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What's really interesting about this business model is not the fact that you can buy a car online, it's the price transparency that you create with this: Car de

What's really interesting about this business model is not the fact that you can buy a car online, it's the price transparency that you create with this: Car dealers often have 10-20 % margin on a car sale, and they make most of their money by providing services to you after you bought the car, so they are usually able to give you some big discounts. Also, as they usually receive a bonus by the car maker for selling a given number of cars, they have a strong incentive to sell more. The money that they make for themselves depends therefore on the margin that they can achieve, which in turn depends on the customer's knowledge of the "fair" price. Having all the transaction prices out in the open would therefore be quite a nightmare for most of them, as it will allow customers to push the price down quite a bit. Especially for small dealerships (that have higher fixed cost in comparison to their sales and receive less bonus as they sell fewer cars than big dealers) this could be highly problematic, while it could be beneficial for the larger dealerships. Truecar has been doing this model for a while, and I guess Amazon finally wanted to have a share of this market too (and the data associated with it). On the technical side it looks like they're using the JATO database for their search/configuration tool (http://www.jato.com/ http://www.jato.com/). A few years ago I also implemented a car configuration website/app for a German startup (which doesn't exist anymore) using this data. The most challenging aspect was the huge amount of possible configurations/options that exist for some models (especially BMW and Mercedes), which would also have very complex inter-dependencies (e.g. choosing package A + B means you can't choose package C except if you also choose D). To resolve this I had to write a dynamic constraint solver: Finally some abstract computer science that was usable in practice :D As far as I understand, in the US there are usually less options to choose from, which makes extensive configurators unnecessary. Still, it was an interesting challenge.

