Can Amazon Roll Out its Plan to Sell Cars Online?

December 16th, 2016 by

Amazon must be trying to expand its online services just for the hell of it. I mean, it’s not like the internet giant is at risk of collapsing any time soon. At this point, it is pretty much the premier website when it comes to online sales. So, what’s the point of rolling out a partnership program with Italy’s Fiat Chrysler Automobiles that allows the monster cyber-retailer to essentially sell cars online? I say essentially, because it’s a little more involved than that, as you’ll soon read. This plan might work in Europe, but not in America.

Why? I’ll explain later, along with the problems Amazon Vehicles will face, and why this new campaign is just a bad idea in general.

 

The Prospective Process

The reason why this pitch makes sense in Europe and the way that Amazon and FCA intend to facilitate it, go hand-in-hand. Since buyers in Europe already spec out their vehicles before taking delivery, it works quite well with what Amazon has in mind. Amazon will target the online audience and then try to initiate the transactions for car dealers. Then, they will turn the deal over to the dealership for the finishing touches.

Obviously, there is no way for us in the U.S. of A to know (in detail) how the process will work over here. But, I’d imagine it would go down like this:

Buyers visit the Amazon Vehicles site, research a new car, spec one out, and then get presented with dealership, insurance, and financing options. After this is all said and done, this tidy package of information will be passed along by Amazon to a local car dealer or dealer network that’s connected to the program. Amazon gets a cut if the sale becomes final and the dealership pockets the rest.

But, there are a few problems Amazon could face if this ever hits the U.S.

 

Potential Issues

Perhaps the biggest thing that’s going to hold Amazon back from bringing its program to the U.S. is pricing. Over in Italy, Amazon is currently applying a 30% discount to sales. While that’s great news for consumers, that’s a huge discount off a new MSRP. Dealers in the US most likely would not accept a price cut like that, unless it was for a slow-selling, unpopular model. If a deal with a discount like that is passed on to a dealership, that dealership stands to lose a decent chunk of money on the sale, plus whatever Amazon would keep as its cut.

Surely, dealerships in America will have zero interest in this program. Snowballing off that, if Amazon ends up passing over all sorts of cheap vehicles to the dealership, that dealership’s potential interest in the program will probably plummet even further. After all, why put in the time and money for a paltry profit?

It’s Just a Bad Idea

It’s just a bad idea overall for the United States, unfortunately. Even if it would work out great for consumers, and it would, it wouldn’t be for the benefit of the dealership and dealerships are the ultimate decision makers when it comes to car sales.