Lincoln maps out China strategy, sees learning lab for world

Lincoln is planning to operate 60 dealerships in 50 Chinese cities by late 2016.
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Lincoln set up a showcase called The Lincoln Space in a busy pedestrian area of central Beijing today to outline its strategy for entering the world’s largest auto market.

An initial presence of eight dealerships in seven cities this fall will grow to 20 stores by the end of the year. By the end of 2016, Ford Motor Co.’s luxury brand plans to have a network of 60 dealerships in 50 cities, operating independently of Ford-brand stores.

The strategy fulfills a plan revealed in 2012, as the storied 97-year-old U.S. brand attempts to chip away at much-bigger German rivals who rule China’s landscape for premium cars.

As in the United States, Lincoln will be banking on novel approaches to customer service to set itself apart.

“Success in China is key to our efforts to build Lincoln into a global luxury brand,” said Jim Farley, Ford’s executive vice president of global marketing, sales, service and Lincoln, in a statement.

First cities

Lincoln’s initial cities will be Beijing, Shanghai, Nanjing, Xi’an, Guangzhou, Huangzhou and Chengdu.

When the dealerships open, they will offer just two models, both of them exported from North America: the MKZ sedan and the MKC compact crossover. The refreshed Lincoln Navigator SUV follows in 2015.

Lincoln plans to show a concept at the Beijing auto show on Easter Sunday, but has not set a production date.

Other models, possibly including a large sedan, are also planned.

China will give Lincoln added sales volume to justify investment in new products -- spending not justified by Lincoln’s dwindling U.S. sales in recent years.

Lincoln is entering a crowded and hotly contested Chinese luxury market populated by formidable competitors, particularly the German brands that hold 80 percent of the segment. Unlike Lincoln, they already operate globally.

Last year, Audi topped China's luxury market with 492,000 sales, ahead of BMW (326,444) and Mercedes-Benz (228,000). 

Lincoln sales in its primary market, the United States, fell to 81,694 last year, less than half of its 1998 peak. This year’s U.S. demand is up 36 percent through March.

Late arrival

“Lincoln is late entering this market, which is now very developed and full of powerful brands who are well established in China in terms of brand image, extensive product portfolio, wide distribution network and also local production,” said Ashwin Chotai, managing director of London-based Intelligence Automotive Asia via e-mail.

“The leading brands are Audi, BMW and Mercedes-Benz, and even a small percent swing from these brands would be significant for Lincoln,” said Chotai. “For the initial few years, Lincoln is likely to remain a niche brand with sales well below even second-tier luxury brands such as Jaguar, Land Rover, Lexus, Infiniti and Volvo.”

But Keith Lomason, JATO Dynamics president for greater China, said Lincoln has done its homework.

“Lincoln has been preparing their entry for several years and I believe they are well poised to have some early success that will be converted to long-term growth.”

Lomason said Lincoln should capitalize on its relationship with Ford.

“Ford is seeing tremendous growth in both sales and appeal in China and I believe Lincoln should emphasize the appropriate aspects of the Ford-Lincoln relationship to gain immediate acceptance with those Ford clients.”

Ford's strategy for Lincoln in China has been emerging over the last few years. From left in a 2012 photo: Joe Hinrichs, then-president of Ford's Asia-Pacific unit (now president of the Americas); CEO Alan Mulally; Jim Farley head of global marketing sales and service; and Dave Schoch, then-CEO of Ford China (now president of Ford Asia-Pacific); pose with a Lincoln MKZ concept in Beijing.

Learning lab

Following the strategy of its planned U.S. rejuvenation, Lincoln will tout a new brand of personalized customer service called “The Lincoln Way’’ and modeled after boutique luxury hotels.

Lincoln sees China as something of a learning lab for understanding customers and their needs. Lincoln built a functioning dealership prototype facility in Shanghai to perfect its service. The things Lincoln learns in China could very well find their way across the Pacific to the United States, according to Matt VanDyke, director of global Lincoln.

Lincoln wants to create a warm, welcoming environment for customers. Each dealership will feature license plate recognition technology that lets employees know instantly that a customer has arrived.

In a Personalization Studio, prospective buyers can configure life-size images of a vehicle at the touch of a button. Owners can sit in a cozy lounge and watch their vehicles being serviced thanks to a camera in the service bay.

Dealership employees -- known as The Lincoln Team -- will be trained at The Lincoln Institute in Shanghai.

Deliberate

Lincoln is taking a very measured approach in developing its dealer network in China.

“We will be very deliberate about how we develop the dealership network,” VanDyke said. “We will not over-dealer the markets. We’re going to give them very big PMAs (primary market areas) to work with so they can have the right kind of throughput so they can take super high-touch care of customers.”

VanDyke, who has logged more flight miles to China than he cares to count, said Lincoln executives explained the China strategy to its U.S. dealers at a national dealer meeting in Las Vegas a couple of weeks ago.

One message: The expansion to China benefits the entire Lincoln enterprise.

“We recognize they’re going to hear more about what we do over there. We want them to be enthused and not think we’re distracted by it and it’s good for everyone.”

You can reach Bradford Wernle at bwernle@crain.com.

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