The lap of luxury: Redefining 'personal' cars in the land of Lincoln

[jpd80]

hmm

maybe I've been going about my GRwdP rants all wrong

Has anyone asked the Australian gov'mint how they'd like to have a world-class-Luxury Lincoln Continental flagship built in Australia?

btw, how's shipbuilding down under? Think they might also pick up (part of) the tab for shipping the Continentals over here?

 

1) 2012 is an election year in Australia

2) the decision on the +2015 Falcon for FoA will be made by February...

[Kris Kolman]

Three billion you say?

The whole of FG cost less than $700 million and the recent upgrades to both cars cost $120 million a piece

of which the Aussie government assisted with $40 million. With a starting price North of $37,000 the business

case for Falcon is still good especially now that over 80% of Territory sales are diesels in excess of $45,000 each.

 

That's the problem with the Falcon... People think that because it has survived since ancient times with a long line of $100-200mil of periodic upgrades the same costs are in line with GRWD. For GRWD to work it is going to need to be a new ground up design to accomidate world-wide regulations along with an extremly wide varity of applications. Falcon as it stands now simply would require too many modifications to support world-wide export. Additionally GRWD will have be the base for the SWB Mustang, to the Falcon, to a Lincoln, to a new Territory which will again force a change from the current Falcon platform. And finally I think people forget how expensive it is to modify the plants... Ford is going to spend $1.1 billion to produce the Transit van in Kansas City. Just for comparision the T6 Ranger, which was a smaller project, cost a claimed $1.8 billion.

[BORG]

I agree. There are lots of luxury auto buyers out there that used to own Lincoln products, now drive Audi, Lexus, or whatever, and would come back to brand if Lincoln offered something competitive. Now that Lincoln is getting much more of Ford's attention and focus without previous distractions like PAG and Mercury, I would be absolutley shocked if new MKZ is not a wow vehicle inside and out. I expect it to be a class leading luxury vehicle in its segment in may ways.

 

I don't know that Lincoln absolutely has to have a RWD sport sedan in its lineup to be taken seriously, but I still believe a RWD sport sedan/coupe off of new Mustang platform would be a great bonus for Lincoln lineup. Getting the new MKZ right is far more important, but an exciting RWD sportier Lincoln in future would make a statement for sure. For me, it would mean LIncoln has fully arrived as a serious luxury brand competitor able to take on anyone.

 

The luxury market exploded after Lincoln fell, most of those customers have never owned a domestic luxury nameplate because most of them are young. Lincoln has always appealed to older people, I'm definitely an extreme minority. If I were driving a Mercedes however, I would fall inline with all my kin. I have yet to meet anybody my age who owns a new Lincoln, but quite a few of them own a Caddy. Lincoln does not offer a single youth-friendly vehicle, none at all.

Edited December 30, 2011 by BORG

[TBirdStangSkyliner]

That's the problem with the Falcon... People think that because it has survived since ancient times with a long line of $100-200mil of periodic upgrades the same costs are in line with GRWD. For GRWD to work it is going to need to be a new ground up design to accommodate world-wide regulations along with an extremly wide varity of applications. Falcon as it stands now simply would require too many modifications to support world-wide export. Additionally GRWD will have be the base for the SWB Mustang, to the Falcon, to a Lincoln, to a new Territory which will again force a change from the current Falcon platform. And finally I think people forget how expensive it is to modify the plants... Ford is going to spend $1.1 billion to produce the Transit van in Kansas City. Just for comparision the T6 Ranger, which was a smaller project, cost a claimed $1.8 billion.

 

Lets put this in context to some other numbers. Ford has made about 13 billion dollars in profits over the last two years. The figures I've seen for this year are quarters ranging from about 1.65 to 2.55 billion in profits. They supposedly have an accounting adjustment to make from the days of the recession which will add about 13 billion dollars more in profits. Let's also consider that Germany is now making twice as many cars as the USA. Germany has twice the hourly labor cost and the Euro has been strong for most of the last several years. There is money at Ford to invest in new product, and there is money to be made by selling well-executed RWD vehicles. Traditionally, businesses which come out of recessions with new, desirable product lines do very well against their competition. Those who wait to start developing new product lines until a sustained economic improvement tend to fall behind. Ford has been on both sides of this paradigm during its history.

