(Bloomberg) -- Chinese-Swedish automaker Lynk & Co. expects to turn a profit from its European business in about two years as more customers than expected are signing up for its car-subscription offering.
Lynk in June started deliveries to seven European countries including Germany, Sweden and Spain and so far has 29,000 customers -- more than three times this year's target, Chief Executive Officer Alain Visser said in an interview. About 95% of them are choosing to subscribe rather than buy a vehicle.
“The concept of owning a car will continue to exist, but it'll shrink significantly,” Visser said at the opening of Lynk's lounge-style customer club in Munich. “Service providers will be the brands that deliver mobility, and the industry will be the suppliers.”
Lynk, created five years ago by Geely Auto and Volvo Car AB -- two carmakers owned by China's Zhejiang Geely Holding Group Co. -- offers customers in Europe the option to rent vehicles for 500 euros ($578) a month. The subscription, which can be canceled on a monthly basis, covers 1,250 kilometers (776 miles) of driving as well as maintenance, insurance and taxes.
Subscription-based auto offerings have struggled to turn a profit and several carmakers have abandoned their services, even as drivers welcome more flexibility. Car-sharing, while popular, has also fallen short on producing attractive returns, and operators have quit a number of unprofitable locations.
MORE: Lynk Targets 1 Million Car Sales in Asia, Mideast Push
In China, Lynk is following the more traditional route of selling cars. The company plans to expand into other Asian countries and the Middle East to lift deliveries to 1 million vehicles in the next two years. Lynk has sold about 570,000 cars through September.
The company two months ago added a new app in Belgium to allow a subscription to be split between family and friends, or for a member to rent their car out at an hourly or daily rate to make money on the side. The option will soon be rolled out in Germany, Visser said.
“We want to be like Netflix, where we're a service provider but we also make our own products,” he said.
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