Ford's Lincoln Brand Trails the U.S. Luxury Pack at Midyear

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We expect U.S. luxury automotive sales to rebound this year and going forward as the economy recovers. In the short term, we expect the luxury vehicle market to be led by Toyota's Lexus ( TM ), Daimler 's Mercedes-Benz  (ETR:DAI) and BMW (ETR:BMW), in that order.

Ford's Lincoln brand ( F ) is currently in turnaround mode, as reflected in its lackluster midyear results. Ford CEO Alan Mulally  has launched an ambitious plan to revive the venerable brand by launching seven new or partly new Lincoln models over the next four year. Our analysis follows below.

Midyear results


U.S. automotive sales are expected to total 11.5 million this year, up from 10.5 million in 2009. The following table shows unit sales in the U.S. luxury vehicle segment at midyear

Brand

2010 Mid-Year Sales

Lexus

107,430

Mercedes-Benz

103, 674

BMW

100, 632

Cadillac

64, 785

Acura

61, 117

Lincoln

43, 762

Sales outlook

Mercedes-Benz: We expect Mercedes-Benz to sell 200,000 vehicles in the U.S. this year and 1.38 million worldwide. As we explained in an earlier article, Mercedes-Benz posted very strong results in the first half of the year, driven by euro depreciation, rising luxury car demand, quality improvements and a successful model mix.

Going forward, we expect global Mercedes-Benz sales to exceed 2.1 million by the end of the Trefis forecast period. You can drag the trend-line in the chart below to create your own Mercedes-Benz forecast and see how it impacts Daimler's stock price.

Lincoln: Ford's Lincoln brand should either maintain or slightly reduce its market share in 2010. Lincoln has fallen dramatically in consumer favor since its heyday in the late1990s, when the Lincoln Town Car and the Lincoln Navigator made it one of the hottest luxury auto brands in the country.

Going forward, Ford plans to launch seven new or refreshed Lincoln models, including a hybrid version. As a result, we expect Lincoln's share of the North American luxury vehicle market to rise during the Trefis forecast period, from 0.8% today to 1.1% by 2016.

You can drag the trend-line in the chart below to create your own Lincoln sales forecast for North America and see how it impacts Ford's stock price.

Lexus: Although Lexus has suffered a slew of recalls recently, we expect it to maintain its leading U.S. market share going forward, driven by fuel efficiency, attractive financial incentives and pricing, and a very strong brand associated with both luxury and value.

You can see our complete $63.50 stock price estimate for Daimler here.

You can see our complete $14.20 stock price estimate for Ford here.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: F , TM

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