You've made an eye-opening announcement that you're sending an American to Europe and bringing a European here. What do those two guys, Jim Farley and Stephen Odell, bring to their new jobs?
Both of them are going to bring fresh perspectives to their jobs. In Jim's case, given where we are with our European transformation plan -- particularly if you remember the elements -- it's around product, brand and cost. But when you look at the products we're introducing and the improvement in the brand, Jim's expertise in that area, I think, is very well-placed in the point in time with where we want to take Europe.
In the case of Stephen, he brings a wealth of global marketing and sales experience. A lot of his career has been in marketing and sales, not only in Ford, but he was in Mazda; he was in Jaguar Land Rover; he ran Volvo.
You have said that the company will commit $2.5 billion to Lincoln. Is that a sign of a stronger commitment to Lincoln?
Strategically for the company, Lincoln is very important. First off, the global luxury industry is going to grow faster. Our projection is it has and will continue to grow faster than the nonluxury market. Today, it represents somewhere between 9 and 10 percent of the global industry. We expect that to grow. When you look at the profit generation in the industry, it is almost like a third of the profits globally in the auto industry come from luxury brands.
Our commitment is to transform Lincoln to a world-class luxury brand with a client experience to match. That's why we've gone on this journey of a first generation of products with our MKZ, our C, our X, our full-size sedan and, of course, the new Navigator we just put out. That's our first generation of products. We understand that this is a multiyear, multidecade commitment. It's a journey.
It seems like you can only ratchet up the pricing and the luxury one step at a time. You can't just say, "We're going to build a $100,000 Lincoln tomorrow."
Exactly. We have to have a very clear eye to understand where our brand is today and how it's viewed. The good news is, you look in our two main markets [U.S. and China], our brand favorability is improving. Brand favorability is highly correlated with the pricing that you're going to get.
When Automotive News talked to purchasing chief Hau Thai-Tang a few weeks ago, he said that you personally had been spending a lot of time with vendors in Silicon Valley. What can you get from those companies out there?
I believe we're in a flexion point in the industry. I believe that we're not only a car, utility and truck company, but we're also more and more becoming a technology company. When you look at some of the disruptions in the industry -- I call it the new mobility innovation with autonomous vehicles, connected car, all that kind of stuff -- you can either view that as an OEM as a threat, or you can view it as an opportunity. We are squarely viewing that as an opportunity.
The reason we're viewing that as an opportunity is that we always say we have fierce competition in this industry, and that's true. But now we also have fierce nontraditional competitors.
I don't want our car to end up like the handset business where we're just a receptacle for somebody else's business model, but to do that, I believe very strongly that you should go out and learn from the top down what are the trends, what are the innovations that are out there. Secondly, I believe you should go out and invest the time to establish the relationships.
I want us as a company to be viewed as part of the community and not just some transactional company that wants to get a little bit of the technology.
Give a quick take on the North American market next year. Are we going to see slower growth? Are we going to see more incentives? What's going to happen?
When you stand back and you look at one of the drivers of the growth, what's the health of the industry? Obviously, replacement demand is a big deal. By our calculations, about 50 percent of the car park out there is 10 years or older, up from about 40 percent probably in 2005. So there will be a natural replacement. Pent-up demand: That's done. That's been played out.
We think those metrics and the current pace of economic growth support a pretty healthy and sustainable level of industry. There are some people that ask, "Have we reached a peak?" Well, will we go back to the days of 19 or 20 million units? I don't see that at anytime soon, but I do think we have a number of years in front of us of pretty healthy industry, 17 million, somewhere in that range.
So I think as we go into next year, will you see higher levels of discounting? You may. You may see it maybe more on the car side than on the CUV and on the truck side because you're seeing customers migrate to CUVs and SUVs small, medium and large, and out of traditional passenger cars. We're seeing that in the marketplace today. We're seeing more aggressive activity in that end of the marketplace.
As Ford worked on improving launches, did the company get more closely involved with the suppliers? Was that part of the strategy?
Yes, absolutely. Our launch reviews, for example, we would have not just us walking around a vehicle looking at the latest build, we'd have our suppliers there with us so that we can say, "Look, is this acceptable to you? It's not acceptable to us. Are we not giving you the right specs? Are we not communicating with you appropriately?" So it's very iterative in making sure they're an important part.
The Mustang seems like a unique kind of outlier. How does Ford gauge demand for it in all those new countries?
First off, it's very simple. It's asking our folks in the various markets, what do you think the demand is going to be? It's almost as simple as that.
As you think about what we're doing in terms of some of our key objectives of strengthening our brand around the world, the Mustang is something that's iconic for the Ford brand and iconic for America.