BEIJING (Reuters) - Ford Motor Co (F.N) will launch its Lincoln brand in China within two years as it races to catch up with rivals in the world’s largest auto market and home to a growing number of luxury buyers.
The additional investment to launch Lincoln, which Ford did not disclose, comes on top of around $5 billion that the U.S. automaker has spent since 2006 in a market where it lags some way behind General Motors (GM.N) and Volkswagen (VOWG_p.DE).
As Ford builds its top-tier nameplate, it is also developing a low-cost car under the mainstream brand to appeal to more price-sensitive consumers in the fast-growing cities in western China. This vehicle will compete with GM’s Sail car.
The U.S. automaker, which joins several other companies looking to expand or launch luxury auto brands in China, is building its dealership network from scratch and will begin selling Lincoln vehicles in the second half of 2014.
“The brand in China could be a bright spot for Lincoln globally,” Ford’s global marketing chief Jim Farley said during a Beijing media event on Tuesday. “We have a chance to be different here.”
To succeed in China, Ford said it will slowly court dealers who can help burnish Lincoln’s image. Ford is also in the early stages of reviving the brand’s stale image in the United States, where sales peaked two decades ago.
Ford will launch a refashioned MKZ sedan in the United States this year in a bid to attract younger, more affluent buyers. Much of the design, including push-button transmission, was influenced by Chinese consumer tastes.
“We’re trying to revitalize the Lincoln brand image and the sales and satisfaction image in the U.S.,” said Dave Schoch, Chairman and CEO of Ford Motor China. “Here we have a clean sheet of paper. We don’t have the legacy issues.”
Despite slowing growth in new vehicle sales, China has already overshot the United States as the world’s largest auto market. By 2020, analysts expect luxury sales in the country will surpass those in the United States.
By 2015, Ford aims to double its production capacity and dealers in China. Executives, including Chief Executive Alan Mulally, flew to Ford’s manufacturing hub in Chongqing earlier this week to mark the groundbreaking of a third assembly plant.
But Ford faces considerable challenges in launching its Lincoln brand. A heavy import tax of at least 25 percent will eat into margins as Lincoln initially will not build cars in China.
Competition is also mounting.
One prominent dealership operator in China said he sees “little chance” for the brand to take off the way BMW (BMWG.DE), VW’s Audi and other German brands have, adding that the brand would face a better chance if the market was growing at the torrid pace of 2009 and 2010.
But under current circumstances, “there’s just no way I would take a chance with Lincoln,” said the operator, who declined to be named.
Reporting by Deepa Seetharaman; Editing by Ian Geoghegan