Ford Hopes Alibaba’s Online Sales Plan is Purrfect

Vending machine approach expected to increase online sales.

by on Dec.19, 2017

Ford is looking to expand its online sales in China through its partnership with Alibaba and its cat-shaped vending machines for cars.

Ford Motor Co.’s new three-year deal with Alibaba, considered China’s version of Amazon, offers the automaker a new outlet for selling its vehicles in the country.

The idea of buying a new car on the internet isn’t exactly novel, but Alibaba offers Dearborn, Michigan-based Ford more options than simply “click to proceed to checkout” on its Tmall online store.

Global Auto News!

Ford, which has seen its sales in China stagnate this year, and when signed it deal last month with Alibaba, the automaker was looking to expand its capability of selling vehicles online. The company’s year-to-date sales in China total more than 1,056,000 units, a 6% decrease year over year.

The U.S. automaker isn’t alone in searching for ways to reach a market that is rapidly shifting in its preferences and socioeconomic composition. Less than a decade ago, most buyers traditionally paying by cash, arriving at showrooms with suitcases full of RMB, the Chinese currency.

(Ford inks three-year deal with Alibaba to sell cars in China. Click Here for the story.)

As the market has grown, however, financing has gained traction, creating opportunities for both manufacturers and lenders to come up with creative alternatives. China’s booming middle class has also embraced online retailing at a pace that rivals what has happened in the U.S.

Alibaba’s plan allows customers to view and potentially purchase vehicles through a vending machine — shaped like a cat. Alibaba is proposing to build giant vending machines all over China in the next few years, with the first two coming to Nanjing and Shanghai.

The machines are designed to help potential internet buyers overcome a major hurdle in the process: seeing and touching the vehicle. Much like in America, the purchase of a vehicle via the internet has been hampered by this problem.

Using an app, potential buyers would take a picture of a vehicle they are interested in. Once the app recognizes the vehicle, they would be directed to the nearest “vending machine.” After arriving, the shopper would enter a code or potentially use facial recognition to get their hands on the vehicle.

(Click Here for more about Ford’s online sales plans for China.)

The customer then would take the vehicle out for a three-day test drive, or could even buy the vehicle on the spot. The purchase requires a 10% deposit and financing through Alibaba’s Alipay finance arm. All of this is done without another human being involved as the vending machines are completely automated.

In order to use the vending machines, users must have a score of 700 or higher on China’s Zhima state-sponsored “social credit system,” according to Autoblog.com. Additionally, they must be an Alibaba Super Member.

The system allows users to test drive just one of each model with a five-test-drive maximum during the first two months of the program. While Ford is the first automaker tied to the unique sales process, other makers including Audi, BMW, Maserati, Mercedes-Benz and Volvo are said to have interest, Autoblog reported.

(To see more about Ford’s efforts to sell cars online in China, Click Here.)

Ford saw its sales fall 8% on a year-over-year basis in November. All of the company’s brand struggled with one stark exception: Lincoln, which was up 70%. Changan Ford Automobile total more than 84,000 vehicles, down 12% compared to November last year. Jiangling Motor Corp. sold more than 26,000 vehicles in November, which was about flat year over year. Even Ford’s imported vehicles suffered last month as sales were off 22%.

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