Sun, September 12, 2010
Business > Industries

China's Geely eyes online car sales

2010-09-12 09:09:56 GMT2010-09-12 17:09:56 (Beijing Time)  Xinhua English

HANGZHOU, Sept. 12 (Xinhua) - China's "Henry Ford," Li Shufu, founder and chairman of Geely Automobile Holdings, stunned the world when Geely acquired the 82-year-old luxury-car-maker Volvo earlier this year. Now he is out to shock the world's auto industry again -- this time by selling cars online.

Geely, China's largest privately-owned car maker, said it plans to sell cars specially designed for Internet sales at Alibaba.com, China's biggest online marketplace.

"If you don't try, you will never know if it will work or not," Li, a 47-year old who has proven before his lofty ambitions are not just talk, told Xinhua on the sidelines of an Internet forum that opened in east China's Hangzhou City Friday.

Geely said it would launch an online edition of Geely Panda, a micro car popular among China's young white collar workers. Although it will be sold only online, buyers will enjoy all the services of a Geely dealership that offline buyers receive.

"Hopefully, our first online shop will open early next year," Liu Jinliang, vice president of the Hangzhou-based company, told Xinhua in an exclusive interview at the forum that ended Sunday.

"We have been planning this for a long time and we have already done some testing," Liu said.

Buying a car online may be novel in China, but it is nothing new in the United States.

John Donahoe, chief executive officer of eBay, a leading U.S. e-commerce company, said at an event in Hangzhou Friday several thousand cars have been sold online through mobile devices in the United States, including a 250,000 U.S. dollar luxury sports car from Lamborghini.

Although there is no successful example in China, Liu believes it is the right time to start car selling online, as China has become the world's largest auto market.

China has more than 400 million Internet users, of which one third shop online. And although Internet retail sales have more than tripled over the past three years, it accounted for 2 percent of total retail sales last year. Still, the potential is huge.

Online sales'low cost is the most appealing factor for dealers, especially when compared to the minimum 10 million yuan needed to open a dealership.

Huang Xianhai, an economic professor at Hangzhou-based Zhejiang University, said another benefit of online sales is that it allows consumers more choices in specifications when they order.

Li Shufu said Geely will launch 42 new models over the the next three years, and that could spawn into more than 1,000 new models with different combinations of accessories.

Customized service is expensive offline, but not online, said Sheng Zhenzhong, an Alibaba researcher.

"Online sales is expected to bring revolutionary changes to auto consumers and producers," he said.

Li Shufu admitted he is not sure whether his e-shop will prove to be a success, but he is sure the Internet is an effective platform to showcase new models and generate awareness for Geely products.

Even in the United States, GM's experiment selling cars on eBay in California has met with difficulties.

Only 45 sales were logged in the program's first nine days, Automotive News, a leading U.S. auto industry website, reported last year.

But the pioneering sales effort did draw eyeballs: the eBay experiment received 630,000 visits and more than 960,000 searches were performed on the site in its first week.

"I've sold vehicles to people who say the vehicle on eBay. They didn't buy them on eBay. They called, came in and bought them," the Automotive News report quoted one dealer.

Analysts say consumers are concerned if they do not see the cars they will buy with their own eyes and that underdeveloped logistics services in China may also hinder efficient delivery.

Liu Jinliang said even if online car sales take off, they will not replace the traditional brick-and-mortar store.

"We are in a traditional industry. But we do not want to miss the chance brought by e-commerce," he said.

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