WSJ: Putting the Luxe Back in Lincoln
#1
Guest
Posts: n/a
WSJ: Putting the Luxe Back in Lincoln
Just now reading the WSJ and saw this....
http://online.wsj.com/article/SB1000...962482272.html
Putting the Luxe Back in Lincoln
With Mercury Folding, Dealers Need an Upscale Brand With a Strong Image—Beyond an Airport Car
By MATTHEW DOLAN
For 10 years Ronnie Lohr was a steady buyer of luxury cars. But when it came time to replace his Infiniti earlier this year the 66-year-old retired marketing executive drove off in a Ford Taurus instead. For Ford Motor Co., Mr. Lohr's choice was a nice win. But it illustrates a problem the company faces as it adds more attractive and upscale models to its Ford brand: Its own luxury line, Lincoln, is floundering.
Lincoln generated as much as $2.5 billion in annual gross profit in the late 1990s, driven by its Town Car and Navigator sport-utility vehicle, said a person familiar with the matter. In 1998, it was the top-selling luxury brand in the U.S., and sales topped 193,000 cars in 2000.
How far it has fallen. In 2009, Lincoln sold just 82,847 vehicles. So far this year the brand has slipped to the No. 8 spot among upscale makes, behind such names as Lexus, BMW, Mercedes-Benz and Detroit rival Cadillac. Ford doesn't disclose whether Lincoln is profitable.
Turning around Lincoln is critical for Ford. The company, burdened by about $31 billion in debt, could use the outsize profits luxury cars typically generate.
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Lincoln's importance is further magnified now that Ford has decided to kill off Mercury, the 71-year-old nameplate whose sales have been dwindling for years. Earlier this month, Ford said it would stop making Mercurys by year's end. Since Lincoln and Mercury are usually sold by the same dealers, these franchisees could struggle if Lincoln doesn't bounce back.
With Mercury gone, Ford could put more resources into Lincoln—and indeed, it probably will have to if it aims to rejuvenate a brand whose marque has little resonance among younger car buyers. Lincoln's popularity has been sliding precipitously for a decade.
Among many luxury-car shoppers Lincoln isn't even a contender. Most of these people never even look at comparable Lincolns, according to data from Edmunds.com, a car-shopping website.
Carving out an identity for Lincoln against upscale rivals won't be easy—especially if Ford-brand models start stealing the same customers.
Mr. Lohr, who lives in Houston, said he didn't even consider Lincoln when he went car shopping. "They always seemed like a big boat with loose handling," he said.
But he was taken by the look and amenities of the redesigned Taurus. The Ford Mr. Lohr took home sports pearl-white paint, a leather interior and 19-inch wheels—features that once would have been more common in Lincolns than Fords. But at $26,700, the Taurus was about $15,000 less than the Lincoln MKS, a sedan based on the same underpinnings and many of the same parts as the Taurus.
Ford Motor is widely viewed as a turnaround story. It made money in 2009 while General Motors Co. and Chrysler Group LLCfiled for bankruptcy, and it earned $2 billion in the year's first quarter.
Under Chief Executive Alan Mulally, Ford sold off niche brands Land Rover, Jaguar, Volvo and Aston Martin to free up resources to rebuild the Ford division.
Phasing out Mercury is a further step in Mr. Mullaly's "One Ford" strategy.
[LINCOLN]
For the first five months of the year, Ford-brand sales rose 34% over the same period last year. But Lincoln remained sluggish, up only 11.5%. And the gains at Lincoln have a retro feel: Sales of its aging and soon-to-be-discontinued Town Car were up 17% while the newer MKS sedan slid almost 7%.
One problem with Lincoln is its aging audience. The average age of a Lincoln buyer is 64, compared with 52 at BMW, 56 at Mercedes-Benz and 58 at Lexus, according to J.D. Power and Associates.
Another is that Lincoln owners aren't very loyal. Just 40% of Lincoln owners turn in their vehicle for another Lincoln, compared with 52% for BMW, 57% for Lexus and 66% for Mercedes, according to a 2009 J.D. Power study.
Then there's the issue of Ford cannibalizing Lincoln. In May, 20% of buyers who traded in a Lincoln bought a Ford, up from 14% in May 2005, according to Edmunds.com.
In a recent interview, Ford Executive Chairman Bill Ford said he isn't overly concerned about the issue, saying he'd rather have the sales one way or another.
Mr. Ford added that Lincoln will focus on the performance of its vehicles, but declined to talk about new models in the works, including whether Lincoln would introduce a rear-wheel drive model, which many customers say is needed to provide true luxury-car ride.
Lincoln dealers say Ford needs to do much more to revive the nameplate.
