Amazon is reportedly setting its sights on the automotive market, betting the $50 billion DIY after-market auto parts market is rife for Amazon to dominate.
According to a report by the New York Post, unnamed sources told the paper that, over the past few months, Amazon has reached deals with the biggest auto parts makers in the U.S., including Robert Bosch, Federal-Mogul, Dorman Products and Cardone Industries, which could be bad news for auto parts retailers, including O’Reilly Auto Parts, Advance Auto Parts, AutoZone and Genuine Parts. Those chains, according to the report, have done well over the past several years thanks in large part to the control they have over suppliers. That will all change if the report proves true and Amazon enters the parts market in a big way.
Steve Handschuh, chief executive of the Motor & Equipment Manufacturers Association, told the NY Post that Amazon could even buy a regional parts distributor to gain a foothold in the market. One Wall Street analyst even said the auto parts business at Amazon could expand by greater than 50 percent in 2017, becoming a $5 billion business for the eCommerce retailer.
“I wouldn’t be surprised if [Bezos] were making some of these calls himself,” a top executive at one auto parts supplier said. The report noted Amazon seems to be positioning itself for a big push recently, expanding the selection of name brand parts and selling them cheaper than its rivals that have physical stores. The report pointed to a 34 Series RedTop Optima Battery, which Amazon is selling for $166. It goes for $216 at AutoZone. Meanwhile, in September, investment bank Jefferies said in a research report that Amazon is offering same-day delivery for auto parts in 40 cities around the U.S. at prices that are 23 percent lower than auto parts retailers.