Ford to cut dealers in Lincoln revamp

DEARBORN, Michigan Tue Oct 5, 2010 4:31pm EDT

Ford Motor Company's Executive Chairman Bill Ford Jr speaks before unveiling the new 2011 Lincoln MKX at the 2010 North American International Auto Show during press days in Detroit, Michigan, January 12, 2010. REUTERS/Mark Blinch

Ford Motor Company's Executive Chairman Bill Ford Jr speaks before unveiling the new 2011 Lincoln MKX at the 2010 North American International Auto Show during press days in Detroit, Michigan, January 12, 2010.

Credit: Reuters/Mark Blinch

DEARBORN, Michigan (Reuters) - Ford Motor Co has told its U.S. dealers it expects to drop about 175 Lincoln dealerships in and around urban markets as part of a plan to overhaul the brand with a new look and high-end stores.

Ford executives, who met on Monday and Tuesday with Lincoln dealers at Ford headquarters, said the No. 2 U.S. automaker plans to remake Lincoln by differentiating it more sharply from its mass-market Ford vehicles.

As part of that effort, Ford will focus on the top 130 U.S. metro areas by population, where it has about 500 Lincoln dealerships now, executives said.

Ford expects that about 175 dealerships in urban and suburban neighborhoods will have to be closed down. Buyouts will be offered to dealers who choose to close in meetings set to start in November, executives told reporters on Tuesday.

Ford Credit, the in-house financing arm of the automaker, will also offer credit to help the remaining dealers finance the improvements that they will have to make to stay with the Lincoln brand, U.S. sales chief Ken Czubay said.

Only about a quarter of Ford's 1,187 Lincoln dealers now have the kinds of facilities that the automaker believes it needs to compete with luxury-market competitors like Volkswagen AG's Audi and Daimler AG's Mercedes, Czubay said at a briefing by Ford.

"Our volume needs to be where the luxury buyer is," Czubay said of Ford's decision to focus on urban markets in the overhaul of Lincoln.

Some 88 percent of U.S. luxury auto sales are in the 130 biggest U.S. markets, Ford said.

Lincoln has about 700 rural dealers who will have to decide whether they will continue to represent the brand and make the required investment in new facilities, executives said.

Ford offered no estimate on how many of its rural Lincoln dealerships will be retained.

Ford expects to have agreements in place with dealers in about a year, dealers said.

Lincoln was a top-selling luxury brand in the United States until the 1990s.

By 2009, Lincoln sales had dropped to just under 83,000 vehicles in the United States, less than half of the sales for the luxury market leader, Toyota Motor Corp's Lexus.

Mark Fields, president of the Americas for Ford, said Lincoln sales per dealership must increase for them to succeed. Lexus has only 230 U.S. dealerships, making for a much higher throughput of vehicles for dealers.

In its effort to overhaul Lincoln, Ford has also promised seven new vehicles for the brand, starting with the 2011 model-year MKX crossover, which has already been introduced and is Lincoln's top-seller.

KEEPING 'MK' NAMES

Lincoln will not change the names of its products away from three-letter sets beginning with MK, such as current products MKS, MKT, MKX and MKZ, Jim Farley, Ford group vice president for global marketing, sales and service.

"As far as the nomenclature, we are completely committed to the MK naming," said Farley, who said consumers are interested more in quality products than names.

"I think the MK nomenclature is absolutely compelling, and the cost of changing it is tremendous," said Farley.

Ford executives declined to talk specifically about future products in the Lincoln lineup.

Some auto dealers at Monday's session said they were shown what they said appeared to be a new flagship sedan to be included in the Lincoln lineup that harkened back to the retired Continental large sedan.

Ford on Tuesday said there are no plans to revive the Continental, and that it did not show a large flagship sedan to the more than 1,000 Lincoln dealers representing 700 dealerships present at the Monday or Tuesday sessions.

"Lincoln has a flagship sedan, and it is the MKS," said Christian Bokich, Lincoln brand spokesman.

(Reporting by Bernie Woodall and Kevin Krolicki, editing by Gerald E. McCormick and Tim Dobbyn)