On Monday Ford (NYSE:F) took the wraps off its latest concept car: The Lincoln Continental, a big, plush four-door sedan that represents an interesting take on the idea of a luxury car.
For now, the Continental is a concept, meaning that there are officially no plans to produce the car you see here. But with Ford, a "concept" is often a thinly veiled preview of a model that it does plan to produce, and that seems to be the case here.
It's a safe bet, then, that something very like this Continental will go into production sometime next year. What does it tell us about where Ford plans to take the Lincoln brand?
Lincoln is going in a different direction from its old rival Cadillac
With the New York International Auto Show set to open to the media on Wednesday, you'll see a lot of articles this week that compare the Continental Concept (as it's properly called) to the other big luxury sedan that is expected to debut at the show, General Motors' (NYSE:GM) long-anticipated Cadillac CT6.
I'm not sure that's quite the right comparison for the big new Lincoln, though.
The CT6 and the Continental Concept do have a few things in common. Both are big new luxury sedans from old-school American brands that are attempting to elevate their brands. They're both plush and powerful -- and both should represent a big step forward for their respective brands in quality and luxury.
And both Ford and GM are hoping that a revitalized luxury brand can generate significant profits: Generally speaking, luxury cars can command much higher profit margins than mainstream models.
But in reality, the two brands are going in somewhat different directions. GM is spending $12 billion on an all-out effort to turn Cadillac into a global peer of the German luxury-car giants. That's a daring plan, but a good one: If it works, it should add quite a bit to GM's global bottom line.
Ford's budget for Lincoln is a lot smaller: $2.5 billion for four new models, starting with the production version of the new Continental. The Continental Concept helps us see that Ford's plans for Lincoln are quite different -- and rooted in part in the discovery of a unique-to-Ford opportunity in China's vast market.
There's a lot about the new Continental that is all about China
Speaking at a conference last fall, Lincoln president Kumar Galhotra said that Ford's research around the Lincoln brand in China turned up something quite surprising. Ford had never sold Lincolns in China until late last year, but Chinese customers knew the brand well -- as the brand of American movie stars and presidents from decades past.
With China's market for luxury cars booming (and still wide open), that pre-existing cachet gave Lincoln an interesting entry point. Another point: While the German luxury brands have done very well in China, Toyota -- and its Lexus luxury brand -- have struggled, in large part because of a heated political dispute between China and Japan that cooled Chinese demand for Japanese-brand goods.
To sum it up in one sentence, I think Ford is aiming to take Lexus' spot in China. The Continental isn't intended to compete directly with the German sport sedans -- there's no talk of taut handling or performance numbers. Instead, the emphasis is on what Lincoln is calling "quiet luxury": A well-trimmed interior with an emphasis on comfort and a powerful-enough engine to enable effortless cruising. That's right in Lexus' wheelhouse.
The Continental Concept's designers placed a particular emphasis on rear-seat comfort. That's appreciated in all markets, but it's a crucial point in China, where luxury-car owners often hire drivers to deal with China's crazy urban traffic. That means the owner rides in back.
The upshot: A new Continental flagship for a new and different Lincoln brand
American customers have long known Lincoln as the maker of airport limos and fancied-up Fords. Even the latest Lincolns like the MKZ sedan and MKC SUV follow that old formula: Aside from being plusher, they're not that different from the Fords they're based on, the Fusion and Escape.
Will this new Continental start to change that? That will depend on the details of the production version, which we won't see next year.
Volkswagen Group's Audi brand has shown that a luxury car can be based on mainstream mechanicals and still offer a credible luxury experience (and generate a fat profit) -- if the details that are visible to buyers are executed at a high level.
To be a serious contender, the new Continental will need that same level of execution. Can Ford pull it off? We'll find out in a year or so.
John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool 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.