Lincoln dealers cheered by brand's makeover attempt
Dealer since: 2008 Dealership: Bill Knight Lincoln, Tulsa, Okla. Other brands: Ford, Volvo Average monthly sales at Lincoln dealership in 2012: 20 new, 21 used Quote: "No one hides from the reality of where the brand is today. Everyone is very humble about where we are but very confident about where we're going."
Bill Knight has seen the auto industry from many sides.
For 14 years, he worked for Ford Motor Co. in various sales and marketing positions. Then he joined Penske Automotive Group, where he worked for eight years as an area vice president. In 2008, as the financial crisis was gathering strength, Knight decided to take the leap and become a car dealer, buying two dealerships in the Tulsa, Okla., area: a stand-alone Ford store and a Lincoln-Volvo dealership.
Now Knight is serving a two-year stint as chairman of the Lincoln National Dealer Council. His term coincides with a transformation attempt at Lincoln. The redesigned 2013 MKZ sedan, the first of a new generation of Lincolns, is just now arriving in dealerships. A second new vehicle, the MKC compact luxury crossover, was introduced at the Detroit auto show last month in concept form.
Lincoln also is working to improve the customer service experience at dealerships in an effort to emulate boutique luxury hotels. The brand is kicking off a dealer training program and a concierge service to help customers configure their vehicles.
Knight talked with Staff Reporter Bradford Wernle about the brand and its future.
How was 2012 for Lincoln dealers?
Our volume was up about 15 percent in new and used, and we were able to grow our service business a little. We've had to be very resourceful as a stand-alone Lincoln dealer.
What does 2013 look like for Lincoln dealers?
Clearly we're most excited about the impending arrival of the 2013 MKZ. That's the first of the transformational products we've seen from Lincoln. It brings some excitement to the brand we haven't had for awhile.
What did Lincoln do right in 2012?
I think they have worked really hard on right-sizing the dealer network. In the top 130 markets there are just over 300 dealers, and that's a number I'm not sure we thought they could get to. This is a journey. I don't think any of us back away from the realities of where the brand sits today in the eyes of the luxury customer. I look at our responsibility on the council to provide that retail insight as we move through the journey. We've launched things like the Lincoln Dealer Academy that focuses on the customer and the experience the client gets.
We no longer talk about Ford's commitment to the brand. People ask me all the time if I think it will work. My answer is I don't know. But this is what I do know: I will take my chances with what Ford is giving us. They're giving us their best and brightest. I will take my chances with Jim Farley, Matt VanDyke, Kevin Cour and Andrew Frick (Lincoln's executive sales and marketing leadership team). Now we move from the question of commitment to the question of execution.
We are a challenger brand. We understand that. We think there is a place for a successful American premium brand.
Where would you like to see improvements?
The quicker the MKZ can get here, the better. We also know from [Ford CEO] Alan Mulally that they're not going to deliver the MKZ until they're absolutely sure the product is going to be where it needs to be. We know they're not going to ship it until the quality is right.
They are right in the middle of shipping the product as we speak.
How much of a problem have the repeated MKZ delays been for dealers?
On one side we are disappointed. We would have liked to have seen them in December. To take the longer view, when the car's ready to be shipped, that's when we want it to be shipped. That's so critical as we're trying to attract a new customer base, whether that takes another week or another month. It's not ideal and not what we had hoped for. But the Lincoln of eight years ago would have just shipped the car. That says a lot about the way we've changed.
Lincoln has had many false dawns in the past. How will this time be different?
I do believe that Ford understands that every great car company has a premium brand. When you look at it today, Lincoln is what they have. I think the laser focus on Lincoln is what's going to be different, and it's a different company today than it was before. If you think about it from a Lincoln-Mercury perspective from 2000 to now, it's been mostly bad news. We had to go through what we've gone through with the loss of Mercury, but now there's an energy within the company around Lincoln that's different than three years ago.
Some of your staff went through pilot training last summer at the Lincoln Dealer Academy, which should open soon. How did that training go?
That pilot we went through was the best, most transformational training in terms of how we treat each other and treat the client that we've ever gone through. The key is to capture that for everybody else, using the hospitality approach to both sales and service.
How did the training change the way your people treat customers?
The person who trained us wasn't a car industry person. He was a hotel and restaurant industry person. It was fantastic.
There's this hospitality awareness. There are different ways we now actively talk to, listen to and treat our customers. I would not call it rocket science, but it's a completely different point of view. It's the point of view of the restaurant-hotel industry. We've found it to be absolutely applicable in how we treat and talk to our customers. Our challenge will be to sustain that. That will be where the gold is if we can find out how to sustain that.
What is Lincoln doing to separate the sales process for dealers who hold both Ford and Lincoln franchises?
That clearly is a challenge. What we've seen from Lincoln, what they're working on is how do they grab the hearts and minds of the salespeople in a dual operation, whether that's from a monetary perspective, a product perspective or excitement perspective. What we've tried to help them do is create programs that will work in a side-by-side situation or a stand-alone situation.
Lincoln has a new ad agency -- Hudson Rouge. What do dealers think of the Lincoln advertising?
We've been very happy with the work they've done so far. It's very different from Ford. Everyone has their own opinions. At our dealership, we have seen a significant increase in people talking about Lincoln. We had our best month of the year in December. I don't think that's coincidental. Just the fact we have a strong point of view, the Lincoln Motor Co. launch. Sometimes the talk is negative. A lot of times it's positive but the good news is they're talking about Lincoln.
