Ford to invest $1b to revive Lincoln

The Detroit News = Lincoln dealers say Ford Motor Co. intends to invest about $1 billion in new vehicles by 2014 in a bid to rejuvenate its struggling luxury brand.

Ford's leadership team, including CEO Alan Mulally, met in Dearborn two weeks ago with Lincoln dealers from major metropolitan areas to assure them of the company's commitment to the brand. Lincoln sold fewer than 35,000 vehicles in the United States through the first five months of the year, down 7.5 percent from a year ago. That represents less than 1 percent of the U.S. market.

Last year, Ford promised that Lincoln would get seven new or significantly upgraded vehicles over four years. But major auto shows have come and gone this year with no new Lincolns to excite dealers who are being asked to spend, on faith, $1 million or more each to upgrade their facilities in anticipation of a fresh showroom of vehicles.

"We're fully committed to making Lincoln a world-class luxury brand with compelling vehicles and an exceptional consumer experience to match," Lincoln spokesman Timothy Elliott said Monday.

But many are skeptical about its future.

"The bigger question is whether Lincoln will be viable," said Rebecca Lindland, a director with IHS Automotive Inc. in Lexington, Mass.

General Motors Co. CEO Dan Akerson recently dismissed Ford's efforts to revive Lincoln, its competitor to GM's Cadillac. "You might as well sprinkle holy water. It's over," he told The Detroit News.

IHS predicts Lincoln will next year add a compact sedan — a premium cousin to the Ford Focus — and a compact crossover in 2013 as a 2014 model. The automotive consultants at IHS expect most of the new and upgraded Lincolns to arrive as 2014 models, including a midsize crossover (a premium cousin to the Ford Explorer) as well as the next generation of its MKS full-size sedan. At that time, the MKT — sister to the Ford Flex — is expected to go away, and the Navigator full-size SUV could expire by 2016. But Lincoln will have new versions of the MKZ midsize sedan and MKX utility vehicle.

While the industry hasn't recovered fully — the seasonally adjusted sales rate for 2011 was 11.8 million units in May — the market is slowly coming back.

"Lincoln may miss some of the momentum," Lindland said.

Bob Tasca Jr. is president of Tasca Automotive Group, which includes Ford and Lincoln showrooms in Cranston, R.I. The chairman of the Lincoln Mercury Dealer Council traveled to Dearborn for the meeting that he described as "very positive."

Commitment assured

Ford management "assured dealers, without a question of a doubt, that Ford is fully committed to Lincoln," Tasca said.

"They have a ways to go, but you gotta believe it," he said, referring to promises made and kept to turn around the Ford brand. Tasca expects Mulally and his management team to ramp up Lincoln as well.

But he said he shares the sentiment of many of his fellow dealers in wishing the new vehicles would come sooner. His volume models — the MKX and MKZ — are selling well, but few buyers want the MKT or Navigator, Tasca said.

Ford executives told the dealers that Lincoln sales could fall below 80,000 this year, but predicted they will exceed 150,000 annually by 2015, when the lineup has been overhauled.

Lou Stanford of Varsity Lincoln in Novi also would like more up-to-date vehicles to sell, but recognizes "they're rewinding Lincoln" and resources are still stretched as Ford seeks to reduce its overall debt, which affects the resources available to develop new vehicles.

The automaker's executives have said Lincoln products will share underbellies with Ford products but distinguish themselves with their look, more technology and standard features, and powertrains that give them greater performance.

The sharing of the chassis and many major components makes it possible for Ford to come up with seven new or refreshed Lincoln products for $1 billion, Lindland said.

"They are working with economies of scale to develop these products less expensively and get more immediate return on the investment," she said.

At the meeting in Dearborn, the dealers were told they need showrooms, as well as sales and service employees, dedicated to Lincoln products.

"We were clear about their need to invest in their businesses to recognize the full potential of our investment in the brand," Elliott said. He would not comment on the investment figures.

Investment expected

Tasca said most dealers to whom he spoke will make the necessary investment.

"There is not one stencil you can put over everybody," said Tasca, who added that he will not need to spend much on the Lincoln facility he built in 2000. "I already built the Taj Mahal."

Varsity Lincoln was updated about four years ago, so Stanford doesn't think he needs to make a huge investment.

But some Lincoln dealers who also sold the Mercury brand, discontinued last year, will choose to stop selling Lincolns rather than invest, given their reduced volumes.

There were about 1,180 Lincoln dealers at the start of the year, including about 300 stand-alone Lincoln outlets.

In the top 130 metro markets, Ford wants to pare its dealership network to 325 from about 500 at the end of last year. It wants Lincoln to go head-to-head with premium brands including BMW, Mercedes and Audi — brands whose sales outlets are concentrated in large cities.

Time will tell how many close, Tasca said. But he is optimistic for the brand.