Ford Counting on Lincoln Hybrid Pricing Strategy to Generate Buzz

The MKZ Hybrid’s $35,180 price tag, including destination and delivery, undercuts its top competitor, the ’10 Lexus HS 250h hybrid at $35,525.

Byron Pope, Associate Editor

July 30, 2010

3 Min Read
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Ford Motor Co. is more concerned about establishing its Lincoln luxury brand’s technological prowess than the potential financial hit it could take offering the upcoming all-new ’11 MKZ hybrid-electric vehicle at the same price as the conventional model.

“Lincoln prides itself on offering true luxury and technology at an unbelievable value,” MKZ Marketing Manager Jonathan Richards says.

“If you think in those terms, what we’re doing (with the pricing strategy) is enhancing that equation (by) offering a little more luxury and technology than everybody else.”

The HEV, arriving in October, will feature the same powertrain as the Ford Fusion Hybrid, which boasts fuel economy of 41 mpg (5.7 L/100 km) in the city. But unlike other Ford hybrids, the MXZ will not carry the same $3,100 premium.

He downplays the fact Lincoln essentially is giving away pricey technology, preferring to concentrate on the positive buzz the price break will generate. “Consumers will see a no-cost upgrade to a world-class hybrid,” he tells Ward’s in a phone interview.

The MKZ Hybrid’s $35,180 price tag, including destination and delivery, undercuts its top competitor, the ’10 Lexus HS 250h hybrid. A base Lexus HS 250h is available for $34,650, minus the $875 destination and delivery charge, which raises the price to $35,525.

MKZ Hybrid to be priced same as standard model.

The MKZ Hybrid wins in fuel economy, as well, with its 41/34 mpg (5.7-8.3 L/100 km) city/highway rating, compared with the Lexus 250h’s 35/34 mpg (8.0-8.3 L/100 km).

Additionally, Ford says its hybrid powertrain configuration allows the MKZ HEV to accelerate to 47 mph (76 km/h) in all-electric mode, noting the Lexus HS 250h reaches 25 mph (40 km/h) in battery-only mode.

Performance aside, Richards says the MKZ Hybrid boasts some features that will further differentiate it from the Lexus, such as Ford’s SmartGauge with EcoGuide also found on the Fusion Hybrid.

As with the Fusion, the MKZ’s display shows a graphical representation of vines that grow leaves when the vehicle is driven in a fuel-efficient manner and drops them when the fuel economy falls.

The MKZ adds white flowers to the vines, which remain permanent unless the long-term fuel economy is reset. The display also provides real-time information about the powertrain to help drivers maximize fuel efficiency.

Richards declines to reveal volume expectations for the Lincoln hybrid, but says the model should account for about 20% of total MKZ sales. Through June, MKZ deliveries dipped 5.0% from year-ago to 11,214 units, according to Ward’s data.

The 20% take rate for the Lincoln Hybrid would exceed that of the Fusion. In the year’s first six months, hybrid models accounted for just 9.0% of the 111,175 Fusion sales, Ward’s data indicates.

Richards says the MKZ Hybrid’s anticpated 20% take rate would be set higher if the car were not in the luxury segment.

“Typically, luxury buyers like performance over fuel economy,” he says. “When we talked to our customers, we found that about 40% considered a hybrid. That’s why we think about 20% (actually will purchase one) over the long term.”

The standard MKZ Hybrid is powered by a 3.5L V-6 producing 263 hp and 249 lb.-ft. (184 Nm) of torque.

Although Ford has had hybrid technology in its portfolio since the Escape Hybrid was launched in 2004, the Lincoln brand was not considered for the technology until now.

Richards says it all comes down to timing. “Luxury hybrids are a growing segment. If you’re going to be launching a luxury hybrid, now is the best time to do it.”

U.S. luxury hybrid sales through June rose 2.2% to 2,454 units, according to Ward’s data.

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About the Author(s)

Byron Pope

Associate Editor, WardsAuto

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