Ford Fusion (top), Lincoln MKZ (bottom)
(Fortune) -- You're hearing a lot about Lincoln these days -- not just the revered 15th president -- but also Ford Motor Co.'s luxury auto division. Ford is trying a relaunch. It is tacitly admitting that its sporadic efforts over the past 90 years to establish Lincoln as a top-tier luxury brand have failed, and it has to start over again.
The effort is extensive and includes new advertising, refined customer handling policies, updated dealerships -- and, of course, new products. Lincoln needs the help. "The luxury market is passing it by," says Warren Browne, author of the monthly newsletter Automotive Compass. "Lincoln is the only luxury brand that makes Cadillac look good. It has lost share since 2006."
What the relaunch doesn't betray is much in the way of fresh thinking about what a Lincoln should be -- or where its competitive advantage will lie. Its new slogan -- "We've reinvented the wheel by placing you at the center" -- suggests that it is punting on the question, and customers will have to come up with their own definition of Lincoln.
Their job will be harder because Lincoln is operating like the Detroit Lions fighting a salary cap. Ford (F, Fortune 500) is limiting the amount of fresh capital it wants to invest in rebuilding the brand. It has given Lincoln its own design team and some exclusive features, but it has determined that Lincoln share its engineering with the mainstream volume products that wear the Ford blue oval to hold down costs.
So the first model from the new Lincoln, the 2013 MKZ, will be a fancy version of the 2013 Ford Fusion with a different look and nicer interior, and later models will also keep close company with their Ford cousins. The decision saves product development dollars but keeps Lincoln out of the top automotive tier where the fattest profits are.
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The reason is that most of Lincoln's luxury competitors produce at least one exclusive model that isn't duplicated somewhere else in its corporate product line. Lexus, which shares much of its engineering with Toyota (TM), projects exclusivity with its LS 460 flagship, and Cadillac produces two exclusive vehicles, the ATS and CTS. At the top of the food chain, every Mercedes and BMW are unique to that brand. The big exception is Audi, which shares engineering with Volkswagen, but it does have access to VW's secret platform-sharing sauce that no other automaker has yet been able to duplicate.
Besides being unique, exclusive platforms enable luxury brands to offer the rear-drive cars that are preferred by enthusiasts, instead of the front-drive configurations that are used on popular-priced cars. Ford Motor no longer produces a rear-drive car platform -- the last one went out with the Ford Crown Victoria and Mercury Grand Marquis -- so all Lincolns will be either front or all-wheel drive. "Lincoln needs a broader portfolio, more performance and handling in their vehicles to add some verve and get younger buyers in their cars," says Browne. "It needs rear wheel drive to be taken seriously."
Ford's unwillingness to invest in exclusive platforms suggestsc a couple of alternative explanations. One, that capital is scarce, and it can't spare any more for Lincoln. Another, it has found a better place to spend its money, such as expanding its China operation, where it sees a greater potential return for its dollars.
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Most likely, Ford has determined that the luxury market isn't growing quickly enough for it to make a payoff on a big capital splurge. Besides the German manufacturers, Jaguar and Land Rover, which Ford sold in 2009, are thriving under their new owner Tata, and Hyundai and Tesla are eying upscale customers as hungrily as tiger Richard Parker did his boat mate in Life of Pi. Ford seems to have decided to accept near-luxury margins with near-luxury cars.
The fact that Ford is emphasizing customer pampering as much as vehicle excellence in its advertising suggests that it may be compensating for a less than dynamic product offering. According to published reports, prospective customers will be offered an overnight test drive, and actual buyers will get a gift of jewelry or wine, much as banks used to extend dinnerware and toasters to their depositors back in the day.
Ford has been punished in the past for excessive ambition. It crammed Lincoln into the Premier Automotive Group (PAG), Ford's holding pen for its luxury brands in 1999, and moved its operations to a new office building in Irvine, Calif. The idea, an interesting one, was to provide a vantage point from which designers and engineers could view the luxury market. But losses followed, and Lincoln moved back to Michigan in 2002. Under Alan Mulally, Ford dismantled PAG but you can still see remnants of it, like so many Roman ruins, in old Jaguar-Land Rover-Lincoln dealerships.
The progress of Lincoln's relaunch will be followed closely by Ford watchers for clues to future management ambitions. Global marketing boss Jim Farley, whose progress has been scrutinized ever since he arrived from Toyota in 2007, was handed responsibility on December 1. Farley is considered a master of social media, which is playing a starring role in the relaunch, but he has so far been denied a clear marketing triumph.
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In a delicious irony, Farley will be overseen by newly appointed chief operating officer Mark Fields, who ran PAG during its post-Lincoln years. Lincoln is only a footnote in Ford's financial statement compared to giant businesses like the F-series pickup, but the media will be measuring its health monthly along with Fields' ability to rebuild Ford's market share in North America.
For both men, the challenge will be to create some buzz around Lincoln that will enable it to rise above its pedestrian engineering roots, buzz that goes beyond the puffery generated by advertising that can be translated into genuine customer benefit. If Ford can do that, it just might be able to generate some sweet profits from its entry-luxe brand and develop a permanent identity for Lincoln in time for its centennial celebration in 2022.
First Published: December 4, 2012: 6:03 AM ET
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