Ford Motor Co. executives have repeatedly stressed that Lincoln's return to relevancy will be a long journey. Luis Somoano, chairman of the Lincoln National Dealer Council, thinks the biggest step in that journey will come in 2017.
Sales of the luxury brand topped 111,000 vehicles in 2016 and were up 10 percent compared to a year ago. Lincoln sales have increased for the past four straight years since 2013, when sales fell to a three-decade low. Lincoln recently underwent a face-lift, abandoning the split-wing grille in favor of a new mesh design that debuted on the freshened MKZ and new flagship Continental, both of which hit dealerships in 2016.
The reintroduction of the Continental nameplate has been a hit, and completed Lincoln's vow to introduce four new products in a four-year span. It still plans to add two new vehicles by the end of the decade.
An ongoing quirky ad campaign featuring Oscar-winning actor Matthew McConaughey has helped draw younger buyers to the brand, Somoano said.
Outside of the U.S., Lincoln has opened about 60 dealerships in 50 Chinese cities since it launched there in late 2014. Sales in China exceeded 2015's sales totals halfway through the year.
Stateside, Lincoln dealers last year began offering standard pickup and delivery service on all of its nameplates, the first luxury automaker to do so. Executives still hope to expand Lincoln's volume to 300,000 vehicles by the end of the decade, and are investing $2.5 billion in the brand during that period.
Somoano, 53, president of Doral Lincoln in Miami, spoke with Staff Reporter Michael Martinez.
Q: How was 2016 for Lincoln dealers?
A: 2016 was probably the best year since 2007-08. We went into the downturn and we worked our way up. The last couple years, we've seen an increase in sales and service and profitability. We launched the Continental, which has been great. In general, it's been a great year. We're going to grow our business, not only nationwide but in my market as well, which is good news.
What kind of buyer is the Continental attracting?
Continental is a name that reflects luxury and quality; it was a beautiful car for years. People are wondering what the new Continental looks like. They come to the store, a lot of new middle-age buyers, between 40-55 ... they love what they see, honestly. It has huge space inside, technology-wise, different engines -- the car offers a lot. Especially people that owned luxury cars before, like the German makes, even Japanese makes and Cadillac, too. They're coming back to see what Continental's all about.
The Navigator concept generated a lot of buzz after it was unveiled at the New York show last year. Did that prompt questions or interest in the dealerships?
The Navigator is probably the most recognizable name we have in our mix. For us, it's super important. When they released that concept car in New York, [interest] was booming. That's good and bad. People are coming and wondering when the car is coming out. I have a lot of customers with the current Navigator who are waiting for the new Navigator. That creates some challenge to the sell-down of the Navigator we have right now. It's probably going to be the most important product we've released in my time with Lincoln. I'm looking forward to it and a lot of customers are looking forward to it.
What are the biggest holes that still need to be filled in Lincoln's lineup?
I can't talk about specific products, but I can tell you that Lincoln recognizes that we need to keep pushing on investing in the cycle plan. It's very hard to compete with the Germans and the Japanese. We have a few areas that I'm pretty sure we can maximize opportunities. Over time, you'll see that Lincoln is able and willing to keep investing. This is something that never ends. In some cases, you need to react depending on what the competition does. Lincoln realizes that's something we need to keep pushing and pushing. We know that if we can add a couple more cars to the lineup, we can sell more cars. They know it, too, and we're working together to have a great future for both the factory and us.
What are your Black Label sales like, and has that had an impact on the brand?
The way I see it, it's like having another car to offer in the showroom. In places like Miami, people want to be a little bit different. They can choose the colors and interior materials and this and that, and that creates some excitement around Lincoln. It also gives us the opportunity to compete with the higher-end luxury cars in the segment. A lot of people coming to the brand from the Germans or even from Cadillac and Lexus are used to paying X amount of money for a luxury car don't mind going to Black Label. In a way, they feel they can personalize the car and they're getting more for what they pay.
Black Label has been a brilliant idea for Lincoln. In our particular case, it's been 7 to 8 percent of sales, but there's more profitability in those cars than in the regular cars. For us, it's been great.
