The auto industry has long been defined by in-person showrooms, physical paperwork and the traditional car dealership model. This week’s announcement that Amazon Auto is moving into the used car sales market marks another turning point for the industry.
Known for disrupting sectors with its scale, technology and customer-centric innovation, the U.S. tech giant is changing how consumers buy and experience vehicles. This is more than just a retail expansion. It has deep implications for the automotive industry in terms of ownership models, brand loyalty, data control and product design.
Background
Amazon Auto launched in December 2024, in partnership with Hyundai. The initiative currently operates in 54 U.S. markets and allows car buyers to browse, order and finance any new Hyundai vehicle.
The announcement this week will see the first online sales of used Hyundai models in the Los Angeles area, with plans to expand to other U.S. cities in the coming months
The aim is to partner with dealers and brands to “redesign car shopping,” not only offering consumers more choice and allowing dealers to reach more customers but to provide the end-to-end digital car buying experience modern buyers are seeking.
Consumers today expect an omnichannel buying experience, one that combines online and at-dealership activities, transparent vehicle pricing and greater use of digital tools. Amazon Auto aims to provide shoppers with an end-to-end digital car buying experience, including advanced search functionality and detailed vehicle history as well as the ability to book in-person test drives with dealerships. Users will also be able to arrange financing and sign paperwork electronically, effectively completing the purchase in just a few clicks.
The impact on the auto industry
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Loss of second hand customer relationships
Traditionally, OEMs used dealership-backed CPO programmes and after sales service offerings to maintain contact with used-vehicle buyers. This helps maintain brand integrity but crucially leaves the door open for first-time buyers to become brand loyalists
Digital retail bypasses this conventional dealer model. Its platform becomes a new customer gateway enabling direct-to-consumer used vehicle sales. This threatens the dealership’s role in the customer journey — not just in terms of sales, but also in financing, upselling warranties and maintaining long-term customer relationships.
It also reduces the influence automakers have over how vehicles and their features are communicated and how their brands are perceived in the resale market.
The situation becomes more difficult for OEMs when we consider the impact this broader, more accessible marketplace will have on CPO and used electric vehicles (EV) sales.
The focus on used vehicles — backed by warranties and inspections — will boost trust and visibility in this segment of the market, leading to more robust resale opportunities
This is especially true for EVs, which have struggled to establish a strong resale market due to concerns about battery health, depreciation and limited data transparency. The ability of digital car retail platforms to offer battery health diagnostics, verified vehicle history and bundled warranties, will support the wider adoption of EVs, and extend their lifecycles in the used car market.
If OEMs want to capture these opportunities they will need to think strategically about the end-to-end digital car buying experience and how they can harness it directly through new platforms.
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Disruption of traditional dealership models
This new world of direct-to-consumer auto retail also threatens dealership profitability. Historically, used vehicles have been a key profit centre for dealers, often subsidising thinner margins on new car sales. Amazon’s pricing transparency, data-driven vehicle listings and wide selection will likely compress those margins.
Dealerships may need to reevaluate their business models — potentially pivoting more towards service and aftermarket offerings.
For automakers, it could mean restructuring dealer relationships, potentially pushing more franchise laws to be re-examined or challenged to accommodate new forms of retail.
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Digital car retail becoming the norm
While the auto industry has been undergoing a digital transformation for some time, the retail side has been slow moving. Amazon’s entry into the market has accelerating the shift towards online car buying.
This move raises consumer expectations across the board and automotive retailers —both OEMs and independent dealerships — will need to keep pace.
Automakers must look to build or expand direct-to-consumer (DTC) platforms, integrate online financing and trade-in capabilities, and provide a high-quality customer experience from screen to steering wheel.
Those slow to adopt these digital capabilities risk losing relevance in a market where convenience and transparency are paramount.
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Change in how consumers view car ownership
By lowering the friction in buying and selling vehicles, we may see a faster turnover of used cars and shorter ownership cycles. Are we entering an era where vehicles are treated more like consumer electronics: bought online, used for a few years, and easily resold or traded in?
This trend has broader implications for OEMs and financing providers. It could lead to increased demand for flexible ownership models, such as subscriptions, short-term leases and usage-based financing.
In this software-defined vehicle era, OEMs have even more incentive to design vehicles with long-lasting digital capabilities and easier second-owner transitions.
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Increased focus on software-defined vehicles (SDVs)
The normalisation of digital car ownership means consumers will expect vehicles — new or used — to function more like smart devices.
