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Lincoln Again Asking Dealers to Become Standalone


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https://www.autoblog.com/2019/08/27/lincoln-car-dealerships/

 



Lincoln is once again looking at ways to stand out from parent company Ford and establish itself as a credible player in the luxury segment. The company has returned to its plan for standalone showrooms to give its sales and image a boost.

In 2018, Lincoln asked 150 Ford-Lincoln dealerships in its 30 biggest American markets to make plans for a standalone showroom by July 2019, and inaugurate it by July 2021. Of those stores, 72 signed on — but the others resisted, partly because the move requires investing millions of dollars. Lincoln put the campaign on hiatus in December 2018, and now Automotive News has learned it's ready to relaunch the plan after finding a middle ground that satisfies both executives and store owners.

The publication said dealers gained more freedom to choose how big of a store they build; square foot requirements are no longer tied to the market size. Lincoln also agreed to treat dealers who don't comply more fairly, notably by reducing financial penalties, and it made the aforementioned deadlines more flexible. Standalone Lincoln stores must now be completed by July 2022.

The move makes sense, at least on paper. As Autoblog reported in 2018, research shows dealers with standalone showrooms sell more cars. The handful of Lincoln retailers that sell cars in purpose-built showrooms have seen their sales increase considerably faster than those who display the firm's models next to Ford-badged vehicles. Customers "want to buy a luxury product in a luxury environment," explained Robert Parker, Lincoln's head of marketing, at the time.

 

I think it's a good idea, especially as the brand becomes stronger with better products.  They need to separate themselves from the Ford rebadge image as much as they can.

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Ford's plan for standalone Lincoln dealerships should have been done when the Mercury brand was shut down in 2011. Back then, most Lincoln-Mercury dealership locations were physically separate from Ford dealerships. A lot of those standalone L-M dealerships got shut down entirely. For example, North Hills Lincoln Mercury in Fort Worth. At that point, the combined Ford-Lincoln facilities became more common. For example, Don Davis Ford-Lincoln in Arlington.

 

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52 minutes ago, rperez817 said:

Ford's plan for standalone Lincoln dealerships should have been done when the Mercury brand was shut down in 2011. Back then, most Lincoln-Mercury dealership locations were physically separate from Ford dealerships. A lot of those standalone L-M dealerships got shut down entirely. For example, North Hills Lincoln Mercury in Fort Worth. At that point, the combined Ford-Lincoln facilities became more common. For example, Don Davis Ford-Lincoln in Arlington.

 

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While I don’t disagree with you, I don’t think Lincoln had sufficient products to sustain standalone stores back then. 

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After encouraging stand-alone Lincoln-Mercury dealerships and then starving them for desirable product, how fast would you be to sign up? Dealers seem to be hedging their bets by investing in foreign makes. With that said recently I have visited a Lincoln dealership and a Lexus dealership. While the Lincoln dealer was friendly, not the upscale experience of Lexus. Hard enough to convince a customer to buy a $50- $100K vehicle. Convince a business owner to risk millions.   

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In this transitional period,  I think Lincoln should also lower their prices to meaningfully below the Germans, to establish a healthy volume first. They can then slowly increase the prices to compete with the Germans. Some reviewers already made the comments that because it is a Lincoln, it is not a good value, although it is a great SUV. 

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8 minutes ago, Wheeling said:

In this transitional period,  I think Lincoln should also lower their prices to meaningfully below the Germans, to establish a healthy volume first. They can then slowly increase the prices to compete with the Germans. Some reviewers already made the comments that because it is a Lincoln, it is not a good value, although it is a great SUV. 

 

Some did that to establish a new brand like Lexus.  But I think it would just make it that much harder to raise prices later.  I think it’s a better strategy to keep prices higher but still competitive and adjust volume to match that demand, especially with best in class products.

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18 minutes ago, akirby said:

 

Some did that to establish a new brand like Lexus.  But I think it would just make it that much harder to raise prices later.  I think it’s a better strategy to keep prices higher but still competitive and adjust volume to match that demand, especially with best in class products.

 

And when Lexus came out there was a clear line between mainstream and luxury. Mainstream brands are expected to have all the same features as luxury brands. Cut Lincoln prices and you’ll be stepping on Fords, whereas thirty years ago there was a bigger gap between Lexus an Toyota. 

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I understand what you are saying, it makes sense. However, with a price point comparable to the Germans, people will be cross shopping and it will take longer to have the volume to sustain independent Lincoln dealers. In the end, it is unavoidable to associate Lincoln with Ford. It may be counter productive. 

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7 hours ago, Wheeling said:

I understand what you are saying, it makes sense. However, with a price point comparable to the Germans, people will be cross shopping and it will take longer to have the volume to sustain independent Lincoln dealers. In the end, it is unavoidable to associate Lincoln with Ford. It may be counter productive. 

 

Well they have $80K Navigators plus Nautilus and Corsair.  It will be fine.

