In this articleHTZAMZN your favorite stocksCREATE FREE ACCOUNTThe recently announced partnership between Hertz and Amazon Autos will make it easier for rental car companies to offload their own cars directly to consumers, but it could cut into a historical source of fit for car dealerships, auto industry analysts said.The announcement that the car rental company would be teaming up with the e-commerce giant sent Hertz s soaring.
Hertz already sells most of its fleet directly to consumers — it lists them on its own website and on others, and sells them on Carvana.But selling its rental fleet directly to consumers is a key piece of Hertz's turnaround plan."It's an important part of the , right?" said Chris Woronka, a Deutsche Bank analyst.
"They resell a couple hundred thousand cars every year, the U.S. We're talking several billion dollars worth of inventory that gets resold.
Obviously the name of the game is to resell it at the highest price possible."Amazon vides another channel for that.
The e-commerce giant first announced it was entering car sales in 2023, through a partnership with Hyundai dealers, which it has since expanded.Shoppers on Amazon can secure financing and fill out paperwork, but they have to still head to a lot to pick up the car.
In the U.S., new car sales are governed by laws tecting dealers against direct sales, though some companies such as Tesla, Lucid, and Rivian have found a way to sell directly to the public by opting not to have any dealers in the first place.The Hertz partnership is essentially the same as the Hyundai tie-up.
So far, Amazon is keeping no inventory of its own.
Instead, it is viding the software to execute sales online through its own website.It is quite a different way of doing things than Amazon — which is known for keeping warehouses of goods — is used to."Amazon, ironically enough, has been trying for 15 or 20 years to get into the automotive retail segment," said Steve Greenfield, a general partner at Automotive Ventures, which invests in mobility companies.
"Ultimately, what's giving them heartburn consistently is the fact that with any other duct category, they can control the unpacking experience.
When a box lands on your doorstep, they know exactly what you're unpacking. With automotive retail. It's totally different.
That last mile is fulfilled at a dealership where they have almost zero visibility and zero control of the unpacking experience."But John Possumato, a former Chrysler Plymouth dealer and entrepreneur, said the Hertz-Amazon partnership should give dealers reason to worry.In an open letter to the National Automobile Dealers Association, Possumato said rental companies Hertz can buy cars in bulk, which qualifies them for discounts.
This enables the company to sell cars for less than a dealer can afford. That's been an issue in the past, Possumato said.
Hertz already runs 45 retail lots around the United States.But the digital era supercharges the blem, he said."You have Amazon, the biggest merchandizer retailer in the country, and you've got the biggest or one of the biggest rental fleets, and they're pairing together to sell these cars," he said.Watch the to learn more.