Tag Archives: Daewoo

Lynk & Co goes back to the future

AR-170629957

The best-received presentation at last week’s Automotive News Europe Congress in Barcelona was by Alain Visser, Senior VP of LYNK & CO, Volvo’s sister brand conceived to meet new customer needs. It was rightly scheduled to kick off the event, underpinning the ongoing theme of inevitable change facing the industry, and was delivered with a delicious non-corporate directness.

The car industry business model is, as Visser commented, essentially the same as it was 100 years ago – build cars, sell them, build more. For all their technical wizardry, the carmakers are not innovative. They’re driven by volumes, legislation and necessity. As Visser also said, there’s plenty of discussion about new business models at events like the Congress, “But boardroom talk is only about tech – not services, customers, brands.”

When Volvo’s parent, Geely, asked him to set up LYNK he rightly questioned whether the world needs yet another car brand, and said he’d get on board only if he could do things differently: the customer of today has nothing to do with the customer a century ago.

The LYNK business model is driven by several key changes in consumer behavior. There’s the move away from ownership, not just to leasing but to sharing. Young people are engaging with and shaping trends, and spending their money on social experiences, not cars. And customers expect services to come to them and to be able to transact online. Visser claimed that research shows that people would rather visit the dentist than a car dealer.

So the philosophy behind LYNK’s offering is to start with the customer experience and work back. Three values therefore lie at the heart of the brand, positioning it as lifestyle rather than automotive. Connectivity is to LYNK what safety is to Volvo – think gigabytes, not bhp. Sharing – if people share their homes as on Airbnb model, why not their cars? A subscription model – LYNK sees itself as the Netflix of the car industry.

LYNKCO_share_button_17.00.0

To deliver these the business will have wholly-owned outlets located where people are and will allow end-to-end online purchasing. There will be a single set of prices, and no haggling. There will be a lean product range. LYNK will “kill traditional marketing”.

Yet this brave new world is essentially the same as one launched over 20 years ago, only without the benefit of an online world. I was part of the team which launched Daewoo in the UK in 1995. Like Visser, we knew there was no point launching just another car company. Like him we agreed to do it only if we could do it differently, focusing on the service rather than the vehicles. Like LYNK we tore up the distribution rulebook and set up direct outlets where people went – retail parks, supermarkets. Customers were advised, not sold to, and their kids could use play areas while they had a free coffee and got the information they needed from interactive touch-screen pods. There was no haggling and no commission. The result? Daewoo achieved record share for a new entrant in the UK market and became a benchmark for service across all retail sectors.

Daewoo Sign

The fact that, over two decades later, the LYNK pitch is seen as revolutionary, when it’s merely addressing inevitable shifts in customer dynamics, tells us how conservative the automotive industry is. It’s also ironic that tech, identified by Visser as a stale driver of boardroom decision-making, should now in its digital form in vabe the driver of change: connectivity, social media, virtual showrooms and sharing platforms. So the LYNK proposition is perhaps more interesting for the issues it raises about the industry.

LYNK illustrates the need to not only change but to hedge – no one knows precisely how the complex matrix of connectivity, mobility, electrification, urbanization and environmental imperatives will play out. But Geely – with Volvo as the traditional core brand, LYNK as the first-move disruptor and now Polestar as an EV-only brand – has a hedging model other OEMs might note. Yes, Geely has the advantage of being smaller, more agile. But, as Visser said, the likes of General Motors have a massive advantage in spite of their bulk – it’s far easier for a GM to add connectivity than it is for an Apple to become a carmaker.

LYNK’s lean product offer is another issue. If this helps makes LYNK a profitable success then it threatens to take the car retail business in the opposite direction from the premiumisation model where vast product ranges with endless specification options promise a near-personalised product with dramatic up-sell margins. Great brands are simple, and if simplicity becomes a driver of consumer engagement then LYNK can play a bigger part in setting the new paradigm.

Will it succeed? Some say LYNK’s first car, the 01, could and should look more interesting. The fact is that it’s neither fish nor foul – LYNK’s own hedge is to launch with a car which was conceived to take either an internal combustion engine or an electric/hybrid powertrain. So it hasn’t been able to reinvent the form of the traditional car around batteries and motors in the same as it’s trying to reinvent its consumption.

