Lynk & CO ‘gears’ up for U.S.

Posted on

OYAMA, Japan – In its long-awaited attempt to crack the American car market, Lynk & CO is considering an unusual plan: it will start by not selling cars.

The two-year-old joint venture between Volvo and the Chinese car giant Geely could instead enter the market by selling other merchandise, such as household goods. And once the brand is operational, its vehicles will follow.

Details of the game are still being worked out. But it illustrates the outside-the-box thinking that the founder of East-meets-West is counting on to create space as Geely's new global mass market brand.

Lynk & CO represents new ground for Volvo and Geely, as well as for the industry. The company plans to dump the traditional dealer model by selling directly to the consumer. It gives priority to subscriptions, not to sales or leasing. Products are parked as something outside the car, a kind of rolling smartphone that is always connected to the internet. And built-in applications will facilitate car sharing from the start so drivers can rent out their cars for extra money when they are out of town or not.

"My challenge is not only showing the world that we can make brilliant cars – let the world see that we can change the car industry," Lynk & CO CEO Automotive News told his third nameplate, the 03 sedan. "That is the ambition: doing things in a completely different way."

Visser Photo credit: HANS GREIMEL

Stand out

Across China, automotive starters are seeking new strategies to differentiate legacy car manufacturers while operating globally. Some, such as aspiring Byton, venture to electrified mobility and autonomous driving. Others, including Nio, hope to rely on direct-to-consumer retail and wow-factor gadgets such as artificial intelligence and digital assistants.

Even established Chinese players recognize the need to distinguish themselves when they eventually use developed markets. GAC Motor, for example, is expected to act on a value proposition of surprisingly high quality at bargain basement prices.

All of that increases the commitment to Geely because it looks like expanding internationally.

Parent company Zhejiang Geely Holding Group and its chairman, Li Shufu, see Lynk & CO as the best bet to fill a gap in its product portfolio. The brand name Geely of the company is the bottom of its brands. Although it is China's best-selling house brand, executives claim that it does not have the cachet to compete globally.

At the top of the group is Volvo, which Geely bought in 2010. It has global appeal, but is too expensive for large volumes. Lynk & CO would drop by to meet Hyundai, Toyota and Ford.

"Geely has two goals," Visser said. "One of them is to show that they can really go global without buying a global brand, but secondly, and I would like to say it more importantly, has shown that we are entering an already busy market in a different way."

Visser sees Lynk & CO for the sale of 500,000 vehicles per year in two years. That would be comparable to Volvo, which sold 571,577 units worldwide in 2017, but only after more than 90 years of making cars. In the longer term, Visser expects the Lynk & CO volume to approach 1 million.

Analysts say Lynk & CO have a chance to make it happen, thanks to the deep pockets of the parents Geely and the Volvo technology. They see it as Geely & # 39; s missing link.

"This brand is likely to compete with regular foreign brands," said Yale Zhang, managing director of Automotive Foresight, a consulting firm in Shanghai. "It's pretty important because it fills the gap between Geely and Volvo and can now compete in the international mass market."

But the new approach will require new marketing, according to Visser.

"Merchandise – we call it gear – will be part of it," he said.

Exactly what that merchandise could be, says Visser. The Belgian-born ex-director of General Motors and Volvo said that his company has a "very concrete plan", but will communicate later. A Lynk & CO spokesperson said that items could span everything from household items to fashion.

Lynk & CO vehicles will only land around 2021 countries, according to Visser.

But the chief executive has high expectations from America. Within three years of the US introduction of the brand, Visser is supplying 100,000 to 150,000 vehicles a year.

Lynk & CO plans to start selling vehicles in Europe in 2020. Visser said that he thinks that the company could realize an annual sale of 150,000 to 200,000.

But for now, Lynk & CO sells only in China, where it offers the 01 crossover, the 02 sport crossover and the 03 sedan. All three are based on the same compact modular architecture that forms the basis for the Volvo XC40 crossover. Lynk & CO started sales in China in November 2017.

Visser predicts that the cumulated turnover will reach 130,000 to 150,000 units by the end of this year. Monthly sales in China click on 15,000 units, he said.

Lynk & CO vehicles are assembled in two factories in China, one that also makes Volvo vehicles and another that is dedicated to Lynk & CO. The 01 plug-in hybrid is planned to be assembled at the Volvo plant in Ghent, Belgium. And Visser said the company will look at possible new vehicles in Volvo's new plant in Ridgeville, S.C. after Lynk & CO land on the other side of the world.

The 03 sedan

Build a brand

In order to telegraph its worldwide ambition and unorthodox thinking, Lynk & CO organized an over-the-top launch event for the 03 in Japan, where it only has the faintest plans ever to do business.

Commander Fuji Speedway, Lynk & CO flew in hundreds of Chinese journalists for the show. It included test drives on the Formula 1 circuit and an evening extravaganza full of a fashion show, fog machines, stunt drivers and a helicopter plane.

The 03 will go on sale, equipped with a 1.5-liter three-cylinder turbo engine coupled to a 7-speed dual-clutch transmission, all shared with other Lynk & CO vehicles and Volvo. A plug-in hybrid is planned for next year. And Lynk & CO says it will add an EV at the end of 2020.

Lynk & CO vehicles are mostly developed by technicians in Sweden and share almost all their entrails, from platform to power train, with Volvo. But Andreas Nilsson, senior vice president for design, says that everything customers see and touch is different from the Lynk & CO brand.

In order to cultivate more of a performance character, Lynk & CO announced at Fuji Speedway that the brand would introduce a racing car with 03 cars in the Worlding Car Cup series of 2019. A concept of the car, with a huge rear wing, has 500 hp, compared to 180 hp for the street version.

Why follow a sporting family tree when Lynk & CO's subscription model has a stable clip of trade submissions and a solid carpooling business? And why bother with a debut in Japan, where the company still does not have a timeline for starting the sale? It is striking for Lynk & CO.

Said Visser: "We like to do the unexpected."