It’s taken awhile, but it appears Alan Mulally finally may have completed a long-coming 180-degree turn on Lincoln.
And not a moment too soon.
Back in the depths of the recession, when only the auto maker’s timely all-in mortgage saved it from the same government-bailout fate suffered by General Motors and Chrysler, the newly arrived CEO reportedly was in favor of shutting down the Lincoln brand.
Ford was selling off its other luxury marques, Jaguar, Land Rover, Volvo and Aston Martin, as part of a play to zero in on its core Ford brand, and insiders were having a hard time convincing Mulally Lincoln was worth keeping.
Lincoln’s companion near-luxury brand, Mercury, gradually was being strangled out of existence, and Ford’s top executive made sure to complete the job. And even though Lincoln itself had been spared, it appeared headed down the same slow-death path, with an anemic product line and a game plan that called for North American-only sales.
But today, Mulally reversed his position on global expansion, announcing Lincoln would land in China in second-half 2014, signaling Ford may be ready to bet some money on the brand.
There’s no denying Lincoln is on life-support at the moment. U.S. sales last year totaled fewer than 86,000 vehicles, and so far in 2012 deliveries are pacing 2.3% behind even that feeble volume in a market that’s up 14.0% overall.
Product remains an issue. Lincolns have replaced Mercurys as simply gussied-up Fords, although the auto maker plans to put emphasis on up-level powertrains and electronics features, as well as step up showroom service in an effort to pull the brand up a notch.
There’s also talk of spinning off a Lincoln sedan from the next Mustang platform, which would give the marque a much-needed rear-drive model, though it remains to be seen whether that plan will come to fruition. Let’s keep our fingers crossed.
But one thing is clear: Ford shouldn’t give up on Lincoln without a fight. The dark days of 2008-2009 may have made it impossible to spend money on the brand, but it’s likely even an industry outsider like Mulally would have recognized the long-term importance of owning a viable luxury channel the day he walked in the door.
The luxury-vehicle market is both highly profitable and growing. Even in a mature market such as North America, demand is growing. LMC Automotive predicts premium vehicles will account for 14% of U.S. sales in 2019, up from about 11% today.
That’s a trend likely to be surpassed in other arenas, particularly still-emerging markets such as China, Russia and India as consumer wealth rises. Analysts at IHS Automotive reportedly are forecasting a doubling of the premium-vehicle market in China by 2020.
Having two brands, one focused on the mass market and one aimed a bit higher, isn’t one too many – if the strategy is executed correctly and the product line vigorously supported. It even may be critical to profitability and survival as the world continues to shrink and the competition only gets tougher.