 

There are too many formerly successful product lines in FoMoCo which have been sacrificed by failure to invest. These include: all of Mercury and basically the same for Lincoln, the Ranger (once perennially in the top five in US sales), the Expedition, the Crown Victoria/Grand Marquis, the Town Car, the Continental, the list could go on. There are also several product lines which have been brought back after this same neglect. These include the Mustang, the Taurus and the Fusion (if you consider the companies failures in the FWD compact car class with the neglected Tempo and Contour name-plates). The upcoming Kuga based Escape will likely return this product line to success after the failure to invest for many years.

 

I see no reason to expect the Aussies to switch to USA based FWD Fords instead of to Holden and Japanese RWD vehicles. Ford, GM and Chrysler have also proven that when they don't give the customers what they want, brand loyalty doesn't prevent the erosion of market share. It is much easier to lose customers than to gain them back.

Edited December 30, 2011 by TBirdStangSkyliner

[jpd80]

That's the problem with the Falcon... People think that because it has survived since ancient times with a long line of $100-200mil of periodic upgrades the same costs are in line with GRWD. For GRWD to work it is going to need to be a new ground up design to accomidate world-wide regulations along with an extremly wide varity of applications. Falcon as it stands now simply would require too many modifications to support world-wide export. Additionally GRWD will have be the base for the SWB Mustang, to the Falcon, to a Lincoln, to a new Territory which will again force a change from the current Falcon platform. And finally I think people forget how expensive it is to modify the plants... Ford is going to spend $1.1 billion to produce the Transit van in Kansas City. Just for comparision the T6 Ranger, which was a smaller project, cost a claimed $1.8 billion.

Sigh, only $700 million of that $1.8 billion was for T6, the rest is to develop FoA engineering and testing infrastructure

and is spread out over 10 years. T6 did run over budget but no as much as some people think.

 

The aborted GRWD was going to use the E8 Falcon platform as its foundation, take that as a given.....:shades:

 

And you're right, That's the problem with the Falcon... People thinkthey know but they really don't...

 

Falcon and Territory at current production levels and pricing are still profitable, the problem with Ford Australia

is the huge gaps in product that are going to be filled by Ecosport, Kuga, Figo (budget car) T6 SUV along with the

very efficient Injected LP Gas version of the Falcon I-6 for fleets and Ecoboost I-4 falcon to usher in a new group of buyers.

Edited December 30, 2011 by jpd80

[TBirdStangSkyliner]

Sigh, only $700 million of that $1.8 billion was for T6, the rest is to develop FoA engineering and testing infrastructure

and is spread out over 10 years. T6 did run over budget but no as much as some people think.

 

Running over development budget also isn't inherently negative over the life of a vehicle or platform. This kind of budget is a fairly arbitrary target. The budget was likely not very realistic considering the time period in which it was set. I'm sure that we would both agree that what matters is if the platform is good enough to be a successful seller and create good profits over a reasonably long time period. It's better to be 20% over budget and do this than to be under budget and flop in the market-place.

[jpd80]

Running over development budget also isn't inherently negative over the life of a vehicle or platform. This kind of budget is a fairly arbitrary target. The budget was likely not very realistic considering the time period in which it was set. I'm sure that we would both agree that what matters is if the platform is good enough to be a successful seller and create good profits over a reasonably long time period. It's better to be 20% over budget and do this than to be under budget and flop in the market-place.

 

Internally, Ford had a preference for a Ford division to do the T6 development, even in 2006 Mazda was on the skids..

[RichardJensen]

They supposedly have an accounting adjustment to make from the days of the recession which will add about 13 billion dollars more in profits.

This involves revaluing certain tax assets; it is cash flow neutral.

Let's also consider that Germany is now making twice as many cars as the USA.

Source?

There is money at Ford to invest in new product, and there is money to be made by selling well-executed RWD vehicles. Traditionally, businesses which come out of recessions with new, desirable product lines do very well against their competition. Those who wait to start developing new product lines until a sustained economic improvement tend to fall behind. Ford has been on both sides of this paradigm during its history.

These statements are all true, but it does not follow that they lead to a defensible conclusion...

 

Yes, Ford has money to invest in new product, and RWD can be profitable. However, consider that apart from the rather shaky examples of Cadillac and the LX cars, no car company apart from BMW and Mercedes have been able to churn out significant profits from a lineup of RWD luxury cars.