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10 hours ago, Wheeling said:

In this transitional period,  I think Lincoln should also lower their prices to meaningfully below the Germans, to establish a healthy volume first. They can then slowly increase the prices to compete with the Germans. Some reviewers already made the comments that because it is a Lincoln, it is not a good value, although it is a great SUV. 

 

Excellent post Wheeling sir. Value for the money is one area Lincoln does poorly. But also something Lincoln can improve by lowering vehicle prices across the board immediately, while at the same time continuing to offer exclusive service-based experiences like Pickup & Delivery. That combination can help Lincoln grow its customer base. The brand struggles to attract new customers who don't already own Fords and Lincolns.

 

Hyundai is using this "value" strategy for their Genesis brand and it has been a success.

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Here is the thing, I think Lincoln needs to have separate dealerships if they want to succeed in the long term. However, if i were a dealer i would be a little gun shy. Lincoln is trying to push out great products but we don't know if the Aviator and Corsair will be sales (volume) success for dealerships to survive on just yet.

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13 minutes ago, akirby said:

Don't forget Lincolns have longer warranties and more standard service so they'll make more off those items than a Ford dealer.   And the profit margins should be a lot better on $75K Lincolns than $35K Fords. You don't need huge volume.

 

Is Lincoln profitable at all? Last year Ford CFO Bob Shanks said "most Lincoln products" were among the Ford vehicles in the U.S. losing money. 

 

Lincoln dealerships, and the Lincoln component of Ford-Lincoln dealerships, probably also run a loss on every new Lincoln vehicle they sell and have to make it up with service, F&I, used cars plus spiffs they get from Ford.

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18 hours ago, rperez817 said:

Ford's plan for standalone Lincoln dealerships should have been done when the Mercury brand was shut down in 2011. Back then, most Lincoln-Mercury dealership locations were physically separate from Ford dealerships. A lot of those standalone L-M dealerships got shut down entirely. For example, North Hills Lincoln Mercury in Fort Worth. At that point, the combined Ford-Lincoln facilities became more common. For example, Don Davis Ford-Lincoln in Arlington.

 

The problem was Lincoln didn't have the product to survive at their own dealerships, so while that'd have been ideal, it wouldn't have worked.

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2 minutes ago, rmc523 said:

 

The problem was Lincoln didn't have the product to survive at their own dealerships, so while that'd have been ideal, it wouldn't have worked.

And that is why they should reduce the price to make the products more attractive and to increase the volume quickly, so that the stand alone dealers can survive. Do you want your 75K Lincoln to be serviced by a technician who is working on 35K Ford most of the day?

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1 hour ago, sullynd said:

Lincoln sold 10x as many vehicles as Genesis in 2018. 

 

Yes sir, Genesis went through a transition period of its own in 2018. That year, it applied for licenses in each state for dealership franchises separate from the Hyundai brand. HMA halted imports on Genesis vehicles during this transition, when the number of Genesis dealerships dropped from 850 to about 400. That caused lower sales in 2018.  https://www.wardsauto.com/dealers/genesis-mark-new-phase-repositioned-us-dealer-network

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54 minutes ago, rperez817 said:

 

Is Lincoln profitable at all? Last year Ford CFO Bob Shanks said "most Lincoln products" were among the Ford vehicles in the U.S. losing money. 

 

Lincoln dealerships, and the Lincoln component of Ford-Lincoln dealerships, probably also run a loss on every new Lincoln vehicle they sell and have to make it up with service, F&I, used cars plus spiffs they get from Ford.

 

They were when cars were more popular because they shared all their platforms and drivetrains with Ford so overhead was really low.  Now that they're doing more differentiation and bespoke options and car sales dropped it might be worse but I would think with Navigator and Aviator pulling in high ATPs and Corsair and Nautilus filling in the low end that they should be doing pretty well.

 

If they didn't think they could make a decent profit they would have killed Lincoln a long time ago.

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53 minutes ago, rperez817 said:

 

Yes sir, Genesis went through a transition period of its own in 2018. That year, it applied for licenses in each state for dealership franchises separate from the Hyundai brand. HMA halted imports on Genesis vehicles during this transition, when the number of Genesis dealerships dropped from 850 to about 400. That caused lower sales in 2018.  https://www.wardsauto.com/dealers/genesis-mark-new-phase-repositioned-us-dealer-network

 

But yet Lincoln is still outselling it by roughly 4-5:1 as of Q2 of this year

 

Lincoln 25,941

Genesis 5,805

Genesis 

 

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1 hour ago, akirby said:

If they didn't think they could make a decent profit they would have killed Lincoln a long time ago.

 

I remember Alan Mulally came real close to pulling the plug on Lincoln about 10 years ago but apparently he changed his mind.

 

Anyway, Ford's immediate concern with Lincoln shouldn't be profitability, but brand awareness which is very low. Looks like Ford is doing all the right things to improve that. Including the push for standalone dealerships.

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