Ford's Luxury Effort Gathers Steam

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Most of the time, Ford's (NYSE: F  ) moves make a lot of sense, especially in hindsight. It's usually not too hard to figure out what CEO Alan Mulally and his team had in mind, because it's usually the smart call – and it usually works out well.

Adding luxury features to small cars like the Focus and Fiesta? Gotcha: That proved popular with customers downsizing from bigger cars and did wonders for Ford's margins. Unifying Ford's U.S. and European product lines to increase economies of scale and allow more investment in each model? Simple: Better vehicles plus bigger margins equals more profits.

But I admit that the Blue Oval's decision to keep Lincoln, its venerable luxury brand -- after dumping the rest of its premium brands -- is still puzzling me. But puzzling or no, the effort is gathering steam -- and the latest Lincoln is a stunner.

A big effort for a small slice of the market
I definitely understand why General Motors (NYSE: GM  ) CEO Dan Akerson has committed to a major overhaul of GM's luxury brand, Cadillac. Cadillac has global name recognition, some solid products to build on, and GM has a golden opportunity right now to establish the brand in China, where luxury cars are just starting to take off.

That makes sense to me. But none of those things really apply to Lincoln. Ford's onetime Cadillac rival isn't a global brand; it's only sold in the U.S., Mexico, and a few countries in the Middle East. It's not a big seller, representing just 4% of Ford's 2011 sales in the U.S. And its product line consists mostly of mildly restyled Fords with fancy grills and cushier interiors.

But Ford has committed to a big effort to overhaul Lincoln, promising seven "all-new or significantly refreshed" vehicles by 2014, and saying that these new cars and SUVs will be sharply differentiated from the Ford-brand products with which they share underpinnings. Ford has even established a separate design center for Lincoln, with a staff of 200, to create a strong visual identity for the brand. And Ford spent another $150 million to consolidate Lincoln's dealer network, and more to establish a boutique financing arm and other programs to bring Lincoln's offerings into line with the leading luxury-car brands.

A lot of talk, and now a strong concept
That all sounded great when Ford executives announced it last year. And when Ford took the wraps off the Lincoln MK Z Concept, the first product of this new effort, earlier this week, I was impressed: While it shares underpinnings with the new Ford Fusion, it looks very different, both from the Fusion and from current Lincolns -- and very striking, in a timeless-classic kind of way. Ford said that the concept "strongly hints" at the new midsized Lincoln sedan that will arrive at dealers later this year, as well as at the "design future" for the brand as a whole.

That's all great. It's a very good look, upscale in a soft-edged, timeless way, and the planned eco-friendly focus for the brand seems directly targeted at Lexus, which has parlayed corporate parent Toyota's (NYSE: TM  ) strong emphasis on green technologies into some upscale green cred of its own.

 But it seems like a huge effort for just 4% of Ford's U.S. sales.

Some clues as to the motivation
Maybe it's as simple as this: Ford wants Lincoln's sales to add up to a lot more than that 4%. Ford's Mark Fields, who holds the somewhat awkward title of President of The Americas, laid out the party line in a statement this week:

The luxury piece of the industry is significant. In any given year in the U.S., the luxury segment is 11 to 13 percent of overall sales, and it is important for us to win customers in the luxury market with strong new vehicles. That is a key reason we have invested so heavily in Lincoln.

Is it really that simple? Is it really that Ford figures it should be capturing more of that 11% to 13% of the U.S. market, and that Lincoln is its best (really, only) route to doing that?

It could be. And maybe Ford's internal projections show that its anticipated U.S. sales gain will make this effort worth its while. But I wonder if something more dramatic -- something like a major rollout of the brand in Asia to bolster Ford's growing Chinese presence -- is in store. We'll find out.

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Fool contributor John Rosevear owns shares of Ford and General Motors. You can follow his auto-related musings on Twitter, where he goes by @jrosevear. The Motley Fool owns shares of Ford Motor. Motley Fool newsletter services have recommended buying shares of Ford Motor and General Motors, as well as creating a synthetic long position in Ford Motor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (9) | Recommend This Article (7)

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  • Report this Comment On January 13, 2012, at 2:17 PM, spawn44 wrote:

    It makes perfect sense to me for Ford to revive this classic brand. What made no sense was when they went on a buying spree in the 1990's and bought Jaguar, Volvo, Landrover, to name a few. They now have woken up from that diversionary nightmare and are back on track like never before. I admit Lincoln's have been embarrasing to look at lately. But they still have a base to work on. After making the right consolidation moves Ford still needs to revive this brand to have a complete line-up to offer the public. I believe Lincoln will not only compete in this segment, it will be a leader in a few years.

