Where Is Ford taking the Lincoln Motor Company?

akirby · December 2012

The part about Lincoln needing a Lexus LS halo car should have been tongue-in-cheek. That's the last thing it needs right now. Nobody knew Lexus back then. Everybody knows Lincoln whether for good or bad.

They just need a stellar dealership experience and a complete lineup of cars with luxury features and unique, gorgeous styling. The rest will take care of itself over time.

[Deleted User] · December 2012

They just need a stellar dealership experience and a complete lineup of cars with luxury features and unique, gorgeous styling.

Well, yes. Rocket science it is not.

However, you and Lincoln and everyone else on the planet now admits that for too long they thought they did not actually have to do that to keep in the game.

akirby · December 2012

Ford had to chang the way they operate the company as a whole and get rid of the European PAG brands and Mercury before they could even consider this type of path for Lincoln.

[Deleted User] · December 2012

Well, that is your opinion. If Ford had had a clue how to manage those brands, getting rid of them might not have been the only option for saving Lincoln.

For some reason, Jaguar, Aston, Land Rover and Volvo are still in operation today, after being cast off as crippled (and at fire sale prices) several years ago. All have solid plans for growth. Mazda is growing again as well. It is also possible that Lincoln-Mercury would have sold more vehicles and generated more profits than Lincoln has alone. But we will never know now.
However, Mercury was the only real casualty of all this bad planning.

In GM's case, they destroyed the storied brands of Oldsmobile, Pontiac and Saab, as well as Saturn and Hummer. They managed to save Buick and Cadillac, both of which are growing steadily. But they are being pummeled now, because they cannot get their new trucks to market fast enough, as their current ones are beginning to languish.

Ford continues to have a gold mine in the F150. Without that, Ford would be hurting, despite all its good works. Lincoln needs its own model that will hold it through thick and thin (like the Town Car did for so many years). Do all models well, as the Ford division has started to do, but have one that really stands out.

[Deleted User] · December 2012

Another fairly positive review, although some of the interior details are a miss. If Lincoln can regain a modicum of prestige, the MKZ will have a market above the Fusion.

http://autos.aol.com/gallery/2013-lincoln-mkz-review/

"Now that all those brands have been sold off by Ford after years of managing those badly and racking up billions in losses, it is back to Lincoln. It's as if Ford was married to Lincoln and then went off and had a series of affairs with European beauties only to find itself back at home with the girl Ford married a century ago to make the best of it."

akirby · December 2012

Ford never said those PAG brands were damaged. They simply could not afford the investment that those brands would have required in addition to what was needed to fix the Ford brand. Had they not sold those brands they probably would not have survived the economic crisis without a bailout.

And the question isn't whether Lincoln alone is better than Lincoln/Mercury. It's whether Ford/Lincoln is better then Ford/Mercury/Lincoln. There is no Mercury vehicle that can't be just as successful as either a Ford or a Lincoln. Having Mercury doesn't add anything - it just splits the same pie 3 ways instead of 2.

fezo · December 2012

There is no gear shifter in the center console, or on the steering column. Instead, Lincoln has given us push button gearing on the dashboard, a feature that first surfaced in the 1950s, and has been revived here in a good way.

A push button transmission! Where is Andre? You don't have to wait to get the DeSoto back!

[Deleted User] · December 2012

Allen, you react defensively every time, as if anything critical of Ford or their plans for Lincoln is a personal slight. I am just poking the bear, because it is fun. Sorry.

akirby · December 2012

Not trying to be defensive. I just want to make sure people understand exactly why some decisions are made or not made. There is a lot of misinformation and misunderstanding out there.

[Deleted User] · December 2012

Yes. There is a lot of misinformation. Sometimes even among you and me.

Now, for another perspective on your harping about the inefficiencies of too many brands, please read the following article. It explains how the inefficiently run VW group is the most profitable in the world.

http://www.autoblog.com/2012/12/06/how-volkswagen-is-run-like-no-other-car-compa- ny/#continued

It also explains why GM is no longer as profitable as it used to be years ago, when it was a bunch of companies.

Perhaps Lincoln Motor Company needs to become a real motor company at some point, rather than a marketing ploy.

keystonecarfan · December 2012

I don't believe German companies follow the same accounting standards as American companies, so I take the "most profitable" claim with a grain of salt.

