At a launch party in Beijing on Saturday, Range Rover unveiled its fourth and latest model Velar to Chinese consumers. But it won't be made available at a local Range Rover dealership. Jaguar Land Rover, the carmaker, is selling the first batch of the cars in the new model exclusively online, at its Tmall flagship store.
The company said the Velar cars will be available on Tmall and via distributors.
The Velar, an imported sport utility vehicle model whose price ranges from 688,000 (105,400) to 1.048 million yuan (153,000), appeared to be a hit. Within the three hours of the sales kickoff, 600 vehicles were sold.
Jaguar Land Rover is not a newcomer at Tmall. In 2015, when luxury brands were still hesitant to take the leap to e-commerce, it opened its flagship store on Tmall, which was the first step in its e-commerce strategy.
Back then, the store provided little in the way offerings. It sold accessories, gave brand information and introduced new models. But now, seeing that Tmall has been experimenting with a VR shopping experience and even a “car vending machine,” the company decided to take the partnership further.
“This is a huge change for Land Rover’s business,” Mr. Frank Wittemann, President, Jaguar Land Rover China and Chery Jaguar Land Rover Integrated Marketing Sales and Service, told local media. “Tmall’s strong support will help our growth.”
It’s not the first time Tmall has worked with luxury car companies. Maserati opened its flagship store on the platform last year, and sold 100 cars within 18 minutes. Italian luxury car brand Alfa Romeo did even better, selling 350 Giulia Milano cars in 33 seconds at its online store opening.
However, local media have been critical of the platform, saying that rather than provide a mature channel, Tmall stores are simply used as a marketing tool for luxury car companies. Buying online proved to be easy, but the online stores were incapable of handling car delivery and maintenance.
That complaint was accurate with respect to the case of Range Rover Velar. Consumers could only pay an advance online, but had to go to the local dealership to finish the deal and pick up their car.
Tmall is demonstrating that it's determined to expand into auto retailing, and luxury car companies are likewise serious about working with it. According to the local newspaper Qilu Evening News, Tmall sold over 30,000 cars in three days during its "618" three-day promotional event in June. That number would put in line with the top 100 car dealerships in China.
The real advantage for Tmall is the financial services it offers to car buyers. Consumers can pay a downpayment of as low as 10 percent and drive out of the dealership with their new car. In the first year, buyers pay a relatively low monthly payment. After the first year, buyers can either continue to make the payments, they can pay outright the remaining amount owed to own the car, or they can swap it for a new car.
The idea of selling cars on e-commerce platforms might seem like a marketing trick for now, but Tmall is clearly planning for much bigger business opportunities in the future. Luxury carmakers should be following the trend closely.