  • Report this Comment On January 13, 2012, at 2:39 PM, SMOKEN42 wrote:


  • Report this Comment On January 13, 2012, at 3:35 PM, DJDynamicNC wrote:

    I'll admit, almost everything I know about Lincoln as a brand I just learned from this article. But it sure sounds good.

    I trust Mullaly to make the right call, so I'm interested to see how it plays out.

  • Report this Comment On January 13, 2012, at 5:39 PM, Fonz56 wrote:

    This hopefully is really good news for me and Lincoln. My last two cars have been Lincoln's but honestly do not like the style of the lastest models. Look like overgrown SUV with no identity. Not just Lincolns but most all auto's. Take the emblem off and you can't tell one car from another. Most reliable automobile I've owned with comfort beholden a King.

  • Report this Comment On January 13, 2012, at 5:58 PM, chrisausten wrote:

    I am commenting here as a life long Lincoln customer - or as I should say now an "ex-customer". As long as Lincoln continues to put out cars with the current design style, I will look to Cadillac, or Buick, or (dare I say it) even Chrysler for a proper luxury car. If Lincoln wants to be a player in foreign markets that's fine - put out a couple of models that will work in those markets - but don't just abandon the entire style that made Lincoln the most beautiful American luxury car on the road. Lincolns used to be head turners - now they're just another generic "blob" on four wheels. The question is...can any automobile manufacturer survive without it's "core" group of customers?...I guess we shall soon find out because Lincoln is losing it's traditional customers left and right. I have read so many articles and comments from people in the "livery" industry who are abandoning Lincoln since they discontinued the Town Car. One person who owns a car service said that their customers don't want to see something that looks like a suv or a cheap common car pull up to their door. And there you have the problem...all of Lincolns models look "cheap and common". Lincoln says that the new mkz is indicative of all future designs...if that's true, just pull the plug now and let it go the way of Mercury. I speak for all the folks who loved the Lincoln that "was"...I hear the distant sound of Taps being played for what was once the preeminent American luxury car.

  • Report this Comment On January 13, 2012, at 6:40 PM, JMRog wrote:

    Yes, Ford will need a competitive luxury platform, whether it is badged Lincoln or something else hardly matters..... what matters is: will the product be distinct from lower-line products and worthy to compete not just with Cadillac but M-B, BMW, Lexus, Infiniti and Audi ?.... these are smart, tough competitors with a big lead in products and dealer networks well versed in handling luxury car customers and their vehicles. It will not be as easy for Ford as the article makes it sound!

  • Report this Comment On January 13, 2012, at 7:31 PM, Fonz56 wrote:

    JM, like I said take the emblem off of your Lexus, Audi, BMW and your appearance is just a plain car. Cadillac looks like a crippled piece of metal(rear higher then front) looking for a place to settle.

    I can't argue the interiors, but what do you see when you spend $40,000+.

  • Report this Comment On January 14, 2012, at 10:00 AM, JMRog wrote:

    To be fair to the auto manufacturers, and I worked for one for 23+ years, the sheet metal similarities derive from wind tunnel testing to help achieve lower drag and high fuel economy ... whether the tunnel is in Tokyo, Stuttgart or Detroit, the best results are produced by the shape we see today...but a true luxury car is not determined by its looks..BMW and Mercedes products are DEVELOPED (7 years) to be premium offerings from the wheels up... they are not a modified down-market chassis with different sheet metal... and yes, many people are still attracted by the appearance of a car, but the number of luxury buyers who understand the difference is growing quickly .... I hope for Ford's sake, they understand the difference..... I do not doubt they have the capability to produce a viable luxury entry ... do they have the commitment internally and from their dealer network?

  • Report this Comment On January 15, 2012, at 9:46 AM, KistlerBuildings wrote:

    What will it take to park these "Luxury" vehicles in "Luxury Garages"? It is beyond me why some people who pay top dollar for a high performance car, look for the "cheapest" Garage to protect their prized vehicle? If they were to understand that a "Luxury" vehicle belongs in a "Luxury" Garage, the Audi's,Mercedes,Lexus, etc. would be Happy Vehicles therefore having Happy Owners!

    Don't get me wrong, there are smart buyers out there who know the meaning of value and that's why Kistler, The Number 1 Builder of Luxury Garages and High End Horse Barns, Commercial Buildings etc. has pushed through the recession and came out on top! Our loyal "smart" "Luxury owning customers, continue to believe in the value of parking their luxury cars in luxury "Kistler Garages"! Everybody should take pride in owning the best! owns shares in many Luxury vehicles.

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