Economy

Alibaba partnership could see Ford sell its vehicles in China

At the 2017 Fortune Global Forum held in the southern Chinese city of Guangzhou, Ford said he is bullish on China's new energy vehicle (NEV) market, saying strong government resolve to encourage their use can be successful. Alibaba is often referred to as China's Amazon.

The news comes as Ford CEO Jim Hackett and Executive Chairman Bill Ford Jr. wrap a week-long trip to the country. Those cars could come directly from Ford or its dealers, with details still to be worked out, the unnamed source added.

The vending machine will reportedly allow prospective customers to view a store's inventory on their phones, as well as summon them to the ground floor for a test drive or even purchase them outright. The cars would then be maintained and repaired by these franchise locations.

Vehicles purchased online through Alibaba's Tmall may be delivered and serviced through Ford dealers, and indeed, the same could apply to vehicles found in the company's vending machine buildings. "But if this format gained steam, it would definitely impact dealers", according to Yale Zhang, head of Shanghai-based consultancy Automotive Foresight.

"The scope of alliance is fairly broad and vague at this point, but a large chunk of the" strategic collaboration" appears to be based around developing a direct sales channel to reach consumers in China.

Mobile technology could also be used to enhance marketing and distribution of cars and related products, Alibaba said today. "Retail innovation is great, but it is by its nature disruptive and can't keep everybody happy". Dealers might also lose out on the lucrative financing aspect of their business.

Direct selling by auto brands is not always possible in many markets around the world. In the U.S., for example, the political clout of franchise vehicle dealer operators means direct selling is largely not possible except for a small number of states. People like to touch, feel and drive cars before they buy them, but yet doing basic research and purchasing online is more productive than visiting multiple showrooms. The ability to test drive a auto ordered online could change that.

Ford's sales in the first 10 months of this year were 938,570, a decline of 5 per cent from the same period in 2016, against a 2.2 per cent gains to 3.13 million for hometown rival General Motors.



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