[Deleted User] · December 2012

Well, that's fine that you believe that, but:
1. your belief may not be the reality of the situation,
2. and even if your belief is correct, the point of the article is that VW can do what it does, profitably employ tons more people than any other car company, and keep growing and profiting while doing so.

Cutting more and more jobs has not always paid off for its rivals. It is something to think about.

akirby · December 2012

I watched my company almost go out of business as it struggled to compete with another company. Nobody could figure out how they could be operating at such a high profit level with such low costs. Turns out they were lying and people went to jail and the company folded.

German mfrs routinely buy their own cars then reselling them to dealers as used cars and count the sales as new car revenue. We're talking 20% - 29% of German sales.

So yes - I take those VW results with a huge grain of salt.

The question is how long this can be sustained and whether it's a short-lived bubble? If it's not then more power to them.

nvbanker · December 2012

They just need a stellar dealership experience and a complete lineup of cars with luxury features and unique, gorgeous styling.

Haven't yet seen even close to a stellar dealership experience. My Lexus and Lincoln dealers are in the same Auto Mall, around the block from each other. The difference is still staggering, because only Lexus is stellar.

I think Lincoln is moving the right direction with product, but I really have my doubts that current franchisees or dealer principals "get it". Lincoln has ordered store upgrades, loaner fleets and standards - but the individual dealers must make those changes and generally pay for the upgrades themselves. So what happened in Vegas was, one dealer folded, a Ford dealer picked up the brand (so you can just imagine what kind of service you'll get there, sitting in the "lounge" with the Focus owners), and the other dealer has a nice store, but the service is still "Saturn", which is what the store used to be. And that owner also has a Cadillac dealership around the block, where the service is horrendous as well. So far, they have 1, count it, ONE loaner, an MKT, which you must be pretty important, or a pretty big tipper, to get. Otherwise, you're invited to call Enterprise. Not even close.

The cars are very important. But the service is too, and I see that being the main problem for Lincoln Motor to fix.

akirby · December 2012

I agree it will be difficult. Lexus had a huge advantage being able to open brand new franchises without legacy dealers to worry about. And state franchise laws don't help. The good news is Lincoln understands this is required and they've gotten over 70% of the remaining dealers to agree to make the investment to upgrade to the new standards. But like everything else this won't happen overnight.

nvbanker · December 2012

And having said what I said, Allen, I'm really rooting for Lincoln to make a great comeback. I drove them for 16 years, happily. I even liked my 2 Continentals! (I know, I'm the only one...). I love my Lexus, but would consider another Lincoln. I have always had a soft spot for the brand.

akirby · December 2012

Continental? Don't you mean "rebadged Taurus"?

edward53 · December 2012

I was just going through some old Road Test mags from the late 1960's. Well, I came across this article in the June 68 edition about the newly formed Stutz Motor Car Company Of America. Here is an excerpt of an article from an interview of James D. O'Donnell, the founder of the newly formed company. Mr. O'Donnell when interviewed by the magazine, said to the interviewer that "A Stutz is for the fashionable person who wants the very best luxury that money can buy. This type of owner is not interested in what his auto can do in sixty seconds, neither is he interested in Autostrada or Autobahn type performance. Instead , he is a dignified person who enjoys classical luxury; one can be reasonably assured, that he prefers to own custom made suits ,possibly hand tailored by his favorite Savile Row tailor. Meanwhile, his wife would not be seen dead shopping in Sax Fifth Avenue or Bergdorf's; instead , you would see her shopping at the world's most fashionable boutiques. In fact, Stutz is the ultimate boutique vehicle."

Now ,what does Stutz have to do with Lincoln. It is this, Stutz's bodies and interiors were hand made, but they used a GM frame and running gear from a Pontiac Grand Prix .
Sure, the Stutz was way more luxurious and expensive than any other American car but when it was road tested, its performance was still that of a Pontiac Grand Prix. It was no where worth the price of 30k.

So, we have Lincoln building a more Luxurious and expensive Ford platform based vehicle . In the end though it is still a more expensive Ford with Ford type platform performance dynamics. Ford is following the Stutz hand book as described by Mr. O'Donnell.

