Ford's Lincoln brand to debut in China in seven cities

Reuters

(Adds comments from Lincoln global chief, paragraphs 5-7. 18-19)

By Norihiko Shirouzu

BEIJING, April 17 (Reuters) - Ford Motor Co's premium brand Lincoln may be late to China's luxury boom, but its top executives say the upscale car market still has plenty of steam left for growth to make its debut later this year worthwhile.

John Lawler, head of Ford's China operations, said on Thursday that the Dearborn, Michigan, automaker plans to open eight Lincoln retail outlets in seven Chinese cities including Beijing and Shanghai starting in October. Ford aims to boost the number of stores to 60 and push into a total of some 50 cities by 2016.

Lawler would not provide a forecast for volume.

He told Reuters in an interview earlier this week that Ford was "excited about the potential opportunity" in China, which he said was poised to displace the United States as the world's biggest luxury auto market by 2020.

Matt VanDyke, Lincoln's global director, said in Dearborn last week that the marketing challenge will be to get Chinese consumers more familiar with the brand they are positive about and see as "prestigious."

Chinese luxury vehicle consumers "don't know exactly what our products are, other than presidential limousines and sometimes Navigators."

Lincoln limousines for decades ferried U.S. presidents about, including Richard Nixon during his historic 1972 visit to China. The Navigator is a large SUV that until about a decade ago was a top-seller and money maker for Ford in the U.S. market. Lincoln will introduce a refreshed Navigator in China, VanDyke said.

Some companies forecast the volume of upscale cars costing more than $50,000 in China to total nearly 3 million vehicles a year by 2020.

Demand for premium cars in China has surged in recent years.

"The market might not grow at the same pace as before, but we still think there is a lot of growth left. The party isn't quite over yet," Lawler said.

STIFF, ESTABLISHED COMPETITION

Still, Lincoln's timing for a China entry, along with that of other recently launched luxury car brands such as Nissan Motor Co's Infiniti and the Honda Motor Co's premium brand Acura, is less than perfect.

After well over a decade in China, three German premium brands, Audi, BMW and Mercedes-Benz , dominate the country's marketplace.

What's more, a victim of its own recent success, the Chinese luxury auto market has become a hyper-competitive battleground. Five years ago, there were fewer than a dozen luxury car models sold under five premium brands. Today, that has exploded to more than 90 models offered by 25 brands, according to market research firm TNS.

Lawler, however, said rapidly changing profiles of Chinese customers give an opening for Lincoln.

Before, the market was so new and consumers were so inexperienced that it was "all about the panache of the product, and the (social) statement it made," Lawler said. "You went into the store and you paid whatever the price because price didn't really matter."

Now, luxury cars such as the Lincoln MKZ sedan and the MKC crossover SUV, which Ford begins selling in China later this year, are more than transactions to a newer breed of customers in China. Ford will add the Navigator to those stores next year.

"They're less about conspicuous consumption. They're really about experience and personalized service and enjoying luxury from every element - not just the product but the whole experience," Lawler said.

VanDyke said Lincoln will try to win over customers with a "huge emphasis on client experience" and service.

"Culturally there's a high degree of mistrust about what happens with service and if you take your car in for a service are you getting factory authorized parts," said VanDyke. "So, we're going to be extremely transparent about how we conduct the service." (Additional reporting by Nick Carey in Dearborn, Michigan; Editing by Ryan Woo and Tom Brown)

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