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

[October 20, 2016]  By Caroline Copley

BERLIN (Reuters) - Chinese automaker Geely, the owner of Volvo cars, will unveil 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 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 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.

The SUV, called '01', will target tech-savvy drivers. It will come with a high level of internet connectivity and owners will be able to rent out their vehicles to others by using the Lynk app and a shareable digital key.

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, but gave no details.

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.

Geely said it had teamed up with Sweden's Ericsson for '01's connected features, as well as Microsoft and Chinese e-commerce company Alibaba.

"The new '01' car will be the most connected car in the world, designed for a modern, urban audience who are used to collaborative consumption and all the benefits that this brings," said Alain Visser, senior vice president of Lynk & Co.

Alarmed by the threat posed by Apple and Google, carmakers are co-operating with telecoms equipment makers and technology firms to develop their own digital services.

Geely plans to unveil the '01' at STATION in Berlin, a former railway station that was the final stop for trains connecting West Germany with West Berlin during the Cold War, and now frequently hosts start-up conventions.

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

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