Why this matters now
Amazon’s push into auto retail is moving from test to traction. A new tie-up to help sell Hertz’s used vehicles inserts the e-commerce giant into one of the largest, most analog profit pools in U.S. retail. The strategic backdrop: a tight, data-driven fight for used-vehicle inventory, shifting disposal channels away from wholesale auctions toward direct-to-consumer, and a digital ad market where Amazon already monetizes shopper intent at massive scale. While Amazon isn’t taking inventory or delivering cars, its “listing service on steroids” could accelerate the industry’s migration online—potentially reshaping dealer sourcing economics and auction volumes.
Quick summary
– Amazon’s digital advertising generated $56.2B in 2024, a high‑margin growth engine tied to shopper data.
– Hertz’s fleet totals about 560,000 vehicles; as of September 2025, 80% were less than a year old.
– Hertz resells a “couple hundred thousand” cars annually in the U.S., representing several billion dollars of inventory.
– Less than 10% of Hertz disposals go to auction versus 15–20% for industry peers.
– Dealers source about 20% of used inventory from auctions; nearly three‑quarters from trade‑ins; nearly 10% bought off the street.
– Wholesale scale: roughly 22M used vehicles/year, generating about $230B in sales (2021 estimate).
– Auction structure: around 300 companies; Manheim facilitates ~7M vehicles/year, ~$50B in value and $2.6B in revenue.
– Dealer economics: the average dealer sold 189 used vehicles in Q2 2025, earning $1,567 per unit—about $600 less than new vehicles.
– Impact math: spreading Hertz’s fleet implies roughly 1–2 vehicles per dealership—limited near‑term disruption.
– Relisting and activism: Hertz shares fell nearly 10% on 2021 relist day; an activist disclosed a 4.1% stake as of Dec 31, lifting shares.
What’s changing—and what isn’t
Amazon entered auto retail in 2023 (starting with Hyundai) and still keeps no inventory. Buyers can browse, secure financing, and complete paperwork online; delivery remains at the dealership—an “unpacking” step Amazon can’t control. The near‑term impact on dealer supply looks modest, but if rental fleets broadly adopt direct retail via Amazon, auction volumes and dealer sourcing costs could feel pressure. For Hertz, quicker turns at retail pricing support its ongoing transformation. For Amazon, the prize is data and high‑margin ads—not metal.
Sentiment and themes
– Topic sentiment and overall tone: Positive 35% / Neutral 45% / Negative 20%
– Top 5 themes:
1) Digital disruption of auto retail
2) Inventory channel shift (auctions to direct-to-consumer)
3) Advertising/data economics as profit driver
4) Hertz fleet monetization and turnaround
5) Dealer profitability mix and franchise-law constraints
Amazon’s Auto Ambitions: A Game-Changer for Used Cars and Beyond
Welcome, listeners and readers, to a story that’s as much about reinvention as it is about disruption. Amazon, the e-commerce behemoth that redefined how we shop for everything from books to groceries, has set its sights on a new frontier: the used car market. With a recent partnership to sell vehicles from rental giant Hertz, Amazon is dipping its toes into an industry ripe for digital transformation. This move could reshape the auto retail landscape, challenge traditional dealerships, and signal broader shifts in how inventory and consumer data are leveraged in the digital age. Let’s unpack this development, explore its historical context, and assess the global and sector-specific impacts—while offering some practical insights for investors and policymakers.
# The Amazon Effect: A Historical Perspective
Amazon’s journey began in 1994 as an online bookstore, but its vision quickly expanded to becoming the “everything store.” Over the past quarter-century, the company has grown revenues by a staggering 38,000% with each new product category it enters. From cloud computing (AWS) to streaming (Prime Video), Amazon has a knack for scaling fast and dominating markets. Its ability to wield vast resources—financial, technological, and logistical—has left even seasoned rivals wary. As one industry veteran put it, “I would never bet against Amazon. They effectively have unlimited resources.”
Historically, the auto industry has been one of the few sectors Amazon hadn’t touched—until now. Cars, unlike books or gadgets, involve complex transactions, physical delivery challenges, and entrenched intermediaries like dealerships. Yet, Amazon’s foray into auto retail, starting with a 2023 partnership with Hyundai and now expanding through Hertz, shows it’s ready to tackle these hurdles. This isn’t just about selling cars; it’s about data, advertising, and redefining the consumer experience—hallmarks of Amazon’s playbook.
# The Hertz Partnership: A Win-Win or a Warning?
At the heart of this news is Amazon’s deal to help Hertz sell its used rental cars. Hertz, with a fleet of 560,000 vehicles (80% less than a year old as of September 2025), offloads hundreds of thousands of cars annually in the U.S. alone, representing billions in inventory. Traditionally, rental companies like Hertz sell through auctions (15-20% industry-wide), directly to dealers, or via platforms like Carvana and AutoTrader. Now, Amazon’s digital storefront—complete with shopping features for paperwork and financing—offers Hertz a direct-to-consumer channel to maximize retail prices over wholesale rates.
