Volvo maker Geely to sell cars online
Zhejiang Geely Holding Co., which recently acquired the Swedish luxury brand Volvo, will try its hand at selling cars online, said Li Shufu, president of Geely and the first Chinese chairman of Volvo Car Corporation, at the Seventh Entrepreneurs Conference held in Hangzhou, China recently.
"Selling cars online is still just an idea and experiment, and involves certain risks, but if we do not try, we will never know whether it will work out or not," Li said in an interview with Xinhua News Agency.
In fact, Geely has already started negotiating with Chinese B2B web portal Alibaba in Internet car sales.
"Our first online shop will probably open next year at the earliest," said Liu Jinliang, vice president of Geely.
According to sources, the first batch of cars that Geely plans to sell online is the Geely Panda or Emgrand. In order to make a comparison with the cars sold in dealerships, the company is even considering launching a new model of the Geely Panda specifically designed for Internet sales. Although the new model will only be sold online, buyers can also test-drive it and have it repaired in dealerships.
"We are considering whether to roll out a special model that is only available for Internet sales. The new model's design must be very unique. We have planned this for a long time and are now conducting driving simulation experiments," Liu said.
It's learned that U.S companies have already started selling cars online. John Donahoe, CEO of eBay, said at the conference that several thousand cars have been sold online through mobile devices in the United States, the most expensive of which was a Lamborghini worth 250,000 U.S. dollars.
There are 140 million online consumers among the China's 400 million Internet users. Despite an annual growth rate of 100 percent for online retail sales, there have been very little transactions of big-ticket goods online and there have been no successful cases of online car sales.
Liu believes that given the development of China's e-commerce industry, the conditions for online car sales are already mature. It is known that at the end of June 2010, Geely's domestic distribution network included more than 800 independent franchise outlets and more than 1,000 independent maintenance stations.
However, Liu said that the current stage of "online car sales" cooperation between Geely and Alibaba intends to combine their respective advantages in the traditional automotive industry and e-commerce industry rather than to use online sales channels to replace traditional retail stores.
Li believes that it is hard to predict the results of online car sales, but it is certain that online car sales have obvious advantages in information publication and product displays.
Huang Xianhai, vice president of the School of Economics under Zhejiang University, believes that online car sales will provide the automotive industry with not only a new opportunity to cut costs, but also a chance of innovation in producing tailor-made cars.
Li said that Geely will launch 42 new car models over the next three years.
"If we allow customers to customize their cars by selecting various types of components, we may combine the components and develop up to 1,000 new models," he said.
Sheng Zhenzhong, a senior researcher at Alibaba Group Research Institute, said that under the traditional industrial mode, there is a trade-off between meeting personalized needs and lowering costs. Nevertheless, the vast amount of information on personalized needs may be collected through the Internet, so carmakers may integrate fragmented markets and realize bulk production.
"The revolutionary significance of online car sales perhaps lies in customized production," Sheng said, "This will change the business mode of the automotive industry and the consumption mode of consumers."