Ford Motor Company (F), Alibaba Group Holding Ltd (BABA) Making a Deal
Ford Motor Co (NYSE: F) has taken a lot of heat from investors for arriving late to the game with driverless and electric vehicle technology. Now, however, a new partnership with China's Alibaba Group Holding Ltd ( BABA) suggests Ford is open to new ideas when it comes to the future of auto sales.
This week, Ford and Alibaba are expected to finalize a deal emphasizing online auto sales in China and a direct-to-consumer "auto vending machine" concept.
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Ford has confirmed executive chairman Bill Ford Jr. and CEO Jim Hackett will make an announcement on Thursday in Hangzhou, China, where Alibaba's headquarters are located. An unnamed source at Ford tells Reuters that the company will announce a new partnership with Alibaba that involves a push to sell more automobiles online in China via Alibaba's massive e-commerce platform Tmall.
The vending machine concept involves a multi-level parking structure with hundreds of vehicles ready for purchase. Customers can choose a car to buy or test-drive using an app on their phone and have it delivered to them on the bottom floor of the structure within minutes. Alibaba says buyers with good credit could then choose to make a 10 percent down payment on a vehicle and continue to pay off the balance on a monthly basis through Alibaba's Alipay affiliate.
Alibaba stock has been hit hard in recent weeks over fears of a government crackdown on high-interest "payday loans." Alibaba's finance arm banned these loans in late November, and the stock has fallen 10.4 percent in the past two weeks.
Ford has struggled in China in recent months, and its effort to partner with a domestic Chinese company like Alibaba is a familiar approach for U.S. companies that want the Chinese government on their side.
Earlier this week, Ford announced it plans to roll out 15 electric and hybrid models in China by 2025. IHS Markit analyst Namrita Chow says Ford's new China initiatives demonstrate the automaker is serious about turning the tide.
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"Ford's new strategy highlights the importance of China in the company's growth plans," Chow said this week, according to USA Today. "Its new strategy to significantly ramp up its deliverables to the local consumer base in China comes at a much-needed point for the automaker in China."
Ford's China sales dropped 5 percent in October and are down 5 percent overall in 2017.
Wayne Duggan is a freelance investment strategy reporter with a focus on energy and emerging market stocks. He has a degree in brain and cognitive sciences from the Massachusetts Institute of Technology and specializes in the psychological challenges of investing. He is a senior financial market reporter for Benzinga and has contributed financial market analysis to Motley Fool, Seeking Alpha and InvestorPlace. He is also the author of the book "Beating Wall Street With Common Sense," which focuses on the practical strategies he has used to outperform the stock market. You can follow him on Twitter @DugganSense, check out his latest content at tradingcommonsense.com or email him at wpd@tradingcommonsense.com.
