Ford Motor Co. signed a letter of intent Thursday with the world's largest retailer - Chinese e-commerce company Alibaba Group - which will allow the companies to explore new ways to purchase and finance vehicles in a fast-growing market.
Ford's China 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 lesser-known cities, where demand is booming.
Earlier this year, Alibaba's retail arm Tmall announced the development of a auto vending machine, in which consumers can use their phone to browse through cars stored in a tall windowed building and have the vehicle brought down to street level via elevator lifts.
Ford President and Chief Executive Officer Jim Hackett in the statement said collaborating with technology firms builds on its vision to make "smart vehicles". Consumers could use the vending machine with an app, choosing to either immediately buy one of the vehicles or test drive one.
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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.
Dealers are understandably concerned, though Ford believes they would agree considering they still get to service the cars. "Retail innovation is great, but it's by nature disruptive and can't keep everybody happy", said Yale Zhang, head of Shanghai-based consultancy Automotive Foresight. The cars would then be maintained and repaired by these franchise locations. The direct sales model couldn't work in the US due to a strong auto dealer network with a decent amount of political power.
Direct sales from automaker to consumer are possible in China and other global markets, but the practice is generally illegal in most U.S. states. Getting a test drive via the internet could change that, though.
Ford's sales in the first 10 months of this year were 938,570, a decline of 5 per cent from the same period in 2016, against a 2.2 per cent gains to 3.13 million for hometown rival General Motors.