China key cog for luxury Lincoln

Updated: 2015-01-13 12:02

By Paul Welitzkin in New York(China Daily USA)

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For Ford Motor Co's premium brand Lincoln, China will have a pivotal role in the luxury automotive company's comeback strategy.

China may surpass the US as the world's largest premium car market as early as 2016 according to consulting concern McKinsey & Company. Analysts note that Lincoln will be trying to establish a presence in a market that is dominated by Germany's top three premium brands (Audi, BMW and Mercedes-Benz) which hold more than 70 percent of China's luxury market.

Ye Zaifu, a Beijing-based dealer for Lincoln and Ford, is convinced Lincoln can carve out a comfortable market share. "Even if we only have around 4 percent of the market, that will still be some 100,000 (vehicles) a year by 2020. So, definitely Lincoln will have its place," Ye told China Daily.

China key cog for luxury Lincoln

According to a recent report in the Detroit Free Press, Lincoln plans to spend $2.5 billion over the next five years on product development and grow sales to about 300,000 by 2020, with a heavy dependence on the Chinese market it entered last year. Lincoln finished 2014 with total sales of almost 95,000 in North America, an increase of nearly 16 percent from 2013 and its best sales result since 2008.

Robert Parker, president of Lincoln China, said in an e-mail that Lincoln will establish an independent dealer network with 60 dealers in 50 cities by 2016. "The reinvention of Lincoln is well underway in North America. Now, we are ready to bring this luxury brand to China," he said.

Parker believes that a changing Chinese luxury buyer creates an opportunity for Lincoln. A study of luxury car buyers by Ford shows that while many affluent consumers in China are still motivated by a primary desire to display their wealth, a select group of consumers are evolving toward purchasing luxury for the personal experience rather than as a public statement of their personal net worth.

"Lincoln's combination of outstanding products and a personalized luxury buying and ownership experience are expected to be particularly appealing to this evolving group of Chinese luxury consumers," Parker said.

Lin Huaibin, manager, China light vehicles sales forecastfor IHS Automotive in Shanghai, said Lincoln will focus on China because of its growth potential as a premium vehicle market. Still, with all the competition, is there room for Lincoln in China?

"Yes, the so called Tier 2 luxury brands (Infiniti, Cadillac, and Lincoln) can gain market share by playing `value for money' in the premium segment. Cadillac SRX (same size as Audi Q7) is priced close to an Audi Q5," said Lin.

Huaibin said Lincoln will feature SUVs (sport utility vehicles) such as the MKC. "Given Lincoln's brand positioning, the price range of 300,000-400,000 yuan ($48,346.94-$64,462.58) should be the sweet spot. Anything above that price range could be a tough call given the strong brand image of the German premium brands."

Parker said the Lincoln MKZ and MKC represent the two most popular luxury vehicle segments in China and noted that the SUV has been one of the fastest growing auto segments in China. In 2013, the segment increased 49 percent in China.

Zhang Zhiyong, Beijing-based independent auto analyst, noted that the competition among premium brands in China has been intensifying just as the growth rate is slowing. The China Association of Automobile Manufacturers said on Monday that sales rose by 6.9 percent in 2014, compared with growth of 13.9 percent a year earlier. The industry body also expects the market to expand by 7 percent this year, in line with China's economic growth.

"You have Audi, BMW and Mercedes, and you have Lexus, JLR, Infiniti and Volvo so you get so many brands in your mind in seconds. Lincoln will surely have a bunch of very loyal customers, but it won't be a game changer," Zhang said.

Lu Huiquan in New York contributed to this report.