- Shares of car dealerships fell on Thursday after Amazon announced it would stop selling cars.
- Amazon said it will launch online car sales in 2024 in partnership with Hyundai.
- Shares of Carvana, CarMax and AutoNation fell as much as 8% after Amazon’s announcement.
Competition among car dealerships like CarMax, AutoNation and Carvana is set to increase after Amazon announced it will begin online vehicle sales next year.
Shares of all three companies fell up to 8% on Thursday after Amazon’s announcement. Amazon shares fell by about one percent in Thursday’s trading session.
Amazon said it is partnering with Hyundai to be the first to sell its new line of vehicles, marking the e-commerce giant’s entry into vehicle sales.
Hyundai’s American depositary receipts rose nearly 3% on Thursday, despite very thin volume of less than 2,000 shares traded.
“This new digital shopping experience will make it easier for customers to buy a new car online, and then have it picked up or delivered by their local dealership at a time that works best for them,” Amazon said in a press release. “
Car sales on Amazon’s platform will be managed and fulfilled by local car dealerships, making Amazon essentially an intermediary between the customer and the car dealership. This asset-light approach is a sharp contrast to companies like Carvana and CarMax, which often own the cars they sell.
Amazon’s announcement Thursday isn’t the first time it’s shaken up an industry with a simple press release.
The company sent shock waves through the auto-parts retail industry after announcing plans to begin selling auto parts on its website in early 2017. The company’s entry into health insurance led to a decline in insurance stocks in January 2018. And Amazon intended to launch physical pharmacies. Shares of CVS and Walgreens declined in May 2021.
According to the announcement, Hyundai’s deal with Amazon extends beyond the sale of Hyundai cars. Other aspects of the deal include Hyundai using Amazon Web Services as its preferred cloud provider and Hyundai building Alexa into its car models starting in 2025.