Would you buy a new car online? Lynk & Co is betting on it
Rick Popley
Apr 14, 2017
Lynk & Co.
Lynk & Co, a new car brand offering subscriptions, online shopping and built-in sharing options, aims for the U.S. market. It plans to launch here in early 2019.
If millennials prefer to make most purchases online, why not let them buy cars online? And if they're used to getting a new phone every year or two, why not give them the option to get a new car that often?
That is the approach to selling cars that a fledgling brand called Lynk & Co plans to take when it launches in China in 2018 and in the U.S. and Europe in early 2019.
Lynk is owned by Geely Automobile, the Chinese multinational that also owns Volvo, and it will sell cars online and through company-owned stores, similar to Tesla, instead of through franchised dealers similar to other manufacturers.
Lynk's entry in the U.S. would present another challenge to the franchise dealer system that has been in effect for more than 100 years, following Tesla's lead. In addition, short-term car rental services such as Maven and Zipcar are giving consumers alternatives to owning a vehicle, and companies such as Carvana are selling used cars online directly to consumers.
"We don't think the other model is wrong. We believe that if you come out with a new car brand, just bringing another really great car is not good enough, so we want to offer a totally different customer promise and a different business model," Lynk Senior Vice President Alain Visser said.
The company's approach will depart from traditional automotive retailing in several ways:
Lynk will adopt a fixed, one-price only policy globally. Lynk will offer fewer than 10 trim levels of each model, with no individual options or packages available.
Instead of sprawling suburban dealerships, the company will set up small stores in malls or pop-up stores in major cities such as Chicago, Boston and San Francisco. The company expects to have 70 to 80 U.S. sales points within about three years.
Customers will be able to buy or lease cars, but the company will focus on "subscriptions" for one, two or three years. Visser said subscriptions would be similar to leases, and customers would be able to exchange their cars for new models at the end of their terms.
Vehicles will be delivered to customers (or they can pick them up), and they will receive a walk-around explaining the car features. Lynk also will pick up and deliver cars for service.
Lynk will not own its service centers. It is negotiating with Volvo dealers to provide service.
The vehicles will have a standard "sharing button" and embedded technology that will allow owners to rent their cars to others when they aren't using them.
PRIMARY TARGET
Millennials will be the primary target because they are most likely to embrace this new approach and "they are the biggest customer group in all major regions globally," Visser said in a telephone interview from Gothenburg, Sweden, where Lynk and Volvo are based but have separate headquarters.
"Those customers who do not see the advantage of going to a dealer and negotiating a price can come to us. Does that mean the dealer model is wrong? Not necessarily, but we believe there are enough customers out there who are ready for something else," Visser said.
Initially, the brand will offer one model in the U.S., a compact SUV based on the Volvo XC40 called the 01, which Visser said will be a "premium product" but priced against SUVs from volume brands. Other models will be added (and also have numerical names), though Visser didn't give details.
Lynk's blueprint borrows from Tesla, the electric car company that used a similar approach to sell expensive battery-powered cars to well-heeled buyers without relying on franchised dealers.
Auto industry analyst Maryann Keller, though, thinks that because Lynk will compete with volume brands such as Ford and Toyota, what worked for Tesla and its CEO, Elon Musk, won't work as well for it.
Musk "got a billion dollars' worth of free publicity because of the novelty of the car and who he is, a brilliant entrepreneur, wealthy, very charismatic, a great speaker. And it was a phenomenal car," Keller said in a telephone interview.
"I think (Lynk executives) have this strange notion that who comes to them is going to be able to click online, pick the color, pick the interior, pick whatever style — and please send it. They don't understand that the car-buying process for 90 percent of Americans is more complicated," she said.
Lynk will have to fight the same battles with franchise dealers that Tesla did to open its own stores and sell directly to consumers.
Mark Scarpelli, a Chicago-area dealer and NADA chairman, would not say whether NADA will actively oppose Lynk, but said, "That's a state issue that each state has the flexibility to say yes or no."
Each state has laws that require vehicle manufacturers to sell through franchised dealers or restrict sales through company stores, and Tesla encountered strong opposition from dealer groups in every state where it tried to set up shop. Visser said Lynk is prepared to wage those battles.
"That's why we will start in the U.S. in 2019, so we have time to prepare. As far as Tesla, we have already learned from it," Visser said, adding that Lynk will attempt to follow Tesla into some of the same major cities.
http://www.daily-journal.com/busine...cle_8fa5d9f7-bf47-5f66-93c5-5411c5037952.html