Lincoln backs off 2020 sales target amid Trump trade war with China
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LOS ANGELES -- Lincoln Motor Co. no longer expects to hit its goal of 300,000 annual sales globally by the end of the decade, thanks largely to President Donald Trump's trade war with China.
Lincoln President Joy Falotico told Automotive News on Wednesday that the brand is backing off the target, established under former CEO Mark Fields in 2014, due to higher export costs on U.S.-built vehicles going into China. Lincoln exports the MKZ, MKC, Nautilus, Continental and Navigator to that market with plans to begin local production in 2019.
"With the tariff situation and the instability of that, I don't think [the volume goal] is something that we're gunning for right now," she said in an interview on the sidelines of the 2018 Los Angeles Auto Show. "You're not going to be racing for volume when you have a significant change in the price equation there."
China in July raised tariffs to 40 percent on imported goods, including vehicles, in retaliation for the Trump administration's charges on China-built goods sold in the U.S. The move has hurt Lincoln's growth ambitions in China, a country it eventually expects to be its largest market.
In addition to the tariffs, there are other factors involved in missing the goal: sales for the overall U.S. luxury industry are down 0.5 percent through October, and Lincoln has purposely dialed back on U.S. fleet sales. It’s part of a new strategy that prioritizes profitable sales rather than chasing volume.
"We're looking to grow profitably with healthy sales," said Falotico, who took charge of Lincoln in March. "Volume is important for scale, but we're looking for healthy volume. We don't want to have to build vehicles and discount them."
Fields set the 300,000 goal shortly after becoming CEO in 2014, as he was jump-starting Lincoln's revival with a $5 billion investment. Sales have increased from about 100,000 that year to 188,383 in 2017, but its growth in the U.S. has stalled this year, threatening to end a streak of four consecutive yearly global sales gains.
Falotico, who unveiled the three-row Aviator crossover on Wednesday, did not discount eventually reaching the 300,000 threshold -- just not by the 2020 deadline Fields was aiming for.
"We do like the upward potential with Aviator, we're very pleased with receptivity to Navigator, and it's great to see Continental up year-over-year in China," she said, "but I think with the challenges we're having in the business, that [goal] could be pushed out a bit."
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