Interview with Alain Visser, CEO, of Lynk & Co
As I leave my interview with Alain Visser the Belgian CEO, of Chinese car manufacturer Lynk & Co, I’m handed a promotional brochure. It looks like something from a lifestyle fashion brand: Abercrombie & Fitch, Hollister, Banana Republic. An image of a car doesn’t appear until several pages in. Even then, it’s lurking in the background. A backdrop to youthful models in cool urban settings that could be Tokyo, New York, Shanghai, London.
Lynk & Co don’t want to be seen as yet another car brand. In their own words, they’re looking to start something new. A new way of life in which cars play an incidental role in our busy digitally connected lives. It’s a car manufacturer with ambitions to bring car-sharing to the masses. A company that is leading the revolution towards Mobility as a Service.
Bold ambitions can be easy to dismiss; another faddish idea latching to millennial, mobile-driven lifestyles. But this time their vision seems couched at the centre of change brewing in an industry wrestling with its future. It’s an industry that sees falling car ownership amongst younger drivers and a willingness to accept ride hailing and car sharing as an alternative to the hassle of car ownership.
As an automotive brand Lynk & Co are a spring chicken. Launched in China in 2016, they were purchased by Chinese automotive giant Geely. One of the big five auto groups (alongside SAIC, DongFeng, BYD and FAW) that have ridden the surging domestic market.
Flush with cash Geely snapped up western design and technology know-how, purchasing Volvo in 2010, followed by Lotus and the London Electric Vehicle Company, makers of the electric London Taxi.
Within the Geely portfolio, Lynk & Co is upmarket and youth oriented. It describes itself as a “Chinese-Swedish lifestyle brand”. A product of “advanced Swedish engineering, European heritage and global attitude”. Unlike the much-derided designs that emanated from China some years ago, their cars wouldn’t look out of place on a Volvo forecourt.
Designed under the guidance of Peter Horbury, VP of Design at Volvo (Autocar’s Designer of the year in 1998) they currently have three model variants: the 01 crossover, The 02 crossover coupe and the 03 Sedan. All three share the same platform used in the Volvo XC40.
In August this year a concept version of the 03 picked up two records at the famous Nurburgring, claiming the fastest lap-time for both a four-door car and a front-wheel drive car. Both records put the brand well on the way to winning the respect needed to secure image and performance conscious Western customers.
Lynk & Co cars are currently only manufactured and sold in China, where 53% of its customer base are under the age of 35. All vehicles are sold through company owned stores and via the ecommerce platform Alibaba. They come in one high spec variant, fixed at a no-quibble price.
According to Visser, car ownership is an important status symbol in China, so the company has yet to test out a key part of its proposed European proposition: mobile-driven shared ownership. It’s a concept that will enable European customers to share the ownership of an individual car.
Co-owners will use a mobile App to gain entry and use the vehicle, effectively booking the car only when they need to drive. It’s hassle free motoring in action; no need for buying, insuring, maintaining, parking and other inconveniences.
Co-owners can also rent their car out to others by pressing a “share” button that signals the car is available to surrounding App users. In the process the owners can earn money and conceivably make a profit from a car that might otherwise sit idle on their driveway for 95% of its lifespan. It’s an inherently “member get member” scenario, one that if it reaches its tipping point of users could multiply as a network-driven marketplace.
Visser is hesitant to say what proportion of vehicles will be sold via this shared-model basis (as opposed to a conventional purchase), “we don’t know, perhaps 70%. In some ways Europe will provide the beta-test prior to other global markets.”
If it works, the idea creates the opportunity to turn a traditional business model on its head. From a manufacturer perspective, success has traditionally been judged on the volume and profitability of sales. In this new world, Lynk & Co will earn its revenue through a combination of sales and subscription related sharing. Instead of volume of sales, its success will be measured by vehicle utilisation – the more people sharing their cars, the more money they’ll make.
The model is also aligned to the increasing demands of environmental sustainability. It’s driven by efficiency and resource utilisation, rather than spare capacity and wastage. However, while it appears utopian in vision, shared usage models introduced by other manufacturers have faltered to date. Notably: Ford closed its commuter shuttle service ‘Chariot’ in January this year and GM scaled back its App-based car sharing platform Maven, introduced to several US cities.
Visser seems unfazed by such apparent warnings, “many alternative models are based on 12 to 36-month subscription arrangements that operate more like a finance agreement. Ours will be easy-in / easy-out 1-month agreements priced at an affordable level. The inspiration is the Spotify approach, targeted at users that want on-demand convenience without the binding ties of ownership.”
