Lincoln Trimming Fleet Fat to Shore Up Residual Values
Lincoln is a brand that never fully recovered from the post-recession sales slump. While volume has improved over the last several years, 2017 actually saw a very slight decrease in overall deliveries. That’s a shame, as we’ve seen Lincoln making efforts to turn things around.
Sure, the domestic luxury brand could still stand to distance itself from mainstream Fords a bit more. But Lincoln has stopped attempting to sell Buick-grade luxury at Cadillac prices and seems intent on pursuing more elegant designs. Still, Ford Motor Co. CEO Jim Hackett wants the company’s operational fitness in top form as soon as possible, and getting Lincoln’s overall value up is an important part of that goal.
One way of doing this is by leaning on utility vehicles. Navigator sales have improved dramatically since the fourth-generation model hit dealers and the Aviator seems to hold real promise. But it’s not scheduled for sale until the 2020 model year, which means Lincoln has to do more than just wait around until new and updated SUVs can right the ship.
So, like so many premium automakers, Lincoln has begun cutting back on fleet sales in the hopes that those vehicles don’t come back into circulation and screw with residual values. Given the popularity of leasing, it’s doubly important.
Ford says culling fleet sales to rental companies has already resulted in a 27-percent decline in Lincoln’s daily rentals through the first quarter of 2018. While the decrease is noteworthy, only about 9 percent of the brand’s total volume went to rental agencies last year. Another 2 percent going toward commercial businesses. While the former will continue to be cut, Lincoln has said it’ll continue to furnish airport and hotel livery services. However, it does intend to scale back provisional company cars for both Ford employees and outside agencies.
“Those are very deliberate efforts to really focus on residual values as our new products come out,” Robert Parker, Lincoln’s director of marketing, sales and service, told Automotive News during the New York Auto Show. “What happens is those cars come back in six to 12 months. That’s problematic on our residual values because that’s when all the depreciation occurs. The longer they stay out, the better.”
Parker noted the abandonment of fleet volume has hurt short-term sales but he believes it’s the right move to make in the long run. Ford data has also said that Lincoln’s incentive spending is down while its average transaction price was up for the first quarter.
[Image: Ford Motor Company]
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