Ford Joins Alibaba in Testing Online Car Sales in China

American automaker Ford Motor Co. is believed to be teaming up with Chinese online retailer Alibaba Group Holding Ltd. on Wednesday, as the car company attempts to sell automobiles online to its customers in China.

A source with knowledge of the matter said that the Michigan-based carmaker will try to sell its vehicles through Alibaba’s online retail sector Tmall.

The deal is meant to position Ford in a growing Chinese marketplace where more cars could be sold online. It would also represent a part of its overhaul plan in China to revitalize expansion drive that it lost during the past months.   

According to Alibaba, the plan would allow consumers to buy their new car with a 10 percent down payment and then make monthly payments for the purchase using Alipay.

Ford’s executive chairman Bill Ford Jr. and chief executive Jim Hackett are expected to sign a letter of intent that states the scope of the new partnership on Thursday in Hangzhou.

The company is expected to make an announcement with regards to the deal there as well.

Ford Selling Cars through Automotive Vending Machine Concept

It is likely that the vehicles purchased online would be delivered to buyers by authorized Ford retail stores, who would also handle the maintenance and repairs of the vehicles.

But, the source stated that the automaker could also use the Automotive Vending Machine, Tmall’s new retail store plan, to sell directly to customers.

As said by Alibaba, buyers can use their phones to look around the shop’s garage and choose to either purchase one right away, or test drive it first.

The vehicle would then be brought to them on the ground floor using Tmall’s Vending Machine concept, which is a multi-storey parking garage that sort of looks like a huge vending machine.

The cars could come directly from Ford or from its dealers, but the details still has to be further developed.

The Downside of the Plan

Even though Ford believes that dealers might accept this direct retailing plan, some industry experts have different opinion about it as they think that it could pose a threat for dealers.

The risk is that dealers could end up failing to benefit from not only on a number of car sales, but the potentially profitable auto financing side of their traditional business as well.

A Shanghai-based industry research firm said that when online sales as well as direct sales volume was small that is one thing, but if it starts to grow, it would certainly affect dealers.

The firm added that the retail innovation maybe great, but it still has the tendency to be disruptive regardless of its reputation.

Online car sales volumes are currently short in China given that buyers want to see, touch and drive vehicles before buying them, but that could change if buyers are given the ability to test drive a car they ordered online.   

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