Should Ford Dump Lincoln?

August 21, 2016 by Douglas A. McIntyre

For some odd reason, Ford Motor Co. (NYSE: F) created the Lincoln Motor Company during December of 2012. Ford had owned the brand since 1922. Whatever the reason, the experiment that separated its identify from parent Ford has been a disaster. Why doesn’t Ford sell high-end models of its flagship brand instead of continuing the charade?

Ford’s flagship brand had 1,507,132 sales in the first seven months of the year. Lincoln had 62,395. Lincoln’s sales were up 10.1% in the January through July period. The number would be negative if not for the new MKX crossover. Its sales rose 57.5% to 17,745. Its base price is $38,260. Lincoln’s next gamble will be a new version of the iconic Continental, which will be its high-end sedan with a base price of $44,560. It will have to have extraordinary sales if Lincoln is to be more than a tiny portion of Ford’s overall sales. The rest of the Lincoln line is not successful.

Lincoln has three hurdles, each of which may be insurmountable. It is not a BMW or Mercedes. The only luxury brand that has picked the lock of their dominance is Toyota Motor Corp.’s (NYSE: TM) Lexus division.

The second problem is that Lincoln is seen as an old people’s car, and it has not been able to shake that image. When the MKZ was released in 2012, Ford management said that one of its benefits would be to help drop the average age of the Lincoln driver to 57 from 65. MKZ sales in the first seven months of 2016 were down 1.3% to 17,661.

Last, Lincoln’s lineup has too few cars to compete with the army of models BMW, Mercedes, Lexus and even Audi have.

What are Ford’s options sans Lincoln? These highest end Taurus loaded with every option available costs over $40,000. With a few luxury upgrades, that would put its price about the same as a modestly equipped Mercedes C300 4Matic. The Explorer Platinum compares reasonably to many luxury model crossovers and sport utility vehicles (SUVs). At the mammoth end of the SUV market, the Expedition is competitive as well.

The Lincoln Motor Company has been a failed experiment. The number two U.S. car company should move along.

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