your industry can only make you more prepared for the unknown. You know what needs to be done, but a lot can fall on your shoulders during times of change. An advisor can help take on some of this burden and guide you.
Dealership Experts
Terry Schwer is an experienced dealership consultant specializing in operational efficiency, financial strategy, and dealership profitability. With years of hands-on experience working alongside automotive dealers, Terry helps clients navigate industry changes, optimize their fixed operations, and prepare for market uncertainties. His practical, data-driven approach helps dealerships stay resilient and profitable through shifting economic landscapes.