After production kinks, Ford eyes MKZ’S success
It’s time for Lincoln to stand and deliver.
Ford sold off a stable of European luxury nameplates — Aston Martin and Jaguar, Land Rover and Volvo — to clear the field for its revamped luxury brand, which it rechristened Lincoln Motor Co. in December.
But the eye-catching and advanced 2013 Lincoln MKZ — meant to spearhead the brand’s rebirth — had a painfully slow production launch last fall with some parts arriving late from suppliers and delays related to producing the MKZ and the Fusion on the same line at Ford’s Hermosillo, Mexico, plant.
The many-months delay in delivering vehicles frustrated buyers and left thousands of unfinished MKZs, waiting for parts and final inspections, parked at factories in Mexico and Michigan. The snafus also cost Ford momentum it had built for the relaunch from splashy and expensive Super Bowl ads.
But the flagship car is finally reaching dealers in meaningful numbers. About 10,000 are now in stock at showrooms around the country.
With production kinks out of the way, Ford should know over the next six weeks whether the early missteps have permanently damaged the new brand and whether its bold attempt to reinvent Lincoln as a global luxury player is the start of something big or a very expensive and embarrassing lesson.
“People like the car, and it’s bringing in new customers,” said Jim Farley, Lincoln boss and Ford’s global chief of marketing, sales and service.
Ford is investing hundreds of millions of dollars to upgrade Lincoln’s model line. Dealers around the country are spending millions more to compete with the opulent facilities where Lexus and Mercedes-Benz pamper their customers. The MKZ must start the brand on a journey upscale to justify those expenses and Lincoln’s very existence.
In addition to striking looks, the MKZ features a hybrid model that scored an attention- grabbing 45 mpg EPA rating, which could be a strong selling point for the model going forward.
“There’s promise and potential. The question is whether Lincoln can execute” with its vehicles, marketing and a buying experience that rivals other luxury brands, said analyst Rebecca Lindland of Rebel Three Media.
Ford is counting on Lincoln to attract affluent customers, generate deluxe profit margins and pioneer new technologies. The MKZ’s stumbling launch diverted attention from the sleek sedan to Ford’s ability to compete with global luxury leaders.
“It’s better to under-promise and over-deliver,” said a Lincoln dealership executive who did not want to be identified for fear of irritating Ford officials. “That’s the No. 1 lesson of the MKZ. You should have thousands of cars at the dealerships before you start advertising.”
Keeping buyers waiting
The plentiful supply of MKZs can’t come soon enough for buyers who’ve been waiting for months.
“I love the car now that I’ve received it, but I hated the wait,” said Tanner Smith, 49, an information-security director from Phoenix who ordered his MKZ on Oct. 22 and didn’t take delivery until March 11.
Smith says the worst part of the wait was a lack of information from Lincoln about why his car had been delayed and
FORD when it would be delivered.
That’s one of the biggest lessons Farley says Ford has taken away from the faulty re-launch so far. Lincoln says it now aims to get dealers and customers more accurate information on future vehicles, he said.
“We have learned a lot about how to prepare for the second new product” from Lincoln’s relaunch, a small crossover expected to arrive in 2014, Farley said.
Susan Moiseev ordered her MKZ hybrid in late August and got it six months later. Star Lincoln in Southfield, Mich., handled the delay well, she said, and she’s ecstatic.
“Star forwarded me e-mails saying that cars were being delayed for inspections to make sure everything was right,” she said. “I know that was true, because when my car arrived, it had ‘OK’ written on the back window. I got the first or second MKZ hybrid in Michigan. I ordered it sight unseen. I went to the (Detroit) auto show in January so I could see what my car looked like. It was worth the wait.”
Fusion took priority
Several factors led to the production delays, according to people familiar with the process. The assembly plant in Hermosillo was running flat out with three shifts building Ford Fusions when the MKZ went into production last fall.
The usual process would have been to slow down or stop the line to fix parts and fit issues on the MKZ. But that would have cut into the supply of the Fusion, which was selling faster and more profitably than Ford had foreseen. So getting the MKZ right took much longer than expected, Ford says.
The factory also reduced the number of new MKZs it was building to fix what are referred to as “fit and finish” issues on the assembly line, such as pieces of trim that don’t line up or a glove box door that doesn’t hang evenly or close tightly enough.
“It’s incredibly challenging to try to fix a production issue on a line that’s running full speed,” said Mike Wall, analyst with IHS Automotive.
The company eventually had parking lots full of MKZs waiting for parts to arrive and final inspections. Ford won’t say which specific parts were responsible. Ford had also committed to inspecting every MKZ built — which added to production time — rather than spot checking cars as it usually does with other models.
Ford’s plant in Flat Rock, Mich., will add a second shift in late summer to also build Fusions, a much higher volume model for Ford.
Super Bowl debacle
Interest in the MKZ spiked in response to big-budget advertising when Ford renamed Lincoln in December and during the Super Bowl in early February. But some dealerships didn’t get their first demo vehicle until well after the Super Bowl, months behind schedule.
“Somebody needed to raise their hand and say, ‘We’re not going to have any cars when the commercials air,’ ” said Lindland of Rebel Three Media. “Instead, the Super Bowl ads were a complete waste of money.”
Now Lincoln needs to recapture some shoppers’ attention, experts who have been studying the relaunch say. That could add tens of millions of dollars to the advertising costs Lincoln’s already racked up.
Key to that would be a much heavier promotion of the MKZ hybrid, said Gordon Wangers, a marketing consultant who advises auto dealers.
“The hybrid’s a real winner. It says a lot about technology and what’s new about Lincoln. They need to demonstrate the hybrid everywhere and all the time.”
It’s still nearly impossible to find an MKZ hybrid at a metro Detroit dealership. The few that arrive were pre-sold before they hit the ground. Ford clearly underestimated demand for the model.
In addition, Ford has been shipping most of the hybrids it builds to California, where it’s particularly popular in a market that has been historically difficult for Lincoln over several decades.
A blast from the past
Wangers also advises Lincoln change its new-vehicle names and return to some tried and true nameplates that have been popular for decades.
“They have an arsenal of meaningful, memorable names like Zephyr and Continental,” he said. “Lincoln invested decades and hundreds of millions of dollars in establishing those names. Using them is the single most important thing they could do.”
Other aspects of Lincoln’s product strategy trouble Eric Noble, president of the Carlab, a product-development consultant. He said Lincoln needs to offer more and a greater variety of models than its current lineup of two sedans, two crossovers and a single SUV.
“It’s not a re-launch just because you call it one,” he said.