Industry Trend Analysis - Ford Looking To Online Sales For Growth - FEB 2018
BMI View: Ford ' s partnership with Alibaba will benefit its competitiveness in the Chinese market, as the e-commerce market in China will continue to grow as more consumers opt for online shopping rather than traditional brick - and - mortar stores. However, ford dealers will come under pressure if its strategy is successful.
On December 6 news sources reported that Ford Motor Company will sign a letter of intent outlining its partnership with Alibaba to sell vehicles directly to consumers. They intend to do this through Alibaba's Tmall and a new 'auto vending machine ' - which is a multi-storey building which operates like a large vending machine to sell vehicles - retail concept. Ford is looking to increase its competitiveness due to the growing threat from Chinese and other Asian automotive brands in the Chinese automotive market. This follows Ford's plan to produce its luxury unit Lincoln in China by late-2019 to improve its logistic efficiency ( see ' Lincoln's Production Plan Ups Luxury Car Market Competition ' , March 14). We forecast Chinese passenger vehicle sales to grow 2.8% in 2018 to reach 25.3mn units sold annually and continue to average 2.2% over our 2018-2021 forecast period to reach a period high of 27.6mn units ( see chart below).
We believe that the competitive landscape of the Chinese automotive market (which is the world's largest automotive market) will continue to increase and attract new automotive brands. This will lead automakers to find new and innovative ways of attracting consumers ( see ' China Still Top Five For Sales ' , November 22). As we have noted in our key themes for autos in 2018, automakers will fully implement subscription models, ride-sharing options or other alternatives to full car ownership in 2018 in order to keep up with the shift in vehicle ownership trends ( see ' Key Themes For Autos In 2018 ' , November 29). We believe that this adoption of online vehicle sales and 'auto vending machine ' will form part of the evolution in the automotive industry and can be adopted to facilitate subscription models, especially the 'auto vending machine ' concept.
|Strong Growth Will Continue To Increase Competition|
|China - Passenger Vehicle Sales|
|f = BMI forecast. Source: CAAM, BMI|