Image: Lincoln MKZ Hybrid
Stan Honda  /  AFP - Getty Images
The Lincoln MKZ Hybrid on display at the New York International Auto Show on March 31 in New York. Ford's upscale ambitions are riding on Lincoln.
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updated 5/11/2010 5:57:50 PM ET 2010-05-11T21:57:50

Business is booming in Jack Kain's Ford dealership in London, Ky. Not so much, though, at his Lincoln showroom, where new models like the hulking MKT wagon go begging for buyers. "It would be very, very tough for us to make it if we just had Lincoln," says Kain, who owns two Ford stores and one Lincoln outlet in Kentucky horse country.

Ford is on a roll, as mainstream car buyers embrace the American brand that didn't go bankrupt. Now that Chief Executive Officer Alan Mulally is unloading Volvo, however, Ford's upscale ambitions are riding on Lincoln. Sales at the unit are down 64% from its 1990 peak and buyers average an industry-high age of 62, according to J.D. Power and Associates. "To younger generations, that's grandpa's car," says auto analyst Jesse Toprak of researcher TrueCar, "That doesn't help when you're going up against Mercedes and BMW."

Ford is trying to give Lincoln a hip implant. It's outfitted four new models with more-dramatic design and installed high-tech features including a voice-activated phone and entertainment system. To boost sales, Ford last week gave Lincoln its own marketing manager for the first time in nearly two years.

The new look isn't helping much. Lincoln's U.S. market share is stuck at a paltry 0.8% this year, while the Ford nameplate grew at its fastest rate since 1977. Lincoln isn't even outselling the Mercury brand, which Ford is starving of new models and marketing. Lincoln is still defined by the black Town Car that has ferried generations of business travelers to the airport, says analyst John Wolkonowicz of IHS Global Insight. "Ford doesn't have a true luxury brand anymore," he says. "All the Lincolns are nothing more than gussied-up Fords."

Ford long ignored Lincoln, in part because over the last two decades it bought a stable of European luxury brands that seemed to hold more potential: Jaguar, Land Rover, Aston Martin, and Volvo. But shortly after arriving from Boeing in late 2006, Mulally began dismantling what he called Ford's "house of brands," selling off the European lines at fire sale prices. The idea was to first fix its largest franchise, the middle-market Ford brand, which had become so dependent on sales of big SUVs and pickup trucks that the automaker lost $30 billion from 2006 through 2008. Lincoln, whose models are based on Ford's mechanical platforms and built in Ford plants, would be kept and fixed later.

Lincoln is sold only in North America. That leaves Ford at a disadvantage to other major automakers, which take luxury lines global as a source of prestige — those of mainstream models. That's why Germany's Volkswagen sells Audi cars worldwide and Japan's Toyota has built Lexus into the top-selling U.S. premium line. Even post-bankruptcy General Motors is making a renewed push into Europe, Russia, and China with Cadillac.

Taking a luxury brand abroad also lets automakers tap faster-growing foreign markets. That's why TrueCar's Toprak thinks Ford is "leaving money on the table" by not taking Lincoln overseas. "They really need a global luxury brand because 80% of the growth in vehicle sales in the next five years will come from outside the U.S.," he says.

Still, Ford thinks it has good reason to keep Lincoln at home: "Our track record operating global premium brands has not been stellar," says Chief Financial Officer Lewis Booth.

Ford is retiring the Town Car next year and launching new models aimed at younger buyers like the MKX sport wagon this summer. It's infusing Lincoln advertising with Gen X-friendly music from the 1980s. And Lincoln dealers are being trained to offer the high-touch service given by some European manufacturers, said Jim Farley, Ford's global marketing chief and former head of Lexus. "There's a tremendous opportunity here in North America to get Lincoln right," he says.

Copyright © 2012 Bloomberg L.P.All rights reserved.

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