If TrueCar was a 500lb Gorilla that caused disruption with dealers, you might say Google is the 1000lb Gorilla that has quietly tested the waters to supply leads to dealers. The prize is profiting from the 17+ million vehicles sold in the US in 2015 and 17+ million forecasted for 2016. Yet, staying with my analogy, there is a bigger Gorilla coming to the Automotive Dealership landscape. This disruption will arrive via the web and potentially by just saying her name, “Alexa”, anywhere in your home.
Amazon has become a profitable giant with over 350,000 employees globally and over $100 billion yearly revenue, changing the way we buy everything from TV’s to laundry detergent. The company is currently testing the waters with Amazon Vehicles in the US. The focus, for the moment, is limited to an extensive collection of reviews and specifications for most new and classic vehicles. However, Amazon has already partnered with Fiat in Italy to allow the purchasing, at a 33 percent discount, of a vehicle online. You still must go to the dealership to complete your purchase, which isn’t quite point, click, and delivery to your house.
Yes, the consumer facing difficulties still exist with the issues of trade-ins, financing, registration and other items. However, are these issues unsolvable to facilitate an easy purchase of a vehicle? The franchise laws that protect dealers will also be challenged in this future purchase method, but there will be dealers that want to capitalize on the power of an Amazon to sell more vehicles in order to reap the rewards of servicing those vehicles. I predict there will be more civil unrest in the dealer ranks with an Amazon than we saw with TrueCar.
Time will tell what course Amazon will take, but lets imagine for the moment:
You: Alexa, I want a new car.
Alexa: Ok. What would you like?
You: I would like a new 2018 Widget LX with leather and a moonroof.
Alexa: Ok. What color would you like?
You: I would like in in black.
Alexa: Ok. I’ve found one. Will you be trading your current vehicle?
You: Yes. I would like to trade my 2014 Widget LX.
Alexa: How many miles are on your 2014 Widget LX?
Alexa: Ok. Is it in Excellent, Good, or Poor condition?
You: It’s in Good condition.
Alexa: Ok. The 2018 Widget LX with MSRP $32,000 is selling for $30,000 and you will receive $15,000 for your 2014 Widget LX with 76000 miles. You will owe the balance of $15,000. Would you like to make an appointment to pick up the vehicle I have located which is at XYZ motors?
Could this be the future? The 2000lb Gorilla is coming. Who wants to hold the banana and keep it from Alexa?