Shades of Lincoln-Mercury to Cali in Caddy’s NY Move
This week, GM confirmed that it will move Cadillac to New York in an effort to make it into an entity all its own and reinvigorate sputtering sales numbers. This move is not without precedent, however: Ford attempted to do the very same with Lincoln-Mercury in 1998, moving the division from Detroit to California in order to give the brands a sense of independence. Despite being applauded by analysts at the time and viewed as a huge boon for the local economy, it was what could only be described as a towering failure.
In 1998, the Lincoln-Mercury division began to show signs of growth after a long period of sales struggles, and so Ford brass determined that the time was right to move about 150 employees from Dearborn to a new facility in Irvine, California. At the time, Lincoln-Mercury had about a 12% luxury market share and was looking to expand upon its comparatively weak 7.5% luxury market share in California.
Maryann N. Keller, an auto analyst at Furman Selz in New York, told The New York Times that one of Ford’s largest challenges for the future would be ensuring that those executives who moved out to California would not be so pampered by sun and surf that they would be unwilling to relocate back to Detroit if need be.
Lincoln-Mercury was folded into an entity known as the Premier Automotive Group—comprised of Lincoln, Mercury, Aston Martin, Jaguar, Land Rover, and Volvo. The Irvine, California facility that housed Lincoln-Mercury and the other PAG brands was built in 2001 and cost $68 million.
We know how that story goes: sunscreen-addicted execs were the furthest thing from Ford’s biggest concern, despite a positive early outlook in 1998 when Lincoln outsold Cadillac and appeared poised for a comeback. Lincoln only repeated that feat once more in 2000, and Lincoln-Mercury sales declined exponentially every year thereafter.
In 2003, Lincoln-Mercury was moved back to Dearborn. Alan Mullaly took over as CEO in 2006 and began systematically dismantling PAG, selling Jaguar and Land Rover in 2008 and Volvo to Geely in 2010.
In 2009, sales of Mercury vehicles totaled less than 93,000—down nearly 75% from what they had been even in 2000—forcing Ford to drop the axe on the brand in 2010.
Lincoln was rebranded in 2012 as The Lincoln Motor Company, and it has only recently begun to show sparks of life with the launch of the MKZ in 2013 (which didn’t go so hot) and the MKC this past June (which has been nothing but hot).
In reviving the Lincoln brand, Ford has been measured in its approach, focusing on creating an entity that is separated through unique product and branding as opposed to simply selling rebranded vehicles under a different umbrella on the other side of the country.
So will GM’s gamble with Cadillac pay off in a way Ford’s couldn’t with Lincoln-Mercury? If it does, Edmunds.com’s Jessica Caldwell says it will have a lot to do with location, location, location.
“Unlike Lincoln who moved to the suburbs 50 miles south of Los Angeles, Cadillac is moving to SoHo, right in heart of New York, so it seems like a better financial gamble if the intent is to immerse its culture in an international, urban setting.”
Cadillac’s move comes at a time where the brand is down almost five% through eight months. Comparatively, and despite only delivering about half of Cadillac’s annual volume, Lincoln is up 13.4%.