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Old 11-08-2004, 05:49   #1 (permalink)
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US: Its glory days past, lackluster Lincoln now tries for near-luxury

Gone with the wind: Its glory days past, lackluster Lincoln now tries for near-luxury
AMY WILSON | Automotive News


Lincoln epitomized glamour in its heyday.



Lincoln Mercury President Darryl Hazel tells a story about a lease customer who returned her Lincoln Continental to a Long Island dealership in September.

After telling a salesman she would go elsewhere because Lincoln no longer had desirable products, the woman spotted a 2005 Mercury Montego. She soon took delivery.

Lincoln Mercury kept the sale, which is good, Hazel says. But the story illustrates the squeeze Lincoln is feeling.

Lincoln is losing its status as a pure luxury brand and is moving nearer to so-called premium brands such as Mercury. Average incentives are rising, aging vehicles have hurt sales, and a revamped lineup remains years away.

And those new products increasingly will be derivative of mainstream Ford and Mazda vehicles.

Even as Lincoln has stumbled, the luxury market has grown rapidly. Lincoln has lost ground to powerhouse brands such as BMW and Lexus. And longtime rival Cadillac, which once shared Lincoln's woes as a fading brand, is well into a turnaround effort.

Several developments point to Lincoln's sliding status.

>>> Jaguar, Land Rover and Aston Martin sit above Lincoln among Ford's top brands.

>>> Prices of most Lincoln vehicles will range from $30,000 to $50,000. The brand won't compete against BMW, Mercedes-Benz and Cadillac in higher-priced segments.

>>> Lincoln is retreating from rear-wheel drive for cars, even as some competing luxury automakers pursue more rwd.

According to Edmunds.com, Lincoln's average incentive through the first nine months of 2004 was $5,070, up from $4,673 for all of 2003.

Ford Motor executives acknowledge Lincoln's slip in status.

Is Lincoln aspirational? "Lincoln is in some respects, but to a much narrower segment of the population than it was in the past," Hazel says. "The Lincoln product is not as contemporary. For something to be truly aspirational, it has to maintain a contemporary nature, a vitality."

A full stable of more contemporary Lincoln products won't show up immediately, says Hazel, a Ford Motor sales and marketing veteran tapped in 2002 to revive Lincoln Mercury. In fact, the envisioned showroom lineup won't be complete until the end of the decade, CEO Bill Ford says (see story, Page 39).

Premier Automotive Group's plan

Lincoln stalled largely because of Ford's bigger stumbles in recent years. The company's financial crisis limited new-product programs. There was an unsuccessful effort to roll Lincoln into Ford's Premier Automotive Group - on a new rwd platform - and share more products.

But Lincoln planners say they see opportunity in their current hand. If executed successfully, greater platform sharing will lead to lower costs and higher profits. By adding models such as an entry-luxury sedan, a pickup and a crossover, Lincoln also can build volume and retail sales.

By the end of the decade Lincoln will have at least eight nameplates in its showroom, says John Fitzpatrick, Lincoln general marketing manager. The modern-day high is four. Lincoln is targeting retail sales of around 200,000 annually, he said. That's higher than the brand's record of 193,009 total sales in 2000.

But today's aging lineup frustrates dealers. The top priority for Lincoln Mercury's national dealer council in 2004 is lobbying for new Lincoln products.

Two new vehicles are scheduled to arrive in 2005 (see story above). That shows Lincoln planners are heading in the right direction, says George Benson, dealer council chairman. But he says the new cars need to be world-class, not "just the same old Lincoln stuff."

"We need to revitalize our showroom," says Benson, dealer principal of Benson Lincoln-Mercury in Pittsburgh. "When they took away the Continental a few years ago, that killed us. I think people did think Lincoln was going down the tubes."

The front-drive Continental was one of four low-margin products Ford Motor killed in its 2002 turnaround plan to recover from a $5.45 billion loss in 2001.

Lincoln's showroom today features four products: the Navigator and Aviator SUVs and the LS and Town Car sedans. Sales totaled 158,830 in 2003. Through October Lincoln has sold 116,438 vehicles, down 11.8 percent.

The Town Car is not a top luxury flagship. It rides on a platform that is more than 25 years old and often sells to retail customers three times that age. Despite sharply reducing Town Car fleet sales, about 25 percent of the car's volume still will sell to fleets in 2004, a Lincoln marketer says.

The average Town Car buyer is 70. The average Lincoln buyer is 60.

"Town Car is definitely Lincoln's past. They haven't been able to credibly evolve beyond that in the car market," says Susan Jacobs, president of Jacobs & Associates, a luxury automotive con******cy in Rutherford, N.J.

