Blog Coverage Lincoln China to Start Manufacture of Lincoln SUVs in China by 2019

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LONDON, UK / ACCESSWIRE / March 14, 2017 / Active Wall St. blog coverage looks at the headline from Ford Motor Co. (NYSE: F). In a statement issued by Lincoln China, a luxury unit of Ford Motor Company (NYSE: F) on March 13, 2017, said that it plans to manufacture an all-new model of Lincoln SUVs in China by late 2019. Since its entry in 2014, Lincoln has become China’s fastest-growing luxury brand. Lincoln’s SUV will become the brand’s first model to be locally manufactured in China. There has been no official comment from Ford Motor Company on the matter. Register with us now for your free membership and blog access at:

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The Plan

The all-new luxury SUVs will be manufactured with Ford’s JV partner in China – Changan Automobile Group. The SUV’s are to be manufactured at the assembly plant at Chongqing, which is jointly managed by Ford and Changan Automobile. The other details on the model’s features or the future manufacturing plans were not disclosed. The communication simply mentioned that the all-new SUVs will be built to suit Chinese tastes.

Lincoln China’s statement read:

“The move to local production is a key next step in Lincoln’s evolution in China and will complement continued imports from North America.”

At present, all Lincoln vehicles are imported in China. Ford and Changan Automobile are in the process of getting all necessary approvals that will be required to start the manufacturing of Lincoln’s SUVs in China. In the meanwhile, the Company plans to continue to import the rest of the models from its manufacturing facilities in North America to China.

Advantages of the manufacturing in China

Looking at the growing demand for Lincoln vehicles in China, in the long run, it only makes sense that the production of these vehicles is also done in China. Setting up manufacturing of Lincoln vehicles in China will allow the Company to take on rivals like General Motors’ Cadillac brand. General Motors started manufacturing Cadillac in China in January 2016 and its sales outperformed Lincoln sales. Other luxury brands that rival Lincoln in the Chinese market include, BMW, Audi, Mercedes etc., all of these have manufacturing facility in China.

The most significant advantage of this move for Lincoln will be saving in terms of import taxes, which the Company can avoid altogether. China imposes a 25% tariff on all vehicles imported into the country. This will allow Lincoln to offer the most competitive prices for its vehicles thereby taking on the competition.

Lincoln’s Performance in China

According to Lincoln China, the Company sold 32,558 vehicles in China in 2016 with 11,562 vehicles being sold just in Q4 2016. The sales figures reflect a growth of nearly 180% on a year-to-year basis. The Company also expanded its dealerships to 65 stores and seven branches. With the aim of boosting sales, the Company also plans to open five to 10 smaller sales branches in the lower-tier Chinese cities. The Company also plans to increase the number of dealerships to 80 by end of 2017.

Globally, Lincoln’s China sales are astounding compared to any other market. For the year 2016, in terms of annual sales, 5 out of 10 and 11 out of 20 Lincoln dealerships across the world were from China.

Lincoln has whetted the appetite of Chinese car lovers with an array of new launches. It launched the brand’s flagship and iconic luxury sedan – Lincoln Continental in November 2016. Apart from this, the Company also launched the new Lincoln MKZ, a midsize premium sedan, the new Lincoln MKC, a small premium utility, Lincoln MKX, the midsize premium utility and the full-size luxury SUV Lincoln Navigator in the Chinese market. The launch of these vehicles is the fulfillment of Ford Lincoln’s promise to introduce five new models in China by the end of 2016.

China is becoming an important market for Ford vehicles. In 2016, Ford and its JV Companies sold over 1.27 million vehicles in China. In February 2017, Ford has sold 64,641 vehicles in China.

Stock Performance

At the closing bell, on Monday, March 13, 2017, Ford Motor’s stock was marginally up by 0.08%, ending the trading session at $12.54. A total volume of 22.60 million shares were traded at the end of the day. In the last month and previous six months, shares of the Company have advanced 1.29% and 4.21%, respectively. Moreover, the stock gained 5.05% since the start of the year. The Company’s shares are trading at a PE ratio of 10.91 and have a dividend yield of 4.78%.

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