By on April 9, 2018

2018 Lincoln Navigator

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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34 Comments on “Lincoln Trimming Fleet Fat to Shore Up Residual Values...”

  • avatar

    The Navigator and Aviator have been excellent in their designs. Big, square, well-proportioned and apportioned. These knock the Escalade/Yukon out of the park, and I say that as someone who’s only owned GM. With the right marketing and a push on the brand experience I could see them taking the crown for SUVs. What they need to focus on now is making sure the Nautilus and smaller CUVs carry equal footing, to beat the competition from ze Germans and Lexus.

    • 0 avatar

      Lincoln won’t beat the Germans or even Cadillac if they don’t have a few cars in their lineup. There is no luxury carmaker in the world, with the exception of Range Rover, that sells only SUVs. The truth is nobody takes Lincoln seriously.

      • 0 avatar

        The Continental is the only sedan they need. They others are maligned as thinly rebadged Fords (which they are), which are driven by geriatrics and renters.

        The Navigator is platform sharing done right, the MKS/MKZ are the wrong way to go about it.

    • 0 avatar

      Although these are truly nice vehicles. They do not “knock the Escalade out of the park. I would’nt begin to argue with you on how truly nice these suv’s are and i would easily choose them over anything except a caddy and possibly a Suburban.

  • avatar

    Until Lincoln actually manage to export cars to Europe and make even a modest sucess of that they are doomed to failure. If the Navigator was really any good it would be taking sales off Range Rover in Europe. As it is they will need to compete with BMW and co on relatively low volumes. Good luck with that…. meanwhile for anyone who wants to buy American then wait for the Wagoneer.

  • avatar

    Leave the fleet sales to Toyota.

  • avatar

    Lipstick on pigs. Nothing can help this imitation luxury brand.

  • avatar

    That is a HUUUGE suv.

  • avatar

    I have a question. I know I m not the smartest guy.
    Here goes. Why is fleet sales a bad thing?????

    You are putting people in your car for a long term test drive arent you????>>

    If your car is GOOD and well priced, shouldnt that HELP INCREASE SALES TO A NEW BUYER that would have never considered your product.

    Help me out here would yah?

    • 0 avatar
      30-mile fetch

      “Why is fleet sales a bad thing?????”

      Around here among the best and brightest, it’s just another petty little cudgel to wield in the pathetic brand antipathy p*ssing matches we get into.

      In the real world, I’d be genuinely curious to hear from anyone who knows if fleet sales hurt brand perception and residual values for retail consumers. The Camry has a high fleet presence, but in my recent shopping experience the ex-fleet Camries were pretty cheap to buy while privately owned ones of the same year and mileage were fetching quite a bit more.

      • 0 avatar

        “Why is fleet sales a bad thing?????”

        It is bad in the car and SUV market because most fleet sales are typically rental car fleets. Rental vehicles don’t tend to be abused too badly. They can be sold for a decent price which undercuts used or lease return pricing. Rental fleets also turn over vehicles rather rapidly. This forces residual prices down. It hurts new vehicles directly by being cheep competition and hurts lease resales again due to being cheaper to buy.

        Pickup fleet sales don’t have the same effect since they are typically purchased by industrial fleets and get beat on by careless or “could-care-less” drivers. Residual value doesn’t affect the used or new market since the trucks are of little value at the end of their duty cycle.

        In the case of a luxury vehicle, you don’t want a “rental” stigma, and you don’t want “value” buyers choosing fleet returns. If on spends 100k on a luxury SUV, one would like to see a decent residual value.

      • 0 avatar
        30-mile fetch

        Yes, I understand the stigma and the theoretical reasons why fleet sales could harm brand perception and resale. What I want to know is whether it actually does those things in most/all cases.

        As I mentioned, there was a large price difference between privately owned and ex-fleet Camrys, a car that has been in fleet for awhile and yet still has high resale value even in basic SE trim. I’m not sure I buy the argument that SE/LE are poor emissaries, because most are sold in those trim levels and most of those are retail customers.

        Perhaps if the car isn’t a pile of garbage you can get away with selling a portion to fleets.

      • 0 avatar

        They definitely hurt residuals. Fleet companies buy the cars for cheap so they can afford to sell them for cheap, especially after getting thousands of dollars in rental charges from them. There has to be a perception ding as well.

    • 0 avatar
      Kyree S. Williams

      The main one is that when all of those fleet cars get turned every year, boatloads of them hit the market and sway people who might’ve bought new examples. And when you see a whole bunch of that car, you start to perceive it as a cheap commodity, sometimes justifiably so, but it is still bad for the brand. See the W-body Impala for a good example of this.

      And rental cars, in particular, just don’t allow brands to represent themselves well, especially mainstream ones. Like another commenter mentioned a week ago, a Camry LE and a Camry XLE/XSE are two very different environments. But fleets will often buy the LE. So when you sample a Camry via rental, you’re often getting the cheapest or second-from cheapest variant, and not the well-equipped, noticeably nicer one that Toyota wants to market to you.

