Ford, Alibaba Partner Up to Test New Car Selling Concepts

Ford and Chinese tech giant Alibaba entered into a partnership this Thursday, which aims to explore new car retailing methods in China. The three-year deal primarily focuses on testing the viability of online selling and vending machine concepts for Ford's Chinese-market vehicles. However, other areas of exploration are also on the table, including artificial intelligence, cloud computing, mobility services, and digital marketing.

For the online selling part of the deal, Ford will look into using Alibaba's T-Mall online store to sell its new vehicles in China. Alibaba has sold transport vehicles and even cargo jets via the service before, and Ford hopes to leverage its success to sell their vehicles online. Beyond T-Mall, there may also be room to collaborate for the two companies within Alibaba's 'Next Retail' strategy that harnesses both online and offline selling strategies.

"The agreement aims to explore new ways to redefine how consumers purchase and own vehicles, as well as how to leverage digital channels to identify new retail opportunities," Alibaba said in its statement. Before setting anything in stone, both companies will initially conduct a "pilot study" on the feasibility of the ideas discussed, Alibaba added.

Ford will also investigate leveraging Alibaba's new 'auto vending machine store' concept similar to what Carvana and Autobahn has done successfully in the US and Singapore, respectively. The vending machine concept will reportedly have an accompanying mobile app where potential buyers can view inventory, request a test drive, or even purchase a vehicle right then and there.

Car buyers have the option to put a 10-percent down payment on their new vehicles and pay for the rest through Alipay, Alibaba's online payment platform. Vehicles purchased through T-Mall may be delivered and serviced through Ford dealers. The same could apply to vehicles sold in the planned vending machine structures.

"China is one of the world's largest and most dynamic digital markets, thriving on innovation with customers' online and offline experiences converging rapidly," Jim Hackett, Ford President and CEO, said in a statement. "Collaborating with leading technology players builds on our vision for smart vehicles in a smart world to reimagine and revolutionize consumers' mobility experiences."

Ford may have to deal with some resistance from its dealers, as the new business models could hurt not only their car sales, but also the car financing aspect of their business. Direct sales between automaker and consumer is possible in China and other international markets, but is generally illegal in most American states.

"When online sales and direct sales volume was small, that's one thing. But if this format gained steam, it would definitely impact dealers," according to 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."