Ford links with Alibaba in China expansion

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The two companies will initially conduct a pilot study to explore potential opportunites in New Retail - a reference to the integration of online and offline retailing - at various stages of auto ownership, from pre-sales to financial leasing options, Alibaba said in a statement on Thursday.

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. Among the China initiatives that Ford is considering is the "Automotive Vending Machine" retail concept from Alibaba's Tmall.

Ford is expected to sign a deal with China's Alibaba Group that may allow the carmaker to test selling cars to Chinese consumers via Alibaba's online retail arm Tmall, formerly known as Taobao Mall.

The new partnership was signed in a letter of intent between Hackett and Daniel Zhang, President and CEO of the Alibaba Group, at the Chinese firm's headquarters in Hangzhou.

Executive chairman William C. Ford Jr. was even more direct in his assessment of the importance of China.

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Those cars could come directly from Ford or from its dealers but the details were still to be worked out.

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

Jim Hackett, president and CEO of Ford, said that China is "one of the world's largest and most dynamic digital markets, thriving on innovation, with customers' online and offline experiences converging rapidly".

China is not only the largest auto market in the world, executive chairman Bill Ford pointed out, but is also "at the heart of electric-vehicle and SUV growth and the mobility movement".

The source said Ford is "behind in using big data" to monitor sales trends and effectively market its cars and the move to online sales as well as the access to Tmall's massive database of information on consumers would help it to catch up.

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