12:17 PM
Ford outlines plans to cut Lincoln dealers
Addison Ray
DEARBORN, Michigan | Tue Oct 5, 2010 2:32pm EDT
DEARBORN, Michigan (Reuters) - Ford Motor Co (F.N) has told its U.S. dealers it expects to drop about 175 Lincoln dealerships in and around urban markets as part of a plan to overhaul the brand with a new look and high-end stores.
Ford executives, who met on Monday and Tuesday with Lincoln dealers at Ford headquarters, said the No. 2 U.S. automaker plans to remake Lincoln by differentiating it more sharply from its mass-market Ford vehicles.
As part of that effort, Ford will focus on the top 130 U.S. metro areas by population, an area where it has about 500 Lincoln dealerships now, executives said.
Ford expects that about 175 dealerships in urban and suburban neighborhoods will have to be closed down. Buyouts will be offered to dealers who choose to close in meetings set to start in November, executives told reporters on Tuesday.
Ford Credit, the in-house financing arm of the automaker, will also offer credit to help the remaining dealers finance the improvements that they will have to make to stay with the Lincoln brand, U.S. sales chief Ken Czubay said.
Only about a quarter of Ford's 1,187 Lincoln dealers now have the kinds of facilities that the automaker believes it needs to compete with luxury-market competitors like Volkswagen AG's (VOWG.DE) Audi and Daimler AG's (DAIGn.DE) Mercedes, Czubay said at a briefing by Ford.
"Our volume needs to be where the luxury buyer is," Czubay said of Ford's decision to focus on urban markets in the overhaul of Lincoln.
Some 88 percent of U.S. luxury auto sales are in the top 130 biggest U.S. markets, Ford said.
Lincoln's rural dealerships will have to decide whether they will continue to represent the brand and make the required investment in new facilities, executives said.
Ford expects to have agreements in place with dealers in about a year, dealers said.
Lincoln was a top-selling luxury brand in the United States until the 1990s.
By 2009, Lincoln sales had dropped to just under 83,000 vehicles in the United States, less than half of the sales for the luxury market leader, Toyota Motor Corp's (7203.T) Lexus.
In its effort to overhaul Lincoln, Ford has also promised seven new vehicles for the brand, starting with the 2011 model-year MKX crossover, which has already been introduced.
(Reporting by Kevin Krolicki, editing by Gerald E. McCormick)
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