Lincoln-Mercury dealers have high hopes for new products in 2006.
This year will mark the first full year of sales for the Mercury Milan and Lincoln Zephyr mid-sized sedans. Dealers also have the Lincoln MKX crossover arriving in the fourth quarter. And the Lincoln Navigator SUV gets a significant update - and an extended-length derivative called the Navigator L - for the 2007 model year.
Dealers are counting on the product influx to boost sales and profits, which have taken severe hits in recent years. Lincoln sales dropped 11.4 percent in 2005. Mercury saw a 1.2 percent increase, its first upswing since 1999.
Bob Federico, chairman of the Lincoln Mercury National Retailer Council, says 2006 should be a better year. Federico, dealer principal of Courtesy Lincoln-Mercury in New York, spoke with Staff Reporter Amy Wilson.
How was 2005 for Lincoln-Mercury dealers?
It was a challenging year. There were a lot of changes that needed to take place, as far as product going away and new product coming on. At the end of the year, it was a challenging year, but we're through it, thank God.
What is your outlook on 2006?
Very optimistic. We've got some good plans in place. We've got a lot of great product. We've got programs. We've got a marketing plan. We're on the right direction. Lincoln Mercury is a fabulous brand. I think it can only go up in sales.
What are the top three priorities for the dealer council in 2006?
Everybody's high point is profitability: different ways dealerships can create profit centers, become more profitable, streamline the operations, cost-cutting. Another one is looking further than a 30- or 60-day window (and instead) planning 90 to 120 days out with programs, inventories, incentives.
You're working with the factory to get more long-term programs?
Yeah. The dealer and the factory are one. We both need each other. When we work well together, we can definitely put a plan (in place) that can put a lot of metal on the road. Certain parts of the country can sell a certain type car. (We want to be) nimble enough to make adjustments around the country (and) capitalize on the right markets.
And a third priority?
Working on our advertising, to combine the local (dealer advertising) with the factory advertising for a tighter uniform message.
Is there a clear, cohesive theme on advertising at the factory level?
At this point, yes. Advertising is something that changes throughout the different model years and the different management teams. But I believe at this point they're trying to take a definite stance on brand and image, how we present our vehicles.
Is Mercury still using the "New Doors Open" advertising theme? Is that working? Is it good?
Yes. It's a very unique theme in the sense that it presents a lot of options to the advertising, creative people. It's slated to be continued.
Some dealers question how the theme relates to Mercury as a brand.
There are mixed emotions on New Doors Open. It originated (because) we had two unique vehicles (Mariner and Montego) to sell, and it announced their arrival. It kind of showed Mercury (as) relevant to the market and relevant to buyers they are trying to capture.
Is Lincoln's "Reach Higher" campaign sticking around?
Yes. Lincoln has gone through a lot of advertising changes with the change in product. But we have a lot of new product coming. Very unique, specialized, like the Zephyr (that) relates to a market we're attempting to grow in. Reach Higher's message is to pull in a new, captive audience. Town Car buyers are still our buyers. Town Car is the flagship. But obviously there are more buyers than Town Car buyers. There are all kind of luxury car buyers. The tag "Reach Higher" just basically says you can (raise) one's aspirations and achieve the best.
When you gave your top priorities, you did not mention product.
I was going to wrap that in. Product always is the halo. The dealers always want new cars, and there seems to be a cycle plan coming along with products that are dynamic, relevant, intriguing, that should definitely launch Lincoln and Mercury to a new level.
On the Lincoln side, have dealers seen more of the product that's coming?
I believe that's imminent. We're all anxious. There's a lot of good stuff coming. And it's not that it's 10 years out, which is wonderful.
What are your hot products?
We're doing very well with Milan and Zephyr. And our SUVs the Mariner and Mountaineer are always a very good seller for us here.
Mercury saw a sales increase in 2005 for the first time in a long time. Did your dealership see that increase, too?
We saw a change in the mix. Toward the end of the year, we sold more cars than trucks. Overall, we were a little off from year to year, but the car mix and the Mercury mix was up.
What products are weak?
I don't think we have any weak products. I just think we have products that sometimes in certain markets don't compete as well as others. We don't do minivans in volume for the simple reason there's a lot of competition out there and it's not as large a market as it used to be.
Are there any products you would identify as aging and in need of revitalization?
Anytime you speak about aging and revitalization, everyone talks about the two premium sedans. But the Town Car and the Grand Marquis still enjoy a robust sales rate. We'd always love to do more.
That type of car lends itself to a lot of different buyers. Certain parts of it could use a freshening. It has been changed many times over the past few years. Obviously the skin hasn't changed dramatically; the undercarriage has. And customers have been overwhelmed with the quality of it.
Ford Motor's position in the minivan market has fallen fast. On the Mercury Monterey, there were some months in 2005 where sales hit only 300 or 400. It's hard to sustain a product at that level of volume. Are dealers concerned about that?
Dealers love a product lineup that's diversified. But we also like cars we can sell in volume. That's why the Milan, Mariner, Zephyr, Mountaineer have all been embraced. We can sell these cars in volume.
What about a Lincoln people mover?
There's probably a market for that, too. I don't know that we'd want a car equal to the Mercury. You'd want something unique to Lincoln.
What are some other segments Lincoln-Mercury dealers want to see products in?
We're all anxious for cars we can sell in volume. It's great to have unique niche cars like convertibles and sports coupes, but I think we would all love to sell more of a particular car. As a dealer if I have to have (a top-of-the-line flagship car) or the ability to sell more mid-level or entry-level luxury sedans, I'd rather have those. Volume makes owners. Volume makes customers. Volume makes repeat business.
Is there any change with the Lincoln bonus program to go along with the changes in the Mercury and Ford bonus programs?
Lincoln always stands alone. There's been talk about enhancement and changes, but everything is still in the talking stage.
What kind of changes?
They're always looking for ways to incentivize the dealer and promote a better experience, a better facility. The issue with dealers is we always want more. There's no secret to that.
Are the factory incentive programs structured right?
We have a lot of new initiatives that seem to be working. But there will always be a need to tweak because inventory grows in certain product or in certain areas.