Ford’s Financial Arm Left Out of Alibaba Deal in China

  • William Hoffman
  • December 7, 2017

Via YouTube

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.

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.

Earlier this year, Alibaba’s retail arm Tmall announced the development of a car vending machine, in which consumers can use their phone to browse through cars stored in a tall windowed building and have the car brought down to street level via elevator lifts. This new deal makes it likely that Ford vehicles will be prominently displayed in these vending machines.

Consumers with a “good credit score” — Alibaba has previously said a score above 750 through its own credit scoring model called Sesame — can purchase the vehicle with a 10% down payment and a commitment to monthly payments through Alipay, according to Reuters.

Ford Credit noted that it has operated in China since 2005 but declined to comment on the new arrangement. 

The cars could come directly from Ford or from its dealer network — the details are still being worked out, Reuters reported.

Should Ford choose to provide the cars directly to Alibaba, the deal could anger dealers who are losing out both on potential car sales as well as the financing behind it.

Additionally, the letter of intent between the two company’s commits them to “explore areas of cooperation” over the next three years in connectivity, cloud computing, artificial intelligence, mobility services, and digital marketing, according to Ford’s press release.  

“China is one of the world’s largest and most dynamic digital markets, thriving on innovation with customers’ online and offline experiences converging rapidly,” said Jim Hackett, Ford’s president and chief executive, in a press release. “Collaborating with leading technology players builds on our vision for smart vehicles in a smart world to reimagine and revolutionize consumers’ mobility experiences.”

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