China's Geely shows global ambitions, launching new compact SUV in Germany

October 19, 2016 6:15 PM EDT

Chinese automaker Geely unveils first model of its new Lynk & Co brand in Berlin, Germany, October 20, 2016. REUTERS/Hannibal Hanschke


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By Caroline Copley

BERLIN (Reuters) - Chinese automaker Geely, the owner of Volvo cars, showed off the first model of its new Lynk & Co brand in Germany on Thursday, a compact SUV aimed at taking on the likes of BMW and Mercedes-Benz, as well as ride-hailing service Uber, across the world.

The Lynk, made in China, will go on sale at home in 2017, followed by Europe and the United States in 2018, and marks one of the first attempts by a Chinese carmaker to create a global brand that makes use of European design and technology know-how.

Chinese companies have been snapping up cutting-edge German technology to push upmarket and gain a global footprint. This year alone, Chinese home appliances maker Midea has agreed to buy German robotics firm Kuka and Fujian Grand Chip Investment Fund LP is taking over semiconductor equipment maker Aixtron..

Long seen as a cheap, no-frills brand in China and unheard of in Europe, Zhejiang Geely Holding Group purchased struggling Swedish carmaker Volvo from Ford in 2010 to help it leapfrog a decade of research and development.

While Volvo will continue to focus on premium vehicles, Lynk is an attempt to grab a slice of the mid market. It will initially take on foreign carmakers' joint ventures in China, but - as shown by the global launch in Berlin - it also aims to challenge the world's biggest automakers in their own markets.

'SMARTPHONE ON WHEELS'

At the launch of the '01' model at a former railway station in Berlin that now frequently hosts start-up conventions, Alain Visser, senior vice president at Lynk & Co, described the SUV as "our first smartphone on wheels."

It is targeting tech-savvy consumers that may have prioritized flexibility over car ownership in the past. "We are looking very much at millennial consumers all over the world who are very much concentrated around bigger cities," he said.

Each car will be permanently connected to the Internet and have a "share" button, enabling owners to rent out their car to other motorists via a smartphone app.

"That becomes a source of income, which some of the consumers may use, a bit like an Airbnb vehicle," said Visser, referring to the home rental company.

Lynk has more models in its line-up, which the carmaker plans to launch over the next 3-5 years, but Visser declined to give details on body styles or launch dates apart from the name of the next car: '02'.

Once the full line-up is launched, Lynk aims to sell more than 500,000 vehicles a year by 2021, he said.

EUROPEAN KNOW-HOW

Geely's design has been refined by British designer Peter Horbury, who headed up design at Volvo in the 1990s and oversaw it for Jaguar, Aston Martin and Ford's other brands from 2002.

In doing so, Geely is upping the competitive pressure on established global carmakers, which have long accused Chinese rivals of merely ripping off their designs.

Jaguar Land Rover (JLR), for example, has sued China's Jiangling Motor after it released the Landwind X7 SUV in 2014, a car that JLR says copies its Land Rover Evoque while costing around the third of a price.

The car will be a hybrid powered by a 1.5-litre three cylinder petrol engine combined with a lithium-ion battery and electric motor, and will be the first based on the Complex Modular Architecture platform developed by Geely and Volvo.

Mercedes-owner Daimler and BMW are also investing heavily in hybrid vehicles and will be watching closely to see how the '01' fares with European consumers.

Geely said the car would be priced competitively and said it would be fixed across all markets, but declined to give details. It plans to keep down costs by selling the car online only and limiting the number of configurations available.

(Additional reporting by Edward Taylor in Frankfurt; Editing by Adrian Croft and Mark Potter)



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