Can Ford Really Do This?

And then there were two: Back in June, Ford (NYSE: F  ) announced that it planned to discontinue the venerable Mercury brand and would wind down sales of its existing models by the end of 2010. After that, the company's once-full brand portfolio will hold just two names.

The demise of Mercury was hardly a surprise, given Ford CEO Alan Mulally's relentless focus on "One Ford," a single global family of products to be sold under the company's eponymous blue oval brand. Since Mulally arrived in 2006, Ford has moved to sell or close Aston Martin, Jaguar, Land Rover, Volvo, Mazda, and now Mercury.

But there are two left, not one: Venerable luxury marque Lincoln is the only brand not named "Ford" to survive Mulally's purge. Why?

Ford throws down a gauntlet
Even as it announced Mercury's demise, Ford made it clear that it would lavish Lincoln with attention:

  • The brand will roll out seven "all-new or significantly refreshed" vehicles over the next four years, including Lincoln's first-ever compact.
  • Lincoln will see "more investment and attention" to design and technology efforts, with a focus on performance and fuel efficiency.
  • There will be more money for Lincoln sales, service, and marketing.

Ford's intention is to compete head-to-head with General Motors' Cadillac and Toyota's (NYSE: TM  ) Lexus.

That's a big challenge. Lexus, of course, has become a major force in the U.S. luxury-car market since Toyota introduced it in 1989. It has eclipsed similar offerings from Japanese rivals Honda (NYSE: HMC  ) and Nissan in cachet, if not always in sales. And the past decade has seen Lincoln's ancient rival Cadillac beginning its own renaissance, from its edgy "Art and Science" styling direction to its move to rear-wheel-drive performance with its CTS series cars -- built on a unique-to-Cadillac platform.

Cadillac's renaissance has stalled somewhat in the past couple of years, with several planned models falling victim to budget cuts that happened during GM's downward spiral. But recent reports have suggested that the marque will get back on track, with just-departed GM CEO Ed Whitacre himself directing Cadillac to develop a no-holds-barred full-sized "flagship" sedan, according to one report. Cadillac is also known to be developing a small rear-wheel-drive sedan aimed squarely at BMW's bestselling 3-series line. That model is likely to arrive by 2012.

It's reasonable to expect that GM's investments in Cadillac will increase significantly once the company has returned to public ownership. Although the brand -- like much of GM, at least in North America -- is still in many ways a shadow of its former self, its year-to-date sales have been 65% better than Lincoln's.

That represents a challenge -- and an opportunity -- for Ford.

The route to a Lincoln revival
So can Ford bring about a Lincoln revival? If the company can spare the time and money -- and apparently it thinks it can -- to bring the focused attention that has become its hallmark in the past couple of years, then I think it has a great opportunity to revive the old nameplate.

Careful design with a luxurious feel sells. Just look at the attention Apple (Nasdaq: AAPL  ) gave to its recent design of the iPhone 4, with its precision-fit metal buttons and switches inspired by the work of iconic industrial designer Dieter Rams. And then there's Ford's own bread-and-butter products, such as the Taurus sedan, with its jewel-like taillights and meticulous interior.

Ford marketing VP Jim Farley has promised that Lincoln's upcoming designs will have a distinct "point of view," although the company hasn't yet given details. But it's already clear that Lincoln's future is likely to involve a combination of understated luxury with fuel efficiency -- with a focus on Ford's acclaimed EcoBoost engines, which use Honeywell (NYSE: HON  ) turbochargers to increase power without a significant impact on fuel economy.

Ford has summoned its Lincoln dealers to a meeting in October to unveil its plans for the brand, which are expected to include investments to upgrade the "dealer experience" for customers. It's likely that we'll know more after that -- dealers like to talk to the press, after all -- and the models Lincoln chooses to highlight in the upcoming major auto shows will give us more of a clue as to the brand's future direction.

But it may be a few years before we know the answer to the big question: Will Lincoln add significant value to Ford -- or will it ultimately prove to be a distraction?

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Read/Post Comments (5) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 12, 2010, at 10:55 AM, Varchild2008 wrote:

    If the Lincoln brand fails to add value to FORD then maybe Lincoln could switch to building lawn mowers and Golf Carts? Just a thought.

  • Report this Comment On September 12, 2010, at 1:15 PM, Imodelforartists wrote:

    Ford seeks to defy RIES & TROUT's "POSITIONING THE BATTLE for YOU MIND" with keeping Lincoln.

    Remaking a brand is one tough job.

    It is even tougher in this case.

    By keeping the name "LINCOLN" Ford seeks also to defy the adage "YOU ARE WHAT OTHERS PERCEIVE YOU TO BE"

    So re branding without a name change. TOUGH.

    Perception: Lincoln was a president a long time ago and was old at the time. Lincoln is an old person's vehicle.

    A Lincoln is a penny..the lowest of the low.

    Let's see how this plays to even 35 year old.

    They have all the current Apple items plus.

    They just bought a new car.

