Ford and Alibaba’s new partnership

While it is unconfirmed, there are talks that Ford Motor Co. will be selling cars to consumers in China through Alibaba’s online retail arm, Tmall.

Representatives of Ford and Alibaba, including Ford Executive Chairman Bill Ford and Ford CEO Jim Hackett, are expected to sign a letter of intent that outlines the scope of the partnership.

Jim Hackett, President and CEO, Ford Motor Company, outlines his plans for Ford to become the world’s most trusted mobility company earlier this week.

According to an unnamed source, the deal is intended to position Ford in the emerging Chinese marketplace where more cars will be sold online.

The partnership would be in line with the next phase of their China expansion strategy which was announced earlier this week, where Hackett shared his vision of a bigger presence in China.

Ford global chief spokesman Mark Truby said the company is expected to make an announcement on Thursday in Hangzhou, which is where Alibaba is based, but has declined to make a formal comment.

There is also talk about Ford utilising Tmall’s new retail concept called the “Automotive Vending Machine,” which entails a multi-story parking garage that partly resembles a giant vending machine, to sell directly consumers.

Those cars could come directly from Ford or from its dealers but the details are still to be worked out, the source added.

According to Alibaba, consumers can use their phones to browse through the cars stored in the vending machine and choose to either immediately buy one or test drive it. The vehicle would be delivered to them on the ground floor.

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

The move could be potentially problematic for dealers, as the danger will be that they could lose out, not only on a lot of car sales, but also the lucrative auto financing aspect of their traditional business.

Tagged with: , , ,