Alibaba Revs Up Online Auto Business

A new partnership is driving Alibaba into online car sales.

It was announced last week that Chinese luxury auto service provider Yongda will sell cars online through Alibaba’s Tmall platform at prices below their manufacturers’ suggested retail. The first model being made available is the Chevrolet Epica, offered at a range of ¥60,000 to ¥70,000 (approximately $9,700 to $11,300) — a 40 percent reduction from its sticker cost.

Consumers who purchase cars via Tmall will be able to pick them up at the nearest Yongda dealership, which will also handle the subsequent servicing of the vehicles as necessary.

Wang Zhigao, Yongda’s deputy board chairman, told the South China Morning Post that more expensive brands of cars will eventually be made available through the partnership, though he declined to name specific ones.

SCMP points out that the move on the part of Alibaba and Yongda comes at a time when sales of luxury automobiles in China via traditional methods are on the decline.

Two mutually beneficial factors that contributed to the team-up, the companies told the outlet, were that Alibaba had 80 million online customers in a financial position to buy a car, while Yongda — which specializes in high-end brands such as Porsche, Land Rover and Cadillac — had about 200 outlets selling more than 20 brands throughout mainland China.

As the automobile industry expands its presence in eCommerce, Wang predicts that sales of luxury models will grow 10 percent annually in the next decade, and that 15 percent of those sales will occur online.

“The major driving force in the future will be individual consumers — the growing middle class,” he told SCMP. “Growth [of luxury cars] is slowing down as the Chinese economy transforms, and I don’t think it will recover until at least half a year later.”

Telling SCMP that Tmall previously only partnered with manufacturers and focused on inexpensive vehicles, Wang Licheng, Alibaba’s general manager of automobile business, remarked: “Alibaba is often considered [a platform for] ordinary people, while Yongda is known for its luxury, so the cooperation of the two will bring a revolutionary change, which was unimaginable in the past.”

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