Lynk & Co plans revealed

Bizarrely, Lynk & Co is hoping to become the world’s first car-maker to never sell a car in Europe, the US or anywhere else outside China.

The Chinese-Swedish sub-premium start-up brand is instead looking to bring real disruption to the way cars have always been sold, avoiding what it calls the industry’s “six shit factors” along the way.

It will hit the Old Continent in early 2020 and the US a year later, armed with a plug-in hybrid version of its 01 and 02 crossovers and its plans are nothing short of radical.

It won’t be recruiting franchised dealerships spread around the continent. It will instead own just one dealership per country, starting in Amsterdam, in the Netherlands, with the rest of its customer contact being either online or through a travelling pop-up operation.

And while it will sell cars directly if people want them, it’s instead hoping to gain traction with a full subscription rollout, with customers paying per month to use the Lynk & Co cars.

But it runs deeper than that, with three planned levels of subscription, depending on the age and mileage each car has racked up.

“We have made two business models, retail and subscription, and our hope and our assumption is that we will have more subs than buying,” Lynk & Co CEO Alain Visser insisted.

“When we start in Amsterdam we will also have it online, and online is international. We will deliver the car where you are -- if someone wants a car in Barcelona or Hamburg, we will send it there, to the door.”

Lynk & Co will roll out the same strategy when it launches in the North America in 2021, too, though Visser admits US franchising laws will make it very difficult.

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Subscriptions, not sales

It’s not the first time direct sales bypassing dealer networks have been tried. Tesla famously does it, too, but it doesn’t take it to the next level, like Visser is planning to do.

“I think subscription is what makes us different. From a book-keeping point of view, the subscription cars are on our books, so that’s a cashflow disadvantage, but that’s what customers want,” he said.

“They want mobility but don’t necessarily want to spend 20,000 pounds, so we believe that younger customers will be willing to make the step because it’s only for one month.

“One month will be the minimum. We are finalising it, but we are assuming you will have the option to change four cars in a 12-month period.

“We don’t have dealers, which costs about 25 percent of the net revenue, so that’s between 10-15 percentage points we wipe out.”

Beyond that the whole subscription thing could get tricky, with Lynk & Co stuck with two- or three-year old crossovers coming off the subscription fleet and with no dealer network to shift them on to second-hand buyers. But Visser insists it won’t work like that.

“Our idea is that you will have a subscription cycle with a certain mileage or time, but your first cycle is 50,000km or two years,” he explained.

“When a car leaves that cycle after a certain age, it then moves to a second subscription cycle, which will be at a much lower price.

“That obviously won’t exist at the start, but it will affect the used car market. Then there will be a third cycle of subscription and then scrappage and recycling.

“The calculations we’ve done make us very optimistic, despite the fact that our cars are fully equipped with no options.”

The Lynk & Co plan hasn’t been universally praised by the rest of the car industry, but it’s not being mocked, either.

“Good luck to them,” Volkswagen’s board member for marketing Jürgen Stackmann said last week.

“We’ve done all kinds of modeling on it and it usually falls apart at the same place: at what point do you take your margin out for making the car in the first place?

“At some point, that has to be paid for and we haven’t found a subscription model yet that assures us it can be done.”

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No waiting time, warranty

That’s not the only thing Lynk & Co is looking to switch up. It’s also insisting it will be able to deliver new cars in a day or two, rather than the industry-standard eight to 12 weeks in Europe.

That’s partly because it’s avoiding franchised dealerships, but also because it will deliver extreme simplification of the options lists, cutting the build possibilities down to eight.

“We’ve identified six ‘shit factors’ in the car industry; things that customers don’t like today,” Visser insisted.

“First, you have to go to a dealership that is outside the city, so it’s not a nice experience.

“Two, when you’re at the dealership and you start choosing the model, then you realise there are five billion build combinations. We will have cars like the iPhone: it’s black and silver and you choose the gigabytes.

“Three, you’ve finally made up your mind and you’ve got to negotiate the price. Four, you have to wait four months on average to have your car delivered. We will deliver the cars the same day because we only have eight variants.

“Five, you always have to go to the service to change your lubricants and filters, even during your check-ups.

“Six, when you decide on your car today you decide for 12, 24 or 36 months. For us you only decide for one month.”

The subscription business model brings with it some hidden factors that make it more complicated than it seems, switching not only the ownership of the cars back to the car maker, but any quality problems as well.

“Warranty will be a moot point because it’s irrelevant. We own the cars.

“Most companies generate revenue from the dealership or spare parts, but for us that is a cost. It drives you to make your cars really good.”

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What will it sell?

Both of Lynk & Co’s models (the 01 and 02) are based off the Volvo-developed CMA (compact modular architecture) that also underpins the award-winning Volvo XC40.

The 02 is smaller and more of a crossover, while the 01 is a full-house SUV, with both models sharing distinctive, high-headlight design cues, but only the 02 is bound for a global audience.

Belgian production begins in the fourth quarter next year, with sales deliveries starting, in one way or another, in the first quarter of 2020. A full EV version of the 02 will arrive in late 2020.

None of the cars for the rest of the world will be built in China, with the world’s largest car market soaking up everything it can build there, including at its shiny new plant in the once-neglected Zhangjiakou district, about three hours’ drive north of Beijing.

But Visser insists that’s not a quality issue, but a supply issue.

“The Volvo cars produced in China are the same quality as the ones produced in Sweden,” Visser insisted.

“The business is different there. We have dealers in China. Eighty per cent of our customers there came from premium brands, like Audi, BMW and Benz and Lexus.

“It’s a very young profile, 30 and below, and it’s very urban (a lot of them are from Shanghai) and high education and salary.

“The people who have money here seem to be bored with the same three or four brands.”

Visser insists that, if Lynk & Co gets the subscription model right today, the business model will take just a decade to be viewed the same way as leasing is today. He also insists it gives the brand some opportunities it wouldn’t have without it.

“I would like to see a Lynk & Co car that has things you don’t see on other cars. Why is a safety belt still the same as in 1959? Why does it have two wipers like in 1903? Why does a plug-in hybrid have a cable in the boot, like an old vacuum cleaner?

“We need to change it up so the set-up becomes super easy. If the subscription will work you need to get in the car and understand the settings regardless of the car.

“You need a way -- in the key, we think -- that the settings are already done with your personality.

“Also, car company engineers want to show off their new developments. We say ‘No’, because people need to find things in every model.”