Ford has to break Lincoln down (again) in order to save it.
As the maker’s dealers were advised during meetings at Ford Motor Co. headquarters this month, Lincoln will be undergoing a massive restructuring. It will be costly and risky and likely will result in a significant shakeup of the brand’s distribution network.
Long one of the dominant forces in the American luxury car market, the Lincoln brand has become increasingly irrelevant in recent years. But after selling off its premium import divisions, including Volvo, Jaguar and Aston Martin, and announcing plans to close the long-moribund Mercury brand, Ford can no longer tolerate a floundering Lincoln.
Rebuilding Lincoln may be a tall order. First, Ford has to squeeze Lincoln into a high-line market dominated by luxury imports. Then it has to see if the brand can compete without breaking out of the North American market.
“We are fully committed to transforming Lincoln into a world-class luxury brand,” Mark Fields, Ford’s president of the Americas, told about 900 of the division’s dealers and their representatives at a meeting in Dearborn, Mich.
That sense of commitment was well received considering the concerns many dealers had following Ford’s decision to abandon Mercury. Long paired with Lincoln, Mercury had become Ford’s forgotten brand, starved of product and unable to present customers with a clear reason to exist. By the time the June decision was made to abandon the marque, sales had plunged from a 1980 peak of 580,000 units to 2009’s 92,000.
Now Lincoln will have to fill up the empty space in showrooms. Ford management has approved plans to roll out seven new or significantly redesigned models over the next four years. The makeover has already begun with the launch of the big new MKT and the upcoming redesign of the smaller MKX.
Unlike the offerings of rivals such as Mercedes-Benz or BMW, the new products won’t be entirely unique, notes Jim Hall, chief analyst with Detroit’s 2953 Analytics. “They’re going to wind up using Ford platforms, and there’s nothing wrong with that. But there will have to be heavy differentiation.”
The current version of the MKZ (base priced at $35,180), Hall says, is an example of what not to do. It’s just “a tarted-up Ford," he said. But the new MKT ($44,995) is another matter entirely. It would take a trained eye to realize it shares a platform with the minivan-like Ford Flex.
Jim Farley, Ford’s global marketing chief agrees. The brand “has to be fully competitive,” he declared during an interview at the Paris Motor Show. And that means “the product has to stand for something that’s worth the premium price.”
The distinctive Sync system, considered perhaps the most customer-friendly, yet expansive, infotainment system on the market, is certainly a plus, the company believes. Internal data suggest that Ford and Lincoln dealers have had significant success winning over skeptical buyers by demonstrating the technology.
But that assumes those customers actually visit a Lincoln showroom, and that is, in itself, a challenge to achieve. Not that it’s impossible, insists Farley. He points to the success of one of Lincoln’s Asian competitors, Nissan.
Nissan’s Infiniti division was long relegated to the second tier of luxury brands. But since the launch of its latest G-Series models it has risen in the ranks. It is a “compelling example,” suggests Farley, that with the right products a brand can “become viable again.”
To support the launch of its newest models and begin what is likely to be a long repositioning process, Lincoln this month introduced an all-new marketing campaign, dubbed “Smarter Than Luxury.” The TV portion of the campaign stars John Slattery, one of the lead actors in the hit AMC series, “Mad Men.”
“Is art imitating life or vice versa?” asks Martin Bernstein, former ad agency owner and now a marketing analyst and columnist. While Bernstein is impressed with the print side of the campaign, he’s a little less certain about the use of celebrities to prop up the needed breakout marketing campaign.
One thing is certain: Virtually every aspect of Lincoln will be transformed, even at the retail level. Dealer were advised Ford plans to eliminate about 175 of its metro market showrooms, or 35 percent of its urban retail ranks. That might sound counterproductive, but Ford President Fields argues it is “necessary to be competitive.”
Imports like Lexus have shown that fewer dealers can be more competitive. They’re less likely to battle one another for customers and more likely to target the competition. And with higher sales per store, they’re likely not only to generate higher profits but also to pump some of that money back into their showrooms, keeping them more modern and attractive.
A question that has repeatedly surfaced at Lincoln over the years is whether the brand needs to finally break out of its home market. Some of the biggest growth in the luxury segment is coming from emerging markets like China.
Lincoln doesn’t even have the modest presence abroad of its crosstown rival, Cadillac. And despite long-running discussions of ways to reach beyond U.S. shores, that isn’t likely to happen soon, cautions Ford’s global design chief, J Mays.
“Lincoln is still five to six years away from launching products that have (global) credibility,” Mays cautioned during a Paris interview. “If and when we launch products that have that credibility maybe then we can have that conversation.”
Analyst Hall agrees that it would be a mistake to start thinking globally. The real challenge will be to simply maintain consistency in the American market. That’s something Lincoln hasn’t been very good at.
The brand has repeatedly changed strategies over the last couple decades. The LS sedan, launched barely a decade ago, was meant to shift the brand towards a more Teutonic model. But then management started to position Lincoln as what they described then as a “blue-collar luxury brand,” a concept that was never clearly defined or executed.
As much as it needs to have a clear definition, warns Hall, what may be even more important is the concept of consistency. “Without consistency, they can’t make Lincoln work long-term.”
He’s confident that will happen under current management. But what about after Ford’s well-regarded CEO Alan Mulally leaves, most likely around 2012 or 2013? That will be the real test of whether Lincoln has staying power.