Ford Plans to Shut 175 Lincoln Dealerships in Metro Areas
Following two days of meetings with dealers at the company's Dearborn, Mich., headquarters, Ford said it plans to cut 35%, or about 175, of the 500 dealers who sell Lincoln products in those areas.
"Our message was pretty simple, we are fully committed to transforming Lincoln into a world class luxury brand with compelling vehicles and also a consumer experience to match," said Mark Fields, Ford's president of the Americas. "Our vision is to substantially reduce the number of dealers to be competitive."
Ford held the meetings is to develop a plan to evolve Lincoln into a true luxury brand, one that can better compete with Toyota Motor's (TM) Lexus division, for example. Ford has nearly 1,200 dealers that sell Lincolns in the U.S., compared to 226 for Lexus.
The automaker is focused on reconfiguring its sales operations in large markets because nearly 90% of all luxury buyers live in those areas, the Detroit Free Press reported.
Though a robust number of dealers in many metropolitan areas makes it easier for consumers to get a good deal on Lincoln vehicles, it lowers transaction prices and cheapens the brand's image, said auto analyst Jesse Toprak of TrueCar.com.
A Long Road Ahead
Ford may have a tough time remaking Lincoln, given widespread consumer perception that most of the division's products are merely reskinned Ford models. But General Motors' recent reinvention of Cadillac and, to a lesser extent, its Buick unit show that moribund brands can be reborn.
During the last five years, Cadillac has done a good job at changing its "old-people car" image, Toprak said. Many more younger buyers, those in their 30s and 40s, are now willing to consider Cadillac models such as the CTS midsized sedan.
When it comes to Ford, Toprak said, the carmaker has "clearly the resources and the management and the talent to have a similar change to [Lincoln] brand image." But it's not an overnight process.
As part of the brand's makeover, Ford is also looking to overhaul Lincoln dealerships themselves to bring them more in line with the experience of buyers who shop Lexus, BMW and Mercedes-Benz. Beyond physical transformation, Ford also wants dealers to upgrade services and offer perks, such as delivery of vehicles to buyers' homes.
Ford also has plans to grow the Lincoln brand internationally. That's a good strategy, Toprak said, since 80% of growth in the luxury-brand market during the next decade is expected to happen outside the U.S. market.
One impediment to Lincoln's growth may lie in the way it names its vehicles, a confusing alphabet soup of letters -- MKZ, MKT, MKS and MKX -- that are nearly indistinguishable from each other.
"The naming convention Lincoln uses right now is absolutely horrendous," Toprak said. Ford would be better suited using a more distinct system such as Mercedes-Benz, which combines letters with numbers (E350, S550, etc.), that aids consumers in determining the size of the car and its engine.
Still, such problems can be fixed with a good management team, which Ford has in place, Toprak said. "Product isn't the major issue, which is a good thing," he said, noting that Lincoln's current and future portfolio of vehicles appears solid.