Ford Motor Co.
) plans to introduce its Lincoln luxury lineup in China's booming
luxury vehicles market in order to beat its rival market leaders
General Motors Company
). The automaker will start courting interested dealers in China
this fall to launch the lineup in the second half of 2014.
The Lincolns to be sold in China will be initially manufactured in
North America. However, they will be costlier than the U.S. due to
luxury taxes (based on engine size) and import duties of 25%.
Lincoln is the only surviving luxury line of Ford after the sale of
Jaguar, Land Rover, Aston Martin and Volvo. In 2011, the nearly
100-year old brand's sales totaled 85,643 units.
Ford began to expand its luxury Lincoln line-up at the cost of its
Mercury line-up from late 2010. The automaker plans to roll out
seven all new or significantly upgraded new generation Lincoln
models by 2015, including a small car in 2014.
The automaker will launch 2013 Lincoln MKZ sedan in the U.S. this
year. The designing of MKZ is targeted at younger and affluent
buyers, and has the potential to lure Chinese customers. It will be
priced at $35,925.
Currently, luxury cars constitute 6% of sales in China. According
to Ford's global marketing chief Jim Farley, the ratio could go up
to 10% by 2020. About 75% of the China's luxury car market is ruled
by German brands such as Audi, BMW and
Ford has embarked upon an aggressive expansion plan in China that
includes plans to triple its lineup in China by introducing 15
models, including the Kuga small sport utility vehicle by 2015.
Currently, the company sells seven models in the country.
In order to develop the new models, Ford will build new plants
raising its capital spending to about $6 billion annually by
mid-decade from $4.3 billion in 2011. In order to keep pace with
the expansion, Ford also plans to double its workforce by hiring
1,200 employees by 2015.
Ford anticipates global sales to expand by 50% to 8 million
vehicles by 2015 given the potential growth in Asia, mainly China
and India; and rising demand for small cars. The automaker
anticipates small cars to account for 55% of the total sales by
2020 compared with 48% presently. One third of the small car sales
are expected to come from Asia.
The Zacks #3 Rank (Hold) company posted a 39% fall in profits of
$1.20 billion or 30 cents per share in the second quarter of the
year from $1.98 billion or 49 cents in the corresponding quarter of
2011 due to lower operating results in all the regions except North
America. However, the company's profits were higher than the Zacks
Consensus Estimate of 28 cents per share.
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Revenues in the quarter dipped 6% to $33.3 billion, due to the same
factors mentioned above. However, it exceeded the Zacks Consensus
Estimate of $32.0 billion. In the first half of the year, Ford's
U.S. total market share was 15.4% in the U.S. and 8.1% in Europe.
For 2012, Ford anticipates market share in the U.S. and Europe to
be lower than 16.5% and 8.3%, respectively in 2011. It also expects
the overall pre-tax operating profit to be lower than 2011 compared
with the prior guidance of tallying. Operating margin in the
Automotive segment is anticipated to be equal or lower rather than
the prior guidance of improve over 5.4% in 2011.