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China SUV maker seeks auto leasing partnership in Europe

2019-06-17 14:47 Monday


Chinese electric-vehicle startup Aiways is planning to bring its latest model of smart SUV to Europe, to tap into the continent’s growing demand for larger, eco-friendly offerings at a competitive price point.

China’s automakers are keenly aware of the potential to expand beyond their home market. While they have made some progress in Southeast Asia and Africa, they have had virtually no success in developed markets like the U.S. and Europe so far.

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That is not stopping Aiways from trying. From its base in Shanghai, the four-year-old company recently told reporters it plans to offer its flagship car in Germany, France, Switzerland, Norway, and the Netherlands in 2020. If all goes to plan, Aiways will become the first Chinese-brand EV offered in Europe.

The company’s strategy involves bypassing dealerships and offering consumers direct online sales routes and innovative leasing options. That will help it reduce costs and compete with traditional SUV offerings, Alexander Klose, vice president for overseas operation, said.

The U5 is slated to be priced at less than €40,000 (US$44,700) when it is released.

Aiways’ vehicle leasing partner of choice, Vehiculum was founded in 2015 in Berlin. Initially its services were only available for business customers, but the company has plans to expand its platform to private customers as an alternative to other forms of auto financing.

Vehiculum has made leasing easier by simplifying the process online. In addition to digitalizing the vehicle leasing ecosystem, it already lets users choose from a large selection of cars from various makers such as Porsche, BMW, Audi, Mercedes Benz and Mini.

In 2017, Vehiculum also launched a free fleet management tool for SMEs.

Klose did not indicate how much it would cost to hire the U5, but he said agreements would be a minimum of one year. By contrast, Lynk & Co branded vehicles, made by Chinese carmaker Geely, will be offered in Europe next year via a subscription that can be renewed monthly.

Aiways’s timeline is ambitious. Due to official restrictions in China, the company only recently secured a license to manufacture autos. It is partnering with Chinese automaker Jiangling Motors, to start mass-producing the U5 in September, just 8 months before it wants to deliver the model to the West, where different safety standards are rigorously implemented.

Any delay would not be a surprise: China’s BYD, the world’s biggest EV maker, has already postponed its plans to sell electric cars in the States at least 3 times.

Success is far from guaranteed, by any means. “Chinese automakers have attempted many different methods to enter overseas markets,” says Quin Garcia, managing director at San Francisco-based Autotech Ventures. “The fundamental question I would ask is, ‘What would cause a European consumer to choose the Chinese Aiways vehicles over other vehicle offerings available to these consumers in the European market?'”

China, for all its ambition in the automotive sector, exported only around 760,000 passenger cars in 2018.

Meanwhile, vehicle sales in China contracted last year for the first time in 2 decades, a decline that is likely to continue amid an economic slowdown and the trade war with the U.S. Of course, that gives Chinese carmakers all the more motivation to gain ground in overseas markets. Great Wall Motors plans to boost its exports to Russia, South Africa and Chile by a third this year.

Electric vehicles remain a beacon of light for China’s auto industry. Even amid 2018’s slowdown, EV sales continued to go up. The government and the Ministry of Commerce (MOFCOM) sees electrics as a way for Chinese automakers to gain a foothold in developed markets. And with tensions clouding prospects in the US, Europe appears to be a more promising destination for now.

How well Aiways performs there will be closely watched by industry insiders.

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