Lynk & Co. decide against Belgian production
The Geely brand Lynk & Co will produce its first vehicles for Europe in the second quarter of 2020 – not at the Volvo plant in Ghent, Belgium as originally planned, but in China.
CEO Alain Visser explained this in an interview with local media. Next year will start with the compact SUV 01, which shares its architecture with the Volvo XC40. This Volvo model is the reason behind the decision to produce in China, according to the former Volvo board member, who in 2015 moved to the top of the new brand within the Geely Group. “We decided to produce in China for the simple reason that the Volvo XC40 was doing so well that we couldn’t get the allocation in the [Belgian] factory that we think we need for Europe,” the Belgian said. “We would have had the prospect of having two production plants, Ghent and China, which is a major confusion and cost complication.” He reiterated that this was the only change and that the rest of the plan was “intact”.
He also confirmed that Lynk & Co will only offer electric and plug-in hybrid models in Europe. When asked whether he could imagine Lynk & Co as a fully electric brand in the near future, Visser replied: “Yes, and that will surely happen. The only question is when.”
While many carmakers are experimenting with subscription offers on a small scale, Lynk & Co is focusing exclusively on subscriptions. In sales, volume manufacturers are only interested in who offers the lowest price. “That puts long-term profitability at risk,” says Visser. “It’s better to become a mobility company yourself,” Visser says.
The CEO has not yet revealed what subscription price Lynk & Co will charge in Europe. But he ruled out a price below 250 euros. Research in Europe and the USA has shown that users spend around 500 euros a month on mobility. “And, this is from people who say, “I can’t afford a car,” but then they take taxis, they use Uber and public transportation – and you add it all up, and it’s 500 euros. But they are not aware of it,” says Visser.
Since Lynk & Co does not specify a minimum rental period – long-term commitment is more likely. “Our research shows the biggest issue today for the traditional buying and leasing model is that young customers don’t want to commit to a long-term investment” – therefore, relatively young used cars will soon be included in the fleet. If a customer returns a virtually new vehicle after a few months, it can be offered again, but at a lower price than a new car.
It will be interesting to observe how often the vehicles have to go to the garage. So far, the car industry has “traditionally made money on servicing cars, not selling them”. Now the tables are turning: As the owner, the manufacturer has an interest in ensuring that their cars are as low-maintenance as possible. “But for us, that’s where we lose money because in a subscription the service is part of the cost,” says Visser. “So the more our cars need repair, the less we profit.
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