Ford Motor Company: Can Lincoln's New Crossover Derail General Motors Company's Cadillac?

Lincoln MKC. Source: Ford Motor Company

Earlier this month, I took a look at how Ford's (NYSE: F  ) Lincoln brand is beginning to catchup to General Motors' (NYSE: GM  ) Cadillac brand. Today I want to take a closer at how that gap could get even smaller

Although sales have been rather lackluster for Lincoln over the past several years, it has surged so far in the first six months of 2014, up a robust 16.3% compared to the same period last year. 

Meanwhile, Cadillac's sales have slipped 3% this year, but have largely been held higher by one key model: Its SRX crossover. Lincoln's SUV, the MKX, has posted modest gains too. But its new crossover, the MKC, could be what really puts the pressure on Cadillac.

A closer look at the Cadillac SRX 
First let's take a look at the SRX. It was Cadillac's best selling model in 2013, with over 56,000 models sold. In the first six months of 2014, Cadillac has sold almost 29,000 units of the SRX, a 20.3% increase from the same period last year.

The starting price for this year's SRX increased less than 1% from last year, and now starts at $37,605. 

Cadillac SRX. Source: General Motors Company

In any regard, consumers are loving the vehicle, as it is Cadillac's top selling model this year, (both on a sales growth basis and unit volume basis). 

So what does Lincoln have? 
Entering 2014, Lincoln had just one SUV in the mix: The MKX. The MKX -- which costs more than the Cadillac SRX, with a starting price tag of $38,500 -- has improved sales 12.4% for the first six months of 2014, but has only sold about 13,000 units.

However, this is not the vehicle I'm referring to in regards to derailing Cadillac's SRX success. Instead, it's the MKC, which was introduced in May.

With a starting price tag of $33,100, the Lincoln crossover is roughly 12% cheaper than its crosstown rival's crossover. It's also more fuel efficient, gaining an EPA estimated 20 miles per gallon, or mpg, in the city and 29 mpg on the highway. 

In comparison, the SRX only gets 17 mpg in the city and 24 mpg on the highway. In other words, the Lincoln MKC is 17% more gas efficient in the city and 25% more gas efficient on the highway. 

And believe it or not, three out of five Americans called fuel efficiency a "very important" factor when deciding on their next car. 

Does it matter that it's a crossover -- what about other models?
While the other models do matter for the two brands, crossovers remain the hottest selling type of vehicle in the U.S. In the first six months of 2014, the segment has tacked on a robust 12.9% sales gain compared to the same period in 2013, the most of any of group. 

Americans love their SUVs and crossovers, and for that reason, I expect sales of the Lincoln MKC to pick up speed through the course of 2014. 

Lincoln MKC. Source: Ford Motor Company

Now that doesn't mean I expect Cadillac SRX sales to plummet and Lincoln to sell tens of thousand MKC models per month.

But I do expect to see a modest increase in MKC sales in the second half of 2014 and going into 2015. The big question will remain: Will the potential success of the MKC comes at the expense of the Cadillac SRX?

Final thoughts
While there's no telling that Lincoln MKC will be well received by Americans or if the Cadillac SRX will see a dip in sales, I think it's something for investors to keep an eye on. 

The MKC has only sold 1,361 units this year, but remember, it hasn't been available to consumers until recently. Perhaps it will only cannibalize sales of its more expensive brother, the MKX, instead of putting in dent in Cadillac SRX sales.  

But if the Lincoln MKC begins to gain strong momentum, watch for it to come at the expense of the Cadillac SRX. Cadillac sales have been stagnant in 2014, with the exception of the SRX. A sales decline for the model could hurt more than investors think. 

Warren Buffett's worst highway nightmare (Hint: It's not Tesla)
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to ride this megatrend. Click here to access our exclusive report on this stock.

Read/Post Comments (7) | 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.

  • Report this Comment On July 27, 2014, at 9:09 PM, yuckfu wrote:

    Lincoln needs to build a Lincoln instead of rebadging ford products.

  • Report this Comment On July 27, 2014, at 11:30 PM, wallynm wrote:

    We have had two MKX's and looked at the MKC and it was simply to small in every dimension. Most of the tweaks will wind up on the MKX redesign.

    I would take a SRX over the MKC.

    Agreed Lincoln needs to get away from re-branded Fords.

  • Report this Comment On July 28, 2014, at 2:04 AM, btc909 wrote:

    Nope but this is a good start. I'd dump the lower end motor. Use a Lincoln only platform or go the Lexus NX route and barely use anything from the sister platform.

  • Report this Comment On July 28, 2014, at 2:17 AM, StockgeniusII wrote:

    It might do better if they just wait a few years and just copy the look of a BMW X5 or the new Porsche Macan.

    I find Lincolns especially with the front grill kind of ugly!

  • Report this Comment On July 28, 2014, at 7:31 AM, Cody700 wrote:

    Lincoln needs to keep its foundation of building luxury cars, not rebadging Fords. If anything is rebadged, or a platform is re-purposed, it should be a Ford using a re-purposed Lincoln platform. I do believe that a modern, stand alone in every way, Lincoln Town Car would be a great move for Lincoln. Something that was long, sleek, and had a wow factor when you saw one drive by. Prior to the 80's, Lincoln was very distinguished and they carried a certain prestige to them. That is gone from American cars, and just the really radically expensive imports have that flavor, and not much of it at that.

  • Report this Comment On July 28, 2014, at 11:27 AM, babyleg wrote:

    The Cadillac isn't that much nicer either. The lincoln is absolutely ugly and guaranteed not to be worth the sticker price. The problem is that Lincoln's loose their value quickly and they look obsolete in only a few years. Buy an Acura or an Audi Q5. Much better vehicles overall. Bottom line don't waste your money, this is not a head turner. It's more like your fathers Buick...

  • Report this Comment On July 28, 2014, at 10:58 PM, NoVaEarly wrote:

    Lincoln's current business model shows contempt for potential customers. How else could you explain their design process. Take a Ford, make it heavier with less interior volume, make it handle like a marshmallow, give it an awful grille, tacky trim, awkward profiles, and add a couple grand on top of the price of a comparable Ford.

Add your comment.

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: 3040867, ~/Articles/ArticleHandler.aspx, 8/28/2015 11:01:39 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...

Bret Kenwell

At The Motley Fool I cover consumer goods and industrial companies, and mainly the automakers. I am a long-term investor looking for companies with sustainable and above average growth. I also like to uncover value, dividend-paying companies. Follow me on Twitter @BretKenwell

Today's Market

updated Moments ago Sponsored by:
DOW 16,589.59 -65.18 -0.39%
S&P 500 1,983.26 -4.40 -0.22%
NASD 4,802.60 -10.10 -0.21%

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

8/28/2015 10:35 AM
F $13.73 Up +0.17 +1.25%
Ford CAPS Rating: ****
GM $29.00 Up +0.42 +1.47%
General Motors CAPS Rating: ***