Lincoln's MKC has received much attention after its recent ad campaign. Image source: Lincoln/Ford.
Ford Motor Company's (F 1.41%) struggling luxury brand, Lincoln, has made one heck of a splash over the last couple of months. Ford is pouring in billions of dollars to help spur the brand's moribund sales and introduce Lincoln into China's surging market. On top of all that, Lincoln was thrust into the national spotlight via an ad campaign featuring actor Matthew McConaughey, which quickly provoked spoofs by the likes of Jim Carrey, Ellen DeGeneres, and others. Carrey's spoof from Saturday Night Live has over 8 million views on YouTube, while DeGeneres' has topped 5 million.
While Ford is thrilled with the attention Lincoln is receiving these days, it seems some in the media were too quick to claim that the ads and parodies were boosting sales. Let's take a quick look at some of the recent figures for a better understanding.
Big picture
Watching Lincoln sales in the U.S. has been like watching a slow-motion train wreck. Lincoln sales peaked in 1989 and 1990, with 200,315 and 231,660 units sold, respectively. As you can see below, the brand has fallen far from those heights in recent years.
Graph by author. Data source: Automotive News DataCenter.
Despite Lincoln's downward spiral in sales, Ford is determined to reinvigorate its all-but-dead luxury brand. Having a successful global luxury brand nowadays is synonymous with being one of the world's leading automakers.
For that reason, amid Ford's quest to become one of the top global automakers, the company will spend $5 billion on the Lincoln brand to revive its vehicle portfolio. "It's really important for us to have a relevant and vibrant luxury brand," Ford CEO Mark Fields told Reuters in October. "You need to make the investment and build this brand over time."
Lincoln's surge
Many were quick to claim that Lincoln's 25% year-over-year sales surge in October was due to the massive attention the brand has received lately. It was pointed out that it was no coincidence Lincoln's all-new MKC -- featured in the McConaughey ads -- posted its best month of sales ever.
However, let's look at the sales figures. A total of 7,131 Lincoln vehicles were sold in the United States in October 2013, compared to the 8,883 registered last month. However, that sales comparison isn't apples-to-apples, since this October includes sales of the all-new MKC, while last year's did not. When removing that from this October's total, Lincoln sales are actually down from last year's 7,131 units, to 6,686. Thus, despite the MKC lifting sales incrementally, the brand in an apples-to-apples comparison actually did worse last month.
2015 MKC. Source: Lincoln/Ford Motor Company.
What about the MKC posting its best month ever, you ask? First, it should be noted that the MKC's record month of sales, which hit 2,197 in October, is only competing against five other selling months so far for the all-new ride. Sure, the ads and spoofs had some positive impact, although it is difficult to measure in terms of sales. However, the MKC is meant to challenge Lincoln's flagship sedan, the MKZ, as the brand's best-selling vehicle, so it still has more sales to gain, as the MKZ topped 2,500 sales in October. Plus, it isn't certain which month inventory of the MKC arrived at all dealerships in full supply -- and if supply has just arrived in full amounts recently, that could be the reason for increasing sales figures.
It's important to understand the driving force behind these sales numbers, because Ford hopes to raise its Lincoln annual global sales to 300,000 vehicles by the end of the decade, which is roughly three times the amount sold in 2013. On top of strengthening global sales, luxury brands represent higher average transaction prices and profits. Luxury sales also represent incremental sales, as the Lincoln brand doesn't directly compete with Ford's mainstream brand. Ultimately, Lincoln's revival is critical if Ford's stock is to beat the market over the next decade.
All right, all right, all right...
I own shares of Ford because I'm bullish on the automaker's future, including its plan for Lincoln. However, it is important to look at the recent sales figures objectively, and to understand that the Lincoln brand has not immediately benefited from the ad campaign and viral parodies.
With that said, the spoofs certainly brought more humor and attention to Lincoln than it has seen in years. If Ford can keep the ball rolling by capitalizing on its newfound brand exposure, execute a successful Lincoln launch in China, and continue to design and launch popular new vehicles, this could be the beginning of a great turnaround story.
