What started out as a couch-surfing experiment for three school friends in San Francisco, later morphed into the multi-billion dollar home-sharing platform that we know today as Airbnb. The trio’s business idea has become a major disruptor for the world’s hotel industry. But can a Chinese businessman pull off the same trick in the automotive sector?
Geely founder Li Shufu is pioneering his own form of couch-surfing in the auto industry – a nice irony given that he once famously downplayed the challenges of making cars by describing them as just “two sofas with four wheels” (see WiC22 for our first reference to the remark). Li is now offering customers the chance to rent out these ‘mobile sofas’ through a subscription service that’s far outstripped the company’s expectations since its launch in Europe last year.
The driving force behind the new business line is the company’s Lynk & Co brand, which Geely developed in partnership with Volvo, the Swedish car manufacturer that Li’s firm has owned for just over a decade.
Geely had originally planned to sell 9,000 monthly subscriptions for its Lynk 01 compact SUV in the first year, following its European launch. However, it ended up with 29,000 of them after expanding the pilot programme to cities in Belgium, Germany, Italy, the Netherlands and Sweden.
While these numbers are still small within the context of global car sales, they show how new trends in urban mobility are starting to emerge. Drivers have two choices in the Lynk offer: they can either buy the car for €42,000 ($47,566) or rent it for €500 a month, including taxes, insurance and maintenance.
If customers opt to rent (as 95% have done to date), they get a digital key which will soon allow them to share the vehicle with friends and family, and even to rent it out for short periods to anyone else who signs up to the Lynk community.
So far this year the company has set up membership clubs in Antwerp, Amsterdam, Berlin, Gothenberg and Munich, where Lynk customers can even hang out for a drink. More are coming next year in Barcelona, Madrid, Milan and Paris.
The expansion plan shows how Chinese car manufacturers are getting more confident about taking their brands overseas. As China Daily puts it: “They now have the courage and the ability to take on the European brands head-on”.
Geely is also selling the Lynk 01 in Kuwait, although here it is following a more traditional sales model. It describes the Middle Eastern country as its first Asia-Pacific market (a definitional stretch for a country on the Persian Gulf) and the division is headed by Li Shufu’s son Li Xingxing.
The Kuwait launch event was Li junior’s first public appearance, with a one-minute speech in English. The Chinese press was impressed, noting a low-key manner not often seen with ‘second- generation rich kids’ – known as fu’erdai in China and often associated with materialistic and flamboyant lifestyles. For example, QQ.com compared Li with Wang Sicong (son of property tycoon Wang Jianlin), who was taken to task in the media earlier this year for trying to bully a young livestreamer into becoming his girlfriend (see WiC546).
Lynk has been developed as one of the luxury brands in the Geely stable for younger drivers. It shares the same Compact Modular Architecture (CMA) platform as Volvo’s higher-end XC40 model, helping to reduce R&D costs. Six different Lynk hybrid models have been sold in the Chinese market, where business grew 40% in the first nine months of the year to 147,960 units. Sales there are based on outright ownership but have exceeded those of electric-vehicle upstarts NIO and Li Auto combined, Bloomberg reported last month.
Another EV manufacturer with expansion plans is the joint venture between SAIC, GM and Wuling Auto – the trio behind the all-conquering Wuling Hongguang micro car. The makers of the tiny four-seater are en-route to selling more than 450,000 units in China this year and the car is set for its first international launch in Indonesia in 2022. The micro car has led EV sales in China for 14 consecutive months. Alongside other models, it helped the joint venture partners celebrate the production of their 25,000,000th vehicle on November 18.
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