fweespeech 10y ago
> So having all the transaction prices out in the open is a nightmare for them, as it will allow customers to get an idea of what the actual "fair" price for a car would be. Truecar has been doing this for a while, I guess Amazon finally want to have a share of this market too (and the data associated with it). As far as I can tell Amazon Vehicles is overcharging for the cars by at least 5-10% ( the car I currently drive, they are charging 25%!! more than I paid). This isn't a nightmare for Car Dealers. This is a nightmare for consumers because they will take the prices Amazon quote seriously.
- balls187 10y ago
  Where are you seeing amazon is charging for cars--have any links available? All I could find were Cars that could be added to a virtual garage, presumably to ensure compatibility with any automotive parts purchasing.
  - fweespeech 10y ago
    They are listing MSRPs. I wasn't clear sorry.
    - balls187 10y ago
      Ah, thanks for the clarification.
rckclmbr 10y ago
KBB has existed for quite a while for precisely this reason.
- deleted 10y ago
  [deleted]
- bfung 10y ago
  I used to work for company writing software for car dealerships, and there's a lot under those brands that may make you think twice, even about KBB. Note that this was 2005 - 2011; I haven't kept up with the industry to know if it had changed any, or at all. I'll talk about the used car market, since the new car market doesn't have that much pricing variation. There are several pricing companies for cars in the U.S. Don't forget these companies are also for-profit companies, so the prices consumers get to see are generally also inflated a bit (retail price). The actual market price before the dealership acquires the car is known as the wholesale price. Who determines this wholesale price? Well, the prices actually come from car auctions - a place where buyers that either work independently or for dealers go to restock on used car inventory. So if you really, really had the time - go to a car auction (ex: https://www.autoreturn.com/san-francisco-ca/auction-terms/ https://www.autoreturn.com/san-francisco-ca/auction-terms/) and get your car at wholesale price. Now, what does this have to do with pricing guides such as KBB, BlackBook, NADA (nada.com), Edmunds? Well, these companies have people who go to auctions and record the winning bids. All the data they collect ends up being the wholesale price, usually only seen by the dealership. The retail price is then generally a bump of ~$2000 of the wholesale price, depending on the car + other data factors. The kicker is, back in 200x, the data collection at auctions were just samples, all done manually by pencil and paper, and submitted back to KBB, etc. Often times, the data is so incomplete, the pricing guides would all be off quite a bit between each other. There's also regional variations, as KBB is more west coast based, so the prices tend to be higher. Anyways, that's the surface of things. Also, I don't know if the industry's changed or not. Right when I left that position, KBB and all the other site started to make web enabled API's - we actually used to get shipped a dll w/a data file to integrate into our SaaS product. So take away - KBB or other pricing guide will still have a higher price than what you can actually get a car for.
driverdan 10y ago
You should never pay more than invoice for a new car. For that matter you should never buy a new car, it doesn't make economic sense.
- UnoriginalGuy 10y ago
  > it doesn't make economic sense People repeat this a lot, but it isn't that cut and dry. People often ONLY include the direct cost of the two vehicles. They don't include the massively discounted loans on new vehicles (e.g. 0% APR), the warranties (e.g. 3-5 years bumper to bumper), sometimes better MPG (newer model, etc), cheaper insurance, skipping state inspection for the first three-five years, new tires & other consumables, et al. Obviously you have to look at specific vehicles to know for sure; but when I last looked at exactly this (recently used Vs. new) without the externalities it was approx $2-3K cheaper (talking CarMax, non-negotiable pricing) but after factoring in all the things listed above it was damn close (within $500-800). And as you go more used are you really getting a deal or just exchanging miles/wear&tear for cash? The asset also has depreciated in value by then. Just to be clear, I am simply saying you have to look at each vehicle one by one, a lot of models/manufacturers depreciate at varying speeds (e.g. a Kia depreciates a lot faster than a used Toyota or Honda).
  - pdwetz 10y ago
    Cheaper insurance? I don't follow the logic for that one. If you have an older car you don't need full coverage = less out of pocket.
    - lmm 10y ago
      I think they're talking about the reduced-price (or even free) insurance you often get as part of the deal when you buy a new car.
  - galdosdi 10y ago
    > The asset also has depreciated in value by then. Just to be clear, that's a GOOD thing. You want depreciation to happen NOT on your watch, BEFORE (or after) you own it. Something that starts at $20,000 will lose a lot of value on your watch pretty quickly. Something that starts at $2,000 has already lost most of its value on someone else's watch and by the time you sell it you may only have lost say, $500 on depreciation. There's just not as much room to go down, and frankly if you keep replacing parts you can usually keep it going very economically for hundreds of thousands of miles, till the engine fails and needs rebuild/replace. It takes a hell of a lot of savings on all those things you listed to make up the $18,000. It is especially common for people to way overpay for better MPG, when it would take decades to make it back (by which time they have another new car again)
rblatz 10y ago
What makes you think it is using JATO instead of one of the other configuration products like Chrome or KBB?
- ThePhysicist 10y ago
  The stock images seem to be from JATO and the way the different options/makes are organized and displayed seems to reflect the JATO database layout. I could be wrong of course.
  - rblatz 10y ago
    Ah makes sense. I'm much more familiar with Chrome and eVox images.

fweespeech 10y ago

> So having all the transaction prices out in the open is a nightmare for them, as it will allow customers to get an idea of what the actual "fair" price for a car would be. Truecar has been doing this for a while, I guess Amazon finally want to have a share of this market too (and the data associated with it). As far as I can tell Amazon Vehicles is overcharging for the cars by at least 5-10% ( the car I currently drive, they are charging 25%!! more than I paid). This isn't a nightmare for Car Dealers. This is a nightmare for consumers because they will take the prices Amazon quote seriously.

balls187 10y ago
Where are you seeing amazon is charging for cars--have any links available? All I could find were Cars that could be added to a virtual garage, presumably to ensure compatibility with any automotive parts purchasing.
- fweespeech 10y ago
  They are listing MSRPs. I wasn't clear sorry.
  - balls187 10y ago
    Ah, thanks for the clarification.

rckclmbr 10y ago

KBB has existed for quite a while for precisely this reason.

