Leading automotive manufacturer Ford will sell its Lincoln brand vehicle in China within the next two years as it vies for a share of the luxury segment of the world’s largest car market.
The company did not reveal how much it will invest in the Chinese Lincoln venture, but the announcement comes on the back of some $5 billion pumped into the Chinese market as Ford attempts to close the gap with industry leaders General Motors and Volkswagen.
It is the first time Ford will sell its Lincoln brand in China, and the US automaker believes the prestige of the nearly 100-year old brand will appeal to the Chinese.
"The brand in China could be a bright spot for Lincoln globally," said Jim Farley, head of Ford marketing, at a press event in Beijing. "We have a chance to be different here. Our opportunity is to fill in the blanks of what the brand is now.”
The announcement comes somewhat unexpectedly as the US automaker had said it was concentrating on rebuilding its brand domestically before targeting overseas markets.
In the 1990s, Lincoln was one of the top luxury brands in the US, but a lack of investment in development saw it fall to the bottom of the pile. While the Lincoln brand tries to re-establish itself in the US and Canada, in China it will have no legacy issues, which will give it a clean slate to start out with.
Car Sales Challenges In China
China has recently seen a slump in car sales, but it was not significant enough to stop it replacing the US at the top of the global auto market. By the end of the decade, analysts predict China will also overtake the US in the luxury segment.
Over the next three years, Ford aims to double its dealerships and assembly plants in China. But establishing itself in the luxury market will present the company with some challenges.
Ford will not initially produce its Lincoln models in China, which will incur a minimum 25% import tax and eat into profits.
Competition will also be fierce, as rivals look to launch their luxury brands, including Toyota’s Lexus, Nissan’s Infiniti and General Motors’ Cadillac.
Key Statistics – Car Manufacturing In China (source: MarketLine)
- In 2011, China’s car manufacturing industry generated total revenue of almost $280 billion, which represents an annual growth rate of nearly 15% for the four-year period from 2007 to 2011.
- Consumption levels increased at an annual growth rate of over 7% for the 2007-2011 period, reaching a total of 45 million units in 2011.
- Industry performance is forecast to slow for the 2011-2016 period, with growth expected to drop to 10.5%, which will take the total industry value to over $460 billion through 2016.