DETROIT (TheStreet) -- For what could well be his last revitalization project at Ford ( F), CEO Alan Mulally has established a start-up business inside a $132 billion corporation. That business is called Lincoln. Its goal is to introduce a new player, albeit one with an old name, in the harshly competitive, well-established luxury-car business, where the odds for success are long. The effort begins Tuesday. Last night, Lincoln unveiled the first step in its transformation, the MKZ luxury sedan.
One unique element to the Lincoln start-up is that "we didn't delegate the brand to one person," said Jim Farley, Ford group vice president for global marketing, sales and service. "There is no head of Lincoln because we (on the team) all own Lincoln." Mulally called Farley, whom he hired from Lexus in 2007, "my greatest acquisition from Toyota ( TM)," and said, "He really knows how to do this." 7 Companies That Keep on Growing Farley said Lincoln is "a little personal" because his grandfather, who joined Ford in 1913 as employee number 389, operated a Lincoln dealership in Grosse Point, Mich. Mulally said the Lincoln project has three focus areas: product, the distribution system and customer experience. Farley is overseeing development of a targeted dealership network that will provide personalized service for its luxury customers. Dealerships will be located in the 130 U.S. markets where 90% of all luxury cars are sold. "That's something new at Ford, where we treated everybody the same," Farley said. "Before, Ames, Iowa, was the same as Los Angeles." Ford has culled some dealers: The survivors have invested millions to upgrade their facilities, about half of which are brand-new. Farley cited the example of Columbus, Ohio, where Lincoln had a half-dozen dealers, most shared with Ford. Now Columbus has a single Lincoln dealership, devoted exclusively to the brand, in a new facility. What does the luxury customer want? Farley ticked off requirements including dedicated employees; same-brand loaner cars; an open, bright location; technology display areas; an attractive lounge, even a café, with wireless access; clean restrooms and personalized service from people "who know who you are and what you like," as an alternative to calling a dealership and waiting to be connected to parts or service. 10 Dow Dogs That Are Barking for Gains The U.S. luxury market, with about 1.3 million in annual sales, is a challenging one, dominated by German brands BMW and Mercedes, global brands who have been at it for decades and have full product lines. By contrast, Lincoln in 2011 sold just 85,643 units and now has just four models: MKT, a three-row crossover; MKS large sedan; MKX two-row crossover; and MKZ. The new 2013 MKZ will be available around the end of the year, and Lincoln plans seven new or refreshed vehicles over the next few years.
"We saw the concept (MKZ) car at the Detroit Auto Show, and it really looked terrific," said Joe Phillippi, principal of AutoTrends Consulting. "But Ford is starting on a task that Cadillac has yet to complete after spending countless billions of dollars on new vehicle development, so they have to understand that they have to be very patient. They have to be willing to stick with it when things might not go so well." In several ways, GM's ( GM) experiences can be instructive. Cadillac, which sought revival before Lincoln, sold 152,389 units in 2011 and still trails the German firms. Analyst Rebecca Lindland of IHS Global Insight said Lincoln can also learn from Buic: "The baseline problem with Lincoln is that they have to do what Buick did, which is to get people to reconsider the brand," she said. "Buick is on people's radar screens now; it wasn't a couple of years ago." Meanwhile, Farley said discontinued Saturn got it right in terms of customer service. "The execution at the beginning was stellar," he said. "Saturn was the Apple ( AAPL) Store 20 years ago." Fixing Lincoln is a necessity, not a choice. Said Farley: "For us at Ford, nothing was more frustrating then when we had high end customers who buy Fusions and Explorers, and then they left the brand because we didn't have a compelling luxury offering. "The Ford (turnaround) story has given us this opportunity," he said. "Customers want a second car to be a luxury car, and we have the obligation to be there." -- Written by Ted Reed in Charlotte, N.C. >To contact the writer of this article, click here: Ted Reed >To follow the writer on Twitter, go to http://twitter.com/tedreednc.