"The recent Lincoln products are very nice, but there isn't much evidence that they have cut through the clutter," said Earl J. Hesterberg, chief executive of Group 1 Automotive Inc., a major dealer network whose operations include Lincoln stores.
Journal Community
—Henry Grimmelsman
Mr. Hesterberg said Lincoln needs a flagship sedan, preferably with rear-wheel drive, that has features that aren't found in Fords. "I don't have a good understanding of what the key reason is to buy a Lincoln," he said.
Ford is promising seven new or significantly improved Lincolns in the next four years, including a small luxury car and new MKZ midsize sedan. But it's unclear how deep the commitment to U.S.-dominated Lincoln runs at an increasingly global, one-brand Ford.
In the last few years, Ford gave Lincoln models a bold new look as well as new three-letter names, all beginning with MK. But the brand was without its own marketing manager for more than a year as sales slid.
At the core of Lincoln's problem has been the lack of brand identity. "The big question was how do we invest in the primary brand and build pride so that people say 'I drive a Lincoln' as opposed to 'I drive a Navigator,'" one former company insider said.
IHS Automotive analyst Rebecca Lindland said another issue is many consumers associate Lincoln with the big. wallowing Town Car.
"That's the car that brings you to the airport, that's the car that you rent for prom night," she said. "It's a bad thing in that consumers don't see it as an aspirational vehicle."
With Mercury Folding, Dealers Need an Upscale Brand With a Strong Image—Beyond an Airport Car
By MATTHEW DOLAN
For 10 years Ronnie Lohr was a steady buyer of luxury cars. But when it came time to replace his Infiniti earlier this year the 66-year-old retired marketing executive drove off in a Ford Taurus instead. For Ford Motor Co., Mr. Lohr's choice was a nice win. But it illustrates a problem the company faces as it adds more attractive and upscale models to its Ford brand: Its own luxury line, Lincoln, is floundering.
Lincoln generated as much as $2.5 billion in annual gross profit in the late 1990s, driven by its Town Car and Navigator sport-utility vehicle, said a person familiar with the matter. In 1998, it was the top-selling luxury brand in the U.S., and sales topped 193,000 cars in 2000.
How far it has fallen. In 2009, Lincoln sold just 82,847 vehicles. So far this year the brand has slipped to the No. 8 spot among upscale makes, behind such names as Lexus, BMW, Mercedes-Benz and Detroit rival Cadillac. Ford doesn't disclose whether Lincoln is profitable.
Turning around Lincoln is critical for Ford. The company, burdened by about $31 billion in debt, could use the outsize profits luxury cars typically generate.
View Full Image
Lincoln's importance is further magnified now that Ford has decided to kill off Mercury, the 71-year-old nameplate whose sales have been dwindling for years. Earlier this month, Ford said it would stop making Mercurys by year's end. Since Lincoln and Mercury are usually sold by the same dealers, these franchisees could struggle if Lincoln doesn't bounce back.
With Mercury gone, Ford could put more resources into Lincoln—and indeed, it probably will have to if it aims to rejuvenate a brand whose marque has little resonance among younger car buyers. Lincoln's popularity has been sliding precipitously for a decade.
Among many luxury-car shoppers Lincoln isn't even a contender. Most of these people never even look at comparable Lincolns, according to data from Edmunds.com, a car-shopping website.
Carving out an identity for Lincoln against upscale rivals won't be easy—especially if Ford-brand models start stealing the same customers.
Mr. Lohr, who lives in Houston, said he didn't even consider Lincoln when he went car shopping. "They always seemed like a big boat with loose handling," he said.
But he was taken by the look and amenities of the redesigned Taurus. The Ford Mr. Lohr took home sports pearl-white paint, a leather interior and 19-inch wheels—features that once would have been more common in Lincolns than Fords. But at $26,700, the Taurus was about $15,000 less than the Lincoln MKS, a sedan based on the same underpinnings and many of the same parts as the Taurus.
Ford Motor is widely viewed as a turnaround story. It made money in 2009 while General Motors Co. and Chrysler Group LLCfiled for bankruptcy, and it earned $2 billion in the year's first quarter.
Under Chief Executive Alan Mulally, Ford sold off niche brands Land Rover, Jaguar, Volvo and Aston Martin to free up resources to rebuild the Ford division.
Phasing out Mercury is a further step in Mr. Mullaly's "One Ford" strategy.
[LINCOLN]
For the first five months of the year, Ford-brand sales rose 34% over the same period last year. But Lincoln remained sluggish, up only 11.5%. And the gains at Lincoln have a retro feel: Sales of its aging and soon-to-be-discontinued Town Car were up 17% while the newer MKS sedan slid almost 7%.
