Amazon (NASDAQ:AMZN) has officially entered the used-car market through a new strategic partnership with Hertz (NASDAQ:HTZ), marking its most serious foray yet into the $1.5 trillion automotive industry. Under the expanded Amazon Autos platform, consumers in select U.S. states can now browse, finance, and arrange delivery or pickup for used Hertz vehicles directly through Amazon.com. Hertz, as Amazon’s first fleet partner, will provide the inventory, while Amazon streamlines the front-end experience — search, transactions, and support — within its trusted ecosystem. The move is already sending shockwaves through the digital auto retail space. Carvana (NYSE:CVNA) and CarGurus (NASDAQ:CARG) shares both dipped on the news, with analysts citing long-term competitive risks as Amazon builds out its automotive presence. While Amazon insists this is about enhancing convenience, its scale, logistics dominance, and data advantage could reshape buyer expectations and pressure existing online auto marketplaces. The implications span beyond just one partnership — this may be Amazon laying the groundwork for a broader auto retail strategy.
Tapping A Fragmented Trillion-Dollar Market
The U.S. used-car industry represents one of the largest consumer markets yet to be fully digitized, with over $1.5 trillion in annual volume and tens of millions of transactions spread across fragmented dealerships and marketplaces. Amazon’s entry via Hertz allows it to sidestep the capital intensity of inventory ownership while unlocking massive transaction volume potential. This asset-light approach echoes Amazon’s success in e-commerce aggregation — connecting consumers and sellers while extracting value from logistics, data, and payments. The initial phase focuses on retired rental cars, which are newer, well-maintained, and easier to standardize. This avoids the logistical complexity of dealing with consumer-sourced trade-ins or auctioned vehicles. For Amazon, each car sale represents an opportunity to cross-sell high-margin services: financing, insurance, maintenance, and add-ons, while also building long-term Prime loyalty. Over time, as more fleet operators and possibly OEMs join the platform, Amazon could evolve into a centralized hub for vehicle shopping — a role no current player has truly consolidated. With Amazon Autos now incorporating pre-owned inventory from multiple partners, including Hyundai and Hertz, the company is slowly positioning itself to aggregate automotive e-commerce at scale. This entry into a high-ticket vertical not only diversifies Amazon’s revenue streams but could also drive significant flywheel effects across its marketplace, cloud, and advertising businesses.
Supercharging Amazon’s Marketplace & Ad Ecosystem
Integrating used-car sales into Amazon’s core marketplace significantly enhances its platform value across multiple dimensions. First, it adds a high-consideration, high-value category that increases engagement time and customer stickiness. Automotive listings — with their extended research phases and multiple purchase decision points — generate valuable intent signals that feed Amazon’s ad engine. Amazon’s advertising business, already a $50 billion annual run-rate segment, can now monetize automotive search behavior across owned-and-operated properties like Fire TV, Twitch, and Alexa-enabled devices. This creates a powerful closed-loop system where auto brands, insurers, and dealerships can target users with precision across the funnel — from discovery to conversion. Secondly, Amazon’s fulfillment and returns infrastructure, currently optimized for e-commerce and perishables, may be extended to support test drives, vehicle delivery, or service integration, creating a differentiated customer experience. Prime loyalty further sweetens the offer by bundling convenience and financing tools into the car-buying journey. Most critically, Amazon can use the vehicle purchase journey as a gateway into broader financial services and smart home integrations — tying car ownership to its growing suite of home, mobility, and insurance products. By embedding automotive into its marketplace and monetizing the intent through its DSP, Amazon can replicate its flywheel success in a new category with massive TAM and relatively low digital penetration.
Building A Data Moat & Logistics Advantage
Amazon’s foray into autos creates a strategic data advantage over existing online car retailers. While platforms like CarGurus function as lead generators and Carvana as vertically integrated sellers, neither has Amazon’s breadth of data across commerce, media, and voice ecosystems. By handling search, financing, and post-sale engagement, Amazon can build a complete view of the car buyer journey — from model research on Fire TV to financing discussions via Alexa. This allows the company to feed richer intent signals into AWS and Amazon Ads, improving personalization and funnel optimization in ways that competitors can’t replicate. Moreover, Amazon’s rapidly expanding logistics backbone — now encompassing same-day delivery in 140 million U.S. households — offers an unmatched fulfillment layer. While delivering a vehicle is more complex than a package, Amazon’s recent automation investments and regionalized warehouse model can support vehicle staging and last-mile partnerships over time. The relationship with Hertz also gives Amazon access to vehicle fleet management insights and operational telemetry that could inform future expansion into subscription, leasing, or EV test drive models. In contrast to asset-heavy peers, Amazon’s platform-centric approach allows for experimentation at scale without assuming inventory risk. As car purchases become increasingly digital and touchless, Amazon’s strength in logistics, user acquisition, and AI-driven operations could become a defining competitive edge in the automotive vertical.
Carvana, CarGurus Face Intensifying Platform Pressure
The most immediate impact of Amazon’s automotive expansion is competitive pressure on digital incumbents like Carvana and CarGurus. Carvana has built a vertically integrated model that owns inventory, reconditions vehicles, and handles delivery — a strategy that has led to operational bottlenecks, high debt, and inconsistent profitability. Amazon, by contrast, avoids asset ownership and leverages partners like Hertz to scale quickly. Its entry undercuts Carvana’s value proposition by offering comparable convenience without the capital burden. For CarGurus, the threat is arguably more existential. As a listings platform reliant on dealership inventory and ad revenue, CarGurus competes for attention and traffic. Amazon’s integration of car search into its core marketplace means it can divert organic user traffic without paid advertising. This shifts ad budgets away from CarGurus, weakens its network effect, and erodes dealer loyalty over time. Moreover, Amazon’s ability to bundle car sales with services like financing, insurance, and Prime perks creates a value layer that CarGurus cannot match. With auto-related ads potentially shifting to Amazon’s DSP, smaller platforms risk disintermediation. Both Carvana and CarGurus also face increased expectations around customer experience, delivery times, and pricing transparency — areas where Amazon sets a higher bar. Even though Amazon’s initial rollout is limited to Hertz vehicles in select states, the long-term platform risk is substantial. If Amazon continues onboarding fleet partners or expands into trade-ins, it could absorb meaningful market share, especially among digital-first consumers. This scenario could compress margins, increase customer acquisition costs, and limit monetization optionality for existing players in the online auto ecosystem.
Final Thoughts
Source: Yahoo Finance
Amazon’s stock trajectory has been volatile yet almost flat for the past couple of months but this is largely due to its results. From a valuation standpoint, Amazon’s LTM metrics — including 3.74x EV/Revenue, 18.73x EV/EBITDA, and a 34.90x trailing P/E are more or less unchanged from the time before the news indicating that the market may not have factored in the potential future impact of this new move. However, there is no doubt that this partnership with Hertz represents a strategic entry into a high-value, under-digitized consumer category that aligns with its broader ambitions across marketplace monetization, advertising, and logistics. By focusing on partnerships, Amazon avoids the balance sheet intensity of traditional car retailers while gaining behavioral data, traffic growth, and advertising leverage in a lucrative vertical. This move could easily result in incumbents like Carvana and CarGurus struggling to match Amazon’s scale, logistics network, or bundled service offerings. The competitive landscape is likely to evolve rapidly, and Amazon’s next moves — whether it expands into trade-ins, OEM partnerships, or EV marketplaces — will determine how much share it ultimately captures.