Ford Motor Co. (F) plans to invest $1 billion for developing its only surviving luxury line, Lincoln. The automaker will roll out seven all-new or significantly upgraded new generation Lincoln models by 2015, including a small car in 2014.
Last year, Ford decided to expand its luxury Lincoln line-up at the cost of its Mercury line-up, which completely phased out by the end of 2010. The company suspended production of its Mercury branded vehicles in the fourth quarter of last year and started diverting resources from Mercury towards its core Ford brands, besides enhancing the Lincoln brand.
In October last year, Ford had announced to eliminate a third of its 1,200 Lincoln dealers in the U.S in order to boost sales in the remaining stores. Since then, the company has eliminated 20% of its Lincoln dealerships in the metropolitan markets. Currently, the automaker has about 434 Lincoln dealers in the country’s top 130 metropolitan markets.
Ford’s remaining 700 dealerships are located in rural areas. As of now, none of them have been targeted for closing.
Ford plans to market Lincoln models in 130 urban areas where demand for luxury good is very strong. The automaker has asked the remaining dealerships to upgrade their showrooms and services.
Since October, the company has been meeting the Lincoln dealers and store owners to advise them about the renovations and required investments to be made for the upgradation program.
Dealers have revealed that the renovations could cost about $2 million per showroom. Ford has been offering to buy out Lincoln dealers or pair them with Ford franchises, where sales have risen 25% this year.
Lincoln is the only surviving luxury line of Ford after the sell off other similar lines, including Jaguar, Land Rover, Aston Martin and Volvo. As a result, Ford expects the brand to compete with other notable luxury lines, such as Toyota Motor’s (TM) Lexus, General Motors’ (GM) Cadillac and Daimler AG’s (DDAIF) Mercedes- Benz.
Ford expects Lincoln sales to decline to 78,000 vehicles this year. However, it anticipates the upgrade program to help push Lincoln sales to 162,000 units in 2015.
Ford, a Zacks #3 Rank (Hold) company, posted a roaring 48% rise in profit to $2.61 billion in the first quarter of 2011 from $1.76 billion in the same quarter of 2010. On earnings per share basis, profits rose 35% to 62 cents per share from 46 cents per share a year ago, thereby topping the Zacks Consensus Estimate by 12 cents per share.
It was a turnaround performance with respect to the fourth quarter of 2010, when the automaker recorded a 24% fall in profit. However, the company did not deprive their stockholders from enjoying a profit for seven straight quarters after years of losses. In fact, it posted a profit during the quarter that was the best since the same quarter in 1998.
Total revenue during the quarter escalated 18% to $33.1 billion, surpassing the Zacks Consensus Estimate of $30.5 billion. The increase in revenues was attributable to a 12% rise in sales to 1.40 million vehicles.
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