One problem with Lincoln is its aging audience. The average age of a Lincoln buyer is 64, compared with 52 at BMW, 56 at Mercedes-Benz and 58 at Lexus, according to J.D. Power and Associates.
Another is that Lincoln owners aren't very loyal. Just 40% of Lincoln owners turn in their vehicle for another Lincoln, compared with 52% for BMW, 57% for Lexus and 66% for Mercedes, according to a 2009 J.D. Power study.
Then there's the issue of Ford cannibalizing Lincoln. In May, 20% of buyers who traded in a Lincoln bought a Ford, up from 14% in May 2005, according to Edmunds.com.
In a recent interview, Ford Executive Chairman Bill Ford said he isn't overly concerned about the issue, saying he'd rather have the sales one way or another.
Mr. Ford added that Lincoln will focus on the performance of its vehicles, but declined to talk about new models in the works, including whether Lincoln would introduce a rear-wheel drive model, which many customers say is needed to provide true luxury-car ride.
Lincoln dealers say Ford needs to do much more to revive the nameplate.
"The recent Lincoln products are very nice, but there isn't much evidence that they have cut through the clutter," said Earl J. Hesterberg, chief executive of Group 1 Automotive Inc., a major dealer network whose operations include Lincoln stores.
Journal Community
—Henry Grimmelsman
Mr. Hesterberg said Lincoln needs a flagship sedan, preferably with rear-wheel drive, that has features that aren't found in Fords. "I don't have a good understanding of what the key reason is to buy a Lincoln," he said.
Ford is promising seven new or significantly improved Lincolns in the next four years, including a small luxury car and new MKZ midsize sedan. But it's unclear how deep the commitment to U.S.-dominated Lincoln runs at an increasingly global, one-brand Ford.
In the last few years, Ford gave Lincoln models a bold new look as well as new three-letter names, all beginning with MK. But the brand was without its own marketing manager for more than a year as sales slid.
At the core of Lincoln's problem has been the lack of brand identity. "The big question was how do we invest in the primary brand and build pride so that people say 'I drive a Lincoln' as opposed to 'I drive a Navigator,'" one former company insider said.
IHS Automotive analyst Rebecca Lindland said another issue is many consumers associate Lincoln with the big. wallowing Town Car.
"That's the car that brings you to the airport, that's the car that you rent for prom night," she said. "It's a bad thing in that consumers don't see it as an aspirational vehicle."
#2
Lexus Champion
I was driving home today and saw one of those Lincoln Mark LT trucks in front of me and all I could think was.....who's the sucker that bought the rebadged F150?
There currently isn't a Lincoln vehicle that even gets my attention anymore. The last one that had any appeal for me was the old Mark VIII.
There currently isn't a Lincoln vehicle that even gets my attention anymore. The last one that had any appeal for me was the old Mark VIII.
#3
Cycle Savant
iTrader: (5)
I always wondered what was Lincoln's forte.
It was undefined. Like the image and idea were lost. Yes, it had luxury amenities, but it didn't have stature.
And does anyone really talk about Lincoln's past and present glory? We all talk about BMW and Mercedes' heritages, and even Lexus' 20-year impact; but never Lincoln's decades-old brand status.
It's as if no one wants to talk about Lincoln...
It was undefined. Like the image and idea were lost. Yes, it had luxury amenities, but it didn't have stature.
And does anyone really talk about Lincoln's past and present glory? We all talk about BMW and Mercedes' heritages, and even Lexus' 20-year impact; but never Lincoln's decades-old brand status.
It's as if no one wants to talk about Lincoln...
#4
Royale with cheese
iTrader: (3)
I was driving home today and saw one of those Lincoln Mark LT trucks in front of me and all I could think was.....who's the sucker that bought the rebadged F150?
There currently isn't a Lincoln vehicle that even gets my attention anymore. The last one that had any appeal for me was the old Mark VIII.
There currently isn't a Lincoln vehicle that even gets my attention anymore. The last one that had any appeal for me was the old Mark VIII.
#6
Lexus Test Driver
I was driving home today and saw one of those Lincoln Mark LT trucks in front of me and all I could think was.....who's the sucker that bought the rebadged F150?
There currently isn't a Lincoln vehicle that even gets my attention anymore. The last one that had any appeal for me was the old Mark VIII.
There currently isn't a Lincoln vehicle that even gets my attention anymore. The last one that had any appeal for me was the old Mark VIII.
#7
Lexus Fanatic
There currently isn't a Lincoln vehicle that even gets my attention anymore. The last one that had any appeal for me was the old Mark VIII.
