Ford Looks to a Big New Market
Last week, Ford (NYS: F) made global headlines when it announced the promotion of Mark Fields to chief operating officer. There's a simple and obvious reason for that: Fields now appears to be set to succeed Ford's rock-star CEO, Alan Mulally, when Mulally retires sometime after 2014.
The question of Mulally's eventual successor has worried investors for some time. Executive Chairman Bill Ford's announcement of Fields' promotion -- along with the news that Mulally will be sticking around through at least 2014 -- went a long way toward reassuring investors that Ford's eventual changing of the guard will be a smooth one.
But buried in the news of Fields' promotion were announcements of some other promotions at Ford, including an intriguing one: Ford's marketing chief, Jim Farley, is taking over responsibility for the Lincoln brand.
That could turn out to be a big deal for Ford.
Ford's last brand left standing gets a bright new leader
Ford (NYS: F) used to own a whole stable of automotive brands besides the famous Blue Oval, but one by one, Mulally has sent them packing: Volvo was sold to a Chinese automaker, Jaguar and Land Rover went to India's Tata Motors (NYS: TTM) , Ford's stake in Mazda was sold off, Mercury was shut down, and 007's favorite carmaker, Aston Martin, went to a group of private investors.
But curiously, Ford chose to keep Lincoln, its venerable -- some would say over-the-hill -- American luxury brand. Why?
The answer to that question is starting to become clear: It's because Farley has been passionate about its chances. According to reports, Farley, who arrived at Ford in 2007, stuck up for Lincoln when other executives wanted to shut it down. He apparently felt that with the right products and management, Lincoln had a chance to expand and prosper around the world -- including in China.
That assertion got the attention of everybody on Ford's senior team. Ford's the only big-league global automaker without a significant luxury brand, just as luxury-car sales are booming in places like China.
That lack is costing the Blue Oval more than sales: Luxury cars have fat margins and generate big profits. Ford really needs a strong presence in the luxury market to take its business to the next level. General Motors (NYS: GM) has Cadillac, which it is moving aggressively to expand, Volkswagen (NASDAQOTH: VLKAY) has Audi, Honda (NYS: HMC) has Acura, Fiat (NASDAQOTH: FIATY) has Maserati and Alfa Romeo.
And Toyota (NYS: TM) has its wildly successful Lexus brand, which -- pay attention here, because this is important -- Jim Farley used to run.
A big job for a talented executive
Thanks in part to the shining success he had with Lexus, Farley is a big deal, a talented executive who is very well regarded throughout the industry -- and within Ford: I had a conversation with Mullaly recently in which he referred to Farley as Ford's "secret weapon" and praised him highly.
Farley will need all of his talents to make Lincoln a credible global player. Right now, Lincoln is getting outsold around the world -- and not by small margins -- by brands like Buick and Acura, never mind the luxury heavyweights. It has no significant presence in China or Europe, and it's really only a minor player even here in the United States.
How will Ford change that? Some of the groundwork is already in place: Ford has made a series of big investments in Lincoln over the past couple of years, establishing a dedicated Lincoln-only design center, spending big to upgrade its dealerships, and promising seven new Lincolns by 2014.
One of those cars will arrive at dealers next month: the MKZ sedan, which is based on the same underpinnings as the new Ford Fusion -- but which Ford says is a very different car.
The MKZ won't show Farley's influence -- that won't show up in products for at least a couple of years -- but it's a key product for Lincoln right now, and the first big product of the company's nascent brand overhaul. How will it do? We'll find out soon.
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