DETROIT – Ford CEO Alan Mulally says the auto maker’s Lincoln luxury division’s reinvention represents a tremendous opportunity.
“We make a very good return on the Lincolns we have today, and most of the global car companies have a good volume brand and a good luxury brand,” he says on the sidelines of the North American International Auto Show here.
When Mulally took the helm at Ford in 2006, he quickly moved to sell off the auto maker’s Premier Automotive Group stable of luxury brands, which included Aston Martin, Land Rover, Jaguar and Volvo, and there was widespread speculation Lincoln would be killed off as well.
But today Ford is investing millions to reinvigorate Lincoln, whose sales fell 4.0% last year compared with like-2011 to 85,643 units, according to WardsAuto data.
When asked whether he regrets selling off the PAG brands, most of which have rebounded along with the global luxury automotive market, Mulally says no, noting when he came to Ford it was clear the marques would not fit into the auto maker’s long-term business plan.
“At the time we had all these other brands and the world was slowing down, and 85% of our business was Ford and Lincoln,” he says. “So the decision was to divest and to have a laser focus (on Ford). I think we did exactly the right thing.”
The Lincoln MKC concept small cross/utility vehicle, which debuts at the show here today, is the latest product Ford is launching in an attempt to revitalize Lincoln. The division’s first new model was the redesigned MKZ midsize sedan, which arrives at dealers in the next few months.
Mulally is bullish on the MKC concept, which Ford executives have said likely will make it into production.
“The MKZ is in the largest segment, and the MKC concept is in the fastest-growing segment, so we’re positioning Lincoln right in the heart of the luxury market,” he says.
Ford is ramping up to launch Lincoln in China next year, a reversal in strategy from several years ago when Mulally said the brand only would be sold in North America.
Mulally declines to reveal volume expectations for China, but says early feedback indicates Chinese consumers anxiously are awaiting Lincoln’s arrival.
“The neatest thing about the Chinese market is their appreciation and respect for heritage,” he says. “They know all the history and love the Lincoln brand and what it stands for. It’s going to be very popular in China.”
The executive predicts the U.S. market will rebound from the 14.8 million units sold last year to between 15.0 million-16.0 million this year, adding Wall Street is beginning to better appreciate the auto industry’s importance as an economic driver.
“The U.S gross domestic product is led by the auto industry, and 70% of all research and development is associated with it,” he says. “This is an important foundation and business for the U.S. and around the world.”
While Mulally is bullish on Ford’s U.S. business, he says other parts of the world offer different challenges and opportunities.
In the down European market, Ford last year announced plans to shutter three plants, including a massive facility in Genk, Belgium. Mulally says it’s important for the auto maker to align its capacity with actual demand in Europe as it did in North America.
“Europe is really a tough situation for all of us,” he says. “Outside of Germany most of the economies are in a recession. We’re moving to restructure the business so we can operate profitably at lower demand, and I think we’re doing the right thing. It’s going to be tough, and it’s going to be hard on a lot of people.”
Mulally is optimistic about Ford’s future in Brazil, where the auto maker is launching new global products. “We have a tremendous manufacturing presence (in Brazil), and we’re very pleased with operations there, which are some of the most efficient in the world.”
The future of Ford’s business in Australia, however, remains cloudy amid reports the auto maker is planning to pull manufacturing out of the market. Mulally declines to reveal whether there are concrete plans for Oz, but admits the large cars Ford builds there are falling out of favor.
“The model mix is changing and customers appreciating smaller vehicles, so we’re going to use the One Ford plan to serve customers,” he says. “Right now, we continue to invest, but we will continue to evaluate.”
