Should Ford Investors Be Worried About Slow Growth Of Lincoln Sales In 2016?
Ford (NASDAQ:F) has set a target of increasing the sales of its luxury brand Lincoln to 300,000 units by 2020. The brand sold 120,000 units last year worldwide, including just over 11,600 units in China, the world’s second biggest luxury car market, where it launched last year. We have already written about how the company can increase its valuation by upto 20% simply by meeting its Lincoln sales target.
Given that, it is disappointing for Ford investors that U.S. sales of the brand only grew by 13% in the first half of 2016. Moreover, most of that sales growth was driven by the crossover SUV MKX, whose sales have grown by over 72% so far this year. Excluding the impact of MKX’s sales, U.S. sales of the brand actually declined by 0.4% in the first half of the year.
Since, most of Ford’s ambitions for the brand are centered on its popularity in China, the news that the brand almost tripled its sales for the first half of 2015 in the region, comes as an almighty relief. The brand sold just over 12,500 units in China so far this year, implying a growth rate of 190% over 2015 on a year-to-date basis, and already surpassing 2015’s full year sales of 11,630 units. Moreover, the company is already in talks with its Joint Venture Partner in China, Changan Automobile Group, to manufacture vehicles for the brand in China and also plans to start selling the MKS sedan in China later this year. Both these developments can benefit the company greatly.
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Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Ford Motor
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