IF OEMs go direct to consumer and business – what will that mean for leasing brokers?
With more and more OEMs going the agency route – such as Mercedes – it’s worth considering what might be the implications for brokers.
This is a story written by US automotive journalist Gary S Vasilash in his weekly newsletter on Automotive.
Gary has given permission for us to use it although he points out that it was written for his US audience. Nevertheless, it has pointers for the UK market and how it might evolve – especially as Lynk & Co are scheduled for the UK sometime in 2022.
Article courtesy: www.gardnerweb.com/automotive.
Something to know about Lynk & Co
Although Lynk & Co is a European phenomenon for the moment, it is worth paying attention to what the company is doing because it could portend what could happen elsewhere.
Although it is arguably an OEM, rather than focusing on selling vehicles, it is based on a membership model.
Members can get a Lynk & Co 01, a hybrid, for €500 per month. That’s good for 1,250 km (it is €0,15 per km beyond that) and includes maintenance, insurance and road tax.
And this is something that the demographic the company is focusing on can absolutely understand:
“Members can continue or cancel the membership at the end of each month, much like Spotify or Netflix, depending on their lifestyle needs.”
What’s more, the company has developed an app that facilitates owners of the 01—yes, the vehicles are available for purchase—sharing their cars with other people.
Here’s the reason why Lynk & Co will have trouble gaining traction in the U.S.:
“It also offers a direct-to-consumer approach, nullifying costly dealership intermediaries.”
Franchise laws in the U.S. are such that “dealership intermediaries” are fixtures in transactions of a vehicular nature (although Tesla is putting that to the test in plenty of places, and other new manufacturers are likely to follow suit).
In Europe there are, as of the end of 2021, 59,539 members. (It operates in Belgium, France, Germany, Italy, the Netherlands and Sweden.) Which is about 50,000 more than the company’s target for the first full year.
Here’s the thing
The company is addressing the vehicle market like the aforementioned Netflix and Spotify: Many younger people can’t understand why someone would buy a physical artifact (e.g., an album) or why they can’t have something on their own schedule (e.g., why wait for a movie at a particular time: stream it when you’re interested).
And it also established clubs (in Amsterdam, Gothenburg, Antwerp, Berlin, Stockholm, Hamburg, and Munich) where events are held for members (and probably those who may be thinking about joining).
This isn’t a transaction like buying or leasing a vehicle. It is about joining a community of like-minded people.
At this point there are some of you who are pooh-poohing this whole thing.
But there is something you should know
Lynk & Co is under the Geely Automotive umbrella. Geely owns brands including Volvo, Lotus, Polestar, and Proton. Li Shufu, who heads Geely, is the second largest individual owner (9.68%) of Mercedes-Benz.
This isn’t a company that is likely just taking a flyer on Lynk & Co. Geely has considerable bandwidth and it is using it.
Ralph Morton is the leading journalist in the leasing broker sector and editor of Broker News, the website which provides information and news for BVRLA-registered leasing brokers. He also writes extensively on the fleet and leasing market in both the UK and Europe.
