Ford and China’s largest eCommerce operator, Alibaba, are reportedly close to reaching a deal that would enable the auto dealership to attempt selling its cars online in the country.
If the deal is inked, it would give Ford a way to increase its growth in China and position itself to be a leading player in an online marketplace for vehicles in China. Consumers are already comfortable buying cars over the internet, with car makers in the past doing brisk business online in the country.
Ford’s Global Chief Spokesman Mark Truby declined to comment on the announcement in advance. He told Reuters that under the deal, cars purchased online would be delivered by franchised Ford retail stores. The locations would maintain and repair the vehicles as well.
Ford could also sell its cars through the impending “Automotive Vending Machine,” in which Chinese consumers shop for new cars on their mobile devices and pick them up from a massive vertical vending machine. With the service, consumers who have good credit from Alibaba’s Sesame Credit will be required to put 10 percent down for their new vehicle and make monthly payments via its Alipay digital payment service.
The cars that are part of the vending machine model may come directly from Ford or from other dealers. Ford thinks dealers will be mostly on board with the direct retailing model because they still make money servicing the cars via Tmall. Not everyone is sold, however.
“When online sales and direct sales volume was small, that’s one thing. But if this format gained steam, it would definitely impact dealers,” said Yale Zhang, head of Shanghai-based consultancy Automotive Foresight. “Retail innovation is great, but it is by its nature disruptive and can’t keep everybody happy.”