The Associated Press October 5, 2010, 5:51PM ET

Lincoln to cut dealers, go upscale to lure buyers

In a last-ditch effort to save Lincoln and shed the brand's image as a maker of land yachts for old men, Ford plans to cut dealerships, spiff up remaining showrooms and introduce new cars and trucks, including a replacement for the iconic Town Car.

Lincoln was the top luxury brand in the U.S. 20 years ago, but sales have plummeted in recent years as Ford made little investment in new cars and trucks. Until now, Ford couldn't focus on Lincoln because it had Mercury and four other luxury brands. But it sold off Jaguar, Land Rover, Aston Martin and Volvo and is ending Mercury this year, so the time is ripe for an overhaul.

Bob Tasca Jr., who owns two East Coast Lincoln dealerships and is head of Ford's Lincoln-Mercury Dealer Council, said this could be the 93-year-old brand's last chance.

"If we keep doing things the way we're doing them with Lincoln, we're never going to be a premium brand," he said after hundreds of dealers met with executives at Ford's Dearborn headquarters Tuesday. "It's our last bite of the apple, that's for sure."

Ford began its first serious revamp of Lincoln three years ago. It tried designs that echoed classic Lincolns of the 1940s and gave the cars new names. But Ford has had trouble getting buyers to consider the brand, and it thinks making dealerships more luxurious and exclusive might help.

Ford told dealers Tuesday it will focus on 130 metropolitan markets where most U.S. luxury cars are sold. It plans to eliminate one-third of the 500 Lincoln dealerships in those areas, according to Ramon Alvarez, a Lincoln, Mercury and Jaguar dealer from Riverside, Calif., who attended the meeting.

Ford also will cut some of the 700 Lincoln dealerships outside those areas, although it hasn't set a target for how many will close. Most Lincoln dealers also sell Ford-brand cars and trucks. Around 270 sell only Lincolns and Mercurys, and they face the toughest decisions as Mercury is phased out. A handful of Lincoln-Mercury dealerships have already closed.

Ford's vice president of U.S. sales Ken Czubay said the company will meet with dealers over the next year to help them decide whether to stay open, convert to Ford-only dealerships or close. The dealer consolidation is expected to take about two years.

Ford said the plan will help remaining dealers be more profitable so they can invest in their showrooms. Ford wants dealers to upgrade facilities and offer perks like delivery of vehicles to buyers' homes and car washes. Czubay said only about 25 percent of current Lincoln dealerships meet the company's standards for luxury.

"We're fully committed to transforming Lincoln into a world-class luxury brand with compelling vehicles and also a consumer experience to match," Ford's Americas President Mark Fields said after the dealer meeting. Fields wouldn't give a deadline for the Lincoln revamp to be completed.

Alvarez said the move will be tough for some dealers, but it's necessary to make Lincoln an effective competitor. Lexus, for example, has only 230 U.S. dealerships even though it saw more than twice the sales Lincoln did in the first part of this year.

Ford says it will introduce seven new or redesigned models in the next four years, including a limousine version of its MKT wagon that will replace the Town Car. The Town Car has been a staple in airport limo fleets for decades, but it's unclear if fleets will adopt the MKT or buy other vehicles. Ford plans to stop making the Town Car next August.

Lincoln's top seller by volume is the MKX wagon. Its sales were falling through September, but a redesigned version hitting showrooms now should stem that decline.

Several dealers said the most critical product is Lincoln's first compact car, which will compete with entry-level models like the BMW 3-Series. Right now, Lincoln's cheapest model, the MKZ mid-size sedan, starts at $34,330, which is $2,000 more than a Lexus IS and a few hundred more than a Mercedes C-Class. Lincoln also has no sporty models like Cadillac's CTS-V coupe and no rear-wheel-drive offerings, which some luxury drivers prefer for their handling and acceleration.

Fields said Ford has no immediate plans to take Lincoln overseas, where other luxury brands, like Buick, have been popular in developing countries. The company's priority is to fix Lincoln in North America, he said.

Ford owners used to buy a Lincoln when they wanted to move upscale, but now they're more likely to buy a BMW, Mercedes-Benz or a Lexus, according to data from Kelley Blue Book. Lincoln's annual sales peaked in 1990 at 231,660, according to Ward's AutoInfoBank. Last year, that dropped to 82,847. Lincoln is now the eighth most popular luxury brand in the U.S.

One major problem is Lincoln's frumpy image. Lincoln currently has the oldest customers among luxury brands, with an average age of 66, according to AutoPacific, a consulting firm. BMW buyers are 15 years younger.

Matt VanDyke, U.S. marketing director for Ford and Lincoln, said Lincoln is defined by older vehicles like the Town Car and the Navigator SUV, which used to be a staple in rap videos but saw sales plummet as buyers looked to more fuel-efficient vehicles.

Ford wants to change that. Lincoln ads that began airing last week feature edgy "Mad Men" actor John Slattery and focus on technology, including a touch screen that replaces knobs and dials on the dashboard. Lincoln also is grabbing attention this fall by being the first automaker to price a hybrid -- the MKZ -- the same as a gas version.

Kelley Blue Book analyst James Bell says the timing is ideal for Lincoln. Ford has a strong lineup, a solid string of profits and goodwill from being the only U.S. automaker not to take government bailout money last year.

"There's a new energy, a sense of capturing lightning in a bottle, that can translate to Lincoln," Bell said. "The risk is that the brand itself doesn't really resonate with most people. It's a real grass-roots perception change that Lincoln's going to need to do."


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