Alibaba, Ford in search for new retail business

Ford and the Chinese Alibaba Group Holding have signed a deal in which the online retailer could sell cars in its Tmall platform.

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.

However, in the current unfinalized version of the deal, financing will be provided through Alibaba's affiliate Alipay rather than Ford Motor Credit Co., according to Reuters, which broke the news of the deal late Wednesday. Alibaba is often referred to as China's Amazon.

The source said the tie-up could mean that cars purchased online are delivered to buyers by franchised Ford retail stores and would be maintained and repaired by them. Those cars could come directly from Ford or its dealers, with details still to be worked out, the unnamed source added.

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. "This builds on our commitment to deliver smart vehicles for a smart world, helping people around the world move more safely, confidently and freely".

The model allows shoppers with good credit to purchase their new ride with a 10 per cent down payment and then make monthly payments for the auto purchase through Alibaba's affiliate Alipay, according to Alibaba.

Dealers are understandably concerned, though Ford believes they would agree considering they still get to service the cars. "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. The direct sales model couldn't work in the USA due to a strong auto dealer network with a decent amount of political power.

Meanwhile, the link‐up with Alibaba could also see Ford sell cars through the internet giant´s online portal Tmall. The ability to test drive a auto ordered online could change that.

Ford's China sales have been sluggish in recent months as it struggles to keep pace with rapidly changing trends, including increased demand for entry-level cars in smaller cities.

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