deleted 10y ago
[deleted]
bfung 10y ago
I used to work for company writing software for car dealerships, and there's a lot under those brands that may make you think twice, even about KBB. Note that this was 2005 - 2011; I haven't kept up with the industry to know if it had changed any, or at all. I'll talk about the used car market, since the new car market doesn't have that much pricing variation. There are several pricing companies for cars in the U.S. Don't forget these companies are also for-profit companies, so the prices consumers get to see are generally also inflated a bit (retail price). The actual market price before the dealership acquires the car is known as the wholesale price. Who determines this wholesale price? Well, the prices actually come from car auctions - a place where buyers that either work independently or for dealers go to restock on used car inventory. So if you really, really had the time - go to a car auction (ex: https://www.autoreturn.com/san-francisco-ca/auction-terms/ https://www.autoreturn.com/san-francisco-ca/auction-terms/) and get your car at wholesale price. Now, what does this have to do with pricing guides such as KBB, BlackBook, NADA (nada.com), Edmunds? Well, these companies have people who go to auctions and record the winning bids. All the data they collect ends up being the wholesale price, usually only seen by the dealership. The retail price is then generally a bump of ~$2000 of the wholesale price, depending on the car + other data factors. The kicker is, back in 200x, the data collection at auctions were just samples, all done manually by pencil and paper, and submitted back to KBB, etc. Often times, the data is so incomplete, the pricing guides would all be off quite a bit between each other. There's also regional variations, as KBB is more west coast based, so the prices tend to be higher. Anyways, that's the surface of things. Also, I don't know if the industry's changed or not. Right when I left that position, KBB and all the other site started to make web enabled API's - we actually used to get shipped a dll w/a data file to integrate into our SaaS product. So take away - KBB or other pricing guide will still have a higher price than what you can actually get a car for.

driverdan 10y ago

You should never pay more than invoice for a new car. For that matter you should never buy a new car, it doesn't make economic sense.

UnoriginalGuy 10y ago
> it doesn't make economic sense People repeat this a lot, but it isn't that cut and dry. People often ONLY include the direct cost of the two vehicles. They don't include the massively discounted loans on new vehicles (e.g. 0% APR), the warranties (e.g. 3-5 years bumper to bumper), sometimes better MPG (newer model, etc), cheaper insurance, skipping state inspection for the first three-five years, new tires & other consumables, et al. Obviously you have to look at specific vehicles to know for sure; but when I last looked at exactly this (recently used Vs. new) without the externalities it was approx $2-3K cheaper (talking CarMax, non-negotiable pricing) but after factoring in all the things listed above it was damn close (within $500-800). And as you go more used are you really getting a deal or just exchanging miles/wear&tear for cash? The asset also has depreciated in value by then. Just to be clear, I am simply saying you have to look at each vehicle one by one, a lot of models/manufacturers depreciate at varying speeds (e.g. a Kia depreciates a lot faster than a used Toyota or Honda).
- pdwetz 10y ago
  Cheaper insurance? I don't follow the logic for that one. If you have an older car you don't need full coverage = less out of pocket.
  - lmm 10y ago
    I think they're talking about the reduced-price (or even free) insurance you often get as part of the deal when you buy a new car.
- galdosdi 10y ago
  > The asset also has depreciated in value by then. Just to be clear, that's a GOOD thing. You want depreciation to happen NOT on your watch, BEFORE (or after) you own it. Something that starts at $20,000 will lose a lot of value on your watch pretty quickly. Something that starts at $2,000 has already lost most of its value on someone else's watch and by the time you sell it you may only have lost say, $500 on depreciation. There's just not as much room to go down, and frankly if you keep replacing parts you can usually keep it going very economically for hundreds of thousands of miles, till the engine fails and needs rebuild/replace. It takes a hell of a lot of savings on all those things you listed to make up the $18,000. It is especially common for people to way overpay for better MPG, when it would take decades to make it back (by which time they have another new car again)

rblatz 10y ago

What makes you think it is using JATO instead of one of the other configuration products like Chrome or KBB?

ThePhysicist 10y ago
The stock images seem to be from JATO and the way the different options/makes are organized and displayed seems to reflect the JATO database layout. I could be wrong of course.
- rblatz 10y ago
  Ah makes sense. I'm much more familiar with Chrome and eVox images.