0_lynkco_shanghaiBut that, as the LYNK & CO website says, is “Almost beside the point.” The service is the product.

Armed with the power of an internet-enabled world and a customer base nurtured by Apple – unlike the fax and Nokia world of the 1990s Daewoo inhabited – LYNK can certainly make a mark. It has the remarkable opportunity to be a first-mover while being far from ahead of its time. We won’t all be driving LYNK cars – customer inertia and passive loyalty to existing, conservative but powerfully crafted brands will see to that.

But one of those brands is Volvo, and success for the LYNK will surely be serving as a bellwether and feeder for its well-established and relatively agile stablemate. If it does that, and grabs a good share of online voice and a slice of China’s growing aspirational middle class market it will have served Geely – and the automotive industry – very well indeed.

Advertisements

Changing the way to buy a new car: it’s 1995 (and Daewoo) all over again

daewoo-mirrorsTwenty years ago today, a company called Daewoo Cars was launched in the UK. It’s since disappeared and yet it’s becoming more and more current.

Car companies are only now beginning to explore new ways of engaging customers, of unravelling themselves from the restrictive dealer model and exploiting the internet – virtual showrooms, pop-ups, and shops in malls; service like you get at an Apple store. Tesla’s first UK outlet opened 18 months ago in the upmarket Westfield shopping centre in London. And now Hyundai has launched a joint venture giving it an outlet at the Bluewater shopping centre in Kent, staffed by plain-speaking, plimsoll-wearing people who are not trained to sell and are not paid commission.

New Hyundai store in Bluewater Shopping CentreHyundai’s partner Rockar claims that the end-to-end web process you can access at the outlet is a world first. It’s not. Fiat abortively launched a near-identical initiative, Fiat Click, in 2011. And if you take the website out of the equation, the business model is Daewoo’s – launch date 1995.

I was part of the Daewoo launch team. We knew that the world didn’t need another cheap Asian car brand, another Proton. But we didn’t want to be a Proton. And we had a clean sheet of paper.

So we tore up the rule book. Then burned it and stamped on it. No dealers; no third-party sales. In an industry bound to the archaic, unfit-for-purpose dealer network distribution model, that made us pariahs. It made us notorious. Which was great for our awareness but it was also smart. The message was that when you dealt with Daewoo you weren’t sold to but advised, by Daewoo employees who were not on commission. We could become number one for customer service, which we did. Overnight.

The result was record share for a new market entrant in the UK – immediately ahead of not only Korean arch-rival Hyundai but also mature brands including Volvo and Mazda – with almost 95% awareness, and the ability to stand shoulder-to-shoulder with M&S as a customer-focused high-street brand.

The Hyundai Rockar model gives a great brand message: we’re modern, we do things the way you want them done, we come to you. That’s part of it of course, but there’s a far more pragmatic driver. Car companies want to go to where there’s high footfall, but city centre land is prohibitively expensive. So let’s adjust the thinking and go to where there’s both footfall and people in a buying frame of mind. And let’s have just one car on display so it feels more like a lifestyle retail outlet.

EE_Daewoo_1_webBut remove the web element – like sat nav, Sky+ and Simon Cowell, Sky+ it didn’t exist back then – and Daewoo was doing all that and more. Showrooms exclusively at retail parks, with interactive touch-screen info pods (yes, in 1995), free coffee and children’s play areas. Smaller outlets at Sainsbury’s superstores with test-drives from the car parks. And more customer touchpoints at the Halfords service centres.

We reassured customers about buying a car from a new name with messages about the then-mighty Daewoo Corporation. When I took journalists to Korea we would arrive in a 747, parts of which were made by the company. We transferred in Daewoo coaches to the Seoul Hilton, built and managed by Daewoo, where we went in Daewoo lifts to rooms with Daewoo TVs. We flew to factories in Daewoo-built helicopters, visited Daewoo shipyards with towering Daewoo cranes, and even watched demonstrations of Daewoo military tanks.