Known as a smart salesman and a straight shooter, Hazel, 56, has tried to help dealers move the nameplates they have. Hazel has pumped up advertising and singled out vehicles such as the Town Car and Navigator for special sales promotions. He also brought in retired basketball star Magic Johnson as a spokesman.

Meeting competition

To keep from slipping further down the luxury ladder, Lincoln must make sure the coming cars are competitive. That means distinctive exteriors, top-notch interiors and robust powertrains.

The 2006 Zephyr, an entry-luxury sedan shown in concept form at last spring's New York auto show, already is drawing some doubt. Lincoln planners hope to sell up to 40,000 Zephyrs, company sources have said.

The Zephyr, based on a modified Mazda6 platform, will add needed volume. But its styling may be too bland to pull buyers out of BMW, Lexus or even Infiniti, Jacobs says.

Others are concerned that the 3.0-liter V-6 scheduled for the Zephyr isn't powerful enough for the segment at around 200 hp. Ford is developing a 3.5-liter V-6 that could succeed the smaller engine.

Lincoln's Aviator, currently a dressed-up Ford Explorer SUV, will get that 3.5-liter engine when the next-generation vehicle goes on sale in late 2006. It will also be derived from the Mazda6 platform. Its egg-crate grille will become the face of Lincoln.

Many of Lincoln's hiccups surround its full-sized car strategy. After changing direction several times, Lincoln is developing two cars using a modified Volvo platform.

Design staff changes have delayed Lincoln's design direction. Former Lincoln Mercury design director Gerry McGovern left in mid-2003 for a European Ford position. Peter Horbury, 54, became executive director of design for Ford, Lincoln and Mercury last December. His first priority is firming up the Lincoln look. But dealers and consumers won't see that new look soon. Lincoln expects no concept cars on next year's auto show circuit. The design of the new larger sedans isn't far enough along.

If Lincoln doesn't give the new cars enough style and distinctiveness, Lincoln's main competition could become brands such as Buick and Chrysler, some luxury market watchers warn. Those mainstream brands are among a handful trying to elevate their own positions.

Key competitors

Already, visitors to Edmunds.com are cross-shopping Lincoln vehicles with brands such as Chrysler, Buick, Mercury and Ford, the automotive Web site reported. Cadillac, Acura and Infiniti are in the mix, but Lincoln models are rarely compared to Mercedes, BMW or Lexus, according to Edmunds.com.

While Lincoln has battled Cadillac head to head, it competed against such brands as BMW and Mercedes only in certain segments. With its $4 billion revival plan, Cadillac is moving away from Lincoln. But Hazel says Cadillac, BMW, Mercedes and Lexus remain Lincoln's target.

The luxury segment has nearly doubled in the past 10 years, according to CSM Worldwide, a consulting firm in Northville, Mich. It projects luxury sales will expand by another 39 percent by 2009, growing to nearly 2.9 million vehicles. CSM largely uses brands and prices to define luxury, but it also included entries with luxury intentions, such as the new Chrysler 300.

For Lincoln to capture a meaningful chunk of that market, it must set its new cars apart from the Fords, Mercurys, Mazdas and even Volvos built from the same platforms. While some analysts and automotive critics routinely pan the domestic automakers for platform sharing, it can be executed successfully. Experts point to Lexus and Acura as examples.

If done right, the approach becomes a cost advantage. Lincoln needs that cost edge.

Phil Martens, Ford group vice president of product creation for North America, vows that Lincoln products will be differentiated enough.

Premium, not luxury

Martens says he considers Lincoln a premium brand rather than a "true luxury" brand. He defined true luxury as vehicles priced above $70,000. Premier Automotive Group brands, particularly Jaguar, will occupy that higher segment for Ford, he said.

But there is work to do to make Lincoln more contemporary, he acknowledged.

"They have to be one of the products that people choose to look at," Martens said.

Lincoln won't compete head-to-head with Cadillac on all fronts. It won't match Cadillac on rwd cars, for instance. Fwd platforms with all-wheel-drive capability are the centerpiece of its car development.

Lincoln will duel with Cadillac at lower price points: the $30,000 Zephyr versus the $33,000 CTS, for instance. But Cadillac is toying with a $100,000-plus entry and already has elevated its top price with the $76,200 XLR roadster.

If the awd strategy, pricing and styling hit the right mark, Lincoln could be rewarded with more volume.

Says Hazel: "Ultimately, sales is a pretty good indicator of the inherent interest in the product. Our sales sort of speak for themselves, and we're working at helping them get better."
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