      Rental cars also tend not to be well-kept, no matter how the fleet maintains them mechanically. People scratch them, ding them , rip interior pieces off, and subject them to all sorts of drivetrain abuse. So when you see an ex-rental Camry with 25K miles, you might think “boy, these things sure do wear out quickly,” when, really, it was subjected to a very hard 25K miles by a number of indifferent drivers.

      I take it your question was rhetorical, and you knew all of that already. But it’s important for a company to control its image and brand, and fleet cars often prevent that. Sometimes ex-fleet cars do give you a truly honest window into a model. If you observe that the base model feels cheap and hollow, you might logically come to the conclusion that it’s not all that well-engineered of a car, and that the nicer models are just window dressing. If it’s important for you to have a car that you can ride hard and put away wet and still have it looking and feeling like new…you might be put off by a model that can feel so worn-out at 25K miles, regardless of why. Still, neither of those is the impression the automaker wants you to have.

      It’s a real death knell for luxury automakers, where exclusivity is a factor.

      Contrast that with something like a service loaner, where the automaker and dealership are both vested in presenting a curated experience of the brand and its latest wares, from the model itself, to the configuration, to how clean the car is.

      • 0 avatar

        You want a good idea of who is doing fleet and in what quantities, go look at the CarMax website. See which late model low mileage cars are flooding their lots, guarantee most of them will say “fleet” under the description.

        Kyree makes excellent points about the downside of that.

  • avatar

    Lincoln’s “new” offerings starting with the MKZ (and going up to the Conti) were an improvement over previous endeavors, but still underwhelming compared to the competition.

    The Navi and Avi are changing that (Lincoln has really stepped it up with their interiors in those 2 models; Cadillac needs to do the same with the next Escalade and the XT7).

    There’s a person down the street who clearly loves cars who just added a Navi Black Label to the family fleet (which on its own, may not mean much, but the family fleet includes 2 top-end Porsches and a Bentayga).

    • 0 avatar
      Kyree S. Williams

      I think Lincoln’s been making big strides even with the facelifts. The ’17 MKZ is significantly nicer than the ’16 and earlier. And the MKX’s transformation to the Nautilus looks impressive.

      • 0 avatar

        The interiors of the MKZ and Nautilus are a bit better with their respective refreshes, but still not anywhere near the level of the Navi and Avi even taking into account price.

        Part of the reason is the old Lincoln vertical, center-stack dash design which looks outdated (which is also an issue with the Conti).

        Also, in terms of ride, handling and refinement – the refreshed MKZ and Nautilus still lag behind the competition, whereas the Navi is an impressive beast in that regard compared to its competition.

        But yeah, they’re making some strides with their older models.

  • avatar

    When you are being out sold by Cadillac by better than a 2 to 1 margin there is little that can be done. Making a luxury division that only sells SUVs is pretty much a limited market.

    The only fitness Lincoln needs is refining their platforms to take on the Nurburgring race track like Cadillac did. The performance of Lincoln vehicles is rather sad when compared to Cadillac. Lincoln seems to want to return to land yachts of the 70s.

    • 0 avatar

      Luxury car sales are in freefall. Luxury SUV sales are skyrocketing. Luxury market is not very sensitive to fuel costs. Not much interest in small luxury cars that aren’t German, not much interest in large luxury cars period. A primarily SUV based luxury lineup is smart business. You look at any non-German luxury peddler- Lexus, Caddy, Jaguar, Lincoln, Acura, their sales anchors are crossovers.

      The idea that big sedans = real luxury is dead, at least in the US. Nobody cares about S-Class fighters, look at the sales.

  • avatar
    el scotto

    For most of us, Lincolns were gussied up version of the Fords they shared mechanicals with. LTD/Towncar, Expedition/Navigator, Focus/MKAA-MKZZ. Bonus points if they had F-150 engines. Apologies to those who owned pre-1975 or so Lincolns. Anyway, they’re based on Ford engines/electrics/electronics etc. No need to channel your inner Deadweight and go on a multi paragraph rant about billions and billions wasted by the Soho brain trust. The costs have already been amortized. The Ford family likes Lincoln(s). Press some masculinely elegant sheet metal, throw in some nice leather, some of electronic nannies and they’ll sell. All they need to be is the American Acura.

    • 0 avatar

      The the Acura Acura isn’t exactly worth the marketing effort at this point. Their customers didn’t stick around when they had to adapt throwaway CAFE drivetrains like everyone else except Toyota/Lexus.

  • avatar

    I thought Nissan are trying something similar. Though instead of cutting new fleet, routing select used fleet back on dealer lots as certified buy. Upping residual that way.

  • avatar

    When they will put a V8 in this?

  • avatar

    Seriously, if you are in the market for a vehicle in this class, would you rather be seen in the Toyota Land Cruiser, or the Navigator? Being an east/west coast resident, I have never seen a 18 Navigator on the road.

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