Will Fiat Chrysler's plan to sell cars on Amazon destroy or update the dealership model?

November 28, 2016

America's auto dealership model may not be fully broken, but most folks--especially consumers--would agree that it's in need of a 21st century overhaul. Fiat Chrysler Automobiles apparently thinks so, too.

The car company recently announced plans to begin selling vehicles on Amazon. Doing so won't completely remove dealerships from the picture, but it will dramatically reduce the amount of time that shoppers spend in showrooms.

It'll work like this: new-car buyers will be able to visit Amazon and choose from a limited lineup of FCA vehicles. They'll be able to customize cars to their preferred specs and complete most of the payment process through Amazon. Buyers will sign any remaining paperwork when they pick up their cars at their local dealerships. The entire process is expected to take about two weeks.

The service will launch first in Italy, where FCA will offer three Fiat models: the Panda, the 500 and 500L. The Panda's huge popularity and the appeal of the 500 and 500L to younger consumers accustomed to online shopping make them prime Amazon properties. Pair that target-marketing with the fact that some 50 percent of Italians have expressed interest in buying a car online, and FCA could have a big winner on its hands.

But just to make sure, the automaker plans to offer significant discounts to Amazon shoppers. In the end, online buyers will receive discounts about 33 percent higher than those who buy their cars in person.

Our take

Many of us think that this could be a huge win for FCA. Among the upsides:

1. It's a partnership with Amazon, a highly trusted retailer. Many of today's most eager online shoppers made their first web purchases through Amazon. They've had years to develop strong relationships with the company, often completing transactions on a weekly basis. Though buying things online isn't as scary as it used to be, when anyone's shelling out thousands of dollars (or euros) on something, sight unseen, trust is a very, very important factor.

2. It doesn't eliminate dealerships. If FCA had tried to do a complete end-run around dealerships, it would've angered many in the industry. Dealer networks would cry foul, and waves of lawsuits would be filed. By using Amazon to conduct sales and dealerships to deliver vehicles, FCA has kept both sides happy (we hope).

3. It merges the best parts of online shopping with the best parts of today's dealership model. No doubt about it: many consumers are turned off by the traditional system of auto sales, especially haggling. They're also very wary of sales staff, rating their trustworthiness on par with telemarketers and members of Congress. However, most shoppers want to see their cars before they finish signing on all the dotted lines. By partnering with Amazon, FCA is making the shopping experience more consumer-friendly while letting dealers do what they do best: deliver and service cars.

FCA hasn't said when it plans to launch the Amazon sales program in America. However, given the vast number of eager internet (and smartphone) shoppers here, it's likely to generate some attention--and for struggling Fiat, that attention can't come soon enough.

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