Starting next year, Hyundai dealers will be able to sell vehicles through the Amazon platform with other brands set to follow. Joining us on today’s show to discuss this partnership and what it could mean legally for dealers is Len Bellavia, founding partner of the law firm of Bellavia Blatt, PC also known as DealerLaw.com.
1. Bellavia first addresses the potential legal issues with the Hyundai-Amazon partnership, questioning whether it violates state franchise laws. He emphasizes the need for legal scrutiny, especially since the partnership is still in its early stages and may not have been thoroughly vetted for compliance with these laws.
2. Bellavia and Fitzpatrick discuss the complexities of automotive transactions compared to typical Amazon purchases. How will Amazon’s model handle aspects like trade-ins and financing, which are integral to car buying but not addressed in their platform? Bellavia points out that the simplicity of Amazon’s model may not translate well to the nuanced process of buying a car.
3. There are significant concerns about how this partnership could affect dealers, particularly around issues like pricing, financing, and profit structures. Bellavia suggests that the Amazon-Hyundai model might undermine traditional dealership operations, potentially reducing dealers’ profits and leaving them with limited roles.
4. The idea of purchasing a vehicle with the same ease as ordering everyday items could be a significant draw. However, this initial appeal could be overshadowed by potential long-term implications. If the dealership network becomes economically unsustainable due to this new sales model, it could lead to serious challenges in after-sales services and support. Consumers could face difficulties in getting their vehicles serviced and maintained.
5. Bellavia suggests that a successful transition to online car sales via platforms like Amazon requires the active involvement of various stakeholders. This includes not just the dealers and manufacturers like Hyundai but also state dealer associations and the National Automobile Dealers Association (NADA). Bellavia argues that such collaboration is crucial to ensure that the new sales model is not only legally compliant but also beneficial to all parties involved, including consumers.
“In one respect, it’s great that Amazon, the online leader in retail sales is getting involved. The problem is in its execution. So the devil is in the details and it could portend major problems for franchise dealers, or maybe after this pilot project the kinks will be worked out.” — Len Bellavia