080129-sea-slugThe car operations became healthily Europe-centric. Headed by Ulrich Bez, previously at Porsche and BMW (and later Aston Martin), the company established R&D centres in the UK and Germany. The UK retail model was exported back to Korea and I was asked to advise the global Chairman Kim Woo-Choong’s office on communications strategy – I recall sharing a meal of sea slug with him and Bez in his Hilton penthouse, discussing a plan to establish a manufacturing base in the UK. Strange days but good days.

money-graphics-2005_954555aSo why did Daewoo disappear? Not because the UK model didn’t work but because the Korean economy and Daewoo Corp imploded. The Korean car industry had to be rationalised, so Kia was absorbed into Hyundai, and Daewoo sold off into the old-school homogeneity of General Motors. Oh, and Chairman Kim fled the country in 1999 to avoid charges for his part in the bankruptcy of a conglomerate ranked 18th in the Fortune 500 only two years earlier…

GM rebranded Daewoo as Chevrolet in 2005 before dropping the latter from Europe 15 months ago. And with that the last vestiges of the Daewoo we created appeared to be gone. Dead and buried.

Yet its influence and the trail we blazed in the UK are in the here and now, the new retail motor industry landscape – ironically being championed by Hyundai’s ‘innovative’ approach. So if you hear something strange beating at the heart of the new retail motor industry landscape, remember – that really will be the Daewoo.

Chevrolet – that’ll be the Daewoo…that I die

chevrolet-logo-grillThis week’s resignation of Chevrolet’s global marketing boss, following the resignation of the brand’s European head, is an interesting step. As one of the team who launched Daewoo in the UK, I was sad to see Chevrolet pulled from the region recently by its parent General Motors, which incorporated Daewoo into the Chevrolet brand after acquiring the Korean company in 2001.

After all, Daewoo had had a great start in the UK, Europe’s second most important market. The product was several model cycles past its use-by date but a no-dealer, customer-first strategy provided real brand values and record market share for a new entrant – immediately placing it ahead of Hyundai, Mazda and Volvo – and inspired success in Europe.

The rationale for dropping Chevrolet in Europe? It was losing too much money. It was seen as having too much overlap with the Opel and Vauxhall sister brands. Volumes were too low. True, but these were largely the results; the cause was a failure to develop the right product and build a brand for Europe.

While Daewoo had become synonymous with quality customer service, Chevrolet was known more for being American. The big, brash, chrome-lined Americana image didn’t fit with compact, Korean-made value products, and the fact that these sat in the same line-up as Corvettes and Camaros with old-world V8s presented a chasm for consumers to cross.

Some have suggested that a value brand simply wasn’t right for the company, which has wanted to take the the Opel and Vauxhall products upmarket to fight the tidal wave of new models from the German premium brands. But VW Group has done just fine with Skoda book-ending a brand portfolio with Bugatti, Bentley and Lamborghini. The truth is that GM didn’t develop distinctive product and failed to present a coherent brand.

It’s ironic that Daewoo, which had come to Europe as an independent in the mid-1990s, taken on the establishment and leap-frogged its Asian value counterparts has – under the ownership of an automotive giant with three-quarters of a century’s experience of operating in Europe and with an established brand name – sold just one vehicle for every five clocked up by Hyundai and Kia.

But the ultimate irony is that, having developed a modern, lean and fit-for-purpose approach as Daewoo, Chevrolet has been driven to virtual extinction in Europe while a bankrupt GM Europe has emerged from global recession and Eurozone collapse with great-looking product.

Dropping Chevrolet in Europe may be the best decision for GM financially, and perhaps inevitable in a European market which has shrunk so alarmingly. But with all the places at the premium table taken and no value offering, the lack of strategic investment in the Chevrolet brand will surely prove to be a cause of regret.

Things are different today from when GM acquired Daewoo – excellent product is now a given. But that simply means that the brand is even more important, because it’s the differentiator, the I-want-one factor – something GM will be up against when it aims Opel and Vauxhall at those beautifully honed brands at BMW, Audi and Mercedes.

