January 23, 2025 — Randy Parker, newly appointed as CEO of Hyundai and Genesis North America, discussed the Amazon relationship this morning at the American Financial Services Association conference in New Orleans:
(Paraphrasing on the fly – not direct quotes)
1. After going live in early January, nearly 200 Hyundai dealers are activated on the Amazon program. But clearly, Hyundai and Amazon were hoping for a bigger response
2. After Hyundai began an aggressive advertising program this month, Amazon is seeing “big” traffic on the Hyundai page. Some dealers are concerned (frustrated might be a better description) that Hyundai
3. Conversion has been low – Parker mentioned the initiative has created approximately 400 sales.
4. Beacon scores for customers going through part of the process range from 550 to 650 — so more subprime.
5. Exploring ways with Hyundai Capital to finance more of these customers.
6. Need more dealers participating.
7. Looking to add more financing providers and products, including leasing.
8. The relationship with Amazon has helped improve the reputation of the automaker, according to JD Power.
I talked with a few Hyundai dealers following Parker’s remarks. Clearly, the program needs work. In their words:
- “Amazon has turned into a broker-type play in which we make no money.”
“Not happy that Hyundai spent that much money on a tier one ad campaign to drive traffic to a third party instead of to our websites” - “Cautiously optimistic that Amazon will figure it out.”
- “They are building the plane in the air, and rebuilding it.”
- Another case of an outside player coming in and thinking they know better than the dealer how to sell the vehicle. But we’re still working with them to help create a better experience.”
My thoughts:
Amazon’s automotive play on the retail side is part of a bigger initiative it started in late 2017/early 2018 to dominate the digital advertising space, which at the time was dominated by Google and Facebook. Digital advertising is where the margins are — in the billions. Selling cars? Not so much.
I wrote about the strategy in 2018 and speculated about in 2016 in The Banks Report. And nothing I’ve heard since makes me think the strategy has changed.
