Lincoln Showing Signs of Life

Riding an 8.1% year-to-date sales increase, Ford Motor Co.’s Lincoln division is providing the troubled auto maker with a glimmer of hope its turnaround plan is working.

Last month’s 6% hike in deliveries marked the brand’s fifth consecutive year-over-year sales escalation.

While stopping short of calling Lincoln’s modest growth a trend, it is regarded by insiders as something “sustainable for the foreseeable future,” says George Pipas, Ford’s top U.S. sales analyst.

“It seems like this kind of retail performance might be more than a one-hit wonder,” Pipas tells Ward’s. “Lincoln might emerge as a much different brand than where we started two to three years ago.”

Adding to Lincoln’s surprise performance is the fact it has fewer models than it did last year, when the Lincoln Aviator midsize SUV and the Lincoln LS sedan were in the fold.

Today its showroom boasts the new-for-’07 Lincoln MKX cross/utility vehicle, the MKZ sedan (formerly Zephyr), the Mark LT pickup, the Navigator fullsize SUV and the long-in-the-tooth Town Car, which mostly has been relegated to fleet sales.

Despite this leaner lineup, not all Lincoln products are posting sales increases. Through March, Lincoln Mark LT deliveries were off 38.1% vs. year-ago.

Lincoln MKX has been driving growth at the brand.

When the luxury pickup launched in February 2005, unit sales totaled 10,274. But internal projections called for 13,000 deliveries per year, Ward’s is told.

And with March sales numbering 805 units, according to Ward’s data, the Mark LT unlikely will reach even its 2005 benchmark.

Based on the F-150 pickup, the Mark LT is aimed a different customer. But its sales slide can’t be pinned on the same market conditions affecting F-150 sales, such as a slumping housing market and increased competition, Pipas says.

“It’s not a work truck, but my guess is that among this group of owners you would find a fair amount who own construction companies,” he says. “And if their business is on shaky grounds and they have laid off crews, they’re not popping for a new truck.”

The two largest contributors to Lincoln’s recent success are the MKX and MKZ. March sales totaled 3,054 and 3,626 units, respectively.

The MKX was not on sale last year, negating year-to-year comparisons. Retail sales of the MKZ, however, are up 6% compared with its predecessor, the Zephyr.

With the ’07-model name change comes a new, more powerful engine. Ford’s new 3.5L V-6 – the Duratec 35 – replaces the 3.0L V-6 that survives in the MKZ’s Ford- and Mercury-brand cousins, the Fusion and Milan.

The redesigned Navigator also has been a modest success, though March sales were off 1.5% vs. year-ago, according to Ward’s data.

“Sales are being driven by the MKZ and MKX,” Pipas says. “MKZ retail business is up over the last three months of last year, and the MKX is all retail business that is incremental because it wasn’t (on sale) at all last year.”

Pipas says Lincoln’s lineup only will get stronger, citing the impending arrival of a yet-to-be-named fullsize Lincoln CUV, which will be based on the Ford Flex recently unveiled at the New York auto show.

Ford has yet to announce when the new Lincoln CUV will go on sale, but it likely will be shortly after the debut of the Flex, which is set to hit dealerships in summer 2008.

In addition, a new fullsize sedan, the MKS, is scheduled for production in the ’08 model year. Media speculation says the car will be powered by another new Ford engine, the TwinForce V-6.

“I think Lincoln dealers are delighted to have this product and see what’s coming in front of them,” Pipas says.

“(Dealers have) been down and almost written off by some critics and understandably so, because there wasn’t really much on the showroom floor that was that fresh or distinguishable from something else,” he says, adding the upcoming Lincoln CUV will look substantially different than the Flex.

While there’s no denying Lincoln is experiencing a bit of an upturn, it’s mostly due to the success of one product, says former marketing executive Charles R. Hughes.

“I think if you look at the numbers, all the bulk of the growth comes from the MKX,” says Hughes, who has led both Mazda North American Operations and Land Rover North America and more recently co-authored a book on marketing.

He argues Ford would have been better off committing MKX development resources to increasing production of its sister vehicle, the Ford Edge CUV.

Coming up with the MKX represents “a huge cost for design, the dealer body and marketing,” he tells Ward’s. “Although they’ll say it’s just a top hat. But even a new top hat for 3,000 units is not worth it.

“Odds are they could’ve done the same volume (with the Edge).”

Unlike General Motors Corp.’s Cadillac division, which recently underwent a renaissance and now is attracting younger customers, Lincoln will not be able to emulate that success, Hughes says.

“Cadillac has always been much larger than Lincoln, because it was a separate division of GM,” he says. “Lincoln has always been just the best part of Lincoln-Mercury.

“From a marketing standpoint, Cadillac (has) signaled things have changed. I haven’t had that feeling for Lincoln in 10 years.”

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