Lincoln's marketing idea of "Quiet Luxury" stands in contrast to performance vehicles from Cadillac. Does Quiet Luxury resonate with customers?
In a way, we want to be a little bit different than anyone else. The Germans are all about engines, sound. We need to be a little different, and this is a space we can definitely offer a little bit more for less. In the modern society, you want to sit down in your car and be in a sanctuary. When you go in, you want to feel separated from everyone else and from every place else so you can basically be alone and do whatever you need to do. I love the idea of being a little bit different than the Germans. It's very hard to do what everyone else is doing. Lincoln was famous for luxury and comfort, and that's the space we're good at. We need to keep working on that.
What role did Matthew McConaughey's quirky TV commercials play in Lincoln's recent success?
I think it was a genius campaign. It's amazing how young people are coming to the brand and expecting a car that they can drive. Remember, 10 years ago the perception was that Lincoln was your grandfather's car, or your father's car. That perception has been changed very fast. Matthew, in a way, is responsible for a percentage of that change, although I'm not sure what percentage because the product cycle says a lot about what we do also. You need to have a good car, but the combination has been great. The cars we're making right now are more appealing to younger buyers that we want to bring in, and Matthew has done a hell of a job. He's an artist, he's famous and he's a good-looking guy who's young and vibrant.
What are the biggest challenges Lincoln dealers face in 2017?
We've been having year-over-year gains for the last three, four years. We need to continue that, and that's going to be a challenge. As we know, the industry is selling around 18 million or close to it, and that's probably the ceiling. In order to keep growing, you need to start getting sales from somewhere else, and that's a challenge. The addition of the Navigator will be great. And remember, Continental just arrived in the showroom. Everything I see is good. We depend on the economy and a lot of stuff that's tied to it. But if I had to bet, I'd tell you the future is bright.
How's Lincoln's service business? How was it impacted by offering pickup and delivery on all models?
When you sell more, you definitely grow your service business fast, and that's what's happening. I think we've been doing a great job on the sales side of the business, and we've been doing a solid job in service. We need to increase our investment in service, because in order to keep those conquest customers coming to the brand for the first time, you need to provide an excellent service. We're doing that. We have the pickup/delivery service which has been great for us and differentiates Lincoln.
We need to do more stuff like that. We need to be excellent; not average, not great, but excellent in service. That's our goal. Hopefully we can keep elevating the customer perception of Lincoln on the service side of the business. That's probably the toughest part, because half of the people who come to service have an issue. You need to keep working on personnel, experience and all the stuff that will help you keep that business going. We're doing a great job.
How can the factory help Lincoln dealers sell more vehicles?
We always want to sell more. We have huge potential. It's a very simple math. The cycle plan has to be right, and the lease payments and pricing has to be there. Who's prepared to say what's the right payment on the car? The consumer's usually the one who decides that. I think that combination of product and payments is what will keep us alive and gaining ground. We need to be very vocal and verbal with Lincoln when we feel the payment is not right, and we need to work that out. The customer in the end is the one who dictates if you're right.
What are your top priorities as dealer council president?
No. 1, I think volume will definitely take care of a lot of things, like profitability. We need to elevate our profitability and be more competitive as a dealer body. That's directly connected to volume. My first priority will be to raise the volume to a level that's comfortable nationwide. The second priority is going to be to keep pushing Lincoln to keep a fresh product cycle plan and keep investing in future product. I think that's also a necessity that you almost need to check every day. You need to be aware what's going on in the market. For Lincoln, we have a lot of dealers in the nation who don't sell a lot of cars. It's very hard to go to the rural areas and make these changes in terms of service or sales.
That's another challenge: We need to work together to really elevate the consumer perception of a Lincoln dealership anywhere. [In 2016] we were up about 9 percent year-over-year, and the luxury segment was down. I think that's a great achievement, but we have to keep that number at a level that we feel comfortable with. By adding Navigator and having a full year of Continental, I think we're definitely going to see an increase in volume.