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Sounds too good to be true!
Sounds too good to be true!
Saving Lincoln
Despite calls to mothball it, Ford hopes to revive Lincoln as a legit luxury brand. Can a new rear-drive concept do the trick?
by David Kiley
At next month's North American International Auto Show, BusinessWeek.com has learned that Ford Motor (F) will show a rear-drive Lincoln concept car. It will be based on the same rear-drive chassis and engineering architecture it is planning for a future design of Ford Australia's popular Falcon model.
Ford has made it clear that it wants to try to revive Lincoln. At the center of debate about the struggling brand's future is whether to bring out a rear-drive design, which luxury car buyers tend to love, or concentrate instead on front-drive and all-wheel-drive vehicles. So far, the front-drive crowd has been winning the arguments at Ford.
Rear-Drive Designs
Front-wheel-drivers are usually lighter, and therefore less expensive to manufacture and operate. Typically, rear-wheel-drive cars, such as the BMW 3 series and the Porsche 911, appeal to driving enthusiasts because they offer better handling and acceleration. (see BusinessWeek.com, 10/30/06, "Which Drive Is Right for You?"). A successful rear-wheel-drive luxury car could be the savior that Lincoln and its supporters desperately need.
The rear-drive concept, whose design was led by Ford North American design chief Peter Horbury, will include several design cues he wants to incorporate into a future flagship Lincoln, whether he wins the rear-drive battle or not. But the automaker is looking for enough positive responses from the public and the media to make a case for the rear-drive design.
"If Ford is serious about saving and reviving Lincoln, then rear-drive design is essential," says John Wolkonowicz, an automotive analyst with Global Insight. He says that Ford had recently discussed building a rear-drive Lincoln off the engineering architecture of the Ford Mustang. But that idea was thwarted because the Mustang has a solid rear axle, and the ride of a luxury car should have an independent rear suspension.
Too Much Mismanagement
If Ford builds the rear-drive concept, it wouldn't likely surface in showrooms until 2009 at the earliest. In the meantime, the Lincoln division is beefing up its heretofore paltry lineup with the new MKX crossover, hitting dealerships this month; a front-drive MKS sedan, which shares underpinnings with the much derided Ford Five Hundred/Mercury Montego sedans, due to launch in 2008; and a luxury "people mover" based on the Ford Fairlane concept. The company has just renamed last year's Lincoln Zephyr the MKZ, and given the small sedan a 3.5-liter engine and an all-wheel-drive option. And then there's the venerable Town Car, whose retail business has dwindled, but which remains the juggernaut of the airport livery car business.
When Ford Chairman William Ford Jr. was deliberating over his future as chief executive of the company his great-great-grandfather founded, and what the automaker should look like in 10 years, he made a list of the company's brands. Next to each brand, he wrote notes about which of them could fit in with his goals.
Lincoln has not been one of the brands in the "plus" column. That's because the brand has been so desperately mismanaged over the past two decades, and many analysts have called for the company to pull the plug. Few retail customers, outside those graying die-hards who have never bought anything else, understand what Lincoln is supposed to represent in a luxury category dominated by Toyota's (TM) Lexus, DaimlerChrysler's (DCX) Mercedes, BMW, Audi, Honda's (HMC) Acura and Nissan's (NSANY) Infiniti.
Company Dithering
Even its nemesis, General Motors' (GM) Cadillac, has successfully resurrected itself and is now a legitimate rival to overseas brands, so much so that Caddy is expanding sales in Europe. Despite the Lincoln Navigator luxury SUV hitting the market first, sales of the Cadillac Escalade, which did a much better job of marketing and design, are more than twice that of Navigator.
Lincoln sales this year are off 3%, with only 108,000 units sold through November. But the sales story is worse than that. The Lincoln Town Car, which is around 80% fleet and the division's biggest seller, sold 36,000. So, retail sales for Lincoln through November were around 80,000. That's less than Infiniti, and just ahead of Audi. Cadillac sold 205,000 through November.
Lincoln has suffered from two destructive forces within Ford. The company's churn of management over the last decade has delayed decisions about product, changed Lincoln's status as a priority brand, and created a mess of the brand's marketing. At the same time Ford was dithering over Lincoln's future, it was buying European brands to, in part, make up for the fact that senior management didn't think Lincoln was a strong enough brand with which to take on Lexus, BMW and Mercedes. Ford bought Jaguar back in 1988, and then added Volvo and Land Rover to the Premier Auto Group in 1999 and 2000. Investments in Volvo, and steep losses in Jaguar and Land Rover, meant that investment in Lincoln was in short supply—as was management's attention.
Jump-Starting the Brand
Reviving Lincoln is all the more vital to the future of Ford's luxury car business, which is ironic, since the future viability of Jaguar and Land Rover is in question as Ford considers selling the brands. "This is the time for Lincoln to start putting results together and get the brand going," says Al Giombetti, president of Ford and Lincoln Mercury. "This is why you see so much effort now to make it more relevant in the marketplace."
Lincoln has been held back by lack of proper or consistent product planning and, some would say, its reliance on the Town Car business. The Town Car has been a cash cow for the company. But its most visible car has not received contemporary design or engineering upgrades. Its engineering platform is shared with the Ford Crown Victoria and Mercury Marquis, and dates back to the early 1970s.
If Lincoln is to come back, it must attract some younger wallets. J.D. Power and Associates (which, like BusinessWeek.com, is a division of The McGraw-Hill Companies (MHP)), says the average age buyer of Lincolns is 55. Excluding fleet and livery purchases, the average Town Car buyer is 68. Even the average age buyer of the Zephyr/MKZ has been about 58. Where Lincoln has done the best with younger buyers is with the Navigator SUV (47) and Lincoln Mark LT luxury pickup truck (46).
Comeback Plans
The Zephyr/MKZ has been the cause of some optimism inside Ford. Like four of Lincoln's offerings, it is a retrimmed Ford, but it has attracted notice for its improved interior. Ford will sell about 33,000 this year, up from the 25,000 for which it planned. Giombetti says the car has attracted a lot of first-time luxury-brand buyers and has pulled equally from American and import buyers. The car's upgraded engine this year, the company hopes, will boost sales by about 15%.
Still, the addition in the next few years of a new, rear-drive flagship sedan or sports car—one that is totally unique to Lincoln—is seen as vital to a legitimate comeback. Says Global Insight's Wolkonowicz, "You can't fix any brand, but especially a luxury brand, on the cheap."
Seeing weakness in Lincoln's livery business, DaimlerChrysler has recently begun building a long-wheel base version of its stylish Chrysler 300C sedan. Even in Detroit, the 300C has been increasingly turning up in airport car fleets. Lincoln figures to build the Town Car until 2011, at which time it hopes to have a replacement for the old airport horse. Still, if there are fewer of the current Town Cars ferrying executives to and fro, it will be easier to get new models into new driveways.
