The 2015 Lincoln Navigator, a full-size SUV, is unveiled at the Detroit Auto Show. It will get a mid-cycle makeover and debut in the fall. The Navigator is the luxury brand's most expensive offering. (Carlos Osorio / AP)
A profitable new MKZ sedan boosted Lincoln dealer profits last year, despite the lowest number of cars and SUVs sold in recent history.
Sales of Lincoln vehicles overall fell 0.6 percent in 2013 to 81,694. But a 15 percent rise in sales of the luxury brand’s most popular vehicle, which is selling for about $6,000 more than during the previous year, has Lincoln dealers hoping that the brand’s reinvention — which could include sales gains of 20 percent this year — may be ahead of schedule.
“When you see the new cars that are coming, this is what’s going to resurrect the Lincoln brand,” said Jere Law, general manager at Varsity Lincoln in Novi.
Lincoln dealer profits were higher in 2013 than 2012, said Matt Van Dyke, marketing chief for the luxury brand, in a recent interview.
A Lincoln spokesman did not say when the last time dealers grew profits, and Ford Chief Financial Officer Bob Shanks did not say whether the brand’s profitablity grew in tandem with its dealers in 2013.
The brand’s sales have fallen in five of the past six years, according to data from Autodata Corp., including last year, even after the automaker had told dealers that an 18 percent rise in sales in 2013 would constitute a "good year."
A months-long production delay on the MKZ — which is the first of four new vehicles the brand will introduce by 2016 — stifled sales early in 2013.
But with a full stock of its sedan, a new segment entry this summer with the new MKC compact crossover, plus a mid-cycle makeover this fall for its Navigator full-size SUV, the brand’s sales could climb about 20 percent and top 100,000 for the first time since 2008, said Alec Gutierrez, an analyst at Kelley Blue Book.
“This is somewhat of a critical year for Lincoln,” Gutierrez said. “They’ve been somewhat product-starved over the past couple of years. There’s no excuses this point if it doesn’t deliver.”
The MKC is Lincoln’s first crack at the small crossover segment that has more than tripled in size since 2009. MKC sales could score the brand an extra 35,000 or 40,000 customers per year, analysts project.
Lincoln officials believe the MKC, with a base price of $33,995, can achieve similar pricing power to that of the MKZ. And the Navigator full-size SUV will get a mid-cycle makeover and debut in the fall.
The Navigator is Lincoln’s most expensive offering.
But dealer profitability has not been confined to new vehicles.
Lincoln last year started a tiered incentive program that rewards dealers with bonuses for retaining used Lincolns, with even greater bonuses for cars that can be certified pre-owned, or given a rigorous inspection and then sold with a warranty.
The brand has tripled the percentage of used models that are resold at Lincoln dealerships in about a year. It is leasing a greater percentage of vehicles, which leads to more certified pre-owned vehicles available for resale.
That translates into higher dealer profits and rising residual values.
The next step, Shanks said, is to realize the benefits of scale; greater sales volumes will lessen the per-vehicle investment costs.
That will be greatly aided by Lincoln’s introduction to the Chinese market, expected to kick off at the end of this year at five new dealerships.
“It’s the second-largest premium market in the world,” Shanks said. “And it will provide level of scale that we otherwise wouldn't have.”