Car dealership stocks fell on Thursday after Amazon announced it is going to sell cars.
Amazon said it would launch online car sales in 2024 in partnership with Hyundai.
Shares of Carvana, Carmax, and Autonation fell as much as 8% following Amazon’s announcement.
Car dealerships like Carmax, Autonation, and Carvana are about to see increased competition after Amazon announced it will launch online vehicle sales next year.
Shares of all three companies fell as much as 8% on Thursday following the announcement from Amazon. Shares of Amazon were down about a half of one percent in Thursday’s trading session.
Amazon said it’s partnering first with Hyundai to sell its lineup of new vehicles, marking the e-commerce giant’s foray into vehicle sales.
Hyundai’s American depositary receipts were up about 3% on Thursday, albeit on very light volume of less than 2,000 shares traded.
“This new digital shopping experience will make it easy for customers to purchase a new car online, and then pick it up or have it delivered by their local dealership at a time that works best for them,” Amazon said in a press release.
The car sales on Amazon’s platform will be managed and fulfilled by local car dealerships, making Amazon essentially a middleman between the customer and the car dealership. This asset-light approach contrasts sharply with companies like Carvana and Carmax, which often own the cars they sell.
Amazon’s announcement on Thursday isn’t the first time it has shaken up an industry with a simple press release.
The company sent shockwaves in the auto-parts retail industry after it announced its plans to start selling auto parts on its website in early 2017. The company’s foray into health insurance sent insurance stocks plunging in January 2018. And Amazon’s intention to launch physical pharmacies sent shares of CVS and Walgreens reeling in May 2021.
Hyundai’s deal with Amazon extends beyond selling Hyundai cars, according to the announcement. Other aspects of the deal include Hyundai using Amazon Web Services as its preferred cloud provider and Hyundai building Alexa into its car models beginning in 2025.
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