Most premium car buyers of this generation know what they are buying. The serious question is can Ford convince these folks that Lincoln is really a world class premium vehicle that can be as exclusive in performance and snob appeal as the world's other premium class vehicles? I seriously doubt that that can be accomplished by taking a vehicle aimed at sales volume and then producing a differently styled upmarket vehicle based on it. The upwardly mobile informed discerning buyer wants a premium vehicle that can fly with the eagles. It is doubtful that Ford can convince these buyers that Lincoln fulfills this demand. Apparently , though I am not the only one as I read in a N.Y. times article that Mr. Mulally has no qualms about folding Lincoln up if sales don't improve

Stick a stake in Lincoln's heart and call it dead.

edward53 · December 2012

http://au.ibtimes.com/articles/368097/20120730/ford-jobs.htm

http://www.businessspectator.com.au/bs.nsf/Article/Ford-tipped-to-pull-Australia- n-production-by-2016--pd20120730-WNRUN?OpenDocument

http://www.thetruthaboutcars.com/2012/07/ford-to-shut-down-australian-manufactur- ing-in-2016/

Above are links to articles concerning Ford shutting down production in Australia after 2016. Everyone was praising Ford for not accepting the auto company bailout in the United States. Well people, it seems Ford received over 340 million Australian dollars as aid to modernize without having to repay it back to the Australian taxpayer. I have a feeling that if Ford could have gotten the same deal here as in Australia ,it would have taken the bailout deal. So it turns out that Ford is just another leeching corp after all.

edward53 · December 2012

It just dawned on me that many a poster here have never driven a truly premium vehicle.That is why many here believe that Lincoln is the "Cats Meow." I really feel sorry for those that haven't. It is so sad because they never felt the rush of whipping through a hammer head at 120 mph and feel the likes of a Mercedes AMG C63, Bimmer M5, not to say the least , a Cadillac CTS -V , becoming one with you and the road . If They had ,they would have experienced superb road feel were the driver can actually interpret through the steering where the cars are going . Top that off with the neutral handling of these vehicles and you have some of the safest high performing vehicles in the world. These are cars that have the ability to get out of their own way. Instead of using brakes to avoid a collision a driver can use the vehicles' wonderful handling properties to avoid it. One would think that every driver would want to own a vehicle like these. Instead' most of the posters here are of a by gone era where dinosaurs still tread. They're stuck on velour, lap robes and vinyl landau roofs and memories of when things use to be. So an expensive Ford will do. Lincoln aims to please. Lincoln is really the boutique vehicle.That is its niche. Again, I am not accusing every poster here of this.

stever · December 2012

Ford took US dollars for battery research. ($92.7 million per Bloomberg)

That's just one I know about off-hand, plus they went to DC and testified on behalf of the auto bailout.

Ford is just acting like a corporation. It's Australia's fault if they didn't get any guarantees or pay-back provisions for giving Ford money.

akirby · December 2012

The upwardly mobile informed discerning buyer wants a premium vehicle that can fly with the eagles

Yes but that's only a very small portion of the luxury car market. What about all the people buying Acuras and Lexus ES350s and RX350s?

This isn't about winning magazine comparisons or impressing snobs - it's about making vehicles that can be sold at a profit. Cadillac is finding out that you can't win BMW buyers even with similar performance because the appeal is in the brand name not in the vehicle itself.

Just because Lincoln isn't what YOU think it should be doesn't mean it won't succeed. I honestly don't know why you come here and spout off about it constantly. If you don't like what Lincoln is doing go buy a German car and leave us alone.

akirby · December 2012

Ford took US dollars for battery research.

So did GM and Chrysler.

If you owned Ford stock before the crisis and you didn't sell it - you still own it and it's worth considerably more now than back then.

If you owned GM stock you got screwed.

The money that Ford took from the government was to invest in new technology and was available to all manufacturers.

The money that GM took from the government and never paid back was for general business operations.

Apples and Oranges. Just ask the shareholders.

stever · December 2012

Even better, I bought some Ford after the crisis.

Didn't buy a whole lot since I've been burned on other stocks.

