Continuing with the expansion mode, one of China’s biggest e-commerce companies Alibaba Group Holding Ltd. (BABA, Financial) signed a deal with Shanghai General Motors (GM, Financial) to offer online sales and financing for GM cars and paved its way into automotive industry. In addition, Alibaba has partnered with 50 car brands like BMW (BAMXY, Financial), Jaguar Land Rover (TTM, Financial), Volkswagen (VLKAY, Financial), Buick, Chevrolet and Toyota (TM, Financial) and 10,000 dealerships in China.
Alibaba’s expansion plans
Founded in April 1999, the e-commerce giant is based out of Hangzhou, China providing consumer-to-consumer, business-to-consumer and business-to-business ecommerce web portals. The company also offers electronic payment services, a shopping search engine and data centric cloud computing services.
Previously, Alibaba had shown signs that it has deep interest in China’s Automotive industry as it signed a deal with SAIC Motor Corp. Ltd. to set up a $161 million fund to support the development of "cars over the internet." This in part has been said as a strategic move to collect consumer data. Alibaba has also planned to set up an exclusive automotive division as a one-stop shop for all auto-related things from car manufacturing, car sales and other auto services. Not only the dealers but also the consumers will be able to avail services by these offerings like O2O (online to offline) motor services, new car and second-hand car transactions, auto financing and other localized services. The company also has plans to offer imported cars in May and a mobile application is also in the pipeline due for release in June this year.
Under the tie-in with General Motors, Alibaba is selling the former’s Buick, Cadillac and Chevrolet brands on its web-portal TMall.com. The ecommerce company has exclusively formed a new "Smart Living" division for its web portals which will host a range of products and services of daily needs like television, home appliances and even cars.
China’s automotive market
China’s automotive market is fast emerging and has some great figures to prove a promising future. Approximately 23.49 million vehicles were sold in China last year itself which was an increase of 6.9% from the previous year. Following this, China has been able to retain its top place as the world’s largest auto market for six years in a row.
Alibaba’s futuristic plans
China has since long been encouraging the non-auto makers in the industry to tie-up with the existing ones for growth of innovative ideas and to build up competition. Before Alibaba, another e-commerce company Baidu Inc. (BIDU, Financial) had joined hands with Google Inc. (GOOG, Financial) to develop an autonomous car this year. Leshi Internet Information & Technology Co. has also announced the launch of connected electric car.
Alibaba in the current scenario has an advantage over others with its homegrown operating system YunOS which can be used in the cars and connects the car with the smartphones of the users. Other than Automotive industry, Alibaba has also been spreading in other emerging sectors like finance and entertainment in an endeavor to serve 2 billion customers globally.
Alibaba through the deal with GM will not only get increased revenues through the new business but more importantly, it will get consumer data which can be further utilized in other sectors for targeting the right customer and posting personalized advertisements. The deal has come as positive news, and the company is hopeful of regaining investors’ trust which was at its peak during company’s IPO announcement last year. Although shares of the company were down 2.7% at $81.79 in mid-day trading last Friday, it is hopeful of a quick catch up soon through various such strategic partnerships.