 

One can therefore look at these examples and ask whether or not their success can be duplicated. I would argue not, as based on Cadillac's gradual abandonment of Sigma, and the increased marginalization of the LX cars in Chrysler's portfolio, as Chrysler transitions away from heavy fleet volume.

 

Further, a chief reason for Ford's mortgage in '06 was to sustain product investment while they incurred significant expense in an unfriendly economic environment. The result is that Ford is significantly ahead of GM on most volume product fronts, and indeed, is ahead of Toyota and Honda as well. The lesson of curtailing anything before product investment in a recession is one that Ford has learned.

 

However, they haven't applied that lesson in a manner that you agree with. As you know, I consider Ford's current approach to be far more defensible, and far more likely to produce sustainable results. The greater change at Ford, IMO, is their consistent focus on bread and butter products. Institutional resources are being kept on important products and not redirected towards ego projects.

There are too many formerly successful product lines in FoMoCo which have been sacrificed by failure to invest.

Not all of those product lines merited ongoing investment. Certainly the panthers did not, arguably the Ranger did not (yes, it was once a top 5 vehicle, but now no vehicle in that segment is a top 5 or even a top 10 vehicle).

 

Further, characterizing the current Escape as a failure (implied when you assert that 'the Kuga will return the Escape to success') simply does not square with any reasonable view of that product. If it were not profitable at these volumes, Ford would not be selling it in these volumes. They have elsewhere demonstrated a clear willingness to throttle back production to keep volume profitable--or close to profitable. Why would they not do this in the Escape's case? Honestly the Escape has probably long since paid off its amortized costs and is probably profitable at the rate of revenue minus direct costs and SG&A.

to switch to USA based FWD Fords instead of to Holden and Japanese RWD vehicles.

Some time ago, the greater number of them switched to FWD Japanese vehicles. AFAIK, Toyota replaced Ford at the top of the Australian sales charts in either the late 90s or early 00s.

 

But thanks for providing some stuff to chew into and digest. This was fun to read and respond to.

[Hugh]

Source?

Link

It's three pages and I haven finished it or can say anything about it for that matter.

[RichardJensen]

"twice the 2.7 million built in the United States"

 

There were more than 2.7M cars built in the US in CY 2010.

 

Shoot. Ford sold 1.35M vehicles built in the US in CY 2010. That's half that total.

Edited December 30, 2011 by RichardJensen

[Fgts]

 

Yes, Ford has money to invest in new product, and RWD can be profitable. However, consider that apart from the rather shaky examples of Cadillac and the LX cars, no car company apart from BMW and Mercedes have been able to churn out significant profits from a lineup of RWD luxury cars.

 

One can therefore look at these examples and ask whether or not their success can be duplicated. I would argue not, as based on Cadillac's gradual abandonment of Sigma, and the increased marginalization of the LX cars in Chrysler's portfolio, as Chrysler transitions away from heavy fleet volume.

As many fwd mistakes Detroit made should they make awd cars only?. Sigma is being replaced by Alpha not so much is abandon the platform, Chrysler LX replacements are already on the drawing board with rwd confirmed, also they have less fleet sales but still the current LXs are Chryslers best-selling cars, how's that marginal?.

[RichardJensen]

As many fwd mistakes Detroit made should they make awd cars only?. Sigma is being replaced by Alpha not so much is abandon the platform, Chrysler LX replacements are already on the drawing board with rwd confirmed, also they have less fleet sales but still the current LXs are Chryslers best-selling cars, how's that marginal?.

Other car companies, notably Toyota and Honda have demonstrated the ability to turn a profit with FWD entry level vehicles.

 

Sigma is being replaced by a platform that will no longer be exclusive to Cadillac, and it has yet to be seen if Alpha will be any different than Zeta and Sigma when it comes to profitability and sustainability.

 

Also, LX volume, as a percentage of overall volume at Chrysler, is down significantly from its peak. That the LX cars are Chrysler's best selling is meaningless. At present, Chrysler only makes two families of passenger cars, the LXes and those hideous Mitsubishi derivatives (as opposed to CUVs, SUVs, trucks and minivans).

