Trimming the Ranks of Lincoln Dealers
Ford Motor Co. plans to eliminate more than a third of its Lincoln dealers in large metropolitan areas over the next two years as part of its effort to revive the luxury brand, according to a dealer who attended a closed-door meeting Tuesday.
Ford revealed the plan to around 900 Lincoln dealers at the meeting near its Dearborn headquarters. Ramon Alvarez, who owns a Lincoln, Mercury and Jaguar dealership in Riverside, California, said Ford has identified 130 market areas that represent 85 percent of U.S. luxury car sales. It plans to cut the 500 dealerships it has in those areas by 35 percent.
Ford has 700 Lincoln dealers outside those areas who will be meeting with the company over the next year to decide whether to stay open, convert to Ford-only dealerships or close, Ford's vice president of U.S. sales Ken Czubay said after the dealer meeting in a discussion with media. Czubay wouldn't say exactly how many dealers Ford expects to close.
Those who follow the auto industry closely are not surprised by this development.
"Mercury was really outselling Lincoln, said Steve Findlay, editor of Wards Dealer Business. "These guys had two brands to sell, now they have one. It makes sense to trim their ranks as far as Ford is concerned."
Findlay telling WWJ AutoBeat Reporter Jeff Gilbert that Ford will likely make significant upgrades to Lincoln dealerships. He says Ford will likely compensate any Lincoln dealership that loses its franchise.
"Ford has a track record of doing that," said Findlay. "I think they also have the determination of not having a big dealer fiasco to deal with, when they have other, more important things to do."
Ford executives said the plan will help remaining dealers be more profitable and allow them to invest more in their showrooms. Alvarez said Ford wants dealers to upgrade services and offer perks like delivery of vehicles to buyers' homes.
``We're fully committed to transforming Lincoln into a world-class luxury brand with compelling vehicles and also a consumer experience to match,'' Ford's Americas President Mark Fields said.
Alvarez said the move will be tough for some dealers, particularly those outside the market areas, but he said it's necessary to make Lincoln an effective competitor. Lexus, for example, has only 230 U.S. dealers even though it saw more than twice the sales Lincoln did in the first part of this year.
``You have to be optimistic about these things,'' Alvarez said. Lincoln sales have been lackluster in recent years despite new cars. Lincoln's sales peaked in 1990 at 231,660, according to Ward's AutoInfoBank. Last year, Ford sold 82,847 as buyers looked to other luxury brands like Lexus and BMW.
Ford is under pressure from dealers to replace the volume they'll lose when the company phases out its long-struggling Mercury brand at the end of this year. Ford has around 270 Lincoln-Mercury dealers, and many relied on Mercury for more than half their sales. Some have already closed.
Ford plans to release seven new or revamped Lincolns in the next four years, including Lincoln's first compact car.
Ford also needs to change Lincoln's frumpy image and reach out to younger buyers. Lincoln currently has the oldest customers among luxury brands, with an average age of 66, according to AutoPacific, a consulting firm. BMW buyers are 15 years younger.
Matt VanDyke, U.S. marketing director for Ford and Lincoln, said Lincoln is defined by older vehicles like the Town Car sedan, which is often pressed into service as an airport limo and is being phased out next year. He wants buyers to focus on Lincoln's new products. Its top-sellers are the MKX, a large wagon, and the MKZ mid-size sedan.
(Copyright 2010 by The Associated Press. All Rights Reserved.)
WWJ AutoBeat Reporter Jeff Gilbert contributed to this story.
