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Lincoln Unveils MKC, Keeps Eye on China

Jan. 14, 2013

Lincoln vehicles should be popular in China and all Lincoln products have been developed with that huge potential market in mind, said Jim Farley, head of the Lincoln brand as well as the Ford leader for global sales and marketing.

"We can launch the brand from scratch," Farley said, an opportunity filled with both promise and challenges.

China's consumers love American culture, but as a new challenger brand, Lincoln and its dealers must also work to educate them about the brand's rich heritage, Farley said in interviews following Monday's unveiling of the Lincoln MKC compact crossover at the North American International Auto Show. The MKC will go on sale in the U.S. next year.

Vehicles for China need large and well-appointed back seats. Farley wouldn't say if the cars will be stretched to provide more room in back.

But the real dilemma is the front end. In China, the tastes are very different.

"We've done our homework to understand the cultural reasons for the difference," Farley said.

Chinese customers like large, vertical headlights, while the West, and Ford in particular with its new design, is going towards smaller, sleeker, horizontal headlights. Cars in China also have big, bold grilles with lots of chrome.

In the U.S., Farley thinks the new MKC compact crossover is a strong bet because it is such a vibrant new segment without dominant players. Had Lincoln chose to do a small sedan instead, he does not think there would be as much growth potential.

And small luxury crossovers are high image vehicles, Farley said. "It's a moment where (customers) can switch brands because it's new," Farley said, noting midsize crossovers have gotten larger, leaving more room for vehicles positioned below them.

The revival of the Lincoln brand is taking a major step with the unveiling of the MKC crossover, the smallest vehicle to ever carry the Lincoln name, but a large piece of Ford's strategy to return its remaining luxury brand to prominence.

The task will take years and cost billions, and it runs the risk of proving as ineffective as previous attempts.

But the top of the Glass House is undeterred.

Before joining Ford Motor Co. in 2006, CEO Alan Mulally thought of Lincoln as an storied American brand. "I had a wonderful impression of Lincoln," Mulally told the Detroit Free Press last week in an exclusive interview. "When I got to Ford, I wondered where Lincoln was."

Named for America's beloved 16th president, Lincoln has slipped from the nation's leading luxury brand in 1990, with sales of 231,660, to near-extinction. Lincoln ended 2012 with sales of 82,150, a 4 percent drop when luxury car sales industrywide rose nearly 12 percent.

Today, Lincoln's U.S. sales rank last of eight luxury brands. Restoring Lincoln was quickly added to Mulally's to-do list early in his tenure. But reviving Lincoln kept getting pushed farther down the list by more urgent matters, such as borrowing nearly $24 billion to ensure the company's survival during the financial crisis.

"When I arrived in 2006, the first profit forecast I saw was a $17 billion loss, and we achieved it," Mulally said.

He decided quickly that Ford, which in the late 1990s went on a luxury-carmaker buying spree, could not continue to be a house of many brands. With Ford and Lincoln accounting for 85 percent of business, the decision was to invest in them and divest the rest, including Jaguar, Aston Martin, Land Rover and Volvo.

Job 1 was fixing the Ford brand. The second act is reinvigorating Lincoln. Mulally and Farley insist the focus truly is on the luxury brand now.

It's no accident that the first two products of what Lincoln says will be four all-new vehicles in the next four years are a midsize sedan -- the MKZ -- and the compact crossover MKC. The growth in the luxury market is fueled by younger buyers looking for smaller, fuel-efficient and affordable status symbols.

The MKC won't go on sale until 2014, but the concept car shown Monday is very close to the production car.

"We're setting ourselves up for a really nice opportunity to grow in the next 24 months with these two vehicles," Farley said last week.

Most of the Lincoln's anticipated 18 percent growth this year will come from the MKZ, which is rolling into showrooms now.

The MKZ generated 1,000 orders before it was shipped -- the strongest pre-sale demand ever for a Lincoln, said Matt VanDyke, director of global Lincoln marketing. Mulally and Farley hope the MKC will stop cynical critics from asking when Ford will ax Lincoln.

"The next four, five years are the most critical first step," Farley said. Resale values for the current lineup are in the 50 percent range, global platforms are in place for future products, and dealers have been trained to pamper their customers with the same zeal shown by BMW, Mercedes-Benz and Lexus.

Here are reasons why this time may be different:

--Ford is taking its luxury brand back to its roots and original name: Lincoln Motor Co. A new advertising campaign touts its heritage and reinforces independence from the Ford brand.

--Lincoln is shooting a Super Bowl ad. The last time any Ford brand advertised during the big game was in 2006, the year the company posted a record $12.6 billion loss.

--Lincoln's promise of seven new or upgraded models by 2014, including four all-new vehicles over four years: the MKZ, MKX, MKS and new MKC. Lincoln goes on sale in China beginning in the second half of 2014. A dealer network is being established now.

--The U.S. dealer network in the top 130 metro markets was pared to 300, and dealers are committed to personalized, concierge-like service.

"People will always question the decision to continue Lincoln," said Rebecca Lindland, HIS Automotive director of auto industry for the Americas. "But the constant question about Ford's commitment to the brand may be answered."

Re-animating a languishing brand is a huge challenge.

General Motors set about reinventing Cadillac a decade ago when Mercedes-Benz and BMW were not as entrenched in the U.S. Despite major improvements throughout its lineup, Cadillac still ranks fifth among luxury brands in the U.S.

Mulally said starting in today's tougher climate is not a big factor because Lincoln has modest goals. He recognizes even moderate success will take time. Farley said the goal is bringing luxury to all Americans, rather than catching up with the Germans.

"We're not interested in being an elitist brand," he said. "Lincoln is not pretending to go head-to-head with the established German brands.

"Their expectations are realistic," Lindland said. "They are not trying to be all things to all people. They are more surgical in their approach."

But even a measured approach costs billions, she notes. Lincoln can afford to be patient. It is profitable today, even on modest sales. Farley said Ford's mainstream brand has attracted many new customers in the past five years. As they get older and the economy grows stronger, they will be looking for more upscale transportation.

Founder Henry Ford once said, "You can't build your reputation with people by telling them what you're going to do." Like the company founder, Mulally said he will let new vehicles like the MKC do the talking.

"When they see the MKC," said Mulally, "they're going to go, 'Whoa.' Ford really has a better idea about Lincoln."



Source: (c)2013 Detroit Free Press Distributed by MCT Information Services


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