Amazon Autos partnered with Ford to sell its certified pre-owned vehicles on the platform, enabling customers to purchase, finance, and schedule a pick-up of the cars from participating dealers in Los Angeles, Seattle and Dallas, with more markets coming soon. Ford says that selling on Amazon Autos is a voluntary program, but that 160 of its roughly 2,900 dealers across the country have expressed interest and started the process.
Amazon Autos launched in December 2024 with Hyundai vehicles, later added used vehicles from Hertz's fleet to the platform, and now is partnering with Ford, with more automakers expected to join the platform soon.
This is one of the most avoidable industry disasters in modern history to take shape in real-time in front of our eyes.
Why in the world would Hyundai, Ford, and soon to be other auto manufacturers give away control of their inventory and sales process to the most unscrupulous and ruthless of partners? Has the automobile industry learned nothing from what happened to retailers in the books and toys industries after partnering with Amazon?
Why would automakers do this? So they can later pay Amazon advertising fees after they've helped build its market share?
Here's a timeline of what's about to transpire:
- Amazon entices automobile dealers to sell on its platform with the promise of new customers.
- Amazon leverages its relationships with initial partners to onboard other dealers and manufacturers.
- Suddenly it's hard to get noticed on Amazon Autos, so advertising is introduced and Amazon begins to take the dealers' margins.
- Amazon becomes a market leader in the automobile search space because they have more customers & inventory and better SEO than any individual dealer.
- Amazon pits the dealers, who are now reliant on Amazon Autos, against each other and forces them to undercut each other on price so that Amazon Autos has the lowest prices of any platform.
- Amazon eventually finds a way to bypass the dealers altogether, creating a direct-from-manufacturer model, like the kind that Tesla pioneered. Many US states prohibit automobile manufacturers from selling vehicles directly to consumers and require sales to occur through independently owned dealerships, but Amazon will lobby against those laws, alongside EV companies, and eventually have them changed.
- And/or Amazon will turn its Delivery Service Partners into “auto dealers” to skirt the laws, creating dealership relationships directly with the manufacturers in order to offer Free Prime Delivery of new vehicles.
- Dealerships will eventually find themselves asking, “Why the hell did I participate in Amazon Autos?” as they bleed to death.
“Your margin is my opportunity” — isn't that what Jeff Bezos always said? The world is watching in real-time as Amazon makes dealership margin their opportunity, following their same playbook of leveraging 3rd party sellers' inventory and infrastructure to build their market share before squeezing them of their margin through advertising fees and/or entering the market directly themselves.
If automakers are this desperate to position their car inventory alongside their competitors in a race to the bottom, then why not collaboratively create their own automobile marketplace behemoth? Why not collectively invest in and develop a marketplace solution, similar to how the banking industry created Zelle? Why voluntarily and unnecessarily give control to Amazon?
Is history lost on Ford, Hyundai, and any other automakers that partner with Amazon? Honestly, WTF? Am I the crazy one?
What are your thoughts? Join the conversation on LinkedIn (which has attracted quite the debate in the comments).