Is Ford Finally Turning Lincoln Around?

Ford's latest Lincoln, the MKZ sedan, posted big sales gains in April. Photo credit: Ford Motor Co.

The turnaround of Ford (NYSE: F  ) has been one for the history books. Ford was a mess back in 2006, but lately, nearly everything it touches turns out to be a shining success.

Everything, that is, except Lincoln – Ford's luxury brand.

Ford's sales have been strong, with its latest models posting impressive gains. But at least through the first quarter of 2013, the story was very different at Lincoln.

But now, finally, a bright spot: Sales of Lincoln's latest sedan, the MKZ, were up big in April.

Is a Lincoln turnaround finally taking hold?

A turnaround effort that has been stuck in neutral
While General Motors' (NYSE: GM  ) efforts to turn around its Cadillac brand have produced great cars and rising sales, Ford's efforts with Lincoln haven't produced much of anything. The "Lincoln Motor Company", as Ford renamed it last December, has produced some striking designs, and some intriguing advertising, but until April, sales had remained... elusive.

But that just changed, at least for a month. Ford said on Wednesday that Lincoln's overall sales were up 21% in April, its first big monthly gain in a while. That gain was paced by the MKZ, which had its "best monthly sales performance ever", Ford said, with sales up a whopping 115% over the year-ago result posted by the model's predecessor.

Now, a cynic might say that the phrase "MKZ's best month ever" isn't saying much. And the cynic might be right. But at least in April, Ford's smallest Lincoln sedan handily outsold Cadillac's smallest sedan, the much-acclaimed ATS, by a big margin – 4,012 to 2,725. (But the MKZ still fell short of sales of its true rival, Toyota's (NYSE: TM  ) Lexus ES, which sold 5,122 copies in April.)

That's worth taking notice. But does it mean that a Lincoln revival is finally taking hold? Let's take a closer look.

Did MKZ's botched launch lead to a short-term spike in demand?
That great April result for the MKZ comes, of course, after a few months of terrible sales – sales that were constrained by production problems. Early examples were plagued by quality issues: The car is produced at the same plant that produces Ford's hyper-popular Fusion sedan, and the plant was apparently stretching its resources thin to keep up with the Ford's demand.

Knowing that it needed the MKZ's launch to be a no-issues success, Ford responded with a complicated process to ensure that the MKZs going out the door met top standards of quality. That apparently worked – but it created a bottleneck, and cars were slow getting to dealers.

The upshot was a botched launch: Ford had spent big on advertising to re-introduce the Lincoln brand over the winter, with the MKZ as the centerpiece – but intrigued customers who went to Lincoln dealers found them short on cars.

That cost them a lot of sales – or at least, postponed them. In April, Lincoln's dealers finally had normal levels of inventory – and sales boomed. But was that just a bit of pent-up demand, or does Ford finally have a hit Lincoln on its hands?

The short answer: It's too early to tell. There's no doubt that April was a good month for Lincoln. But let's see how the next few months play out before we declare this a trend.

It's not too late to buy Ford
If you're concerned that Ford's turnaround has run its course, relax – there's good reason to think that the Blue Oval still has big growth opportunities ahead. We've outlined those opportunities in detail, in the Fool's premium Ford research service. If you're looking for some freshly updated guidance to Ford's prospects in coming years, you've come to the right place – click here to get started now.


Read/Post Comments (0) | Recommend This Article (3)

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.

Be the first one to comment on this article.

DocumentId: 2400987, ~/Articles/ArticleHandler.aspx, 4/23/2014 8:50:38 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement