Have you ever had that moment when you slammed into a glass door because you pushed, instead of pulled? That’s essentially what Ford Motor Company (NYSE:F)‘s Lincoln luxury brand did in front of the whole auto industry with its highly anticipated MKZ. It completely stumbled out of the gate and immediately gave investors reason to doubt Lincoln National Corporation (NYSE:LNC)’s long awaited revival. Fortunately, one stumble doesn’t make or break a comeback, and I have two reasons to believe Lincoln will regain its stride.
Let me set the stage
Ford needs Lincoln to be a successful luxury brand – period. After CEO Alan Mulally came on board when the company was posting tens of billions of dollars in losses, he made the decision to cut failing brands. Ford Motor Company (NYSE:F) sold off Jaguar and Land Rover and killed Mercury, to name three of the five brands no longer with the company. Lincoln National Corporation (NYSE:LNC) is now the sole survivor.
After fixing a long list of problems over the past few years Ford recognized the need for a presence in the luxury segment. Putting the money and effort into reviving the Lincoln brand made more sense to Ford Motor Company (NYSE:F) than buying a different brand. The automotive industry is insanely loyal, but if loyal Ford consumers are ready to buy luxury vehicles then they might find themselves leaving Ford dealerships. That’s something Ford can’t sit back and take lightly. Those are incremental sales driving away from dealerships – with higher profit margins to boot. It costs much more to gain a consumer than it costs to keep them; it isn’t a battle Ford can keep losing.
So far, not good
Unfortunately the first quarter of 2013 didn’t shape up well for Lincoln National Corporation (NYSE:LNC) and its newest MKZ model. Due to supplier and quality inspection issues the vehicle didn’t make it onto lots until months beyond its anticipated arrival date. This caused a huge headache for dealers, and ultimately some lost customers.
Lincoln National Corporation (NYSE:LNC)’s advertisement during the Super Bowl was practically worthless since any attention and buzz garnered from it was lost when people couldn’t even buy the product. Despite the shaky quarter, Ford executives finally see a bright spot in the gloomy story of Lincoln’s revival.
Reset, let’s try again
If your day job made it impossible for you to catch Ford Motor Company (NYSE:F)’s recent conference call, you’re in luck – I took notes for you. One of the more interesting points was regarding Lincoln’s MKZ – the vehicle which was supposed to lead the charge on Lincoln’s revival.