I may be wrong on Amazon's plans for auto sales. You may be, too.
I've long thought that the retail giant hadn't launched auto sales yet only because it had higher priorities than low-margin new-vehicle sales. But I also thought that it could start whenever it wanted.
Amazon wouldn't need to buy a single franchised dealership, I figured. It could follow the Costco model. Sign up dealerships wanting the extra volume that agree to sell the vehicle at the clicked-on price — no extra fees, no attempt to steer the costumer to another model — and offer all automaker incentives online. There are dealerships nationwide that would jump at the chance.
But Amazon's $13.7 billion bid for Whole Foods challenges my theory. Grocery margins are notoriously thin. Amazon could have signed Whole Foods as a supplier, tied up with a delivery service and launched food sales. But it decided to buy the stores. Could it decide to buy a dealership group? Or two, to cover all automotive brands? It certainly has the cash.
Amazon isn't broadcasting its plans, but for a hint of what it might do next in vehicle sales, watch Europe. The retailer's pilots there likely presage what it will try here.
So far, the main pilot is in Italy, where it sells three Fiat nameplates online: the top-selling Panda, the 500 and 500L. The program, extended in March, now includes long-term leases, so financing is definitely on Amazon's radar. The program taps Europeans' preference for ordering specific cars and waiting, rather than choosing from inventory on the lot. After shoppers choose a model and click to buy it, they are asked to select a dealership where they will finalize paperwork and pick up the car — in about two weeks.
Amazon also has sold Hyundais and Opels in Europe. It is gearing up for a push in the U.K., where it has hired senior execs to work with automakers.
Will everything it tries in Europe work? No. Will it keep trying? Yes. Will Amazon eventually sell cars and trucks in the U.S.? Do you really think that's a question?
News Editor James B. Treece oversees retail coverage.