Lincoln's renaissance needs a jump

March 29, 2013: 6:57 AM ET

Ford's relaunch of its Lincoln luxury brand isn't off to a great start.

By Doron Levin

130328134937-lincoln-mkz-340xaFORTUNE -- Ford Motor Co.'s campaign to fix its floundering Lincoln luxury brand has slipped back a notch or two with the flubbed launch of its MKZ sedan, which had to be suspended due to poor quality of the vehicles.

Lincoln dealers in the U.S. were understandably irritated after the $7.4 million of MKZ advertising during the Super Bowl and Grammys went more or less for naught because the vehicles weren't high enough quality to sell. The debut of the MKZ coincided with Ford's (F) tony relaunch of the luxury brand as "The Lincoln Motor Company," complete with references to the 16th U.S. president.

The automaker said this week the quality glitches have been resolved, and it is shipping 200 vehicles a day to dealers. Since the startup of production in December at Ford's Hermosillo, Mexico plant, about 6,000 cars were built. But it was quickly evident, upon inspection, that they weren't up to snuff. "We decided to slow this process down, because we weren't going to ship anything but the best," said Tom Kowaleski, a Ford spokesman. In some cases, the fit of parts wasn't correct; in others, the parts were substandard and had to be replaced.

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Ford, along with General Motors (GM), once dominated the U.S. luxury vehicle market with the Lincoln and Cadillac brands. But over the past two decades they were supplanted by Mercedes, BMW, and Lexus (TM). Ford tried once to regroup but stumbled with a failed strategy to acquire European luxury brands like Volvo, Jaguar, Land Rover, Volvo, and Aston Martin -- all of which were eventually sold off.

Cadillac, by contrast, reverted to basics a decade ago with a fresh, bootstrap approach to design and engineering. This week Cadillac introduced the third generation of its CTS sedan at the New York Auto Show to generally positive reviews. The new CTS follows on the heels of its smaller ATS, which was named North American Car of the Year in January.

Lincoln sales in the U.S. fell nearly 25% through the first two months of 2013 to 9,074. Cadillac sales rose 32% over the same period to 26,961. Mercedes-Benz led luxury sales in the U.S. with 46,849, up 16.7% for January and February.

"The question is will consumers give Lincoln a second chance as Ford presumably relaunches marketing, advertising, and PR with some vehicles on dealer lots this time," said Michelle Krebs, an analyst for Edmunds.com, an automotive website.

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Lincoln's MKZ, which starts at $35,925, is mechanically similar to the midsize Ford Fusion, which is built on the same assembly line in Hermosillo. The Fusion, a new model as well, starts at $21,900 and is up 42% in terms of units sold this year. Krebs said that shoppers using Edmunds.com for research aren't cross-shopping the two cars in great numbers, which suggests that Ford doesn't have a problem with consumers rejecting MKZ in favor of Fusion.

If Ford has a strategy for getting Lincoln back into the luxury market on a par with other top brands, it's not talking. Such a plan might mean emulating GM's approach with Cadillac, beginning with a new sedan, exclusively for Lincoln. Such a course would cost billions and could take 20 years to achieve. The penalty for not trying to create a car that's special and high-end might be scarier than the cost. Without a luxury brand Ford might be regarded as ordinary, something no automaker wants.

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