The point is that Ford takes tax money and they also benefitted from the bailout by not losing suppliers to bankruptcy.

akirby · December 2012

Geez, Steve. Nobody is saying that GM and Chrysler should not have been given loans. I'm saying that 1 - they should be required to pay back every penny to the taxpayers now that they're making billions and 2 - they should reimburse the stockholders that got screwed when they changed from "old GM" to "new GM" .

stever · December 2012

They could have made the deal to pay back the "loan" in profits instead of equities. That'd make sense. But they probably waited too long to do something similar to the first Chrysler bailout and no longer had that option.

Shareholders aren't guaranteed a return on their investments though so no sympathy there.

[Deleted User] · December 2012

Yes, agreed on the old GM part. Buying stock carries inherent risk, along with potential rewards. GM did what many other firms have done in crisis. I have seen several of my stocks either do reverse splits, or go down to worthless status in the past few decades. Fortunately, others have done well.

It would be nice though if more of the bailout money came back to the government. Oops...what does this have to do with Lincoln Motor Company (a motor company which doesn't really exist)?

hpmctorque · December 2012

Yes, it would be nice if the government could recoup its investment in GM, but that's highly unlikely. The government would have to sell its remaining stake in GM at ~$53/share. It's currently about 25.50, and just in the last couple of days I read that the government is planning to sell its stake in the company, or the majority of it, soon. True, GM is making billions, but that's a modest return on sales. It has also been losing market share since the bailout.

nvbanker · December 2012

Continental? Don't you mean "rebadged Taurus"?

Au contrare: Despite the inadequate Taurus underpinnings, which cause a front suspension inadequacy, and other acknowledged weaknesses, the limosine roofline, huge back seat, headroom and legroom space, quality leather and other materials used and sophisticated instrumentation made the car a perfect "business sedan". It wasn't the "best" car Ford ever made, but the design was outstanding. Even the V-6 Essex engine did well enough, and economy was good. I raced a Cadillac of the era with the 4.6L Aluminum Leaker, and beat it handily, for those who think the power was poor. I was very disappointed with the new Continental that debuted in 95. The rear seat room was gone. So was the headroom. It was an upgrade in power with the V-8 and had tons of electronics, wasn't bad to drive, but was not a roomy business sedan any longer. And I never warmed up to the Town Car enough to go that route. Of course, when the 98 TC debuted, it was ruined. Not even luxurious anymore. Left me in a bind, so I bought a Navigator instead. NO, the Conti was ANYTHING but a rebadged Taurus.

[Deleted User] · December 2012

True. Though based on the same architecture, Taurus and Continental shared not a window nor body panel, and the wheelbase was slightly different as well. I dare say they were more differentiated then than the Fusion and MKZ are now.

berri · December 2012

Lincoln's just got a very tough battle ahead. They basically left the lux market decades ago when they reverted to what consumers conceived as gussied up Fords with no real status of ownership. Unfortunately, many imports moved into the vacated space while they were napping. I wish them luck and hope they can succeed, but I don't think I'm going to wager on it. Maybe just a small increase in their volume can generate an incremental profit though.

[Deleted User] · December 2012

You are more or less correct. Lincoln started going the wrong way quite awhile ago now. However, the Town Car was still perceived as a separate luxury car, rather than another Panther iteration at least through 1997. The 1999-2006 LS was also anything but a gussied up Ford.

In hindsight, which is often 20/20 (but useless), killing both Mercury and Lincoln, while keeping either Jaguar or Volvo, may have worked better. Neither of those brands, though troubled, had the baggage of being "gussied up Fords," and both are still seen as luxury brands.

However, what's done is done. Lincoln can still rise, if the investment is made and the importance of differentiation and delivering the best has truly sunken in.

akirby · December 2012

While the Town Car was perceived as a luxury car at one time, it was still never really in the same class as the imports.

My "rebadged Taurus" comment was just a joke for the people who still like to call the new MKZ just a rebadged Fusion.

I agree that Jaguar has a much higher perception of luxury in addition to having better luxury vehicles than Lincoln. But I'm not so sure that keeping Jaguar would have been a better move.

Remember that the reason they got rid of the PAG brands was to free up the investment capital that they would have required and put it all towards saving the Ford brand. Or to look at it another way - had they not sold Jaguar they might not have survived the downturn like they did.

