Ford Motor (NYSE:F) said on Thursday that it plans to pitch its luxury Lincoln brand in China, the world’s hottest car market. The second largest U.S. automaker would introduce the car late this year and give its dealership to eight firms across seven cities. As part of its bigger plan, the company proposes to offer five Lincoln models in the Mainland by 2016.
The First Step
Ford has been a latecomer in the Chinese luxury car market. But there’s much of research and consideration behind it. The company would launch MKZ midsize sedan as the first Lincoln model in the emerging nation. Robert Parker, Lincoln’s China president said that the company would ensure that Lincoln’s backseat are well cushioned and padded as people in China expect the car to give huge backseat comfort.
The American automaker has targeted Lincoln MKZ model to compete with Volkswagen’s (VLKAY) luxury brand Audi’s A4 model, and Mercedes C-Class. These automakers are making huge money in China in collaboration with local players. Ford’s China division CEO John Lawler said that Lincoln would be priced competitively, although didn’t reveal how much it would cost the buyer.
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The company wants to make it big with the Lincoln. It wants to provide customers an awesome experience when they enter the dealers’ showroom. The showroom would have first-rate amenities such as a tea room, a nice lobby where customers can be seated and that would give them the feeling of a being in a luxurious hotel. The store would also have a “personalized studio” featuring a touch screen table where customers would get the option of sliding designs and selecting the interiors that they want in their car.
Wow! Quite impressive! It’s evident that Ford has some elaborate plans for the high-end car market. So what’s the carmaker crafting for the long run?
Long Term Plan
Parker says that Ford proposes to increase Lincoln dealership in China to 60 odd dealers spread in 50 cities by 2016. He considers that there’s huge scope for Lincoln in China’s luxury car market, and that Chinese buyers have good appetite for Lincoln. Last year close to 1.6 million luxury cars were sold in the economy of which every two out of three cars carried the Audi, BMW (BAMXF), or the Mercedes nameplate. So there’s a sizable market for luxury cars in China that provides good room for the Lincoln to grow.
In the long run the Detroit automaker plans to set up facilities and manufacture the high-end model in China. The move should help the company in a big way. Vehicles that are imported in China are subject to exorbitant duties and taxes, which automatically pull up the price of the car making it more expensive for the buyer. But the problem would be addressed if facilities dedicated to the production of Lincoln can be set up in the country.
It would help the company to record better margins and compete with the likes of luxury brands such as Audi, Mercedes-Benz, and BMW. Archrival Toyota (NYSE:TM) is preparing itself to launch a compact sports utility vehicle (SUV), the NX under its luxury brand Lexus. As competition is expected to heat up, it’s imperative for Ford to get its resource aligned at the earliest and set up solid plans for the long term.
Right away Lincoln might not give stiff competition to the already established brands of Audi, BMW, and Mercedes in China. But this step of entering the Chinese territory will help the brand create its presence and strengthen its footing. Ford’s experiencing enormous success in the mainland, and is charged up to make the most of this thriving market.