According to Visser pricing will be competitive but not cheap. The end user will get access to a desirable car brimming with technology to appeal to its urban target audience. The technology itself will be facilitated by what Visser describes as “a co-lab environment, where developers will be encouraged to use Lynk & Co’s open APIs, to freely create Apps that can be downloaded for in-car usage. The comparison would be like an iPhone; each car in effect a smart phone with doors and wheels.”
The ethos of lifestyle, efficiency and technology also extends to Lynk & Co’s retail strategy. As Visser explains “we won’t have boring out of town car showrooms that no one wants to visit. We’re aiming for lifestyle experiences in urban settings. The outlets – perhaps 300 square metres in cool parts of town, will only have one or two cars, the rest of the space given up to pure lifestyle events and merchandise.”
“Experiences might include appearances from local heroes like fashion designers, chefs, talented artists, DJs. All open 24-hours, with both Lynk & Co customers and others able to book online to attend.”
Visser says the venues will be a mixture of permanent and pop-up stores in high footfall retail environments. The first in Amsterdam towards the end of 2020, with London following soon after. Earlier remarks he makes about Soho in London (where our interview takes place) makes me think that the vibrant central London spot could be a typical contender.
Importantly, Lynk & Co’s retail model also enables them to break from a traditional dealer network approach. With sales delivered direct to customer, Visser can do away with the 25-30% loss of margin soaked up by dealer distribution. This in turn adds to the bottom line and helps them deliver a “fully loaded car at an affordable price.”
The ability to support competitive pricing and margin will be further supported by a strategy of only selling a limited range of vehicle variants. European vehicles will initially be hybrid, with fully electric cars arriving a year later. But whereas some manufacturers currently support an endless list of customisable derivatives, Lynk & Co will only deliver a limited range of six to eight high spec-models in three to four different colours.
According to Visser, Lynk & Co is not trying to be different just for the sake of market positioning. For him it is fundamental to his business model, a strategy that is wedded to people’s changing relationship with cars.
He doesn’t see his target audience as urban millennials, a segment which he thinks has almost become a cliché. Instead, it’s a broader group that are simply open to new things. The marketing strategy to reach them is likely to kick off mid 2020, prior to a European launch - originally slated for 2019 - but now targeting the end of 2020. Visser says marketing will be skewed to social and events, dismissing the idea of mass market channels like TV.
Visser sees Lynk & Co very much as a disruptor. He says his bosses at Geely in China have given him a fair deal of autonomy, viewing Lynk & Co as the wild horse in the stable, able to take risks and explore new territories. This unshackled description seems to be at odds with conversations I’ve had with other Western business leaders working for Chinese companies. Most of whom have described regimented and controlling lines of command that have restricted agility and free-thinking.
Then again, given the rules that Lynk & Co seem to be re-writing, perhaps there is more of an institutional desire to experiment. Visser nods in agreement when I suggest his brand are akin to an incubator unit in the Geely portfolio.
Lynk & Co’s approach seems to lean heavily on aspects common in digital and marketplace business models – network effects, social sharing and open APIs. So, in selecting their business leader it must have been tempting to place a Silicon Valley veteran. Someone who had struck gold with a social media or e-commerce start-up that whisked them to the top of a digital empire.
But Visser is different, he’s an industry insider, with some 24 years under his belt, fighting battles winning sales and market share at GM and Volvo. In his own words, he has witnessed the flaws in traditional automotive value chains.
Whether he is correct in chasing targets based on vehicle utilisation in addition to sales, remains to be seen. 2020 looks set to be a landmark year for automotive, with punitive emissions legislation arriving and a barrage of important electric vehicles hitting the market. The Honda e, Mini Electric and Tesla Model Y crossover will all be looking to compete for the hearts and minds of urban, lifestyle conscious car buyers. And with VW’s all electric ID3 hatchback hitting forecourts next year, the options for environmentally friendly driving will hit a new high.
Lynk & Co’s car sharing model could well bring a further dimension to this new era of accelerated change. With its launch already delayed from 2019, it will be playing with time and will have to work its marketing and PR machine hard to gain customer awareness. But its agile and open-minded approach is a telling sign that it is ready to adapt to the twists and turns of the market.
Perhaps its open API mentality could extend to partnerships with car sharing platforms like Turo or Getaround, providing new options for co-owners to make money. Are we ready for a new era of car sharing, or will it simply come down to purchase decisions based on good old brand value? Only time will tell.