Finance

Lincoln’s president explains why China is critical for the luxury brand — and why the company hasn’t yet gone fully electric (F)

At the 2019 Los Angeles Auto Show the week before Thanksgiving, Lincoln unveiled a hybrid version of its new Corsair SUV, bringing another plug-in hybrid to the brand’s revamped SUV line. The Corsair joined the Aviator, also available in a grand-touring, or GT, trim.

At the event, Business Insider had a chance to catch up with Joy Falotico, who took over at Lincoln more than a year ago and is one of the few women in the car business to run a luxury automaker. 

Of particular interest was Falotico’s point of view on Lincoln’s expanding China operations. The brand has been in the midst of a reimagining, started under Kumar Galhotra, who now oversees all of Ford’s North America activities (Lincoln is Ford’s longstanding premium nameplate).

Even people with just a passing acquaintance with the badge could have seen the numerous ads featuring actor Matthew McConaughey, gliding through LA nightlife or offering esoteric musings from behind the wheel of a Lincoln vehicle.

Falotico said that the McConaughey relationship isn’t going anywhere and then moved on to a relatively upbeat assessment of Lincoln’s China business. She had just returned from the country, where Lincoln had launched its three-row Aviator midsize SUV. 

Challenges in China

Joy Falotico Lincoln

Lincoln President Joy Falotico.
Lincoln

“We’re really pleased with positioning of the product there and were excited to launch Aviator,” she said, noting that sales in the Middle Kingdom have been encouraging for certain models in 2019, with the iconic Navigator SUV and the Nautilus midsize SUV leading the charge.

Lincoln has been making up for lost time in China. Other premium automakers have been selling vehicles there for longer — more than a decade versus only about five years for Lincoln.

But thus far, while Ford itself has struggled to match General Motors and Volkswagen in the country, the Lincoln story has given the No. 2 US carmaker something to brag about, even as overall sales have declined. Lincoln sold over 750,000 vehicles there in 2018, but through the first three quarters of 2019, sales slid 24% year-over-year. Navigator and Nautilus, however, posted gains.

Falotico wants to build on that momentum.

“The brand is really healthy,” she said. “But awareness is something we have to work on and accelerate. It’s a big market, and we’re new.”

Lincoln has some pluses, however. Its current “Lincoln Way” strategy, emphasizing effortless luxury over high-performance and edgy styling, was developed in China and brought to the US market. (We aren’t trying to out-German the Germans, Falotico quipped.)

Falotico also said that women are growing in power in China, making up a larger number of buyers. Consequently, Lincoln wants to have whatever insights it has gathered about its Chinese customers in its vehicles before they hit the market.

The pace of new-car sales in China has been slowing from an historically torrid rate, leading Falotico to consider that the country’s growth might be coming into alignment with mature luxury markets. What she’s optimistic about is the future increase in sales volumes that China could deliver, if the market adds another few million in annual unit sales each year, above its nearly 30-million level. (China is now the world’s largest auto market, distancing itself from the US and its 17 million in yearly sales.)

The electric question

Lincoln Navigator

The Navigator SUV is selling well in China.
Hollis Johnson/Business Insider

This all leads naturally to the question of how Lincoln is going to manage the electrification of its vehicles in China. 

Falotico said that electric vehicles could potentially “marry well” with luxury customer in China.

“They want the latest technology,” she said. “But we have to be able to remove range anxiety.”

That’s why Lincoln is rolling out hybrids first in China, just as it has in the US, despite having a fully-electric vehicle slated for launch in the coming years (it’s worth mentioning that Ford stole the show in LA with the reveal of its Mustang Mach-E EV). 

“We’re starting with hybrids because it gives you choice — a way of easing in,” she said. “But we do think there will be heavy electrification in the luxury segment.

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