But I also think Ford has the ability to make a lot more profit on a revamped Lincoln than they could with Jaguar even without the luxury image.

If Ford thought Jaguar would be more profitable they could have bought it back and killed Lincoln.

hpmctorque · December 2012

On the suggestion that Ford Motor Co. should have kept Jaguar and killed Lincoln, I think that the price and image gap between Jaguar and the Ford brand is just too wide for that to have worked well. If Ford FoMoCo had had the money to keep Lincoln and Jaguar, then Lincoln could have been FoMoCo's lower luxury brand (think Buick and Lexus ES, IS and GS competitor), while Jaguar became the upper luxury brand.

As things stand I think Lincoln will have to introduce some RWD models to really succeed, starting with a luxury version using the next generation Mustang platform.

[Deleted User] · December 2012

Ford sold both Jaguar and Volvo at a huge loss. Whatever immediate cash the Volvo sale made for Ford would not have made the difference between saving Ford or not. They still would have sold their interest in Jag, Aston, Land Rover and Mazda. Volvo sits right above Ford price-wise. As I said, hindsight...

stever · December 2012

I think part of the problem was that Volvo was only viable with continuing investment, and the new owners have committed to 11 billion for that. (link).

Volvo Car Corp. is struggling but just got a $1.2 billion loan from a Chinese bank and they are still looking for more money. Sales are lagging. (WSJ)

Ford got 1.3 billion from Geely for the sale.

akirby · December 2012

Bingo. The cash from the sales was gravy. The real benefit was that they did not have to spend any future capital on those brands which would have been significant to keep them competitive.

Considering that Ford BARELY had enough cash on hand to make it through the downturn - the extra Billions required probably would have sunk them. Or at least hindered the turnaround of the Ford brand significantly.

akirby · December 2012

While I and many other Lincoln fans would love to see a RWD performance vehicle or two, I don't understand why people continue to say that Lincoln NEEDS RWD to "succeed".

If you consider "success" getting good reviews from enthusiasts and the media - ok, I'll buy that.

If you consider "success" as selling a reasonable number of vehicles at a decent profit - no way.

Let's open 2 Lexus car dealerships. I'll sell the FWD models and you can sell the RWD models. Who do you think will be more "successful"?

hpmctorque · December 2012

I agree with Steve's response to your post regarding Volvo. In addition, Volvo doesn't rank as a true luxury car, but, rather, a near-luxury one. As such, Ford can do better with Lincoln, which has been in the Ford family for as long as anyone can remember (Ford originally purchased Lincoln). Like Jaguar, Volvo is an unnatural fit in the FoMoCo portfolio.

hpmctorque · December 2012

I understand and agree with your point that market share and profitability, not necessarily in that order, should be the determinants of success. However, the success of Lexus' FWD models is probably helped by its more upscale RWD GS and LS siblings, in my opinion.

I know that Audi and Acura rely almost exclusively on FWD architecture, but they haven't been as successful, by your metrics, as BMW, Mercedes and Lexus. Wouldn't you agree? For this reason I would bet on Cadillac over Lincoln.

[Deleted User] · December 2012

Unnatural? We are talking cars here. Besides, Ford and Volvo were quite incestuous, sharing platforms and engines in the USA, Europe and Asia. Ford totally screwed up the S80 when it was redesigned. Boring. Come to think of it, Volvo is way better off with a Chinese investor. Never mind. Back to Lincoln.

akirby · December 2012

the success of Lexus' FWD models is probably helped by its more upscale RWD GS and LS siblings

Everybody says this, but I'm not sure I believe it. Are you thinking that people go into the dealership for a GS or LS but leave with a RX or ES?

akirby · December 2012

For this reason I would bet on Cadillac over Lincoln.

Do you think it's easier for Cadillac to win over BMW and MB owners or for Lincoln to win over Audi, Lexus and Acura owners?

And let's say that Cadillac and Lincoln end up with the same sales volume. Ford probably spent 25% of what GM had to spend for platforms.