For Hertz, this is a potential lifeline. The company has faced turbulent times, filing for bankruptcy in 2020 amid a pandemic-driven collapse in rental demand, relisting in 2021, and undergoing a “critical transformation” in 2024. Under CEO Gil West, Q2 2025 marked its best quarter in two years, though operational inefficiencies remain. Activist investor Bill Ackman’s recent stake (reportedly over 4.1% as of December 31, 2025) signals confidence in Hertz’s undervaluation, sending shares soaring. Partnering with Amazon could boost margins by cutting out middlemen and tapping into a broader consumer base.
For Amazon, this is a low-risk entry into auto retail. It holds no inventory and isn’t selling cars directly; instead, it acts as a “listing service on steroids,” connecting buyers with sellers while capturing valuable consumer data. Analysts note that the real prize for Amazon lies in digital advertising—a $56.2 billion business for the company in 2024—rivaling Google and Meta with high-margin, targeted ad opportunities.
# Sector-Specific Impacts: Dealers Under Pressure?
The ripple effects of this partnership are most acutely felt in the auto dealership sector. Traditional dealers, already grappling with digital disruptors like Carvana and CarMax, now face a formidable new competitor. About 20% of dealers’ used car inventory comes from auctions, where rental fleets like Hertz’s play a role (though only 5% of auction cars are from rentals). By selling directly to consumers via Amazon, Hertz could bypass auctions and dealers, squeezing supply and threatening the 25% of dealership profits tied to used car sales (per a 2019 Edmunds report). Moreover, losing retail sales means losing service and finance/insurance revenue—key profit drivers accounting for nearly half of dealership earnings.
Industry voices, like former dealer John Amato, warn of history repeating itself “on steroids.” Thirty years ago, rental companies set up retail stores near dealerships, undercutting prices thanks to bulk discounts and “stair-step incentives” from automakers. Today, Amazon’s digital reach amplifies this threat. If this pilot scales to other rental giants (the total U.S. rental fleet is 2.5 million vehicles), dealers could see a significant erosion of inventory access. However, some analysts downplay the immediate impact, noting Hertz’s fleet equates to just 1-2 cars per dealership when spread across the U.S. market.
# Global Implications: A Digital Auto Revolution?
Beyond the U.S., Amazon’s auto ambitions could inspire similar disruptions globally. The used car market, valued at over $230 billion annually in wholesale channels alone (per ACV’s 2021 IPO data), is fragmented and often analog in many regions. Amazon’s model—leveraging digital platforms, consumer data, and advertising—could appeal to international rental firms and automakers seeking efficiency. Partnerships like the one with Hyundai suggest Amazon is already eyeing global OEMs (original equipment manufacturers).
However, challenges remain. Franchise laws in the U.S. and similar regulations abroad protect dealers by restricting direct-to-consumer sales by manufacturers or third parties. Tesla, Rivian, and others have fought legal battles to bypass these laws, and Amazon may face similar hurdles. Additionally, the “last mile” of auto sales—physical delivery and customer experience at dealerships—remains outside Amazon’s control, a stark contrast to its mastery over other product categories.
# Investment and Policy Implications
For investors, this news offers both opportunity and caution. Hertz stock has surged on the Amazon deal and Ackman’s involvement, but its turnaround is far from complete. Operational inefficiencies and fleet costs remain headwinds, making it a speculative play. Amazon, meanwhile, is a safer bet for long-term growth, given its advertising focus and low-risk entry into autos. However, investors should monitor whether this pilot scales and how it impacts digital ad revenues. For those eyeing dealership stocks (e.g., large public groups like AutoNation), near-term risks are limited, but a broader shift to direct-to-consumer sales could pressure margins over time.
Policymakers must grapple with the tension between innovation and protectionism. Franchise laws, designed to shield dealers, may stifle digital transformation. Updating these regulations to balance competition with dealer interests—perhaps by incentivizing hybrid models—could prevent market distortions while fostering consumer choice.
# Near-Term Catalysts to Watch
Several developments could accelerate or derail this trend in the coming months:
1. Expansion of Amazon’s Auto Partnerships: If Amazon secures deals with other rental firms like Enterprise or Avis, the impact on dealers and auctions will intensify.
2. Hertz’s Operational Progress: Q3 2025 earnings will reveal if cost efficiencies are taking hold, potentially solidifying investor confidence.
3. Regulatory Shifts: Legal challenges or policy changes around direct-to-consumer auto sales could either embolden or constrain Amazon’s model.
4. Consumer Adoption: Early data on transaction volumes through Amazon’s platform will signal whether buyers embrace this digital showroom.
# Conclusion: The Road Ahead
Amazon’s move into used car sales via Hertz is a microcosm of a broader digital revolution in retail. It’s not just about cars; it’s about data, scale, and reimagining consumer journeys. While dealers face near-term supply risks and long-term competitive threats, the immediate impact may be overstated. For Hertz, this partnership could be a turning point; for Amazon, it’s another step toward market omnipresence. Investors should tread carefully, focusing on scalable trends over short-term hype, while policymakers must adapt to a world where giants like Amazon rewrite the rules. Buckle up, folks—this ride is just beginning.