Giving customers something to bite on

sign-used-carsI’m about to replace my Audi. My shopping list ranges from a Scirocco to an A7 so I’ve been going to quite a few dealerships. We also have a family Volvo estate, so in the interests of science I went to see them too. All premium or thereabouts. But not a premium experience.

Visiting dealers is rarely satisfactory and you wonder why. Things have improved over the past 20 years but the franchise dealer system is a very old one and it has not kept pace with the retail world. A survey by motoring.co.uk has just found that almost a quarter of customers still find dealer staff unhelpful or uninterested. Meantime the internet has evolved to the extent that customer’s first port of call is the web. That probably won’t mean the local dealer’s site. Or any dealer site. It may not even mean a manufacturer’s site. It’s far more likely to be What Car? or another third party.

I was at Daewoo when it launched in the UK as a new brand in the mid-90s. We knew we needed to do things differently to be relevant and we knew customers didn’t enjoy the dealer experience. So we went to the market without dealers. Car manufacturers perform feats of technological wonder in creating brilliant, complex but easy-to-use products for the modern world, but then interact with customers through a third party. At Daewoo we removed that element so we could control customer communication and offer the best customer service in the market. The result? Record market share for a new market entrant.

Online media means that the customer can now be hooked in much earlier in the process, and it should be used far more to drive traffic to those showrooms. The showrooms themselves need to change – from being displays of cars almost certain not to include the specific variant you want, to being trusted contact points delivering a useful and engaging experience.

We’re not talking about Burberry-style brand experience environments, or the corporate showboats Peugeot and Renault have on the Champs-Elysee – although these should have a place in a carmaker’s grand brand scheme. We’re talking about Apple: wholly-owned retail outlets putting the customer in direct contact with the company. Staff who are there not to sell but to explain, cut through the complexity and help the customer make the right choice.

These days most of the major brands own part of their retail network. The opportunity is there.

Autocar overturns Matiz verdict!

Passover-Bagel-458x320The current issue of Autocar has a feature on the best old bangers, among them the Daewoo Matiz. Can this be the same Daewoo Matiz they gave a void star rating when it was launched in 1998 after they rolled one? Indeed it can.

Back then they liked the car but said they couldn’t give a star rating because it could be overturned while reversing if given enough welly and an armful of lock, and was therefore dangerous. As I was Daewoo’s head of communications at the time, and Autocar published shots of the car on its roof, this caused me somewhat more of a headache than the people who rolled it.

No mention of all this in the banger feature though. Probably because no customers have ever turned one over. Google ‘Matiz’ and ‘roll’ it’ll think you’re searching for matzo rolls, the Jewish bread eaten at Passover. Look further and the nearest thing you’ll find is a reference to the car’s body roll.

I’m glad about this. The Matiz was a cracking little car with real character. Its three-cylinder engine sounded like a water-cooled 911 being strangled. It looked cheeky and, unlike the other Asian mini vehicles of the time, didn’t appear to have been styled to accommodate Marge Simpson’s hair.

Don’t get me wrong. I like Autocar. They’re enthusiasts. On this occasion they were just a little too enthusiastic in exploring the handling limits of a mini-MPV in reverse gear. Effectively a rear-wheel-steer vehicle. Like a forklift and with about the same wheelbase and centre of gravity.

An aside about the Matiz. It was styled by Italdesign and first shown at the Turin motor show in the early 90s wearing a Fiat badge. Fiat decided to go its own way for its new Cinquecento so Daewoo Group founder and Chairman Woo-Choong Kim, who was touting all the Italian styling houses, bought the design. Embarrassingly for Fiat, the Matiz was not only a big success in Italy but outsold the Cinquecento. Fiat top brass were not pleased and demanded explanations.

To add insult to injury, Fiat group’s Maserati then, astonishingly, launched a Daewoo reject. Really. When the 1995 Italdesign-styled Daewoo Bucrane concept car was aborted it was reworked into the Maserati 3200GT. Take away the beetle tail and the gullwing doors and it’s genetically the same. Don’t forget to point that out to anyone you see driving one. That’ll be the Daewoo.