More new vehicles could be sold online as Amazon enters the market

13 June 2017

Amazon, the online marketing company, is planning a digital showroom to take on the traditional automotive retail sector, selling vehicles and accessories online rather than in dedicated showrooms.

The company plans to set up headquarters in Luxembourg, as it plans an assault on the European market first. It is expected that this strategy will see it roll out services for the UK market before moving on to other territories on the continent.

While used car sales are prominent online, with eBay and Auto Trader offering them to the public, the number of new cars sold online remains limited. It remains to be seen which direction Amazon will take, but the company does have agreements in place with several manufacturers, including Fiat Chrysler Automobiles (FCA) to sell cars through its website.

In November 2016, FCA announced the partnership, which will be exclusive to Amazon.it in Italy. The company’s Fiat Panda, 500 and 500L models are available online, a deliberate choice as the biggest selling and most popular models amongst younger people in the Italian market.

‘The time has arrived to give consumers a new, more efficient and transparent way to choose a new vehicle,’ Gianluca Italia, responsible for Fiat Chrysler in Italy, said during an online press conference.

The model sees buyers choosing their vehicle build online, then arranging pick up at a traditional dealership, rather than having the vehicle delivered to their home. FCA states this is due to market research, where 97% of those polled suggested they still wanted to collect their vehicle in person.

In a statement, FCA said: ′Built around the needs expressed by customers, 50% of Italians declare that they could choose a car online, 97% still wish to pick it up from a dealership. As with many online purchases, speed is of high importance, so the chosen car will be handed over to the customer very rapidly via dedicated logistics, taking into consideration the particularities of the activation of a rental package in all cases.’

Amazon has hired Christoph Moeller, a partner at the Oliver Wyman consultancy for the sales effort. He was responsible for the auto industry at the firm up until last February. The internet company will be spending a considerable sum to ensure operations can go ahead without problems, and could well call on its other partner manufacturers, Hyundai and Opel, when it launches the service.

The news has been linked with a recent downturn in shares in Auto Trader. The firm receives almost all of its revenue from its UK online platform and while retaining a strong share, any perceived challenge can hit its index price. While the company announced increased profits, its share price fell by 5.9% in June 2017.