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Lincoln Aspiring to Become Luxury Player in China

Executive Summary

Lincoln must clear some hurdles if it hopes to succeed in China’s competitive luxury segment. Fortunately, it does have a head start with its enduring brand image.

In 2012, Ford started researching Chinese attitudes toward its Lincoln brand.

Lincoln often is viewed as a wedding car in China, but the automaker found the Chinese also associate it with historical events, presidential sedans and pop culture.

“They actually held it in much higher regard than we anticipated,” Robert Parker, president- Lincoln China, tells WardsAuto in an interview at last month’s Shanghai Auto Show.

Ford is somewhat belatedly using a full-court press to promote its luxury brand in China. It may have a history it can build on, but Lincoln still must clear some hurdles if it hopes to succeed in China’s competitive luxury segment.

Fortunately for Lincoln, it does have a head start with its enduring brand image. A J.D. Power study finds Chinese consumers like a luxury brand to have its own history and culture. At a news conference at the auto show, Ford Chairman Bill Ford stressed Lincoln’s long legacy.

Exterior styling also is key, and Lincoln has gotten that right, says Jeff Cai, director-performance improvement for J.D. Power China.

“The front-end grille is very easy to stand out,” he says. “That gives the Chinese a premium feeling.”

However, Lincoln needs to do some work on its interiors to meet picky Chinese consumer standards, says Cai. The imported models may use high-quality materials, he says, but their fit and finish isn’t top-quality.

“The gaps are too big,” he says. “There is a misunderstanding about luxury. Manufacturers think it is just putting the nice materials together, (but) without the basic assembly you cannot talk about luxury.”

SUBHEAD: Local Production Planned

Lincoln will have a chance to fix that when it begins local production in 2017 at its Hangzhou plant, starting with the MKX. A supplier tells WardsAuto Lincoln already has put out a request for quotes for parts for the sedan.

It will be built on the same platform as the Ford Edge CUV already being produced in Hangzhou. Local production of the MKX is “easy to do,” says the supplier. “Just new body, new interior and new fascia.”

That will help Lincoln overcome another of Cai’s concerns for the brand: price. BMW, Audi and Mercedes, its main competitors in China, all have produced in the country for many years. Meanwhile, Lincoln will have to import its models and face tariffs as high as 25%.

The dealership experience is another key element of a luxury brand in China, and Lincoln has put a lot of work into that area. It even built a mock dealership in Shanghai and brought in customers “to see what they liked and didn’t like,” Parker says.

As a result, Lincoln has created a China-specific program for its dealerships called the Lincoln Way, which is in place in the 13 dealerships already open in China. That will grow to 25 dealerships by the end of this year and to 60 by the end of 2016, Parker says.

Lincoln’s typical customers in China are college-educated, want to be seen as standing out from a peer group and are between 25 and 35 years old. That is a quarter of a century younger than the typical customer in the U.S.

Many are first-time buyers who pay with cash, Parker says. Lincoln expects a fairly even split between men and women for the MKX, though buyers of the MKC CUV have skewed toward women. “It will be interesting to see who buys” the MKX, he says.

Advertising will be “largely word of mouth,” Parker says, though that may include Internet chatter. Lincoln has seen a “massive” increase in traffic on its mobile site, so it is paying a lot of attention to that, Parker adds.

It also is spending much more on advertising on online TV than on traditional TV, he says, because online TV allows targeting of specific markets. China’s Internet TV providers often stream U.S. programs.

There is a certain irony in the effort and enthusiasm Lincoln is putting into China. It entered the modern Chinese auto market in 2005, when it launched the imported Lincoln Navigator at an event at a swanky art gallery on Shanghai’s Bund.

But Ford never wholeheartedly promoted the brand in China after that launch.

“Had they maintained it, they would be ahead of everyone else,” Cai says. ‟That is very unfortunate.”

 

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