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Geely set to launch 'connected' car brand in Shanghai

Chinese carmaker tight-lipped over seeking stake in Malaysia's Proton

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The Geely Automobile Holdings logo is pictured at the Auto China 2016 auto show in Beijing, China on April 25, 2016.   © Reuters

HONG KONG -- China's Geely Automobile said on Thursday it would launch new car brand Lynk & Co. in Shanghai this April, as the carmaker seeks to woo young Chinese drivers with its new subscription and car-sharing model.

The brand will hit the Chinese market in the last quarter of this year, ahead of official sales in Europe and the U.S. in the first quarter of 2019.

Lynk & Co. cars will be produced in China but incorporate the design expertise of Volvo Cars, which the Chinese carmaker acquired in 2010. The first car in the range is the 01 compact SUV built on Volvo Cars' technology.

First unveiled in Berlin last October, Lynk & Co's vehicles will be offered in a fixed pricing and flexible subscription model without the need for a down payment, just like a mobile phone subscription.

Geely said what differentiates a Lynk & Co car from others is that it is "born digital." It is connected to the internet, allowing vehicle-to-vehicle communication. For instance, drivers will be able to share and sub-let their vehicles by tapping a built-in button in the car. Three technology companies -- Alibaba Group Holding, Ericsson and Microsoft -- are providing infrastructure support to its vehicles.

More connected

"The car industry is trying to get more connected. The connectivity industry is trying to be mobile," said Alain Visser, Lynk & Co.'s senior vice-president, at a marketing event held by Geely on Thursday.

Visser cited the example of iPhone maker Apple making a foray into the auto industry, but reportedly putting its plans to build cars on hold. "Building a car is not a very easy thing," he said. "The car industry has built expertise on this and adding connectivity to a car is a lot [simpler] than adding mobility to a phone."

Meanwhile, media reports suggest Geely's parent, Zhejiang Geely Holding Group, is seeking to buy a stake in Proton, the loss-making Malaysian carmaker.

The group has been tight-lipped about the potential deal. "The arrangements are still being negotiated, so we cannot comment on that," said Lawrence Ang Siu-lun, executive director of Geely's listed unit in Hong Kong, speaking to investors at the same event.

Ang also made a "disclaimer" that the group was in a blackout period pending the release of annual earnings. "We are not prepared to answer any question related to financials. This is a marketing event."

Proton is owned by DRB-Hicom, a listed-conglomerate controlled by Malaysian tycoon Mokhtar Al-Bukhary. Plagued by growing debts and slumping sales, the carmaker has been seeking a foreign partner as part of the conditions for a $280 million government bailout loan.

French car maker PSA Group, which owns Peugeot and Citroen, confirmed to the media on Tuesday that it submitted a bid. While France's Renault and Japanese carmakers such as Suzuki Motors are reported to be interested parties, it is understood that the former is not in the bidding race.

Proton said last week that it had not decided on the foreign partnership, adding that it would make a decision in the first half of the year. Founded when Mahathir Mohammed was prime minister in the 1980s, Proton was once a dominant player at home and is the only national automaker in Southeast Asia.

Buying a controlling stake in Proton would allow Geely to expand into new markets in Southeast Asia. The region has reduced or eliminated tariffs for cars produced in the 10-country Association of Southeast Asian Nations.

Despite Proton's waning status, its plants, which have capacity to produce 400,000 to 600,000 vehicles annually, are of interest to the Chinese carmaker. Proton also owns British sports-car brand Lotus Cars, which is known for its lightweight platform technology, but it remains unclear if the deal would cover the unit.

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