Edited December 30, 2011 by RichardJensen

[Fgts]

Other car companies, notably Toyota and Honda have demonstrated the ability to turn a profit with FWD entry level vehicles.

 

As much i don't like them, they had a much better business plan then Detroit overall, Honda rarely sold a rwd car, Toyota otoh still offer rwd but on a much smaller scale. I doubt drive wheels have too do with it.

Sigma is being replaced by a platform that will no longer be exclusive to Cadillac, and it has yet to be seen if Alpha will be any different than Zeta and Sigma when it comes to profitability and sustainability.

 

Fair enough, but historically most big automakers shared key componets (like engines and platforms) not only to save money but make money.

 

Also, LX volume, as a percentage of overall volume at Chrysler, is down significantly from its peak. That the LX cars are Chrysler's best selling is meaningless. At present, Chrysler only makes two families of passenger cars, the LXes and those hideous Mitsubishi derivatives (as opposed to CUVs, SUVs, trucks and minivans).

 

3 things could had happened;

 

1. the economy- Chrysler was moving 10-13,000 300's alone per month in 05, but other carmakers had similar success back then selling 35,000+ cars (Camry was a 50,000+ month car), now you hot if you're selling 25,000 a month.

 

2. Fleets- i don't know the profit margin on the LX's but the current ones are selling up to 50% less to fleets then the older ones.

 

3. both 1 and 2- during those days a lot of fleet dumping did happed many cars were snaped up due to a hot housing market (buyers), tax receipts (goverment/police) and plenty of travelers (Avis) but of course Chrysler wasn't alone on this.

 

Edited December 30, 2011 by Fgts

[Kris Kolman]

To respond directly…

 

I am not at all suggesting Ford sit and let these products die on the vine… What I am suggesting is that Ford should not just follow the group-think that says they need a RWD platform to survive. To not invest in a multi-billion dollar product due to the clamoring of what could be a vocal minority. To examine the alternative options with an open mind. Ford might have some profits right now, but those profits are because Ford has made the right decisions, not just throwing around money. One needs money to make money, but one doesn’t keep their money for long if they make bad investments.

 

There is a legitimate argument that the investment to profit ratio for GRWD isn’t very ideal. The success ratio for manufacturers other than Mercedes and BMW with a RWD platform is mixed at best. There are plenty of failure stories, including Ford just recently with DEW and Jaguar. Additionally the so called easy option with the Falcon is no longer so clear. The Falcon wasn’t the only vehicle to see a huge decrease in sales this year. The entire Aussi large car market suffered a 20+% decline. So the question is this a one year aberration or is the Falcon a Canary of what is a sick market segment. And if one looks at the Australian market, while the large RWD V8 sedans are icons less and less people are purchasing them. Toyota is the sales leader in Australia has transitioned completely to FWD/AWD only platforms… Same with Honda, Nissan, and Mitsubishi. Holden with the Commodore and Ford with the Falcon are the last holdouts. So if Ford didn't continue a RWD sedan that wouldn't be a market surprise.

 

On the other hand there is a legitimate argument that a new FWD/AWD platform like the Volkswagen Group MLB platform would be very successful. Platform details aren't as important (I like an evolved D3, but EUCD could work) but capability is... Sedan and SUV versions, FWD and AWD capability, EB4 to EB6 power, Sedans performs dynamically great, and CUVs have good taul/haul capability. The potential scale of applications worldwide would be better than the two pronged strategy of GRWD and EUCD, VW MLB is the basis for everything from the Audi A4 to Bentley Continental (only Q7 isn’t based on it). If Ford can decide that other products better serve the market than a compact pickup truck market in NA it can make the same decision for the RWD V8 sedan market in Australia.

Edited December 30, 2011 by Kris Kolman

[RichardJensen]

As much i don't like them, they had a much better business plan then Detroit overall, Honda rarely sold a rwd car, Toyota otoh still offer rwd but on a much smaller scale. I doubt drive wheels have too do with it.

 

FWD is cheaper and has better packaging vs. RWD. That makes it a more economical option for run-of-the-mill products, as evidenced by Toyota and Honda's success in with that layout in quotidian segments.

 

3 things could had happened;

 

#1 does not explain why the proportion of total Chrysler vehicles changed.

[2005Explorer]

FWD is cheaper and has better packaging vs. RWD. That makes it a more economical option for run-of-the-mill products, as evidenced by Toyota and Honda's success in with that layout in quotidian segments.

