Though Lincoln sales fell slightly last year from 2012, a 15% increase in the sales of the midsize MKZ sedan, coupled with the fact that the new MKZ is bringing average transaction prices about $6,000 more than the previous model, has meant that Lincoln dealers' profits were up in 2013 from 2012, despite selling fewer Lincolns overall than at any time in recent history. While Matt Van Dyke, marketing chief for Lincoln said that dealer profits were up, Ford Chief Financial Officer Bob Shanks would not say whether the Lincoln brand earned a profit for parent Ford Motor Company.
The MKZ launch was delayed by quality and supplier issues and dealers and Lincoln are hoping that with a full year of MKZ sales, the all-new MKC compact crossover, plus the redesigned Navigator that arrives later this year, 2014 will see a 20% sales increase over 2013, after three straight years of declining sales.
"When you see the new cars that are coming, this is what's going to resurrect the Lincoln brand," said Jere Law, general manager at Varsity Lincoln in Novi, outside of Detroit. The MKZ and MKC are the first two of four new Lincolns intended to be introduced by 2016.
Now that dealers have full stocks of the MKZ and will have something to compete in the hot luxury compact crossover segment may allow Lincoln to break the 100,000 unit/yr mark for the first time since 2008. "This is somewhat of a critical year for Lincoln," Alec Gutierrez, an analyst at Kelley Blue Book, said. "They've been somewhat product-starved over the past couple of years. There's no excuses this point if it doesn't deliver."
The compact crossover segment has grown more than 300% since 2009. Analysts predict that having the MKC in their lineup could mean 35,000-40,000 more sales per year for Lincoln.
Lincoln dealer profitability has also been buoyed by stronger used vehicle programs. Last year, Lincoln started a tiered incentive program that encourages dealers to retain used Lincolns, with greater incentives for cars that can pass certified-pre-owned inspections and sold with warranties. That program has resulted in a tripling of the percentage of used cars sold at Lincoln stores. Dealers are also leasing a greater percentage of cars, which typically means a greater percentage of CPO vehicles available for sale as used cars, higher dealer profits, and better residual values, which make consumers happy.
Shanks said that the next step is to realize the benefits of scale. Bigger sales volumes lower per-vehicle investment costs. Those volumes may come incrementally in North America, but for economies of scale Lincoln is looking to the East. Ford will be introducing the Lincoln brand to China by the end of this year, with the opening of five new dealerships in that market.
"It's the second-largest premium market in the world," Shanks said. "And it will provide level of scale that we otherwise wouldn't have."
from The Truth About Cars http://ift.tt/Jh8LjA
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