Ford reportedly is set to announce a deal with Chinese e-commerce conglomerate Alibaba to trial car sales online.

Citing an unnamed source at the automaker, Reuters said Ford executive chairman Bill Ford and CEO Jim Hackett (in China this week to announce a new strategy for the market) were expected in Hangzhou on Thursday to sign a letter of intent with Alibaba which outlines the scope of the new partnership.

According to Reuters' source, the deal is intended to position the automaker for an emerging Chinese marketplace where more cars could be sold online.

Ford's global chief spokesman Mark Truby told the news agency the company was expected to make an announcement on Thursday in Hangzhou, where Alibaba is based, but declined to comment in advance, suggesting Reuters' report is accurate.

Alibaba spokeswoman Crystal Liu declined to comment to the news agency.

The source told Reuters the proposal could mean cars purchased online are delivered to buyers by franchised Ford retail stores and would be maintained and repaired by them. Ford could also use Tmall's new retail concept called the Automotive Vending Machine - a multi-storey parking garage that partly resembles a giant vending machine - to sell directly to consumers, the source said. Those cars could come directly from Ford or from its dealers but the details were still to be worked out, the source added.

According to Alibaba, consumers can use their phones to browse through the cars garaged in the store and choose to either immediately buy one or test drive it. The vehicle would be delivered to them on the ground floor.

Reuters said the model allows shoppers with good credit to purchase their new vehicle with a 10% down payment and then make monthly payments for the car purchase through Alibaba's affiliate Alipay.

Ford believes dealers would likely agree to this direct retailing model because they still get to service cars sold through Tmall, the Ford source told Reuters.

The move, though, could be potentially problematic for dealers, some industry experts said.

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