The chief executive of VCC and Geely’s Lynk & Co division stated on several occasions in recent years that the brand would be selling half a million vehicles annually in 2020. That won’t now happen, due to delayed launches in the USA and Europe as well as turbulence in the Chinese market. Nonetheless, what Geely chairman Li Shufu calls his ‘disrupter’ brand will push ahead with new ways of doing business on three continents.
Alain Visser has been deeply involved in the global car business for decades, starting at Ford in his native Belgium then progressing up the ranks at GM Opel and most recently Volvo, before being made head of Lynk & Co International AB.
As CEO, Visser is responsible for the global business and is right now fully concerned with the implementation of the division’s business model in markets outside China. That will firstly involve a push into Europe, starting with Amsterdam in late 2020, then a couple of other cities and the US in 2021.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe brand’s headquarters is in Volvo’s home city of Gothenburg but until recently, the main focus has been firmly on China. Visser was interviewed while on a visit to London.
This year has been an unusual one in the world’s biggest passenger vehicle market. Volvo is doing well but Geely and Lynk & Co have seen dramatic falls. Why?
You’re right in saying that the year until now in China has been dramatic. And I don’t think that’s exaggerated. I have been 32 years in the car industry and I’ve never seen a market of that size collapsing in such a short time. The overall volume year to date is down about 15%. And the reductions or the changes, in terms of brands are shockingly different. The German brands are actually slightly up, the Chinese brands are 30% down, and the French brands are 62% down.
Some of the reasons are psychological ones with the uncertainty of the trade war. The biggest reason, however, is the change in emissions legislation from level five to level six, where the dealers have to clean out the old level five cars. And what basically happened is that the discounts have been so massive, that lots of people bought premium brand models, which were sold at prices where you would normally only be able to buy a Chinese brand. So the market has been distorted in an amazing way. This is why, in a market which is down 15%, Chinese brands are down 30%. But Lynk & Co volume is up significantly.
Nonetheless, sales of the Lynk & Co 01 and 02 have plummeted just as the newer 03 has surged.
You could say yes, of course that happened because there’s a new vehicle. But overall, we knew that when we launched 03, it will also affect 01. In 02, we knew that we have three cars and on the same platform in the same size for a similar customer target. So if you launch a product like the 02, we know that some of the product demand will overlap with the 01, etc, etc. So we have not been disappointed. Well, we have been disappointed in our volumes versus what we planned because nobody planned for the collapse of the Chinese market. But given where the market is, we are very happy with the results.
You have said that by 2020 or by the end of 2020, that Lynk & Co would be selling half a million vehicles a year.
Your quote is absolutely right: I’ve said in the past that our objective is by the end of 2020, half a million cars. But in that plan, we were still assuming the launch in Europe would be in 2019. As you know, that has been delayed and therefore our volumes will not hit half a million by that period.
August was a terrible month but how did September turn out?
As you may have heard, sales were up in September. We were anticipating that as the legislation for level six emission started to take effect last month that we would be in an upward trend. And that has indeed happened. So our numbers were significantly up. And we anticipate that there will be further up in October as well.
What is Li Shufu’s view on where the brand is at the moment?
From a strategic point of view, Chairman Li sees Lynk & Co as the disruptor. And as the, if I could call it that way, ‘the wild horse in a stable’. He is really expanding his range as a mobility provider rather than a growing car company. And Lynk & Co for him is almost like the…shall I say…that part of his empire that is testing new waters and challenging the status quo of the car industry.
We deliberately said, let’s start with phase one. In China, Lynk & Co is perceived as a revolutionary brand. Next, Chairman Li really wants to push it further in Europe, where the customer is much more advanced from a car industry point of view. Lynk & Co will try something very different: to shake up the markets. That is his [Li Shufu’s] strategic view, which of course, is very, very much in line with what I want to do.
To address your second point, he is very worried about how the market has evolved in China this year. But he’s very happy with the fact that despite the decline we are growing. And he clearly says, we have to prioritise Lynk & Co because that’s the future of the car industry. So I am not worried about that at all. But of course, we are both concerned over what’s happened in China over the last 10 months.
Is Lynk & Co a stand-alone business in terms of P&L? And are you as CEO seeing cuts to your budgets?
Yes, we’re separate and also a separate legal entity. As for how we run the business from a financial viewpoint, unfortunately, I can’t comment on that. But as always in these situations, when the market and the revenue shrink quite significantly, you adjust accordingly. The good thing is that for me in terms of the preparation for the European market, that hasn’t happened.
The originally stated plans for Europe have changed a lot. For example, no production at Volvo’s Ghent plant. Why not?
Yes, that is correct, cars will come from China. And we will have three ways of distribution, one of which is online. Secondly, there will be company owned stores in cities rather than dealerships. And then the third is pop-up stores that travel around.
We think that to cover Europe, we don’t need a vast dealer network, we just need some points. And on top of that, of course, you need many more points for servicing. But under the plan as I think I have outlined before, we will use the Volvo network for servicing our vehicles. Lynk & Co launches at the end of next year starting with Amsterdam, and then we cascade out the stores across Europe in the next two years.
What of plans for local manufacture in Europe/the US, are they shelved or cancelled?
They’re shelved. Our plan initially was to build the 01 car in Belgium at the Volvo factory. The reason why we pulled out of that idea was that actually XC40 sales went up a bit faster than anybody anticipated. And the remaining capacity was way below what we needed to cover our planning volumes for Europe. So the solution would have been that we built in Ghent and in China, which is of course a double investment and doesn’t make sense. So then we said, if we cannot have enough capacity in one plant, in Belgium, then we’ll use the full capacity of another plant in China.
So our current model is that our first car [the 01 PHEV] will be indeed, as you say, imported from China [Luqiao District plant in Taizhou, Zhejiang]. But that doesn’t take away our medium term objective: as volumes grow in Europe, our plan is to have a manufacturing facility in Europe. But there’s no concrete plan on when and where for that.
Lynk & Co has three vehicles in the Chinese market. When will we see an 04?
We don’t disclose your future products, but we will soon communicate to you in terms of our next 04, 05, etc. That will be in the coming months.
Will that be at the Guangzhou motor show?
I can’t say, but of course it’s possible.
And will there be larger models? Perhaps the SPA-based XC90 gets a new body and becomes a Lynk & Co vehicle when Volvo launches its SPA 2-based replacement in 2021?
Well, we have never said that we would focus only on compact cars. We think that’s the product range where Lynk & Co still has a lot of potential, so I wouldn’t exclude any option. As you know, we share the [CMA] platform and technology with Volvo. The XC40 is our brother vehicle for the 01 and other synergies on other vehicles are totally possible. So without being able to say that we have concrete plans, I don’t exclude those options at all.
