Lincoln Looks to MKX, Continental for Growth

DETROIT – From Acura, Audi and BMW to Cadillac, Lexus and Mercedes-Benz, the Lincoln brand is lagging its luxury rivals by a wide margin when it comes to vehicle sales, but Lincoln President Kumar Galhotra remains upbeat about overall prospects for growth in the U.S. and in China.

Speaking here to the Automotive Press Assn., Galhotra says the all-new MKX midsize CUV went on sale in September and has been selling briskly for two months at reasonably high transaction prices. “The MKX is off to a fantastic start,” he says.

Next year, Ford’s luxury brand will bring back the Continental nameplate based on a sedan concept that was well-received at auto shows in New York and Shanghai. It will replace the slow-selling MKS sedan.

Overall, Lincoln sold 8,485 vehicles in October in the U.S., down slightly from year-ago. Year-to-date, Lincoln has delivered 82,449 vehicles, up 7.5% from like-2014, according to WardsAuto data.

Lincoln Continental concept at 2015 Pebble Beach Concours.

For perspective, BMW sold 29,439 vehicles in October, bringing its year-to-date tally to 279,395 units. U.S. sales of luxury vehicles are up 9.3% to 1.6 million units through October, according to WardsAuto data.

When asked if it is difficult selling the MKX as an upscale version of the Ford Edge, Galhotra says there is considerable differentiation between the two.

“It’s a unique Lincoln product. There is no piece of sheet metal that is common with any of the Ford product,” he says.

Still, automakers with both luxury and mainstream brands routinely share vehicle platforms and certain components, and Galhotra has no problem with that if the practice is measured.

“Which technology is important to the customer? We’re trying to design new experiences,” he says. “If a fuel tank is common between two vehicles, is that really important? My argument is it’s not a big deal. Actually it’s great for the business, great for our supplier partners and great for manufacturing. But it’s not a key part of the consumer experience.”

Technology may be shared, but the styling and interiors are completely unique, “and the experiences we are creating for both our customers are unique.”

Production of the Edge in Oakville, ON, Canada, began in February, while MKX output ramped up in September, reaching about 16,000 units to date, Galhotra says. Two shipments of the MKX already have landed in China.

Meanwhile, Lincoln dealers spent much of the year clearing out ’15 MKXs, and Galhotra says that should be completed by year’s end.

In the U.S., Lincoln has 300 dealership in the top 11 urban markets (making up about half of all luxury-vehicle sales) and another 600 stores in rural areas. Galhotra says he is satisfied with the mix.

“We are staying with that 2-tier dealership structure, in urban and rural areas,” he says. “In certain markets, we have some open parts where we’re not well represented.” A new store recently opened in New Jersey, and talks are ongoing for another new showroom on the East Coast and another on the West Coast.

Chinese Market Alluring to Lincoln

In China, Lincoln has opened 22 stores and expects to have 65 by the end of 2016, opening at the rate of about one every 10 days, Galhotra says.

Extensive research of consumer preferences in China was done before any facilities were constructed.

For instance, Chinese consumers “did not want to come into the dealership and negotiate with a sales person across a desk. To them, it’s a very transactional space. They wanted more of a relationship-building, living-room type of environment. So there are no cubes for negotiating at our facilities in China.”

Customers are met by a greeter at the door, and an expert walks them through the product. “And the dealership itself looks more like an art gallery or a 5-star hotel than an automotive dealership,” Galhotra says.

Chinese consumers also are distrustful of mechanics working on their cars. “And we just took that off the table,” he says. Mechanics explain what work is being done and offer to return parts that were replaced.

“Some of the customers mentioned, ‘How do I know that came off my car or not?’ We designed the dealership with a mezzanine so you can overlook the service bay and watch your car being worked on if you wish. If you can’t stay at the dealership, a camera is on top of every service bay.

“We give you a password, and you can watch what’s happening at the service bay on a tablet or an iPhone or a laptop. Not many people actually signed on to watch their cars being worked on, but it took that distrust factor completely off the table.”

Premium leather, rich colors part of Black Label trim offerings.

As for vehicle names, Galhotra says the “MK nomenclature has gained a lot of brand equity” and will remain in place for existing vehicles. However, the Navigator and new Continental will be exceptions, he says.

The MKT 3-row CUV is not selling well, but Galhotra says it will remain in the lineup for the foreseeable future. “There’s still a need for that vehicle, and there’s a customer for that vehicle and we plan to continue that vehicle.”

The WardsAuto product forecast says the MKT will end its production run in 2020.

Lincoln’s year-old Black Label marketing strategy to pamper customers is off to a good start, Galhotra says. The number of showrooms certified to deliver the Black Label experience has grown from 30 to 80, and 20 more dealers are in the certification process.

The MKC CUV, MKZ sedan and now the MKX are offered with special upscale Black Label trim features and colors. The Continental also will offer Black Label content.

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