Why Ford Is Chasing Porsche Strategy With Mustang

Ford apparently is looking to address the massive hole in its luxury lineup with an expansion of the Mustang line into more products priced $50,000 and up, according to dealers who were presented with future product renderings at the automaker’s recent sales meetings.

As first reported by Automotive News, dealers were shown ideas and renderings for variants including a four-door coupe and a four-wheel-drive off-road model. Retailers were also shown a high-performance manual-transmission V-8 convertible somewhat similar to the former Shelby GT350 or GT500.

Ford CEO Jim Farley has a challenge on his hands with the automaker’s skimpy premium/luxury lineup. Other than high-trim Ford F-Series pickups and two Lincoln models, Ford doesn’t have many vehicles that appeal to shoppers of Mercedes-Benz, BMW, Lexus and new upper end battery-electric vehicles.

Enter the Mustang brand.

When Ford launched the Mach-E EV crossover under the Mustang badge in 2019, there was pushback from traditional Mustang buyers. But Ford executives, even then, internally and externally, pointed to the Porsche brand as a model for what the company believed it could do to leverage the brand awareness of the Mustang brand globally. Indeed, Farley’s team used the Porsche example to get the Mach-E greenlighted by Ford’s review board.

One former Ford executive who worked at Lincoln in recent years told WardsAuto there is little appetite at Ford for starting a new brand as Toyota did with Lexus in late 1989. After former CEO Alan Mulally sold off the brands in Ford’s Premier Auto Group that included Jaguar, Land Rover, Volvo and Aston Martin, he also wanted to kill the Lincoln marque along with Ford’s now-defunct Mercury brand. He ultimately was convinced to keep it because of the potential for Lincoln to do well in China, despite its struggles in the U.S., much like General Motors’ Buick brand that was thriving in China at the time.

But the world has changed in the last 10 years when those decisions were made. Ford and other legacy automakers – GM, Stellantis, Volkswagen, Mercedes-Benz – are struggling to hold sales and share in China as the market is rapidly becoming dominated by Chinese-branded EVs.

Bank of America auto analyst John Murphy recently wrote in his annual “Car Wars” report that the Detroit-3 should exit China. GM, Ford and Stellantis should focus on where they are making profits to fund the R&D needed for the EVs of the future, the analyst says. "Focus on your core," Murphy said.  “And China is no longer a core strategy to GM, Ford or Stellantis."

Ford's luxury Lincoln brand officially entered the Chinese market in 2014. Initially, it faced significant challenges as the brand was relatively unknown there and competing against well-established luxury automakers such as BMW, Mercedes-Benz and Audi. However, Lincoln sought to differentiate itself by focusing on personalized customer service, launching a network of “Lincoln Stores” designed to offer a unique and premium purchasing experience. That, and a design and portfolio strategy heavily modeled on Audi’s, showed some promise.

Ford now is actively retooling its strategy in China to try and boost profitability by focusing on higher-margin models and improving operational efficiency. If the company stays in China, these proposed Mustang products could be part of the future. One hurdle that must be overcome: The automaker needs to build the cars it sells in China in China. If Ford leaves China, which is likely, Lincoln’s viability in North America becomes very tenuous if the brand doesn’t have China sales to backstop sales.

Between the increasing domestic market share for Chinese automakers as they’ve rolled out more and more BEVs and the ongoing trade tensions and tariff battles between the U.S. and China, it’s getting harder to make money for all western automakers.

If Ford folds its tent in China, it still must fill out a roster of compelling products priced north of $60,000. Lincoln, with its very limited appeal to buyers under the age of 65, does not have a bright future in the U.S. in terms of compelling sales volumes. The Mustang brand, though, has a lot of appeal and equity with younger buyers.

And the softening of the Biden Administration's ZEV mandates allows for more investments in ICE vehicles. As the introduction of the Mustang Mach-E shows, Ford can grow the Mustang brand with both EVs and ICE models.

Today’s Mustang lineup starts at $31,920, but it has four trims priced above $50,000, and Ford believes there is room for more.

By following the Porsche game plan and cultivating some demand around an expanding Mustang model lineup positioned alongside Ford’s high-priced pickups and remaining Lincolns, Ford’s high-margin vehicle volumes could start to look respectable.

The lineup moves saved Porsche’s bacon when it launched the Cayenne SUV. Maybe Mustang’s brand expansion can help save Ford’s in the premium space.