Lincoln Motor Co. continues to drive toward its goal of 300,000 global sales by the end of the decade, but 2018 could prove challenging as the brand looks to avoid stalling out.
The U.S. luxury market dipped slightly in 2017, down 0.2 percent to 2,022,044 vehicles, and could face another tough year as most forecasters call for lower sales. Lincoln finished the year down 0.5 percent, although strong numbers in China helped the brand bump its global sales gain streak to four years.
Amid the challenges, Lincoln dealers have reason to be optimistic.
The brand can lean on the hefty profits of its largest vehicle: the redesigned 2018 Navigator, which came out last fall. Sales so far have exceeded expectations, and Ford this year announced it would boost production targets to help satisfy demand.
Reinforcements will arrive this spring, including a freshened MKC crossover. The MKX has been updated and will come with a new name: Nautilus. Lincoln is also expected to show another new vehicle this month at the New York auto show, possibly a Ford Explorer-based Aviator crossover to slot between the Navigator and Nautilus.
It's continuing to expand customer service initiatives such as standard pickup and delivery, and pilot programs for things such as chauffeur services and date-night rental programs. It will also likely open more "experience center" galleries in select cities to expose new customers to the brand.
Following Ford's executive shakeup in May that installed Jim Hackett as CEO, Jim Farley returned from Europe and has responsibility for Lincoln, a role he had earlier this decade when he implemented many of the changes that set the brand up for success. Kumar Galhotra, who helped transform the brand when he was named Lincoln president in 2014, was recently promoted to Ford's head of North America. Joy Falotico, formerly Ford Credit CEO, will now steer Lincoln.
Luis Somoano, chairman of the Lincoln National Dealer Council, said 2018 will be a differentiating year for the brand, and that its newest products, especially the Navigator, continue to attract new customers and help it shed its troubled past.
"It's changing our perception, it's changing our showroom and it's changing our profitability," he said. "Not only does the company make good money off it, we make good money off it, too. And the customer is satisfied.
"It's a win-win situation."
Somoano, 54, owner of Doral Lincoln in Miami, talked with Staff Reporter Michael Martinez.
Q: How was 2017 for Lincoln dealers?
A:The year was great, not only because we grew [globally], but because a lot of luxury manufacturers were even or lost some ground. Also, we had the release of the Navigator. That changed customer perception about Lincoln again. We've been doing this every two or three years: with the MKZ, MKC, the Continental and now the Navigator. I think it keeps the conversation going and has been great for the brand in general. A lot of the buyers come to the showroom to see the Navigator — sometimes just to see it — and that's a great conversation.
What's your biggest challenge in 2018?
I think our biggest challenge will also be the industry's biggest challenge, which is growing the business. It's going to be very tough. We're talking a little decline in total U.S. sales this year. So if you're going to grow the business, you're going to have to take business from somebody else. A second challenge will be profitability. Those two elements go together. When you sell more cars, you make more money. We need to keep the brand moving in the right direction and also keep profitability moving in the right direction. We're very focused on that and recognize the task we have in front of us.
What about the Navigator appeals to customers? Can it be a segment-leading vehicle?
The Navigator is a huge name in the market. And I think we delivered this time. The amount of detail we put in the interior, the car's so silent when you drive it; it's a very, very appealing car to drive. The old Navigator and the competition in some cases feels more like a truck. When you drive this Navigator, it feels amazing. We don't have any in stock and we're one of the biggest Lincoln dealers in the country. Every car that comes in is already sold. If you talk about technology and being a great vehicle to drive, I think we're the best option out there. Lincoln created this segment in 1997, and we were the No. 1 seller for years. I don't think it's only about the amount of cars you sell. It's also about customer perception. Every customer that comes to see the car, you don't have any negative reaction, which is something very important. For the first time in a long time, we have waiting lists for this car.
Where have Navigator customers been coming from?
Cadillac owns that segment. A lot of the customers come from Cadillac. I've also been seeing the GLS buyers, the Q7 buyers looking at this Navigator. So not only are we competing with Cadillac and Infiniti in that segment, we're also getting conquest customers from the Germans. It's probably 60 percent from Cadillac and 40 percent from others.
How have customers responded to Lincoln's new mesh grille and exterior design change?
I think the split-wing grille was very polarizing. The reaction to this new front end has been great. With the release of the MKC and Nautilus, the conversation is around those two cars, and a big part of that conversation is the front end. For the first time in many, many years, Lincoln is going to have a unique front end. That's great, and it's going to be easy to recognize the car from a distance. It's a great way of doing business.
Were you a fan of the MK naming scheme?
