Can Ford’s Lincoln Brand Catch Cadillac?

Lincoln's MKZ. Photo Credit: Ford Motor Company.

Unfortunately for Ford (NYSE: F  ) , its luxury-car competition with crosstown rival General Motors (NYSE: GM  ) hasn't been pretty recently. GM is having one of its most improved sales years since 1976, while sales of Ford's Lincoln line have declined 7.6%. Across its full lineup, Lincoln's 2013 sales have nearly been surpassed by the Ford Fusion's sales in July alone. Investors hoping to see Lincoln quickly turn around as quickly as Ford fixed its core brand after the recession should prepare for a big disappointment.

Roll up your sleeves...

At least Ford executives aren't delusional about what the Lincoln brand is today, and what it will take to revive the brand.

"No, we're not true luxury," said J Mays, Ford's design chief at the Dearborn campus, according to the Detroit News. "We're in an investment stage with Lincoln. We've probably got a 10-year investment to make."

One of the biggest knocks against Lincoln currently is that while Ford is significantly trimming its number of platforms, a luxury Lincoln vehicle is basically a repackaged standard Ford vehicle. "It's definitely a wanna-be luxury brand," said Michelle Krebs, senior analyst at automotive research firm, according to the Detroit News. "It's not there, though, by any stretch."

To reimage its luxury lineup next year, Ford will add "Black Label" themes: three new ultra-premium themes available for the MKZ late in 2014, and one for the MKC.

Exterior of MKC Black Label Chroma Flame exterior concept. Photo credit: Ford Motor.

It's definitely a good first step to include exclusive materials and colors that will differentiate Lincoln trim packages from Ford vehicles. Some of the materials in the Black Labels will include Venetian leather and Ziricote wood trim, usually found on high-end yachts.

To speed up its resurgence, Lincoln must also change its target audience. It will now shift from retirement-aged consumers to a younger, more affluent crowd. In its quest to shake things up, Ford is asking Lincoln dealerships to change its showrooms to meet specific guidelines.

According to the AP, 70% of dealerships in the 130 largest metropolitan areas have agreed to the changes, which will improve showrooms, selling strategy and overall appearance. Renovations even extend to the smallest details: new showroom smells, foods, drinks and even luxurious chairs. That means no more hamburgers and hotdogs during summer sale cookouts; you'll be getting wine paired with cheese.

Next steps

Ford needs its luxury brand to succeed now more than ever, after killing or selling all of its brands besides the Blue Oval and Lincoln. As most of you know, luxury vehicles bring in higher transaction prices and margins, while representing incremental sales. Because the two brands don't compete for the same consumer, luxury cars can fuel quick top- and bottom-line growth.

Lincoln hopes its next handful of launches can kickstart the brand's revival. The MKC will be its next step, debuting in the second quarter of 2014, and competing with the Acura RDX and Audi Q5, among others.

After that, the MKS will debut in the large sedan segment, hitting showrooms in 2016. Another historically big-selling model, the MKX, will arrive in the first half of 2015. The kicker could be Lincoln's once-flagship SUV, the Navigator, which could hit the market in late 2014. 

Halfway there

There are two major things Ford needs to grow in order to be a great investment over the rest of the decade: market share overseas, and luxury sales in the U.S. and China.

Ford's great progress in the latter country has boosted its pre-tax profit in the Asia-Pacific-Africa region to its best-ever quarterly result. Ford's sales in China are up 50% over last year, and continue to climb thanks to new product launches. 

Now Ford needs to shore up the other half of that strategy for success. As the old saying goes "The fastest way to do something is to do it right the first time." If that means Lincoln's resurgence will take longer than expected -- even up to 10 years -- to catch Cadillac, then that's what must be done. Investors who remain patient should be rewarded during the journey.

Will Ford Even Get the Chance to Revive the Lincoln Line?

Growing market shares in emerging markets, and reviving its luxury brand, will be key to Ford's success. But there are other major developments that could crush Ford -- and crucial areas of its business you need to keep an eye on. The Motley Fool is sharing those details in a free report, "5 Secrets to Ford's Future," where we outline critical information every Ford investor must know. Click here now for your free report.

Read/Post Comments (4) | Recommend This Article (2)

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 August 28, 2013, at 11:02 PM, tstorey1 wrote:

    Ford abandoned it's Lincoln brand long ago.

    They still build them, but, a $34,000 Taurus is still just that. It is not the technology in a car. It is what the car looks like.

    Cadillac is selling boat loads of beautiful cars and taking market share from Lexus et al. Cadillac went back to what got them there...styling.

    Today's Lincoln has got zero mojo.

    Today's Caddy has it in spades.

    The new CTS will outsell you know who for the first time in a generation.

    The 2013 Lincoln will outsell no one. They were once a style leader, they have a long road back.

  • Report this Comment On August 29, 2013, at 1:15 AM, vinnieboiblue wrote:

    If you sat in a Lincoln and sat in a FORD, you would not be able to tell the difference. That alone tells you, Lincoln has a problem. This Black Label bit is nothing but a gimmick. Is Lincoln selling American luxury or are they selling Hormel Black Label bacon? That smoked taste will not go good with a Lincoln. Lincoln needs focus and redefine what makes Lincoln special.

  • Report this Comment On August 29, 2013, at 2:15 AM, btc909 wrote:

    Sure it can. Will it take decades, yes it will. Lexus is almost as big of a joke as Lincoln. The Avalon beats any Lexus in a similar price point and even some of the higher end Lexus models.

    Building Lincolns in Mexico doesn't inspire confidence.

  • Report this Comment On August 29, 2013, at 9:06 AM, Jason87467 wrote:

    Ford would do well to discontinue the Lincoln because while trying to catch up with the Caddy, the Caddy will also move ahead while losing a lot of money in the process. The Lincoln is doom!!!

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2614675, ~/Articles/ArticleHandler.aspx, 9/28/2016 11:28:52 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...

Today's Market

updated Moments ago Sponsored by:
DOW 18,196.05 -32.25 -0.18%
S&P 500 2,153.55 -6.38 -0.30%
NASD 5,289.49 -16.22 -0.31%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/28/2016 11:13 AM
F $11.98 Down -0.01 -0.04%
Ford CAPS Rating: ****
GM $31.60 Down -0.01 -0.02%
General Motors CAPS Rating: ***