Alibaba forms partnership to increase vehicle sales

Wang Yulei, president of Alibaba's Tmall, said e-commerce would take over sales functions from showrooms in the next two to three years. An online-to-offline model would help manufacturers close deals, with customers going to showrooms to collect their vehicles and access related services.

The country's auto sector has utilized a manufacturer-wholesaler-retailer distribution model for decades. A dealership's 4S showroom functions sales, service, spare parts and surveys, with manufacturers accessing information through the survey system.

Frequently, a "completely satisfied" comment on just sold products and completed services might be achieved by giving gifts, coupons or discounts to customers. In cases of customers not being satisfied, the manufacturers' after-sales service departments forward unhappy customers to the related dealer and ask the manager to solve the problem.

Hu Bo, chief marketing officer for Greater China and ASEAN sales and marketing, Volkswagen Group China, said: "Earlier, manufacturers and dealers obtained some fragmentary information about customers through disorganized approaches. Thus, they failed to bring customers a seamless experience, which may end with losing customers to other brands.

"But carmakers will not dump their dealers. However, the dealers are facing significant changes in their roles. In the future, they will play a greater role in after sales services, and will gain more from after sales and value-added services."

He said, "The e-commerce platform and dealer channels need to mix together. An online-to-offline platform could be established for seamless convergence."

Alibaba Group and SAIC Motor Corp announced in March they would invest 1 billion yuan ($163.9 million) in a fund to develop Internet-connected vehicles, and a 50-50 joint venture will be set up based on the fund.