I never was. What happened, for a normal consumer, it was very hard to identify. If you own a Navigator, you know you own a Navigator. But it would happen a lot in the showroom, where a customer would come back and say they've been driving a car for three years, and when you'd ask what that car was, they'd say "I don't know, MK-something, you know, the small one." So for the customer, it was a little confusing, having the X, the T, the C, the S. So I'm a fan of the names. Nobody forgets you're driving a Continental. Going away from MK is going to be good.
What is still missing in Lincoln's portfolio?
I think the company recognized there's some opportunities in the cycle plan. The focus right now is on SUVs. In that particular segment, you have a few opportunities. There's opportunities to do something smaller, something bigger, something in the middle. And maybe do something creative. The Germans will do three or four cars off one platform. So I think there's a lot of opportunities, and I think the company has recognized that. In order to keep the brand moving forward, we need to reinvest in the cycle plan.
Is Lincoln doing enough to differentiate itself from the Germans and other luxury brands?
In the global world we live in, everyone offers similar comfort and fuel economy. But what Lincoln is doing differently than everyone else is the experience inside the dealership. When the people cross my door, or even when they call, things like pickup and delivery, a warm environment on the showroom floor, I think that's an advantage for us. Because of our scale, we can do a lot of stuff that would be difficult for Lexus or the Germans to do. The biggest change we make is on this side of the business: inside the dealership. Pickup and delivery has been great. The new generation of buyers want more than the normal process of buying and selling a car. They want that commitment that, after I sell you the car, I'll be there all the time for you. Our industry is changing a lot, and one thing that's changing very fast is how we interact with customers. They need that commitment we'll be there forever. When you combine things like that with great product, like the Navigator, that's lethal.
Do you think Lincoln's boutique "experience center" model could grow to replace regular showrooms?
It's a great opportunity to show Lincoln to people who would have never considered Lincoln. I'm pretty sure that it's pretty costly, and being a factory proposition, it's the only way it can work. You can't take it to a normal dealer and have it be an operational success. It's small, high-end places where the rent factor is huge. It's working for Lincoln, but I don't think we can take it to the dealers.
What are your thoughts on CEO Jim Hackett and his commitment to Lincoln?
He's emphasized that Ford needs a luxury brand and they'll do everything in their power to enhance it. I feel we're on the right path.
How does he compare to Mark Fields?
Jim is more of an Alan Mulally type; more of a visionary and someone who delegates and lets his people do their jobs. Mark was more hands-on. It's a difference, but both have been great for Ford.
Do you see an electrified future for Lincoln and how can that technology enhance the brand?
We know the company has a plan, but that plan is still very high level. We don't have access to that. But I think every luxury manufacturer realizes they have to play in that space. If you don't, you'll be out in the next 10 to 15 years. It's going to be part of the future of Lincoln.
Were you happy to see Jim Farley return to North America and work with Lincoln again?
Jim's a great guy. The level of energy he has is hard to duplicate. He's a really intense guy. We sometimes don't agree on stuff when we discuss it, but I love the way he takes this business really serious. He's not afraid to make big calls, and really, that's what visionaries are for. He owns his decisions and he goes for it. To be honest, he was a big part of the change at Lincoln [during his first stint with the brand]. We did a lot of stuff that now we're seeing the fruits of. He knows the car business and he's very involved in the daily operations. The biggest thing I see in Jim is he's not afraid to make the call. That's something you need in leadership. I trust his instincts.
Kumar Galhotra has been a big part of Lincoln's recent success. Are you worried now that he's taking on responsibility as Ford's chief marketing officer in addition to his duties with Lincoln?
You're always going to have a concern when someone takes on such a big role, but I love Kumar. He's an engineer, so he sees everything through that way of doing business. He's a visionary and is always focused on the customer, which I love. He's also very cycle plan oriented. Not only is he helping with the whole operation, he's very involved with the cycle plan and figuring out what products we need. Kumar has been doing great for Lincoln and I don't doubt that he'll continue doing great for Lincoln. He's probably going to help a lot on the Ford side of the business, too. He's been a key, key player in Lincoln's success, 100 percent.
What have you been most proud of during your time on dealer council?
We've been raising the volume every year. I take that personal. I'll fight with Lincoln and tell them we need this rebate or we need that to sell this car, and we do that on a daily basis. To grow the brand the way we've been doing, that's one of the biggest things we've achieved. Also the profitability. To come from where we've come from, and now we see light at the end of the tunnel. Those two go together and it's what I'm most proud of since I started serving in council in 2012.
What's next for you once your term as dealer council chairman ends this summer?
I'm investing $20 million to open a new dealership in South Florida later this year. Imagine how much I believe in the future of Lincoln if I'm investing $20 million in this brand. We could always go out and buy another dealership and put the money somewhere else, but we believe in the future of Lincoln.