For OEMs, this raises the bar for software-defined vehicle (SDV) architecture. Vehicles will need to be designed with longer-term digital support, enabling multiple owners to benefit from software features across the vehicle’s lifecycle. Automakers must also decouple digital services from a single user and make them transferable, secure and upgradeable.
A managed connectivity platform will be central to this, providing crucial over-the-air (OTA) updates, remote diagnostics and connected services and features.
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Boost for the CPO and EV resale market
The focus on selling certified pre-owned (CPO) vehicles — backed by warranties and inspections — will boost trust and visibility in this segment of the market.
Previously, CPO vehicles could only be bought via OEM-sponsored programmes at dealerships. Now they’ll gain new life in a broader, more accessible marketplace. This, in turn, will give buyers more confidence in used vehicles and creates more robust resale opportunities.
This is especially impactful for electric vehicles (EVs), which have struggled to establish a strong resale market due to concerns about battery health, depreciation and limited data transparency.
A digital car retail platform can offer battery health diagnostics, verified vehicle history and bundled warranties. This will rebuild trust in used electric vehicles. It will also support the wider adoption of EVs and extend their lifecycles in the used car market. Finally, it will benefit OEMs by strengthening the overall electric vehicle ecosystem and improve residual values — both critical for future EV growth.
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The battle for customer data and loyalty
Traditionally, OEMs and dealerships have controlled the customer relationship, collecting data across service, financing and ownership stages.
Now direct-to-consumer sales platforms stand to own the automotive customer interface. This means the opportunity to collect insights on:
- Buyer preferences by region and model
- Search behaviour and purchase intent
- Financing and insurance preferences
- Lifetime vehicle ownership patterns
Long-term, this information is as valuable as vehicle sales themselves. It provides the ability to personalise recommendations, cross-sell services (e.g., insurance, maintenance etc…) and potentially influence vehicle design by providing feedback loops that OEMs may lack direct access to.
Automakers cannot run the risk of missing out on this valuable data. They need to invest in their own digital ecosystems if they want to ensure they are not only supplier of vehicles but stewards of the entire customer journey.
The road ahead: platform vs. product
The auto industry is already shifting from one built around products (the cars) to one built around platforms.
Amazon’s expansion into the used and CPO vehicle market is set to change how cars are bought, sold and serviced. This both a challenge and an opportunity for carmakers. They can either adapt, digitise and rethink the customer journey, or risk being sidelined in the next era of mobility.
While the move may create short-term turbulence for traditional players, it also brings long-term opportunities: greater efficiency, broader access to used vehicles and the chance to redesign customer journeys for a digital-first future.
Those who embrace the shift can evolve into mobility and technology companies, building lasting customer relationships through data, digital services and integrated ownership experiences. Those who cling to old models’ risk becoming hardware suppliers in a software-defined future.
How Cubic3 can help you compete in the direct-to-consumer retail landscape:
A seamless direct-to-consumer platform
With Cubic3 Cloud, you get always-on, secure connectivity management —making it easy to deliver the end-to-end digital car buying experience today’s customers expect.
Our scalable APIs let you integrate valuable vehicle data (like odometer readings and battery health) directly into your DTC portal. This provides a more transparent and engaging buyer journey.
Effortless buyer enrolment and activation
DriverConnect3 streamlines the onboarding process for both new and used vehicle buyers. Forget dealer-password hassles — customers can enrol and activate their profiles in just a minute using the vehicle app.
Plus, you can easily manage e-signatures, contract downloads and offer warranties or subscriptions throughout the entire ownership lifecycle.
Ongoing post-sale engagement
Keep drivers engaged and unlock new revenue opportunities, even as vehicles change hands. With Cubic3 Cloud and DriverConnect3, you can deliver over-the-air (OTA) updates, push new features or upgrades and enable in-car subscription purchases.
From mileage and battery health to in-car services, we enable you to better understand how your vehicles are used. This means you can offer flexible subscriptions or short-term leases tailored to each customer.
Transparency for CPO and EV resale
Unlocking vehicle data, will give you a competitive advantage in the used car sales market.
Explore3 provide you with real-time vehicle tracking, vehicle persona information and subscription management, vital fleet management information and application classification detail. This verified data will enhance your certified pre-owned (CPO) listings.
Automated audit trails can also certify inspection results and warranty status, giving your buyers greater confidence — especially in the used EV market.
Reclaim the customer relationship
Cubic3 Cloud helps you take back control of the customer journey.
Providing buyer preferences, usage patterns and service history into a unified CRM feed allows you to personalise offers, sell charging subscriptions or maintenance plans and easily upsell new features. It helps you build lasting loyalty in a digital-first world.
