Are Car Vending Machines the New Way to Buy Cars?

Ford Car Vending Machine (Alibaba) 
The first modern vending machines were introduced in London, in the early 1880s, filled with a selection of postcards. Since then, the vending machine has gone onto to become a regular sight, dispensing candies and sodas in the most convenient way.
DEC 12, 2017
Pinch Free Crab Vending (Sean Yong.Reuters)

Chinese vending machines are a little more adventurous. In one Chinese city, you can purchase live crabs from a subway station vending machine. Even more surprisingly, Ford recently announced they were teaming up with online wholesaler Alibaba, in a 3-year agreement, to investigate selling cars direct to consumers via giant car vending machines.

Ford Intensifies China Growth Plan (Ford Media Center)

Ford’s China sales have been slowing lately and the company is looking at digital technology to help move more units. Ford is predicting an emerging opportunity in the Chinese car marketplace through online and digital sales. Surveys have shown that one-third of China's digital consumers would readily buy a car online and Ford plans to offer its products to those buyers.

The letter of intent between the two companies states that Ford will leverage Alibaba's Tmall Platform, a Chinese language business to consumer website that operates not only in mainland China but also Hong Kong, Macau and Taiwan. 

Ford and Alibaba have signed a three-year deal to look at new automated car sales opportunities in China. (Ford)

The cars will be stored in large multi-story parking garages and inventory will be published online. The exact details are still being hashed out, but it is thought that consumers will be able to browse through models on their devices, before summoning them to the ground floor for a test drive or to purchase the vehicle.

Sales and financing will be handled by Alibaba with their Alipay service. Buyers will put 10 percent deposits down on their chosen vehicle through the website

Ford Car Vending Machine (Alibaba) 

Dealers are understandably concerned about this development, but Ford expects to be able to bring them round to the concept as the vehicles will still need servicing and warranty work

Not the first Car Vending Machine

This is not the first car vending machine, with US start-up Carvana offering the service in a growing number of US locations. Buyers can view cars in 3D online and get instant financing quotes, whilst each listing includes the Edmunds consumer review for that model.

The company has expanded rapidly and its growth is steady, but the concept is unlikely to take off in the US.

Used Car Vending Machine published by INSIDER

Direct to Consumer is Illegal in Most US States

In the US, the dealership network is well established and carries a lot of political power. Direct to consumer sales are prohibited. Franchise Lawyer, Roger M Quinland, explains the 2 principles behind the lawmaking:

The first principle is that allowing automakers to sell cars directly to customers will endanger the businesses of automobile franchises, which presumably do not have the economic resources to compete with manufacturers on vehicle pricing.

The second principle is that consumers need a knowledgeable, independent sales intermediary who is capable of guiding individuals through the buying process and can later be called on for support in the event of difficulties with the vehicle.

Tesla has found just how extensive this lockdown is, the brand having to battle for the right to sell directly to consumers.

Not the future of Car Sales

The idea of setting up car vending machines isn’t likely to take off in a big way in the US, but around the world, where franchise laws are less stringent, this could signify a new model for selling cars. It’s certainly an intriguing and revolutionary idea and with the backing of commercial goliath Ford, the concept will be explored to its fullest.