Ford confirms Lincoln will come to China in 2014
Published on August 28, 2012 by Joey Wang
Ford, lagging behind General Motors and Volkswagen in China, will add the Lincoln luxury brand to its lineup of vehicles in the country as part of the company’s biggest expansion push in half a century.
The luxury vehicles will be available in China in the second half of 2014, the Dearborn, Michigan-based carmaker said in a statement today. The company will begin recruiting dealers for the marque in the fourth quarter of this year.
Ford follows GM in stepping up efforts to compete in China’s luxury-vehicle market, a segment that researcher IHS Automotive forecasts will more than double and surpass the U.S. by the end of the decade. Volkswagen’s Audi, BMW, Mercedes-Benz currently dominate, accounting for more than three-quarters of high-end cars sold in the country.
“The decision to bring a luxury brand to China is a bold decision but it’s a necessary decision,” said Bill Russo, a Beijing-based senior adviser at Booz & Co. “If you’re a global company with global brands you have to have global brands in China.”
Ford is counting on China to help revive growth of its premium nameplate, which has seen deliveries tumble more than 60 percent since their peak two decades ago. Ford, which in 1922 bought the brand named after former U.S. president Abraham Lincoln, plans to unleash seven new Lincoln models — including the glass-roofed MKZ sedan — by 2015 as it seeks to attract younger, wealthier customers.
“Lincoln in China marks the next step in our expansion in Asia and our commitment to serving customers in the luxury market,” Chief Executive Officer Alan Mulally said in a statement today. “Lincoln is an important part of our plan.”
Ford is introducing more models and building five factories in China, including a $760 million assembly plant in Hangzhou and a $600 million facility in Chongqing, to double its annual production capacity in the country to 1.2 million passenger vehicles. The expansion will help Ford increase global sales to about 8 million vehicles by mid-decade, up about 50 percent from 2010, according to the company.
The automaker has reason to expand. Ford only accounts for 2.4 percent of the country’s light-vehicle market, versus VW’s 19 percent and GM’s 10 percent, according to data from industry researcher LMC Automotive. Ford’s share of the more lucrative luxury segment is practically non-existent.
That’s because Audi, BMW, and Mercedes-Benz dominate by accounting for 76 percent of the Chinese luxury market, according to data from research firm LMC Automotive. The German automakers have succeeded partly because they tailored their cars to Chinese consumer preferences, selling long wheelbase versions of traditional sedans to cater to the need for more legroom in the backseat.
GM, the biggest U.S. carmaker, is seeking to loosen their grip by renewing a push for its Cadillac vehicles in China. GM said in April it plans to bring in more Cadillac products, increase local production and sales outlets in China to boost sales five-fold and match U.S. deliveries by 2020.
At Ford, Mulally is seeking to revitalize the aging Lincoln, which counts 65-year-olds as its average buyers. The brand’s 85,643 vehicles sold in the U.S. last year was a 63 percent slide from its peak in 1990.
Ford plans to target Chinese consumers with more “individual and personalised motor cars” and bank on Lincoln’s nearly 100-year-old heritage to expand sales, Jim Farley, the auto company’s global marketing chief, said in today’s statement. “In China, the emerging luxury buyers are younger and fast-changing, and they have a strong desire to understand and appreciate the heritage of a brand.”
Ford’s expansion in China will help the company more than double its market share in the country to 6 percent in the next five years and generate income to $1 billion by 2016 from about $137 million in 2011, according to estimates at CLSA Asia- Pacific Markets.
Ford’s Lincoln announcement comes a day after it said the National Development and Reform Commission approved Ford’s application to have a separate venture with Changan Automobile Co. instead of the current three-way ownership with Mazda, paving the way for the company to increase control of its China expansion and product roll outs.