Posted by Abe Sauer on August 28, 2012 03:52 PM
On August 15, Hollywood's The Lincoln Lawyer--about a shady attorney who uses his Lincoln's backseat as an office--opened in China's theaters with less than fantastic results or fanfare. Two weeks later, Ford announced that it would bring its Lincoln brand to China's booming luxury car market. One had nothing to do with the other, a bit of odd coincidence.
Ford is hoping to make a bigger splash than the film. But that is very unlikely to happen for a good number of reasons.
In a long awaited move, Ford says that it will begin to introduce Lincoln to China in 2014. The key to Lincoln's success, the market it will corner, the back seat: "Farley said Lincoln designers paid close attention to the materials and feel of the back seat, since many Chinese luxury buyers are chauffeured."
In the beginning, these models will all be imported. As China's auto import taxes can add more than 100 percent to the sticker price, it will be difficult for Lincoln to compete on price. But, as Ford China Chairman and CEO Dave Schoch said, Lincoln will weigh China-made models if sales demand it.
Sales will not demand that.
James Roy, senior analyst at China Market Research Group, told Brandchannel that Lincoln faces two main problems. First, he said, "It faces very popular competitors in BMW, Audi and Mercedes Benz. BMW now owns the space as the desired car of the premium segment."
The second reason is that, in Roy's blunt words, "Nobody has heard of Lincoln." This is directly opposite of Lincoln's contention at its Beijing launch event that "Lincoln is well known in China." Roy agrees that Lincoln might be able to find some success as a mid-range model, an "affordable luxury" offering. But either way, whatever path Lincoln takes, Roy sees the slog as "a long term project."
When it comes to luxury, China is currently not a market where a brand can "make" itself. Luxury brands are well established before arrival, with very well-worn backgrounds. These brand attributes also follow very national lines. French wines are the best. The Germans make the top luxury autos. American products are well known for quality, but not luxury. As Roy puts it, "Germany is not known for luxury handbags." The trifecta of Audi, Mercedes and BMW own China's luxury auto market, accounting for 75 percent of the total, with the latter of the three pulling out front as owner of the premium segment mindspace. Just how dominant is BMW's brand? On one TV dating show, a young Chinese woman flatly declared that she would "rather be crying in the backseat of a BMW than smiling on the back of a bicycle."
Porsche meanwhile has recently had success breaking in with its Cayenne SUV. Yes, Porsche is German.
Lincoln will be fighting these preconceptions, and not from a position of strength. The brand need only look at Cadillac's woes in China's luxury market to get an idea of what might happen there. Caddy signed up superstar spokesperson Karen Mok and even wooed the cadre-dollar--currently controlled by Audi--by co-funding the Chinese Communist Party's vanity project The Birth of a Party. But, as the Chinese would say, 没有 (méi yǒu).
Cadillac sales in China recently drove off a cliff, or, more accurately, down a 20-percent decline. That data is made all the more painful as BMW and Audi posted, during that same period, 31 and 44 percent sales increases. And it is made all the more telling about China's attitude toward "American Luxury" since Cadillac parent GM's China sales during that period were up. Nonetheless, Cadillac has committed to releasing 10 new models in China in the next four years.
Of course, with the epicenter of the luxury auto world now centered in China, Lincoln has to at least try to crack the market.