Amazon is weighing up plans to pursue a corporate partnership that could see it begin selling cars to UK consumers on its website after whetting its appetite in European markets including France and Italy. It would see the online retail giant team up with a vehicle manufacturer to offer promotions and receive orders for new cars from UK customers through Amazon’s platform, it is understood.
Amazon has clinched a similar deal with Seat in France and its Fiat welcome kit was introduced in Italy through its dedicated country website last year. News of Amazon’s interest in the UK recently re-emerged in an article by German trade magazine Automobilwoche, which translated reports said outlined Amazon’s plans to base its online car unit in Luxembourg before launching new operations in the UK.
Amazon said it does not comment on rumour or speculation. The programmes offered in France and Italy allow online customers to access promotions or reach a price arrangement with the car manufacturer through the Amazon platform. Shoppers can then lock in a reservation for a set price, arrange a test drive, purchase that car through the local dealer or even organise home delivery.
Amazon, which celebrated 20 years as a publicly traded company last month, has been criticised for its impact on local businesses that have struggled to compete with its aggressive push into books, clothing, groceries through AmazonFresh, and now cars. But experts say Britain’s leading competitors, including auto classifieds group Auto Trader, have little to fear in terms of competition from Amazon in the car sales business.
In a note published by earlier this week by Exane BNP Paribas, executive director of media equity research William Packer said: “Overall the reaction looks overdone to us. “Based on our reading of the article and conversations with industry contacts (we note Amazon have provided no comment), we understand this is a continuation of Amazon’s existing European automotive strategy.”
“They currently offer lead generation for French and Italian OEMs (original equipment manufacturers) with the orders fulfilled by local dealers. The article suggests this is extending to the UK, but the language of the article suggests this remains focused on the new car space.” Mr Packer noted that more than 90% of Auto Trader revenue comes from the used car segment, an area that Amazon does not appear to be pursuing.
“We view Auto Trader’s network effects (dominant traffic and inventory) as very tough to replicate, even for the US global internet players. We note Google failed with its property portal in the UK and Australia and Google failed with a car classified business in the USA.” The internet titan launched AmazonFresh in the UK last June amid great expectations that it would shake up the supermarket sector and threaten the cosy dominance of the established players.
AmazonFresh, which has teamed up with supermarket Morrisons in the UK, has more than tripled its reach since launch to 260 postcodes across London, Surrey and more recently parts of Hampshire, but is still nowhere near stealing market share from the Big Four players in a notoriously tricky sector to crack.
Kantar Worldpanel data shows AmazonFresh would need to build up a customer base of three million shoppers spending on average €264 each a year to match Tesco, which holds the biggest share of the online grocery market at 3%.