Is Lincoln doing enough to keep former Mercury owners in the fold?
I think Ford has worked really hard to try to allow for that Mercury owner to find his way back to the Lincoln showroom. We also know the reality is that a lot of those owners found their way to the Ford showroom, which is OK for a dual, but not for a stand-alone. The reality is that when you look at where we're going, it's difficult for us to appeal to that owner group. We just don't have the products at the price point that is going to appeal to many of those customers.
Lincoln is concentrating on the top 130 luxury markets. What is happening with the brand outside those markets? Is Lincoln being more relaxed about your meeting the facility requirements?
A couple of things: We have a Select dealer on the council who represents the voice of the small dealers. We have been adamant that the standards are the same. That's one of the things we hope we've accomplished. This hasn't been dictated to the dealer body -- who can stay and who can go. For a small dealer, if they want to engage with the brand and make the commitments all of us make, they can stay. If they don't, it will be hard to comply.
Lincoln is raising invoice prices, ending the holdback and adopting an approach similar to other luxury brands. This move was somewhat controversial when it was announced. How are dealers receiving it?
I think it's too early to tell. The standards Lincoln is asking a dealer to meet are consistent with other premium brands. What we've tried to provide is that retailer insight. Let's take a crawl-walk-run approach where the standards are achievable. There's always that challenge of what comes first. Does the product come first or the compliance? We've tried to go slowly but at the same time be prepared for when that new Lincoln customer comes to see us to look at the new MKZ.
Lincoln is trying to encourage dealers to buy more off-lease cars for their certified lots. How will that help the brand?
We know that keeping off-lease vehicles within the network is the way to increase residuals, which decreases payments and makes the brand stronger. And today that doesn't happen within the Lincoln brand. We're beginning to take steps to change that. When you look at other premium brands and how they keep their products within their dealer network, they're the ones with the strongest residuals and the strongest dealer networks.
Does Lincoln need its own platforms separate from Ford?
When I saw the announcement of their plan to go into China, that was very exciting to me. That announcement means we can get our own platforms or however that looks. What every dealer hopes is that [the move into China] provides the scale to lead us down that path. Today, from a dollars and cents standpoint, the volume can't justify such a program. Having global scale is something we hope will provide a broader breadth of products.
What did you think of the MKC Concept?
I was struck at the reveal that Bill Ford was the opening speaker, then turned to Jim Farley and ended by Alan Mulally. That excited me as much as the product. I was just blown away by the MKC and the differentiation between it and the Ford Escape. That's what we asked for and what they delivered.
The MK naming system has been confusing to many customers. Would dealers like to see it changed?
We've certainly discussed naming with the company. They've shown us a lot of research. It's similar to what a lot of the other luxury manufacturers do. It's what we have.
When we talk about the journey of Lincoln, trying to redo the names while we redo the customer experience and redo the product line just doesn't make a lot of sense. It is what it is. We don't think it's going to get in the way of our progress.
Lincoln plans to sell the MKZ hybrid at similar price and incentive levels to other MKZs.
A lot of customers are looking for that new cool hybrid Lincoln is coming to the table with. No longer do you have to be punished with the design of a hybrid. I think Lincoln will carve out its own niche with the Z hybrid.
How is the relationship with Lincoln Automotive Financial Services coming along?
I don't know that there's another part of Ford that has been as responsive to Lincoln's needs as they have been. Whatever we've talked to them about, they have done nothing short of moving mountains to allow that to happen.
Can you give an example?
Two things come to mind. The whole redesign of their Web site -- it's very different from Ford, and more premium. It used to be that a Lincoln customer would get the Ford Credit letterhead. Now they get everything addressed to them from Lincoln Automotive Financial Services just like the other brands do. That's something they did, and did very quickly.
They also partnered with us on the whole approach to the off-lease vehicle and keeping them in inventory.
Do you believe Lincoln will do more leasing?
I do. Over the past few years, a lot of us have gotten away from leasing. To be competitive, the 2013 MKZ will have to be leased competitively, which I believe we will.
Some customers have struggled with the MyLincoln Touch interface. What kind of support is Lincoln giving dealers to train customers to keep up on all the technology?
First of all, the software updates we've received most recently in December help simplify some of the commands. That makes the system better. They added some peace of mind when they extended the warranty on the hardware and software. They've continued the technology bonus allowance that's been in place for the last two years -- $75.
Do you believe Lincoln is right in saying there's a base of culturally progressive luxury customers who aren't being served by other luxury brands?
I do. I believe there's a section of the population that's cheering and wanting an American luxury car to be successful. If we provide the experience, we will find a market.
How do Lincoln dealers get from where they are now, with a very skimpy lineup of legacy cars, to where Ford promises they will be at the end of 2014, with at least four new, highly competitive vehicles?
Clearly the MKZ will help. The MKZ makes up roughly 30 percent of our volume. Getting a brand-new competitive entry in that segment will certainly help. We certainly hope and believe the industry will improve in 2013. There's been a lot of network reduction, so throughput should continue to improve.
When I look at where we've been and what we've been through, it seems like we're on the other side of the economic challenges and the product challenges.
No one takes for granted how difficult it has been to survive being a stand-alone Lincoln dealer the last five years. Now we've had a network reduction, we've got a new product and some improvement in the industry. It's going to be better. Will we be the No. 1 luxury brand tomorrow? No. But it's going to be better. c