    They are at Happy Hour sipping a Cosmopolitan and say, "Hey guys I just bought a new car"

    "WHAT DID YOU GET?"

    "A Lincoln"

    "AH WHAT?"..followed in unison with "WHY?"

    Now replace the name Lincoln with almost anything else, except a Chrysler or GMPK whatever name.

    Of course what do we know?

    We're just the 36 years of experience in" Top of The Mind Awareness" Thematic guys and gals.

    We're Lovin' It--oh wait that is McDonalds Top of The Mind Awareness Thematic, isn't it?

    "

  • Report this Comment On September 13, 2010, at 1:39 AM, baldheadeddork wrote:

    I know I have a (well deserved) reputation for being a Ford cheerleader, but I think they have a very good chance to do something spectacular with Lincoln.

    The first advantage with Lincoln is that it's as close as you can get to a blank slate for a 80 year-old brand. Mercury was the geezer division. Since the elimination of the Continental in 2002 there's been a quarter-assed attempt to rebrand Lincoln as a challenger to the European luxury brands, but there was so little effort put into it that I don't know if many buyers are even aware that Lincoln even makes cars.

    The second advantage is, Ford developed the talent to build genuinely world-class cars during it's ownership of the Premier Automotive Group. Look at the cars Aston Martin, Jaguar and Range Rover are selling today. Every single one was designed and engineered by Ford, and they are serious, no-excuses competition to Ferrari, Mercedes and BMW. GM and Chrysler have always had the best reputation of the big three for engineering, but you underestimate Ford today at your peril. These guys can create a car that can compete with anyone. Turn them loose on Lincoln and I think you're going to see some amazing things.

  • Report this Comment On September 14, 2010, at 9:22 AM, elramone wrote:

    Doing something spectacular would be revamping the managment string. How can you claim a 80 year old brand with a blank slate is an advantage. Think McIntosh, KitchenAid mixers, and others where their products were unprecedented throughout the years. Their HISTORY is what gives them a marketing advantage. The "unblankness" if you will of their slate. I dont mean to bash, but one of my Continentals literally had the engine mounted on a H subframe that fell out onto the street in downtown Royal Oak Michigan. I left it there and walked into a bar to have a beer and started to tear. When asked by others what was the matter, I told them my engine just fell out and it was in the middle of Mainstreet. With disbelief they went out and looked and once they came back, I didnt have to pay for any more of the beers. The dealers and Ford alike denied this yet in the Lincoln shop there where lines of similar Continentals with unistrust across the hood and threaded rod down to the intake manifolds holding their motors up. After years of denial, Lincoln finally sent a letter saying engine mounts could rust thru and engine "could" fall on rack and pinion steering making steering difficult? I saved the letter to this day as a joke about how modern managment is in denial. Second you claim Premier Auto Group? Dont you think those are literally some of the darkest years? Does bad investment come to mind? Volvo was the only decent buy. About same time Ford was buying up Quikfit or secondary repair shops, scrap metal, and junk yards. Do you really believe products got better? They paid dearly to get rid of that guy too by the way. I remember them taking quality and cost out of components under the gize of "cost saves". If decisions were so good, why didnt they say, improve quality before removing cost? A large portion of the most talented engineers have left due to Viston split. Many engineers spent years trying to get managment off Kool Aid. I have said it before and state it again, once you have been unethical or tried to cheat customers, employees, investors, you set a precident that your company can not be trusted. How can you in good faith lay off employees of 29 years just to reduce their retirement and not expect a backlash with public perception. How could you have Pestillo on the Ford Board of Directors, run Visteon without a conflict of interest? How many of the good managers left once they saw what was being asked of them? Now I do appreciate you and others that prefer to only see and comment on the good, but dont you think that should be rolled out with caution? Look at the key statistics of the company and how they have performed over the last decade. Its shameful. They are leveraged with loans now. Its like the Obama situation, the only thing talked about is how wonderful Mulally is. They have literally tried to make it part of their chant and culture internally. What has Mulally done? He didnt even know cars when they brought him in for crying out loud. Yet everyone prefers to think hes a mesiah? Sad truth is invetors are more cautious and scrutinize their purchases any more. If Ford wants to get back to world class status, it has to be performance based. Not just filling the news with propoganda. They need to ask for forgiveness from past customers, employees, and investors. Then behave and pray people will buy product again. Oh, one more thing, start bringing manufacturing back to America, dont just pretend to. That alone would impress the masses. Advertise based on truthfullness. Even if slight cost disadvantage, tote it as needed because they are bringing jobs and factories home. This will increase market share and trend toward increased sales. Give up short term profit for increased customer base and explain the margin price diff for true American goods. Companies here can compete just fine. We have all seen it thru the years. CAN FORD REALLY DO THIS?

  • Report this Comment On September 14, 2010, at 5:11 PM, Melaschasm wrote:

    Ford can make Lincoln a success, but I am not sure if doing so will increase profits. I would rather they just put a Lincoln name plate on a few Ford vehicles, than to expend great effort to sell 10's of thousands of cars per model.

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