Alibaba, Ford Sign Agreement To Explore New Sales Channels

Posted December 09, 2017

Ford is expected to sign a deal with China's Alibaba Group that may allow the carmaker to test selling cars to Chinese consumers via Alibaba's online retail arm Tmall, formerly known as Taobao Mall. Among the China initiatives that Ford is considering is the "Automotive Vending Machine" retail concept from Alibaba's Tmall.

It is further evidence of a new strategy being pursued by Ford boss Jim Hackett, who took over the reins as chief executive from Mark Fields earlier this year.

Ford Credit did not respond to a request for comment by press time. Those cars could come directly from Ford or its dealers, with details still to be worked out, the unnamed source added.

Cars would be housed in and picked up from a multi-story parking garage resembling a giant vending machine, but consumers can "browse" options on their smartphones before testing them on site and buying, according to Reuters.

In October alone, 77,000 full electric vehicles were manufactured and an equal number of them were sold, up more than 76 percent and 95 percent respectively.

"China is not only the largest auto market in the world, it's also at the heart of electric-vehicle and SUV growth and the mobility movement", Ford Motor Executive Chairman Bill Ford said at the Shanghai event. "But if this format gains steam, it would definitely impact dealers", said Yale Zhang, the head of Shanghai consultancy Automotive Foresight.

"When online sales and direct sales volume was small that is one thing". "Retail innovation is great, but it is by its nature disruptive and can't keep everybody happy".

Direct selling by automotive brands is not always possible in many markets around the world.

Should Ford choose to provide the cars directly to Alibaba, the deal could anger dealers who are losing out both on potential vehicle sales as well as the financing behind it.

Online auto sales volumes are now small in China because buyers want to be able to see, touch and drive cars before buying, Zhang pointed out. The ability to test drive a vehicle ordered online could change that.

Ford's sales in the first 10 months of 2017 were 938,570, a decline of 5% from the same period in 2016, against a 2.2% gain to 3.13-million for rival General Motors.