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#8
Lexus Fanatic
One problem with Lincoln is its aging audience. The average age of a Lincoln buyer is 64, compared with 52 at BMW, 56 at Mercedes-Benz and 58 at Lexus, according to J.D. Power and Associates.
#9
Guest
Posts: n/a
I don't think there is anything inherently bad or wrong with Lincolns but as the article mentioned they have no idea what they are and what they want to be and they simply are not on many peoples radar.
They BLEW the Navigator. The Navigator was THE SUV back in the day but they didn't update it accordingly and the 2nd gen looked just like the first.
In comparison Cadillac really upgraded the Escalade every generation and the Navigator became the afterthought.
Brands also have GOT TO REALIZE the importance of a good name. Lincoln named the entry level car Zephyer for ONE YEAR and then wham, its a MKZ. Bring the damn names back!
I hope Ford invests appropriately in Lincoln. Nothing wrong with some "American luxury"
They BLEW the Navigator. The Navigator was THE SUV back in the day but they didn't update it accordingly and the 2nd gen looked just like the first.
In comparison Cadillac really upgraded the Escalade every generation and the Navigator became the afterthought.
Brands also have GOT TO REALIZE the importance of a good name. Lincoln named the entry level car Zephyer for ONE YEAR and then wham, its a MKZ. Bring the damn names back!
I hope Ford invests appropriately in Lincoln. Nothing wrong with some "American luxury"
#10
Lexus Fanatic
They BLEW the Navigator. The Navigator was THE SUV back in the day but they didn't update it accordingly and the 2nd gen looked just like the first. In comparison Cadillac really upgraded the Escalade every generation and the Navigator became the afterthought.
Brands also have GOT TO REALIZE the importance of a good name. Lincoln named the entry level car Zephyer for ONE YEAR and then wham, its a MKZ. Bring the damn names back!
I hope Ford invests appropriately in Lincoln. Nothing wrong with some "American luxury"
If I was running Lincoln right now, the VERY first thing on my list (besides scrapping the letter-names), would be to redesign the front and rear styling of the MKT. It's a good vehicle, but I think the frumpy styling is definitely turning some people off. When I reviewed the MKT a few months ago, I placed both the front and rear styling (though, of course, subjective), high up in my negative comments. The front end looks like a grinning teen-ager showing off a set of new tooth-braces, and the rear looks like a PT Cruiser with belt-tailights.
#11
Lexus Fanatic
I won't get into the stereotypes of Navigator buyers (because a vast majority of Navigator owners don't fit the stereotypes), but Lincoln has a lot of work to be done in order to be considered a competitive luxury vehicle.
Agreed the model number scheme is unusually bad (certainly far worse than Lexus, Mercedes, BMW, Audi to name a few). Nobody knows or even cares what Mxx Lincoln model is what.
Agreed the model number scheme is unusually bad (certainly far worse than Lexus, Mercedes, BMW, Audi to name a few). Nobody knows or even cares what Mxx Lincoln model is what.
#12
Lexus Fanatic
Agreed the model number scheme is unusually bad (certainly far worse than Lexus, Mercedes, BMW, Audi to name a few). Nobody knows or even cares what Mxx Lincoln model is what.
What is interesting, at least in my view, is that Lincoln first departed from the traditional-name policy with the 1999 LS, which was a nice car, but not a huge sales success. Yet, they seem to be sticking to (or converting) more and more to that system, even though it didn't work particularly well with the LS.
#13
Lexus Fanatic
Agreed to some extent, but, stereotypes or not, Cadillac was concerned enough with the 1Gen Navigator's initial success that, in the late 1990's, they hirriedly pushed through a rather hastily-designed 1Gen Escalade off the Chevy Tahoe platform (the longer, Suburban-sized Escalade wouldn't come till later). It was a rushed design, and it showed. As Mike (1SICKLEX) pointed out, and I agree, the real Escalade would not arrive till the 2Gen model, and the redesigned interiors of 2007. The Navigator, by this time, had been redesigned, with a much better (and more Lincoln-like) interior as well.
And Lincoln and Cadillac know the key to these divisions being successful in 2010 and beyond will no longer be dependent on these outdated trucks.
#14
Lexus Champion
Totally agree. The letter/number game is absurd.....with Lincoln's and Acura's being some of the most confusing of all.
Last edited by tex2670; 06-29-10 at 10:10 AM.
#15
Lexus Fanatic
And Lincoln and Cadillac know the key to these divisions being successful in 2010 and beyond will no longer be dependent on these outdated trucks.
Last edited by mmarshall; 06-29-10 at 10:19 AM.