Why The Amazon-Hertz Deal Worries Dealerships

Post Inspired by: https://www.youtube.com/watch?v=pm_CeKFhZ0s

Summary

Amazon is expanding into auto retail by partnering with Hertz to list and help sell Hertz’s used rental cars on Amazon’s platform. Amazon won’t hold inventory or deliver vehicles; it acts as a powerful digital showroom where buyers can browse, finance, and complete paperwork, then take delivery via a dealer or Hertz site. The play aligns with Amazon’s high-margin advertising business (>$56B in 2024), leveraging shopper data to sell targeted ads rather than cars.

For Hertz—emerging from bankruptcy, reshaping its fleet, and under activist pressure—the tie-up could boost retail resale values, reduce auction dependence, and lower fleet costs. Dealers may feel pressure if rental fleets increasingly bypass wholesale auctions and sell direct to consumers online, constraining used-car supply for lots. Some experts downplay the near-term impact (Hertz volume spread across all dealers ≈ 1–2 units per store), but warn the model could scale fast to other rental fleets.

Structural frictions remain: franchise laws limit direct sales, and Amazon can’t control the final “last-mile” dealership experience. Still, this underscores a broader shift—digital platforms (Amazon, Carvana) competing for used-vehicle inventory and customer acquisition, while dealers lean harder on service/parts and trade-ins to protect profitability.

Key takeaways

• Amazon’s role = ad-driven marketplace, not a dealer: Revenue upside is in targeted auto ads and consumer data, not vehicle margins.

• Hertz gets a bigger retail funnel: More eyeballs may mean higher retail dispositions vs. lower-priced wholesale auctions, aiding fleet cost control.

• Dealer supply risk (medium-term): If rental fleets scale direct-to-consumer listings via Amazon, auction volumes shrink, tightening dealer sourcing.

• Impact today is modest, but scalable: One Hertz fleet spread across all stores is small—yet success could expand to other rental companies quickly.

• Franchise-law speed bumps: Amazon cannot control delivery or sell directly; dealers still handle handoff, preserving some dealer leverage.

• Inventory is the real battleground: Dealers counter by buying off the street and maximizing trade-in capture to avoid auction costs.

• Dealer profit mix matters: Service/parts (~50% of profit) and F&I make dealers resilient even if some used-car sales migrate online.

• Broader trend: Ongoing push toward digital car retail, with legal fights over direct sales (Tesla, Rivian, Lucid, Scout) reshaping the landscape.

• Advertising flywheel: Auto listings deepen Amazon’s commerce data moat, attracting OEMs, insurers, lenders—fueling more ad spend.

• Watch for copycats: If Hertz–Amazon works, expect Avis/Enterprise-style partnerships—and more pressure on auctions and dealer sourcing.

Related Keywords

1. Amazon Hertz partnership

2. used car marketplace

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4. dealer franchise laws

5. wholesale auction supply

6. digital auto retail ads

7. Carvana vs dealers

8. fleet disposition strategy

9. last-mile delivery (dealers)

10. targeted automotive advertising