Up From the Livery Car Brand
Ford Motor (F) may be unloading Jaguar Cars (F) and Land Rover (F), but that doesn't mean the company has given up on the luxury car business. Now that its two most glamorous divisions are on the block, Ford is pinning its hopes on another upscale brand that's been a big disappointment: Lincoln.
After more than a decade of offering customers vehicles that were merely gussied-up versions of less expensive models from Ford's lineup, the company is planning to roll out designs unique to Lincoln. The initial offering will be the four-door MKS sedan, to be introduced this fall. In 2010, Ford hopes to launch the luxury MKT crossover sport utility vehicle first unveiled at the Detroit auto show on Jan 14. A potential sports car is also on the drawing board.
The new strategy represents a big change of heart for Detroit's second-biggest auto manufacturer. Executives had lost their faith in Lincoln. But new Chief Marketing Officer James D. Farley, whom CEO Alan R. Mulally lured from Toyota Motor (TM) to rethink Ford's product lineup and brand strategies, believes he can entice fortysomethings and foreigners. "Lincoln is not a damaged brand, it is one that has been neglected," says Farley, whose grandfather owned a Lincoln dealership in Grosse Pointe, Mich., before World War II.
This is a notion that, not so long ago, would have been dismissed at company headquarters. Just six months before Farley arrived in October, 2007, a proposal to export Lincolns overseas was shot down by Ford brass. "There wasn't a lot of confidence that Lincoln could go up against the Asians and Europeans," says Ford Americas President Mark Fields.
But Farley believes his predecessors underestimated the brand's potential. When he was helping Toyota introduce Lexus to developing markets such as China, India, and Russia, Farley envied the way Lincoln Town Car limos, imported from the U.S. by private companies, buzzed around airports, hotels, and other high-visibility locations. "Operating then as a Ford competitor, it always seemed like a lost opportunity not to sell Lincolns at retail in markets where the limousines are known," says the 45-year-old Farley.
The difference in his assessment of Lincoln's prospects stems in part from the difference in his assessment of the Town Car itself. Depending on whom you ask, America's most popular executive livery vehicle is either the brand's greatest strength or curse. On the one hand, thousands of wealthy people ride in Town Cars every day. On the other, many of them perceive it as just a backseat ride. The soft, couchlike driving experience is not what many luxury car buyers want when they are at the wheel. And the fact that Town Cars are the basis for most hearses built in America adds, in some people's minds, to the brand's ponderous image. "I just can't see myself in the front seat of a Lincoln," says Peter Carney, 53, a corporate attorney in Manhattan.
Farley's plan is not to aim for Carney's generation of baby boomers, who already have largely rejected Lincoln. Rather, he is targeting their immediate successors, consumers in their early 40s. He believes this group is more open-minded about Lincoln and willing to accept it as a retro-hip brand. He likens it to products such as Puma shoes and Old Style beer. "These brands were rediscovered without overt attempts by their owners to advertise," Farley says. "Why? Because they are authentic."
Farley's positioning of Lincoln is in marked contrast to General Motors (GM)' handling of Cadillac—a once-floundering luxury line that has enjoyed a turnaround. Where GM created a flashy image of a vehicle promoted with Led Zeppelin songs and bought by celebrities, Ford is taking a down-to-earth approach with Lincoln. Farley labels the new MKS sedan a "responsible luxury" car. Its V-6 engine generates as much horsepower as a V-8, he notes, but gets 20% better mileage.
Not everybody is convinced the sales pitch will work. It "is going to be pushing hard uphill with a new generation of buyers," says Dan Gorrell, president of consulting firm AutoStrategem.
But Farley is hoping that Lincoln's rising customer satisfaction and quality scores will win over attentive consumers. According to the most recent Initial Quality Study published by J.D. Power & Associates (MHP) (like BusinessWeek, part of The McGraw-Hill Companies (MHP)), Lincoln ranked No.4. The vehicles will appeal to "independent-minded people who pay attention to the research they find on the Internet," he says. In 2007, Lincoln sold 131,000 vehicles, vs. 215,000 for Cadillac and 330,000 for Lexus.
At the moment, the Lincoln Town Car is scheduled to go out of production in 2011. But Fields says it could be replaced with something similar. "Mercedes-Benz (DAI) is the taxicab of choice in Germany, which shows if you have the right products, being the airport car won't hurt you," he says.