BEIJING – Does the world need another automotive brand?
For Geely and its vice president of global marketing and sales, Alain Visser, the answer is a firm yes.
Visser, who joined Geely late last year from Volvo Cars, told the audience at the 2nd CAR Symposium held in Beijing on April 26 that the young automaker is indeed planning to launch a new car brand, confirming rumors earlier in the month that it would do so.
“I have now spent about six months at Geely and we are in the process of developing a new car brand that you will hear of very soon,” said Visser, former senior vice president of marketing, sales and customer service at Volvo Cars, which is owned by Geely.
The 28-year industry veteran did not reveal much detail about the brand, which reportedly is codenamed “L” with cars based on the Compact Modular Architecture (CMA) platform jointly developed by Geely and Volvo. But he did disclose one ambitious reason why Geely is doing so: an opportunity to change an industry that he says has been sleeping in the past 130 years.
“Our business model in the car industry is identically the same as it was 100 years ago, in a world that has moved in an unbelievable pace,” said Visser. “The car industry shipped their cars to the dealers, the dealers got their margins, and they then sold the cars to customers. Customers were happy, OEMs made money, dealers made money and the customers could buy their car. This is the model that worked until probably 10-15 years ago. I wouldn’t say it works right now.”
Visser gave five new trends that have quickly emerged to show how consumers have evolved and why the car industry is an arrogant industry.
First, customers are moving away from owning a product toward having a quality experience. Second, they are moving away from buying a car toward buying a service. Third, everything via dealerships versus everything available online. Fourth, being constantly connected rather than going to places. Finally, building strong brands by owning the consumer touchpoints rather than building products and outsourcing consumer touchpoints, a favorite of Visser’s among the five trends.
“We insource everything whether it’s product development, engineering, design or manufacturing. Everything is insourced. The only thing the car industry outsources is the retail process to our dealerships,” said Visser. “Shouldn’t it be the other way around? We should outsource manufacturing, and insource customer contacts. Why do we outsource the only thing that builds the brand and revenue?”
Visser predicts that cars eventually will be sold online and the carmakers need to be prepared for it. “Physical buying at dealerships is something we need to question ourselves,” said Visser. “We have to break out of the sea of sameness.”
Visser believes the car industry is insane for spending 25 percent on distribution networks, which are non-product related costs, in an industry that has an EBIT in the single digits, and the company that manages to reduce that distribution cost has an unbelievable edge than the rest of the sleeping industry.
“One company should be that company that drives the change in the car industry and I’d like to be a part of it,” said Visser. “The only way to shake this box is you start from scratch. You start with the customer expectations rather than what car you are going to build.”
Visser predicted that the Google and Apple car will come and the car industry will laugh at it and say it will be insanely bad, but it will “sell like hell.”
When asked who the new brand will target to sell to despite the fact people are moving away from owning cars to sharing cars, Visser told CBU/CAR that the target customers would be the Millennials which is the fastest growing population in the world, including 350 million in China, massively growing and still open for buying cars.
“If there is one thing I’ve learned in the car industry, it is that customers are irrational. There is an irrational behavior in how people buy a car. There is irrational behavior in how people buy a thing,” said Visser. “This business is so interesting, if it was rational, you can forecast it, but it is unforecastable.”
For Geely, the new brand also serves another purpose: to help it go global, according to Visser. The decision was to start from scratch and build something new to reshape the industry.
“It’s time to press control+alt+delete and start something totally different. I can’t tell you more about it. I’m working on it, it is extremely much fun,” said Visser.