Et Tu Brutus: The Decline of Lincoln

Lincoln was once a serious departure from everything else at Ford.

An uncle of mine bought one brand new in 1957. He brought it to my grandfather's Kansas farm when I was eight.

My dad had a 1951 Plymouth with an under-powered generator which often resulted in dead-battery push starts. I had never seen power windows or antennas.

I sat in the new Lincoln for 30 minutes running the windows and power antenna up and down. My father came and told me to stop, as the battery was surely low. My uncle chuckled and reached in to start the big V8.

Good thing he didn't leave the keys in the ignition. Me and that Lincoln would'a been gone.

Pride Cometh Before a Fall

Lincoln, in 1998 and again in 2000, was the top luxury brand in America. The big boxy Town Car, the favorite of Presidents and limousine conversion firms, at one point earned Ford $1 billion a year.

At that time Ford Motor Company, riding the success the of pickup and SUV boom, was sitting on a nice pile of cash.

Ford CEO Jac Nasser gambled most of that cash, around $12 billion, on Volvo, Aston Martin, and former British-Leyland properties Jaguar and Land Rover.

Ford execs knew they needed to move upmarket and away from pickup sales. They needed to go global, and Lincoln was confined to North America.

The empty nest baby boom demographic had money and wanted luxury now that the kids had finished college.

Moving up to the high margins in the less economically sensitive luxury space seemed logical.

The idea that Ford could turn the tables on Lexus, BMW, and Mercedes-Benz, by investing in these had-been luxury brands seems preposterous in hindsight.

All Ford needed to do was increase efficiency by sharing parts, platforms, and factories while broadening each brand's offerings.

Just Fordize the until-recently-hand-built Land Rovers, the Swedish safety-first Volvos, Union-Jack clad Jags, and James Bond Astons into mass market cars without damaging the brands' venerable images.

How hard could that be?

They should have invested in Ford itself, producing modern drivetrains and better product. Instead they let Lincon and Taurus wither on the vine.

As the search for synergy in the "Premiere Auto Group" (PAG) dragged on for years, the company's core product lineup saw few significant updates or improvements. Lincoln-Mercury continued to receive badge engineered Fords with a bit of leather and chrome added.

Japanese and German luxury cars sprouted dual turbos and six speed transmissions. Lincolns didn't.

Instead they were given Jag engines and Mazda platforms.

Fording Down Lincoln

Lincoln was moved out of the Premiere Auto Group, and as the remaining PAG brands were Forded down, returned to Detroit as a low end "blue collar" luxury car.

Management realized that without enormous development money, Lincoln could never match BMW, Mercedes, Audi, Lexus, Infiniti and Acura on the global stage.

Vehicles which do not have a global beachhead will eventually disappear.

So Lincolns were relegated to the North American market, to compete with Cadillac.

Marketing began to focus on a younger demographic and African-American buyers.

But the low end of the luxury segment is intensely competitive and lacks the inelastic demand of the top tier. When the economy softens, big incentives show up early.

GM spent its money on some nice halo roadsters and put them in Saturn and Pontiac/Buick showrooms.

What youth market products did traditionally mature-oriented Lincoln have to entice younger buyers to showrooms?

Meanwhile GM took advantage by pumping money into a re-emergent Cadillac and establishing Buick in booming China.

Lincoln and Mercury: Twins

Like Arnold Schwarzenegger and Danny Devito in the film Twins, Lincoln is tied to Mercury, another identity-crisis brand in the Ford family.

Under the Ford Motor marketing channel, all dealerships are combined Lincoln-Mercury franchises.

Neither brand would have stood alone and supported a dealer network.

Lincoln-Mercury dealerships which formerly moved 100 new vehicles a month must survive today on 35 sales a month.

Consider the following Texas news item:

"Thursday, July 5, 2007
AutoNation Inc., the largest new-car retailer in the U.S., has terminated its Bankston Lincoln-Mercury franchise in Dallas...AutoNation has long struggled with the Lincoln Mercury franchise, selling only 253 vehicles last year"

Mercury has sold dressed up badge-engineered Fords for decades, but as Lincoln moves downmarket Mercury becomes a bigger liability.

With excess dealerships draining Ford family cash, these Lincoln-Mercury lots form a resistance to the dealer consolidation. To drop Mercury, Lincoln would have to move to Ford dealers, with a massive closing.

After the Oldsmobile dealer lawsuit debacle at GM, this seems unlikely.

Lincoln needs truly distinct models to stay competitive, not just badge engineered Fords.

And if Lincoln gets all the pretty rebadged Fords, what does Mercury sell?

Recent Lincolns have suffered high depreciation.

Automotive Lease Guide (ALG) lists the majority of the product line, Mark LT, MKX, MKZ, and Navigator as three-star residuals. Town Car gets just two stars.

When it became clear that Ford would have to sell some Premiere Group brands, and might keep Volvo, Lincoln began to get some notice in Dearborn.

Lincoln Leads Ford Comeback

Lincoln still has an identity crisis but a turnaround like GM did at Cadillac might be possible.

Lincoln’s surprise performance, posting its ninth consecutive month of higher retail sales, caught this analyst off guard.

June sales (12,494) were 30 percent higher than June a year ago (9,610) In the first half of 2007, Lincoln sales were 73,333 up 15% year over year.

Lincoln's resurgence reflects the new Ford Edge/Lincoln MKX crossover, the new Lincoln MKZ sedan, and the refurbished Navigator. Many of these sales are new customers.

Ford Edge June sales were 12,470 and Lincoln MKX moved 3,400 units.

Town car and the Mark LT pickup did not participate in the sales uptick.

Ironically, Lincolns are the only brand within Ford with year over year sales gains.

Lincoln's new MKS V8-powered full-size flagship sedan, based on the concept vehicle displayed to accolades at the North American International Auto Show, will probably be sold as a 2009.

US car manufacturers, fighting for their lives, are bringing much improved products to market. Maybe this new Lincoln will be one of them.

Houston, Texas, July 2007