 

It also has many other advantages, not to the enthusiast, but for the average consumer. It is possible that Lincoln should add a RWD performance or flagship sedan in the future, however today the brand has so many other issues they need to try and fix those first.

[akirby]

It also has many other advantages, not to the enthusiast, but for the average consumer. It is possible that Lincoln should add a RWD performance or flagship sedan in the future, however today the brand has so many other issues they need to try and fix those first.

 

I suspect we may see Lincolns being AWD only with more powerful engines except maybe for Hybrids and c sized and smaller vehicles.

[TBirdStangSkyliner]

 

 

These statements are all true, but it does not follow that they lead to a defensible conclusion...

 

Yes, Ford has money to invest in new product, and RWD can be profitable. However, consider that apart from the rather shaky examples of Cadillac and the LX cars, no car company apart from BMW and Mercedes have been able to churn out significant profits from a lineup of RWD luxury cars......blah, blah...................

 

The Germans brands are dominating luxury car sales with RWD cars. This is at twice the average USA hourly labor cost and with a currency much less devalued than the US Dollar, the Canadian Dollar, the Japanese Yen, and especially the Chinese Yuan. They also incur shipping and other export related costs. On top of this, they use some pretty esoteric engineering and materials such as magnesium engine blocks. There is a significant number of Americans who like RWD vehicles. Many people in the USA and world markets live in areas which don't get a lot of freezing precipitation. Texas, SoCal, Florida, the Southeast and Southwest and the West Coast cities are home to more than a few customers. Globally there is also the snow/ice free Australia, the Middle-East, most of the heavily populated parts of the UK and Japan, much of Southern Europe and Asia, and most of Africa. If you live in these areas and want something besides FWD, RWD is likely a more attractive option than AWD. If the Germans can make money selling this platform, then Ford should be able to use their cost advantage to do the same.

 

Chrysler is making money with the 300. Infiniti appears to be doing the same with RWD. Subaru and Toyota seem to think that new investment in the platform is worth-while. Lexus is also bringing in new RWD product. Cadillac appears very anxious to show their new RWD sedan at the NAIAS in a few days. If I had to bet on success. I'd go with a Max Wolfe body on a new RWD platform,wearing a Cadillac badge over a Max Wolfe body of similar size, on a FWD platform, wearing a Lincoln MKwhatthehelleverletter badge.

[akirby]

The Germans brands are dominating luxury car sales with RWD cars.

 

Because they're German, not because they're RWD. Switch the C class and E class volume models to transverse engine AWD setups with the same power output and most buyers wouldn't even notice.

 

Obviously RWD is important for high performance vehicles and most here would like to see Lincoln with at least one or two RWD high performance vehicles. But to imply they need RWD just to compete is wrong. The current platforms can yield enough performance and refinement to get Lincoln back on the luxury map.

 

Go check sales of Lexus' FWD based vehicles vs. RWD based vehicles.

[RichardJensen]

This is at twice the average USA hourly labor cost and with a currency much less devalued than the US Dollar, the Canadian Dollar, the Japanese Yen, and especially the Chinese Yuan. They also incur shipping and other export related costs. On top of this, they use some pretty esoteric engineering and materials such as magnesium engine blocks

They also run 8+ year model cycles, and have a lock on their home market due to jingoism, chauvinism, or whatever you want to call it--which market, BTW, has volume that sells at prices significantly higher than the US.

 

Don't read one paper, that is obviously attempting to advance a political cause, and assume you've gotten the whole story, much less that it supports a conclusion as tangential as 'RWD = win'.

Edited December 31, 2011 by RichardJensen

[TBirdStangSkyliner]

Because they're German, not because they're RWD. Switch the C class and E class volume models to transverse engine AWD setups with the same power output and most buyers wouldn't even notice.

 

Obviously RWD is important for high performance vehicles and most here would like to see Lincoln with at least one or two RWD high performance vehicles. But to imply they need RWD just to compete is wrong. The current platforms can yield enough performance and refinement to get Lincoln back on the luxury map.

 

Go check sales of Lexus' FWD based vehicles vs. RWD based vehicles.

