It could be the start of a new sales tactic for the Blue Oval

Ford is making a push to become a direct seller in China after a Reuters report revealed that the American automaker is in the final stages of negotiations with Alibaba to sell cars directly to Chinese customers through the tech giant’s online retail arm Tmall. The report further claims that an announcement surrounding the joint venture is expected to take place today. In addition to plans of selling its cars online, Ford is also looking into developing a brick-and-mortar “Automotive Vending Machine” store concept with Alibaba.

Something New: Ford will use Alibaba to Sell Cars Online in China
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If this partnership comes to fruition as most expect it to, it would be a major step for a company like Ford

If this partnership comes to fruition as most expect it to, it would be a major step for a company like Ford. It will dip its toes into direct sales, a system that has gained popularity in recent years, thanks in large part to Tesla, which has used it since the beginning to the chagrin of frustrated franchised dealers.

The setup being discussed involves cars being sold online. Customers can then take delivery of the models they buy at traditional Ford dealerships. These dealerships will also handle the maintenance of the cars that are sold online. Then there’s the “Automotive Vending Machine” that Alibaba’s Tmall plans to test in China. This setup involves creating a retail store that’s connected to a multi-story garage that would look the part of a massive vending machine. Customers can check which cars are available at any given point using software that will be supplied by Ford. Once a customer decides to buy something, they can put at least 10 percent of a car’s price down, and pay the remaining balance in monthly installments through Alibaba’s Alipay service.

Something New: Ford will use Alibaba to Sell Cars Online in China
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The direct sales setup isn’t something new to the industry, but it is something that Ford has yet to do on a massive scale

The direct sales setup isn’t something new to the industry, but it is something that Ford has yet to do on a massive scale. This development effectively changes that as the company continues to ramp up its presence in the Chinese market. The direct sales system could be a big part of China’s automotive future.

That said, don’t expect it to fly in the US where there’s a larger resistance to the direct sales format. Tesla has fought that battle from state to state, even at the cost of being banned in some states. As big as Ford is, I don’t think it’s willing to take the risk of alienating an entrenched franchised dealership network. That’s a big reason Ford decided to go to China to try this new system. There’s less resistance there, and the market itself is open to the idea of buying Ford models online as opposed to having to go the traditional route of buying through dealerships.

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Source: Reuters

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