Again - I'd love to see a high performance Lincoln but it would be a niche vehicle. They need lower cost higher volume higher profit vehicles to survive.

hpmctorque · December 2012

I'm saying that the GS and LS lift the prestige and cache of the Lexus brand, thereby making the RX and ES more aspirational. Those larger models help people justify choosing the RX and ES over the RAV and Camry, as well as over competing luxury models. I think these are important factors, in addition to the excellent quality of Lexus vehicles, that drive Lexus sales and profitability. Lincoln doesn't enjoy this advantage presently.

Maybe the automotive press and performance car buffs, who are generally positive on RWD, raise the value assigned to this architecture, but that's unlikely to change any time soon.

As for Audi, its halo sportscars, the R8 models, use RWD architecture. I believe that the Acura NSX replacement will too, although I'm not certain. I've read that this future Acura model will incorporate Hybrid technology in its AWD drive system.

I would summarize my point by saying that while having some RWD models may not be essential for Lincoln, going forward, it would be very helpful.

hpmctorque · December 2012

I don't know the answer to your question. To the point in your second paragraph, though, yes, Lincoln spend significantly less than Cadillac on pIatforms. However, I think that it's unlikely that Lincoln will come close, much less equal to Cadillac's sales volume without introducing some RWD models. Time will tell who's right.

A high performance niche vehicle would help Lincon achieve preater sales in its near-luxury models, in my opinion. That's the main point of high proces niche vehicles, since they're often loss leaders.

I think that a sport coupe or sedan built off of the next generation Mustang platform, which will finally feature IRS, could be a relatively high volume model for Lincoln. I'd consider it a slam dunk.

akirby · December 2012

We disagree on the "halo" effect and how much RWD adds "prestige" to the lower cost FWD models.

I don't see the GS and LS as any kind of "halo" vehicle that would draw in buyers. I think Lexus RX and ES buyers are looking for luxury features and a luxury dealership experience at entry level prices.

The R8 would be the best halo candidate along with the RS vehicles for Audi.

You could use Acura as a case study and say that their sales are low because they don't have any RWD vehicles but I don't think that's the reason for low sales.

It sounds like there will be a RWD Lincoln built off the mustang platform so I guess we'll have to wait and see. Sales of the new MKZ and new MKC (small crossover) will be very telling.

hpmctorque · December 2012

Yeah, we're both just expressing opinion because neither of us has hard statistical evidence to support our positions. To clarify, I'm not saying that RWD models are the only reason for the relative sales success of BMW, Mercedes, Lexus and Cadillac over Audi, Acura and Lincoln; only that it's an important factor, based on annecdotal evidence.

Regarding profitability, to the best of my knowledge these automakers don't break out such things as the profitability of individual models, margins, or their contribution to break even, etc., so we can only make educated guess regarding profitability.

berri · December 2012

Most people aren't really auto enthusiasts, so I've always wondered whether most people who have the means to buy a luxury vehicle really care about RWD vs. FWD. I think that for the majority, it is probably more about looks and perceived status. If there is, I'd expect it would be more correlated to buyers in the Snowbelt leaning FWD and those in the Sunbelt going the other way. Besides, in much of the country the roads and terrain are rather flat and boring.

akirby · December 2012

That's my point. I don't think the average buyer knows the difference or cares.

80 percent of BMW 1 series owners actually think their vehicle is FWD.

nvbanker · December 2012

I used to believe that to be a true "Luxury" or performance car, you needed to be RWD, if not V-8 as well. I'm beginning to reconsider due to:

1) Audi has a FWD layout, usually with AWD to compensate, and has been on a meteoric trajectory for the past decade with that platform, plus, it's not the A8 that is selling, it's the A6 & A4.

2) The Lexus ES is by far the best selling Lexus Sedan, and has been since about 1993. And it's FWD only. Part of it is the value/price proposition, but the FWD doesn't seem to hurt it at all.

3) The perceived status of the brand seems to matter a lot more than platform layout these days in the sales results. Not as true when Cadillac started their comeback, but is today. Lincoln is going to have to re-establish some Panache before it will be perceived as a player again, somehow. Cadillac did it with the Art & Science styling, despite abysmally ugly interiors at the early period, and the RWD layout.

Big cars are dying as are their V-8 powerplants. I fear for the Lexus LS' future. The 7 series is not a great seller as well, the S Class will be the last large survivor. Things are changing fast in the Luxury Lines.

Where Is Ford taking the Lincoln Motor Company?

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