Alibaba and Ford form technology-based alliance

Lloyd Doyle
December 7, 2017

The Alibaba partnership is the latest in a series of partnerships and initiatives in recent months in which Ford amplifies its presence in China.

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. "The multi-pronged "letter of intent" will investigate leveraging Alibaba's Tmall online store to sell new vehicles, as well as its new "'auto vending machine' store concept", an idea that sounds more than a bit like what used car retailer Carvana has pioneered with increasing success.

Ford believed dealers were likely to agree to this direct retailing model because they would still get to service cars sold through Tmall, the Ford source said.

Ford and Alibaba will initially focus on digital solutions for new retail opportunities at various stages of the automotive ownership cycle.

Hackett added that Ford's goal is to become the most trusted mobility firm of the world, designing smart cars for a smart world.

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. The cars would then be maintained and repaired by these franchise locations.

The move, though, could be potentially problematic for dealers, some industry experts said.

"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.

Speaking to Reuters, head of Shanghai-based consultancy Automotive Foresight, Yale Zhang, said it will hurt traditional dealers. "Retail innovation is great, but it is by its nature disruptive and can't keep everybody happy".

The danger is that the dealers lose out not only on a lot of vehicle sales but also the potentially lucrative auto financing aspect of their traditional business.

According to Alibaba, consumers can use their phones to browse through the cars garaged in the store and choose to either immediately buy one or test drive it. 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. Getting a test drive via the internet could change that, though.

Other reports by Iphone Fresh

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