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Ford set to strike a deal with Alibaba

08 December 2017

"China is not only the largest auto market in the world, it's also at the heart of electric vehicle and SUV growth and the mobility movement", said Bill Ford.

Hoping the spread of NEVs can help ease pressure on the environment, the Chinese government has introduced a slew of measures, including offering tax exemptions and subsidies for vehicle purchases, and ordering government organizations to buy more new energy cars.

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.

Ford and Alibaba will initially focus on digital solutions for new retail opportunities at various stages of the automotive ownership cycle.

According to sources close to the matter, Ford chief executive Jim Hackett and Ford executive chairman Bill Ford Jr. are set to be in Hangzhou on Thursday to sign the deal.

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

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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.

In October alone, 77,000 full electric vehicles were manufactured and an equal number of them were sold, up more than 76 percent and 95 percent respectively.

The move, though, could be potentially problematic for dealers, some industry experts said. "But if this format gains steam, it would definitely impact dealers", said Yale Zhang, the head of Shanghai consultancy Automotive Foresight.

"When online sales and direct sales volume was small that is one thing". Dealers might also lose out on the lucrative financing aspect of their business.

Ford Motor Company (NYSE:F) is launching more than 50 new automobiles in China by 2025, including at least 15 electrified cars from Lincoln and Ford, and eight all-new SUVs; in addition, the latest Zotye-Ford JV will introduce an all-new range of reasonably priced all-electric automobiles.

Online auto sales volumes are now limited in China because vehicle buyers want to be able to see, touch and drive cars before buying them, said Zhang. Reuters on Wednesday reported that Ford was planning to sign such a deal as it overhauls its China strategy to stimulate growth. Getting a test drive via the internet could change that, though.

Ford set to strike a deal with Alibaba