Lincoln is not pinning its revival on a new flagship sedan but expanding its lineup to include its smallest vehicle to date, the MKC compact crossover.
The strategy flaunts what used to be conventional wisdom for a luxury brand: Impress the world with a big car dripping with features and amenities and then leverage that splash to sell smaller, more affordable vehicles.
With the MKC launch, Lincoln is hoping to wrangle some market share in the hot-selling small SUV crossover market. The new crossover will be the best deal in its segment with a starting price of $33,995, including the $895 destination charge.
"MKC was a big decision for the company because conventional wisdom says you build imagery by your most expensive cars but that's not the reality in the luxury industry anymore," said Jim Farley, Ford's head of Lincoln as well as global sales and marketing. "What luxury customers look for, and the essence of your brand, is your most affordable products."
After a lackluster re-introduction of Lincoln last year as Ford's only luxury brand, the automaker is not giving up as it tweaks conventional relaunch wisdom. Along that vein, Lincoln continues its rebirth by concentrating on smaller vehicles and saving the next generation of its full-size sedan, the MKS, and also its larger SUVs -- MKT and Navigator -- for later.
Farley said there was a discussion by the leadership team about the small crossover MKC and whether it should be the second vehicle in the new lineup. "Boy I'm glad we made that decision because it's really allowed us to get new customers in the showroom." And industry growth, globally, is in smaller vehicles.
Mike Bernacchi, marketing professor at University of Detroit Mercy, said there is a danger in not starting a brand revamp with the flagship sedan or something customers recognize from Lincoln's storied past -- MKZ and MKC are not household names while the defunct Town Car and Continental are. It might feel confusing with the various letter designations, but Lincoln is following a new-ish industry trend of using letters and numbers for luxury brands instead of names.
Matt VanDyke, director of Global Lincoln, disagrees. "The MKZ was a great start in building the brand. The MKC shows our interpretation of developing the brand. These choices demonstrate a big step forward in what we have to do to establish Lincoln."
Cash flow is key
There are practical reasons for the strategy as well.
Fixing Lincoln is a multiyear investment and high-volume models, like a small crossover, are needed to limit the number of years of operating losses, said New Jersey analyst Joe Phillippi of AutoTrends Consulting. Top-end sedans may be splashy and loaded with expensive technology but they sell in lower volumes. It's easier to persuade the board to OK an expensive vehicle after first generating cash flow from the rest of the lineup.
And time will also help memories of the Town Car and Continental fade from the public's memory, making them more receptive to a new MKS flagship when it is introduced down the road, Phillippi said.
Lincoln is years from recovery, but Ford's only luxury brand is approaching a 100,000 annual sales running rate in the U.S, Farley said. "That's a big milestone for us in the U.S. with one new product."
"MKC will add a lot of vibrancy to our showroom," Farley said, and a new nameplate means incremental sales.
'A blank sheet'
Importantly, the MKC will go on sale in China when Lincoln enters that market for the first time this fall with a starting lineup that also includes the MKZ and Navigator, with the MKX and MKS expected to follow in subsequent years. The MKC will also be exported from the Louisville, Ky., plant to South Korea and Middle East later this year. There are no plans to sell Lincolns in Europe.
"China's a blank sheet of paper," VanDyke said, with profound potential for growth.
Lincoln is starting with eight dealers in seven cities with plans to add 12 next year and a goal of 60 in 50 cities by 2016.
Farley said China could become a larger market for MKC than the U.S. once a full dealership network is in place.
China's luxury segment used to be big vehicles "but boy has that changed in the last year and the MKC segment is really coming to life in volume," Farley said.
In the U.S., the new MKC went on sale last month. Digital and social media advertising is under way with a full ad campaign to start in September.
Dedicated design effort
The MKC is the first product completely developed in Ford's new dedicated design center where about 150 people worked on the interior and exterior, said Soo Kang, Lincoln interior design chief.
The crossover shares underpinnings with the Ford Escape but is wider and lower and the cabin adopts a less-is-more philosophy, combining wood with bright touches for contrast, Kang said. Efforts to present a clean and spacious cabin are helped by the push-button gearshift that has become a Lincoln signature and frees up space for storage.
Models for China will have bolder interiors -- no light colors that will soil with pollution -- and the mandatory ashtray, Kang said.
Kang said 85% of visible parts are unique to the MKC and 65% of all parts are different from ones used in the Escape.
Chief engineer John Jraiche said there is a choice of a 2-liter 4-cylinder engine or the new twin scroll turbocharged 2.3-liter EcoBoost with all-wheel drive. Lincoln Drive Control adjusts the ride control and suspension for comfort or sport mode. The larger brakes are unique to the MKC.
There's a lot of luxury and advanced features including park assist and exterior lighting that guides customers to their car in the dark. There's an eye-catching wraparound liftgate with 150 LED lights and acoustic laminated glass that creates a quiet cabin to enjoy the THX audio system.
The vehicle was designed to appeal to empty-nesters and young families.
"There are more luxury vehicles than ever before so the space is crowded," Bernacchi said.
But Lincoln needs a full lineup with a small crossover and a competitive large sedan, Bernacchi said, or the competition will pass it by.
"It's a dogfight."
Original headline: Lincoln's big-volume strategy to start small with new MKC crossover
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