Ford Will Test Online Car Sales With Alibaba in China, Report Says

The companies will reportedly announce a collaboration Thursday.

Ford

Ford is set to announce plans to test online car sales in China in collaboration with tech giant Alibaba, according to a Reuters report. The report, which cites an anonymous Ford source familiar with the matter, claims the two companies will announce the joint effort Thursday.

The Blue Oval will reportedly test selling cars directly to Chinese customers through Alibaba's online retail arm Tmall as well as a brick-and-mortar "Automotive Vending Machine" store concept. This would mark Ford's first major foray into direct sales, a system that is currently used by Tesla and is gaining attention from other automakers.

Representatives of Ford and Alibaba, including Ford chairman Bill Ford Jr. and CEO Jim Hackett, are expected to sign a letter of intent in Hangzhou on Thursday outlining these programs, according to Reuters. Ford confirmed that it will make an announcement in Hangzhou Thursday, but did not provide details. The partnership could mark an escalation in Ford's efforts to increase sales in China. The company recently announced a deal with local firm Zotye Auto to build electric cars there.

While cars could be sold online, customers may take delivery at conventional Ford dealerships, who would also handle maintenance, the report said. But Alibaba's Tmall is also testing something called the "Automotive Vending Machine," a retail store based around a multi-story garage that would actually resemble a giant vending machine. Customers would browse available cars supplied directly by Ford on their phones to buy or test drive. Alibaba envisions customers putting 10 percent of the purchase price down, and paying the balance in monthly installments through its Alipay service.

Both models could bypass traditional franchised dealerships, something Tesla is already doing. The Silicon Valley automaker has sold cars directly to customers from the start, angering franchised dealers who view direct sales as a threat to their business. In the U.S., Tesla has fought a state-by-state battle against dealer-franchise laws, which still bar it from selling cars directly to customers in some states.

A major legacy automaker like Ford embracing the concept could be a big boost for direct sales. But it's unclear if Ford would actually import direct sales to the U.S., and risk alienating its network of dealers. Anyone who has bought a car knows that current franchised dealerships are far from perfect, but the system is well entrenched.