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Ford, Alibaba Sign Letter of Intent for Three-Year Collaborative Agreement

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Ford Motor Co. and leading Chinese e-commerce firm Alibaba on Thursday announced a major strategic collaboration in online car-related services, as the USA auto giant seeks to revive its flagging sales in the world's largest vehicle market.

However, in the current unfinalized version of the deal, financing will be provided through Alibaba's affiliate Alipay rather than Ford Motor Credit Co., according to Reuters, which broke the news of the deal late Wednesday. Ford will collaborate with Alibaba's cloud computing unit, its computer operating system, Alimama digital marketing arm and its popular Tmall business-to-consumer (B2C) online shopping mall.

Mark Truby, Ford's global chief spokesman said the company is expected to make an announcement on Thursday in Hangzhou, where Alibaba is based, but declined to comment in advance. Those cars could come directly from Ford or its dealers, with details still to be worked out, the unnamed source added. Consumers could use the vending machine with an app, choosing to either immediately buy one of the vehicles or test drive one. The chosen vehicle would be delivered to the ground floor.

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

The move, though, could be potentially problematic for dealers, some industry experts said.

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

The three‐year agreement will see the duo work together on online vehicle sales, artificial intelligence and transport services. "Retail innovation is great, but it is by its nature disruptive and can't keep everybody happy".

The danger to dealers was that they could lose out not only on a lot of auto sales but also the potentially lucrative vehicle financing aspect of their traditional business.

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.

Should Ford choose to provide the cars directly to Alibaba, the deal could anger dealers who are losing out both on potential auto sales as well as the financing behind it. Getting a test drive via the internet could change that, though.

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