Lincoln China Will Speed Localization to Detour Around Bumpy Tariff Road
Yu Liyan
DATE:  Dec 05 2018
/ SOURCE:  yicai
Lincoln China Will Speed Localization to Detour Around Bumpy Tariff Road Lincoln China Will Speed Localization to Detour Around Bumpy Tariff Road

(Yicai Global) Dec. 4 -- The epitome of US luxury marques, Ford Motor's Lincoln is accelerating its expansion in China with a plan to introduce a locally-made model each year from next year to 2021 to meet user demands.

The first China-made model will be a brand-new sports utility vehicle that will go into production in the second half of next year.

Accelerating the production of its luxury cars in China is "about ensuring our competitiveness with the pricing given the tariff headwinds," Joy Falotico, head of Lincoln, and Ford's chief marketing officer, said in an interview last week.

"Lincoln will introduce a locally-made model each year from 2019 to 2021 with the deepening of development in China. In China, the Lincoln models made for China will better reflect the demands of Chinese customers. The first locally-made model will be a brand-new sports utility vehicle that will go into production in the second half of next year, and we will release more information at a more opportune time later," Lincoln China told Yicai Global today.

As the most important deluxe car brand of Dearborn, Michigan, US-based Ford Motor, Lincoln officially entered China at the end of 2014. A latecomer, its progress in the country has been relatively smooth nonetheless, with sales rising to 32,000 units in 2016 in an annual almost threefold increase on the 11,000 ones booked the year before. The brand's China sales went up 66 percent per year to 54,000 units last year.

Lincoln has now run into a broadly sluggish Chinese auto market after only three years of growth.

The adjective 'wretched' best describes Chinese auto sales from September to last month compared to those of the same period last year. Chinese auto production and sales in October dropped 10.1 percent and 11.7 percent per year to 2.3 million and 2.4 million units, respectively, data from China Association of Automobile Manufactures show.

Against this backdrop, Lincoln's Chinese sales fell 6 percent annually to 4,753 units in October, slipping below the 5,000 mark.

The stagnant China car market has combined with the tariff flip-flops to deliver a body blow to Lincoln as a pure imported brand.

Lincoln nimbly responded by cutting prices between CNY20,000 (USD2,900) and CNY60,000 on all models after China's finance ministry on May 22 announced a 25 percent to 15 percent reduction of the vehicle tariff from July 1.

The country then slammed a 25 percent tax increase on US products on July 6. The luxury carmaker then rode the rollercoaster of import taxes, which dropped to 15 percent from 25 percent before going back up to 40 percent.

The brand soon announced zero price increases on several products and pledged to absorb the costs of the changed duty. A rise in the rate will undoubtedly impose additional costs on Lincoln China, however.

The company has raised the sticker of its Navigator model by about CNY60,000 since Sept. 1, while the prices of others have remained unchanged.

Lincoln confirmed the localization of its models last year, stating they will be made in the Chongqing plant of Ford's Chinese partner Chang'an Automobile. Lincoln has also confirmed it will introduce a locally-made model in China each year over the next three years.

The fruits of the China-US trade talks over the weekend have greatly encouraged Ford China, it told Yicai Global, commenting on the apparently easing trade spat between the two, and adding it will continue to follow the joint efforts of their governments to promote balanced, fair trade.

Editor: Ben Armour

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Keywords:   Lincoln Automobiles,Ford