 

I'm pretty sure that the majority of people who can afford Mercedes have some awareness of what they are getting when they spend this size of money. Most people at this income level earned their money using their brains. A small minority inherited it. Sure, there are those who just want to drive something because it has the Mercedes badge. I propose that this badge doesn't have this kind of cachet from making FWD cars based on vehicles with the perception of prestige given to Ford products. Mercedes could buy Taurus and Fusion platforms and powertrains and then skin them as C and E class cars. This probably would devalue their brands cachet.

 

The ES and the RX are the only two FWD based Lexus vehicles. Yes, they sell well. I'm not so sure that they represent the majority of the profits, though. The ES starts at $36,725 and the LS at 67,130. I'm guessing that they have to sell several ES's to equal the profit of one LS. Take away the reputation of the LS and see how many people want to pony-up so much more for the ES than what the similar Toyota costs. Take away the history of the LS and the other RWD models and see if Lexus exceeds Acura in prestige and volume. The LX starts at $79,455 and wouldn't need to sell in high numbers to make some serious money. It's fully twice as expensive as the RX and has lots of components sourced from other vehicles.

 

Let's remember that Lexus was able to move up-market from Toyota because Toyota had killed it in about every metric or standard for quality and reliability for several years. During this time period Toyota's also weren't available with all of the options and accessories that volume cars have today. Not much was luxurious about the 1989 Camry. There was a lot more up-market space. They still anchored this venture completely on the LS being tremendously well engineered and executed. It was a RWD car which competed very well against any other car in the world, well except for being distinctive. In 1989, only Mercedes was seen to be luxurious and reliable. Jaguar, BMW, Audi, Alfa and whoever else were all largely considered maintenance and break-down nightmares. Things are now different, well maybe not with Alfa, but how much do they matter.

 

I don't see any of these advantages currently existing for Lincoln. The only reputation Lexus had was being associated with the good reputation of Toyota for quality. Lincoln in 2011/2012 has lots of reputation baggage of its own. The Ford association isn't as currently positive as what the Toyota one was when Lexus was born. No one, absolutely no one, is saying that they want a car with the reliability, quality, and driving dynamics of a Taurus or Fusion, but with more luxury features. Some poster will likely come out and say that they do, but let's be serious. If there are even five such willing funny-blue punch drinkers, three are probably on this board. The same probably goes for people desiring Synch with even more features, possibilities and complexity. Ford's recent fall in JD Power and other measures moved the company from a not very good position to relaunch Lincoln as a slightly more luxurious product line, to a even weaker standing. I say go big, go truly distinctive, and go right or give Lincoln a dirt nap. I hope they go big and distinctive and do it well. My critique is because I want Lincoln to succeed and I honestly don't see the current direction and leaked information heading to that end.

Edited December 31, 2011 by TBirdStangSkyliner

[akirby]

You're assuming 2 things that are patently incorrect:

 

1 - that the new Lincolns will perform just like current Fords but with more luxury features. They'll have more power and much better driving dynamics with standard AWD, unique powertrains and electronically adjustable suspensions.

 

2 - that luxury vehicles must have superior driving dynamics to be successful. The Lexus LS made it's mark with luxury features, not performance. There has never been a performance version like an AMG Mercedes. Even BMW doesn't do a M7.

 

You're taking your desire for RWD and trying to rationalize it. Lincoln will do just fine without RWD as long as they get the dealer network fixed and offer a luxury ownership experience with gorgeous vehicles that look better and out perform similar Fords. Once that's done they can add RWD niche platforms to satisfy the small enthusiast market.

[RichardJensen]

with luxury features, not performance.

...and ownership experience.

[RichardJensen]

I'm pretty sure that the majority of people who can afford Mercedes have some awareness of what they are getting when they spend this size of money.

Betcherass they know what they're buying.

 

They're buying a Mercedes.

 

And that's not exactly something Ford can do with Lincoln.

[BORG]

The quickest way to Kill Lincoln is to spend too much on a hope and a prayer that flops. If you want Lincoln to survive, you have to do be patient; persistence pays off eventually. And keep in mind Lincoln has to fund its own products, Ford doesn't care about building a RWD sedan just so Lincoln can use it. If Lincoln wants a RWD sedan, it will have to fund its own...and Lincoln can't afford it. It's like anything else, if you want it badly enough, you'll work long and hard to get it.

Edited December 31, 2011 by BORG