Ford to Build New Lincoln SUV in China

Paul Ausick

This week’s New York International Auto Show is one opportunity no automaker can afford to ignore if it wants to get its message out to a large audience of industry insiders, journalists and even consumers. Ford Motor Co. (NYSE: F) is among the carmakers taking full advantage of the show.

According to Ford, today, April 17, is National Mustang Day and the 55th anniversary of the company’s legendary pony car. Ford said that the Mustang’s global market share in 2018 rose to 15.4% in the sports-coupe segment, making it the best-selling sports coupe in the world.

Meanwhile, back in New York, Ford today unveiled its new luxury crossover, the 2020 Lincoln Corsair, which is expected to be in U.S. showrooms later this year. The Corsair joins Lincoln’s luxury all-new-for-2020 Aviator sport utility vehicle. The Corsair will be built in Louisville, Kentucky, for the U.S. market and in China for the Chinese market, according to a statement from Joy Falotico, president of Ford’s Lincoln Motor Company.

The decision to build the Chinese version of the Corsair in China was made to avoid a possible reimposition of a 40% tariff on vehicles imported into China. When the Chinese government temporarily raised its tariff on imported cars from 25% to 40%, import sales in the country withered. Ford lost $1.5 billion in Chinese sales last year. The 25% U.S. tariff on Chinese vehicles imported to the United States (which was also temporarily increased to 40% last year) has essentially no impact on Chinese automakers because few Chinese-built vehicles are imported.

In a presentation at the Merrill Lynch 2019 Auto Summit that also took place Wednesday, Ford outlined its strategy for returning profitable growth. The company plans to shift spending even more heavily to its trucks, utility vehicles and other winning businesses, like the Mustang.

Where spending on Ford passenger cars accounted for 57% of the company’s investment in 2015, by 2023 the company plans to reduce that total to just 9% of its capital allocation for the year.

Investors liked all the action, apparently, lifting the share price by about 1% to $9.46 midday Wednesday, in a 52-week range of $7.41 to $12.15. The consensus 12-month price target on the stock is $9.27.