How can dealers maintain the high profit levels of recent years?
More supply reduces margins somewhat, but throughout this process dealers and clients have become much more accustomed to going with the flow. If we were to be as transparent as possible about this deal, it would seem that the atmosphere is less confrontational right now. These profits may remain.
How are rising interest rates impacting sales and funding?
It does not affect clients who buy cars for $100,000. And maybe even a $70,000 or $80,000 car. They just write me a check. But the most impactful clients for me are entry level new car clients, those who buy $25,000 or he $30,000 cars, and used clients. If you’re looking at a used car, you’re trying to save on its depreciation, the initial depreciation on a new car, and leaving all of that to the interest rate will ruin your plans. If you can’t get good rates in the market, you’ll need to have your captive subsidize some of these rates to offset the cost to your business of those rates.
Corsair was Lincoln’s top seller in 2022. What are the most important products for Lincoln dealers today?
Varies by region. I think Corsair and Nautilus are important to all our success, but some parts of the country are better. For example, in Texas, aviators and navigators are vehicles in high demand. Over the past 180 days, we’ve focused on improving sales of her Nautilus and Corsair. Overall, we are happy with the four products we have. Because they all have the ability and design to be production cars for everyone. I think the current lineup is in a pretty good position.
What is your main message to the company and other dealers as you begin your term as chairman?
If there’s one thing I’ve learned in the last two years, it’s to be agile and prepare for possible pitfalls. It’s made for a much smarter dealer body. There will always be disruptors in this industry. But you don’t have to be a leading disruptor to win. Ultimately, those who follow a very consistent path, stay on course, and stay true to their roots will win.
Building a car is not easy. It’s a lot of work and requires a team of people coordinated on the ground. That’s the dealer. We cannot afford to lose sight of it. Clients need humanity. The people I meet are quite social. I feel it is very important to re-evaluate and remember the importance of car dealers and their role in the whole process. For this to work, retailers and manufacturers must go hand in hand.
Former dealer council chairman Bill Dawes wanted Lincoln to be more transparent about its product plans. Did Lincoln’s leader improve in that area?
I agree with Bill’s statement. Obviously, we don’t have a lot of information about the future at this point. Need to know more. Dianne Craig has been on this job for 60 days and I think we have a great relationship. She was happy to speak and get involved. We talk every week about what we need and where we are going.
Lincoln will debut two concept cars in 2022. If so, do you want it to be a production car?
It’s all about design. The sporty design with an edge is cool. Eye appeal is very important in our industry. I hope it serves as a reminder that as cars develop, they have to look cool on the outside as well as on the inside. You still need something eye-pleasing for your clients. Despite the skyrocketing prices of luxury cars, it’s still an impulse buy. That’s what someone says, “I must have it.” Ultimately, we want to ensure that we offer a very elegant and stylish vehicle that takes a whole new look at what luxury is all about.
Is Lincoln moving too slowly in the EV?
When you look at what’s going on at Tesla right now and their challenges with sales and battery production…it’s great to be on the cutting edge of a new technology, but even better to be at the right time for that technology. Looking at where the market has gone today, I know there is still a lot of range anxiety out there. There’s probably a point where that whole idea got a little weird. But don’t rush down this road as you may overtake everything you need to support EV. I really don’t think we are there yet. There is a lot of work that local governments need to do to provide long-term comfort for customers who buy EVs. A year ago, I was thinking, “What am I doing when I’m so late?” But I think we are probably in the right place today.
How are Lincoln dealers reacting to the EV certification program?
That’s a very polarizing point. However, it should come as no surprise to anyone that there are some requirements. Other manufacturers will follow the same path. After the program’s initial announcement, there were clearly some causes for concern, but I think the company was flexible in working with dealer associations and partners to get this thing right sized. It’s like a ping-pong game until you find the equilibrium point, but I think you can get there. Sounds dangerous to some dealers, but I get it. I don’t think they are trying to create haves and have-nots. They’re just trying to make sure retailers meet customer expectations.
Given our reports that Lincoln has no plans to launch its first EV until the end of 2024, is it fair for Lincoln to demand this level of investment?
I think there needs to be some flexibility on the part of the company. But look, when we all try to get a charging station at the same time… I remember when my Buick-GMC store did the first EV addition. Transformers had him 6 months delay. Level 3 chargers were not available. There was a delay throughout the process. If the process starts too late and causes delays, you’re stuck and you’re in a bad situation. I think the timing is well thought out. It seems early, but I also understand that there are pitfalls if you don’t start early.
Lincoln expects the consolidation to continue, albeit slowly. Is the network sized appropriately?
It comes down to throughput and profitability. The company is focusing on brand-only stores, strengthening Vitrine’s footprint. I think a lot of the integration happens naturally. We obviously want a dealership that matches where Lincoln wants to be as a brand. It’s very important.
What are your priorities as council chair?
Production is No. 1. We must continue the quality dialogue and improve our position on quality. Marketing will be key to how we move forward. As we move down this EV path, we want this transition to go smoothly for our customers as well as our dealers. To do that, cooperation between the company and Congress is essential. I think there is still work to be done there.
What is the relationship between Lincoln and its dealers?
I think that relationship needs a massage. We need to be treated as a trusted partner to manufacturers, and part of that trust is transparency on our part.As that transparency improves they will gain our trust. [with company executives], and I’m sure some of the things I want to tell them are things they don’t want to hear. But they are not negative. They want to work to get better. I think they see opportunities in our industry, especially in Lincoln, to do really, really impressive things.
This is a small sample size for Diane Craig, but early returns tell us she intends to do everything in her power to make Lincoln something we’re all very proud of. I look forward to working with you to get there.
Is Ford Motor Co.’s commitment to the Lincoln brand to the level you want it to be?
Improved. I don’t think we are there yet. It requires a very clear vision, not only for the dealers, but also for the employees of the company. Everyone needs to know, what the heck is Lincoln? What is our Nirvana and how do we get there? It’s really good, but I’m not sure if the message is being conveyed clearly to the general public inside Lincoln, and I think it needs to be improved.