An Assessment of Lynk & Co Features and Brand-fit to Uncover Entry Possibilities at the Danish Market

Elias Nikos Vakirtzis Poulsen

Student thesis: Diploma thesis

Abstract

The technological development in the world is changing the way automotive companies approach markets. The automotive industry has been evolving slowly compared to other BTC industries and in the light of digitalization and powertrain technology, companies are now seeing the possibilities of harvesting the benefits derived from digitalization. The thesis will explore areas within business modelling, technological development, innovation management and further explore, based on research whether the Danish market/consumer is ready for a change in the fundamental way of thinking cars with reference to Lynk & Co as case company. In other words, an assessment of the possibilities to enter the Danish market based on the three mentioned topics. In order to gain relevant insight into the industry, several expert interviews have been conducted. Qualified knowledge of market and trends derived from experts, have been used to support findings from a conducted online consumer survey. Primary data combined with academic literature have been used to explore the opportunities at the Danish market. The Danish market is dominated by traditional gasoline cars from respectively VW, Peugeot and Toyota (Top 3). EV´s and PHEV’s are sold on a limited basis and are still in the introductory phase. Nevertheless, an increased focus on environmental awareness in Denmark drive a trend toward EV´s/PHEV´s. It has been identified that the industry has an increasing focus on four topline areas: 1) More Fuel-Efficient Rides = Hybrids and EV’s 2) Predictive Vehicle Technology = Artificial Intelligence, IoT and data 3) Cars-as-a-Service (CaaS) = Car-sharing 4) Self-Driving Technology = Autonomous driving For the Danish market 1-3 are true, whereas autonomous driving is experienced as yet to come. The “connected car” car market is projected to be a $141 billion market in 2020 and new entrants can be expected within the nearest future. Lynk & Co and Tesla can be considered first-movers due to the fact that they embrace a fully digital and connected car strategy. Lynk & Co have an untraditional approach compared to traditional-thinking automotive companies. Several business elements and product features are in line with the consumer demands at the Danish market. It has been identified that the Danish consumer are early adopter of technology and are keen to explore digital solutions. As well as in cars. The Danish market is affected by a transformation toward flexible solutions. The need for flexibility and ease of use seen from e.g. Mobilepay, Uber, Airbnb etc. are driving the consumer demands in Denmark. Consumers are now used to these types of businesses and companies need to adapt. Hence, an increasing need for digitalization and/or subscription solutions. The Danish market are characterized by many substituting products/solutions. The need for a car in urban areas is low, and bikes and mobility solutions seem to cover the need of easy and on-demand pay-as you-go solutions. Furthermore, new entrants from rental companies are coming to the Danish market as seen with Sixt/BMW (DriveNow) and Europcar (MovOn). The author estimates that the subscription model has a more sustainable future compared to private ownership. The conducted survey shows that even the consumers that already own a car, would be keen to subscribe instead of owning. Based on an in-depth analysis of Lynk & Co´s business model and core competences, the author is able to assess its competitive acumen. Competing on technology alone has been identified as a less sustainable strategy and have to be combined with a business model that are customer-centric and offers flexible solutions. Lynk & Co have acted on the increasingly use of internet-shopping and are therefore offering online sales with the option to see/feel the car at a wholly owned showroom. It is though estimated that Lynk & Co takes up too much risk by investing in a wholly owned showroom in a country that is less likely to earn the ROI due to its small market size. Therefore, the entry form of a franchise agreement is seen as beneficial in the short run in order to lower risk.

EducationsGraduate Diploma in International Business, (Diploma Programme) Final Thesis
LanguageEnglish
Publication date2019
Number of pages135