Amazon UK Bumps Heads with Autotrader

According to Bloomberg, Amazon UK will be premiering a large scale test of a car dealership product. Amazon Europe has been tinkering with a small test in Italy last year, when car buyers were able to buy Fiat 500, Panda and 500L models for delivery. The cars are advertised online then dropped off at a local dealership and, according to their research, this model is unlikely to change. This news has already seen ripples in the stock market, as Manchester-based Auto Trader fell 5.8% and Amazon gained 3%. This is a trigger reaction by many investors who have previously experienced Amazon throwing their weight into new markets. Their video streaming service has captured UK viewers with the Grand Tour and The Crown, and they are on track to invest even more, eclipsing national television channels in production costs. This demonstrates the sheer scale they are prepared to push into new markets. While the automotive market is dominated by AutoTrader online, they could be facing fresh and fierce competition which challenges their hold over the UK automotive market.

How does this affect consumers?

Competition is always good for consumers, it’s what drives down prices between supermarkets. Amazon is a massive player, who have plenty of power to squeeze margins from AutoTrader and regular car dealers. Not only can they be price competitive, but they can also steal market share very quickly with their recognisable brand. Autotrader will have a tough time fighting back as their product is controlled by independent retailers who manage their stock and set the prices, while Amazon can buy and sell cars themselves or be heavily linked to manufacturers directly. No doubt, Amazon will offer their Prime customers extra value for this product, maybe even free test drive/loan periods. Their product teams have always found ways to innovate stale markets, such as their revolution of the delivery networks around the world. Recently they bested 20 minute deliveries in London, which is faster than a takeaway.

Is the automotive industry due to be revolutionised?

With automation on the horizon, many car manufacturers are designing smarter, cleaner and better connected products. Tesla are making strides with automated cars, with features such as ‘summon’ where your car picks you up, with no driver necessary! They are ruling the roost by recording billions of miles of data and analysing how their car performs in real world conditions. This data is invaluable for their development and many automotive manufacturers will follow in their footsteps, something they shy away from to hide petrol emissions of real world car use. Such research will inevitably lead to the development of better connected cars, which will be able to perform tasks previously unheard of. Soon they may be able to tell you whether a repair needs to be performed, order the necessary parts and connect you to a local mechanic. Amazon have been sneaky in offering their e-commerce support, excluding all results except Amazon own brand products when asking Alexa, their personal home assistant.

Looking into a crystal ball, this may mean your car tells you it needs a repair, the parts are delivered before you even get home and a friendly ClickMechanic is there to sort it all out. Who knows?