Ford links with Alibaba in China expansion

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Under the agreement, Ford will be working with four of Alibaba's business units-operating-system developer AliOS, cloud-computing platform Alibaba Cloud, digital-marketing arm Alimama and B2C shopping site Tmall-to identify opportunities in these areas as well as artificial intelligence, infotainment and the Internet-of-Things (IoT).

Vehicles purchased online through Alibaba's Tmall may be delivered and serviced through Ford dealers, and indeed, the same could apply to vehicles found in the company's vending machine buildings.

Meanwhile, the link‐up with Alibaba could also see Ford sell cars through the internet giant´s online portal Tmall.

Consumers could use the vending machine with an app, choosing to either immediately buy one of the vehicles or test drive one.

The report says that Ford bigwigs, including Blue Oval executive chairman Bill Ford Jr. and CEO Jim Hackett, are expected to be in Hangzhou today to sign a letter of intent that outlines the scope of the new partnership.

Ford will likely have to work hard to assuage any concerns of its dealer body with any Alibaba deal, as their existing network of retailers could grow concerned that they are being cut out of new vehicle sales and financing opportunities.

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

Speaking to Reuters, head of Shanghai-based consultancy Automotive Foresight, Yale Zhang, said it will hurt traditional dealers.

The danger is that the dealers lose out not only on a lot of vehicle sales but also the potentially lucrative auto financing aspect of their traditional business. Getting a test drive via the internet could change that, though.

Ford's Chinese sales have been sluggish in recent months in part because it has failed to catch on to rapidly changing trends in the marketplace, including the rise of entry-level cars popular in smaller and less well-known cities, where demand is booming.

"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", Ford Motor Executive Chairman Bill Ford said at the Shanghai event.