Ford's Battle Royal Begins
Make way, the uber-cool Lincoln is here! Ford (NYS: F) is going all out to make Lincoln the car it never was. From the bulky limousine look to a stylish mid-size sedan complete with a glass roof, classy interiors, and top-notch features -- the car has come a long way.
Ford chose the New York International Auto Show to unveil the 2013 Lincoln MKZ, the first of seven new or redesigned Lincoln models it plans to roll out by 2014.
Ford's attachment with Lincoln was evident when it decided to hold on to the brand while selling off others. Jaguar and Land Rover were handed over to Indian auto giant Tata Motors (NYS: TTM) , while Volvo was taken over by a Chinese automaker. Of the remaining, Mercury got killed last year, leaving Lincoln to enjoy all the attention.
Ford decided to revamp Lincoln in a big way, making a lot of promises in 2010. Today, we're seeing those being kept. The MKZ is the first model created in Ford's Lincoln-only design studio. After launching the studio and consolidating its dealer network, Ford has even taken a first-of-its-kind initiative in the auto industry by joining hands with a hotel concierge association. The plan is to set up a Lincoln Academy that will give customer service training to staff.
Why is Ford putting so much effort in one brand? Because it doesn't have much of a presence in the luxury car segment -- a market that's getting bigger by the day.
Need to milk the market
Sales growth for most of the luxury brands beat the overall U.S. auto market's growth rate of 10% last year. Things could get even better this year. Total luxury car sales were up 10% in March from the comparable period last year. Audi's sales were up 23.6% while BMW's sales rose nearly 22%.
With Lincoln lagging far behind its rivals, the race to the top won't be easy. In 2011, General Motors (NYS: GM) sold 152,389 Cadillacs and ToyotaMotor (NYS: TM) sold 198,552 Lexuses. Lincoln's 85,643 units pale in comparison. Lincoln was the best-selling luxury car in the U.S. with a 20% market share in 1990. So the company knows there's a lot of room to grow.
Don't stop here
I'd also like to see Ford take the luxury car to newer geographies. So far, Ford has remained somewhat coy about its Lincoln plans. Countries such as China and India are fast emerging as strong buyers of luxury cars. Audi's car sales in India, for instance, shot up 41% during the first quarter of this year. According to analysts' estimates, India's luxury car market is worth $1 billion, with an annual growth of around 40%.
In China, with the number of billionaires and millionaires rising manifold in the past two years, the country is seeing more affluence. Toyota and Volkswagen already have a good presence. Tata Motors' Jaguar-Land Rover, which has been killing it lately, has decided to give the Middle Kingdom a try through a joint venture with Chinese automaker Chery Automobile. BMW counts China as one of its biggest markets. Ford, too, is expanding in a big way in China, and I just hope Lincoln is a part of the plan.
The Foolish bottom line
The 2013 Lincoln MKZ will be launched commercially later this year. Ford is pinning its luxury hopes on the brand, and it'll be interesting to see how things turn out for the auto giant. Can Lincoln add value to Ford and become its key to higher growth? To stay updated, click here and add Ford to your stock watchlist.
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At the time this article was published Neha Chamaria does not own shares of any of the companies mentioned in this article. The Motley Fool owns shares of Ford Motor. Motley Fool newsletter services have recommended buying shares of Ford Motor and General Motors. Motley Fool newsletter services have recommended creating a synthetic long position in Ford Motor. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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