Lynk & CO 'gears' up for U.S.
OYAMA, Japan -- In its long-shot bid to crack the U.S. auto market, Lynk & CO is contemplating an unusual plan: It will begin by not selling autos.
The 2-year-old joint venture between Volvo and Chinese automotive giant Geely might instead enter the market by selling other merchandise, such as household goods. And once the brand is up and running, its vehicles will follow.
Details of the gambit are still being worked out. But it illustrates the outside-the-box thinking that the East-meets-West upstart is counting on to carve out 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 venture plans to dump the traditional dealer model by selling directly to consumers. It will prioritize subscriptions, not sales or leasing. Products will be pitched as something beyond the automobile, a kind of rolling smartphone always connected to the Internet. And built-in applications will facilitate car-sharing from the get-go, so drivers can rent out their cars for extra cash when they are out of town or not using them.
"My challenge is, don't just show the world we can make brilliant cars ¡ª show the world we can change the car industry," Lynk & CO CEO Alain Visser told Automotive News as his company launched its third nameplate, the 03 sedan. "That's the ambition: to do things in a very different way."
Across China, automotive upstarts are seeking new strategies to stand out from legacy automakers as they go global. Some, such as electric vehicle aspirant Byton, are banking on electrified mobility and autonomous driving. Others, including Nio, hope to lean on direct-to-consumer retailing and wow-factor gadgetry such as artificial intelligence and digital assistants.
Even established Chinese players recognize the need to differentiate themselves when they eventually tap into developed markets. GAC Motor, for example, is expected to trade on a value proposition of surprisingly upscale quality at bargain-basement prices.
All that raises the stakes for Geely as it looks to expand 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 company's namesake Geely marque is the bottom of its brands. Although it is China's best-selling domestic brand, executives say it doesn't 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 upmarket for big volume. Lynk & CO would slot in between to take on the likes of Hyundai, Toyota and Ford.
"Geely has two objectives," Visser said. "One is to show they can really go global without purchasing a global brand. But secondly, and I would dare say more importantly, is to show that we're entering an already busy market in a different way."
Visser envisions Lynk & CO selling 500,000 vehicles annually in two years. That would be on par with Volvo, which reached global sales of 571,577 units in 2017 ¡ª but only after more than 90 years of making cars. Longer term, Visser expects Lynk & CO volume to approach 1 million.
Analysts say Lynk & CO has a shot at making it happen, thanks to parent Geely's deep pockets and Volvo's technology. They see it as Geely's missing link.
"This brand is set to compete with mainstream foreign brands," said Yale Zhang, managing director of Automotive Foresight, a consultancy in Shanghai. "It is quite important because it fills the gap between Geely and Volvo. It can now compete in the global mass market."
But the new approach will need new marketing, Visser said.
"Merchandise ¡ª we call it gear ¡ª will be part of it," he said.
Just what that merchandise might be, Visser isn't saying. The Belgium-born former General Motors and Volvo executive said his company has a "very concrete plan" but will communicate it later. A Lynk & CO spokesman said items could span everything from home goods to fashion.
Lynk & CO vehicles won't land stateside until around 2021, Visser said.
But the chief executive has high hopes for America. Within three years of the brand's U.S. introduction, Visser envisions selling 100,000 to 150,000 vehicles a year.
Lynk & CO plans to start selling vehicles in Europe in 2020. Visser said he believes the company could achieve annual sales of 150,000 to 200,000 there.
But for now, Lynk & CO sells only in China, where it offers the 01 crossover, the 02 sporty crossover and the 03 sedan. All three are based on the same Compact Modular Architecture that underpins the Volvo XC40 crossover. Lynk & CO began sales in China in November 2017.
Visser forecasts that cumulative sales since then will reach 130,000 to 150,000 units by the end of this year. Monthly sales in China are clicking along at 15,000 units, he said.
Lynk & CO vehicles are assembled at two plants in China, one that also makes Volvo vehicles and another that is dedicated to Lynk & CO. The 01 plug-in hybrid is slated to be assembled at Volvo's plant in Ghent, Belgium. And Visser said the company is looking at possibly building vehicles at Volvo's new plant in Ridgeville, S.C., after Lynk & CO lands stateside.
Building a brand
To telegraph its global ambition and unorthodox thinking, Lynk & CO hosted an over-the-top launch event for the 03 in Japan, where it has only the vaguest plans of ever doing business.
Commandeering Fuji Speedway, Lynk & CO flew in hundreds of Chinese journalists for the spectacle. It encompassed test drives on the Formula One circuit and an evening extravaganza replete with a fashion show, fog machines, stunt drivers and a helicopter flyover.
The 03 will go on sale equipped with a 1.5-liter, three-cylinder turbocharged engine mated to a seven-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 engineers in Sweden and share almost all their innards, from platform to powertrain, with Volvo. But Andreas Nilsson, senior vice president for design, says everything the customers see and touch is distinct to the Lynk & CO brand.
To cultivate more of a performance persona, Lynk & CO announced at Fuji Speedway that the brand would enter an 03-based race car in the 2019 World Touring Car Cup series. A concept of the car, with a huge rear wing, boasts 500 hp, compared with 180 hp for the street version.
Why chase a sports pedigree when Lynk & CO's subscription model envisions a steady clip of trade ins and a brisk business in car-sharing? And why bother with a debut in Japan, where the company still hasn't set a timeline for starting sales? For Lynk & CO, it's about standing out.
Said Visser: "We like to do the unexpected."
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