It's no secret that Ford Motor Company (NYSE:F) has decided to pour billions of dollars in investments into reviving its struggling Lincoln luxury brand. The problem, though, is that many consumers believe that Lincolns are merely re-badged Ford vehicles. While that theory has had some merit in the past, and perhaps still has some, Ford is going to great lengths to change that stereotype. Case in point: Lincoln's new collaboration with a manufacturer that makes speakers that will cost you a staggering $22,000 -- though those aren't the ones that will be in the Lincoln.
What's going on
Lincoln announced a new collaboration with Revel, an audiophile speaker system manufacturer, to bring high-quality "concert" sound to its vehicles. Fortunately, for us consumers with a budget, instead of the $22,000 speakers, Lincoln will instead have two Revel systems available in the 2016 MKX: the 19-speaker Revel Ultima system, as well as a 12-speaker system. These ultra-premium speakers will eventually make it into every Lincoln vehicle in an agreement between the two companies that will run for 10 years.
One thing is clear: Lincoln is going out of its way to make its next generation of luxury vehicles far from re-badged Ford vehicles. Lincoln engineers worked with Revel to make desired changes that included moving mechanical and electrical elements of the vehicle.
The Revel Ultima system seems pretty impressive, with the ability to deliver 2,000 watts or more, as well as its Clari-Fi technology -- oh, what a clever name -- which rebuilds what compression destroys in MP3 files.
"The Revel system for Lincoln was created for the unique interior environment of each Lincoln model," said Phil Eyler, senior vice president and general manager of Harman global car audio, in a press release. "The system is tuned to create an immersive audio experience unlike any other on the road."
That all sounds great -- no pun intended -- as long as you're willing to pay a premium for some magnificent sound. But is all this worth it? Why is Lincoln going to such lengths to make sure its luxury vehicles fit the bill?
It's all about the money
As you can see above, Lincoln has failed to deliver impressive sales for years, and it's becoming increasingly important for global automakers like Ford to have a successful luxury lineup. One reason is that luxury sales don't compete with sales of Ford's mainstream branded vehicles. Also, luxury sales are less affected during tough economic times, and that's important in a very cyclical industry. Most important, though, is the fact that luxury vehicles offer much higher average transaction prices and margins, which deliver more dollars to Ford's top and bottom lines.
As you can see above, despite luxury vehicles accounting for a meager 10% of U.S. sales, the segment accounts for roughly one-third of profits. Lincoln is also in the very early stages of launching in China, and currently will only sell the MKZ and MKC in the region. If Lincoln's new vehicles fail to spark sales for its struggling brand in the U.S. and in China, it's going to be a huge detriment to Ford's future success.
That's why Ford and Lincoln are going to such extremes to make sure you don't think its luxury vehicles are just re-badged Ford rides. It's worth a lot of money, even if it means dishing out capital for some seriously high-end speakers.
Daniel Miller owns shares of Ford. The Motley Fool recommends and owns shares of Ford. 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.