Lincoln originally planned to start building cars in China later in 2019.
This week has been a rocky one, as General Motors announced its plans to lay off 15 percent of its corporate workforce and close five of its plants by the end of 2019. That move still requires getting through the unions, which plan to fight the closures. Then Ford announced it would cut shifts at its Louisville and Flat Rock assembly plant. Crucially, however, the automaker stated it wouldn’t cut any jobs.
Then there’s the matter of the ongoing trade disputes between the U.S. and other countries, particularly China. Now, Lincoln wants to boost its bottom line by building its models for the Chinese market. The company originally planned to start production in late 2019, with the help of a local partner. As retaliatory tariffs between the U.S. and China mount, however, Lincoln president and Ford chief marketing officer Joy Falotico wants to speed up those plans, Bloomberg reports. “What we want to do is accelerate that,” said Falotico. “We will look for opportunities, but it’s a big undertaking and I think it won’t be a significant change in our plans.”
Why the rush?
Prices have soared by 40 percent for U.S.-built cars in China as a result of recent tariffs. Ford can absorb the costs, as it sells a much higher volume in China than its luxury counterpart. Lincoln, however, has suffered as its sales slowed down. It’s not an isolated incident either, as Ford CEO Jim Hackett stated earlier in the year that metal tariffs hit the company’s bottom line to the tune of $1 billion. Ford also cancelled plans to bring the Chinese-built Focus Active to the U.S. market.
Facing headwinds from the ongoing tariffs, Lincoln and other automakers are reconsidering their plans. Instead of exporting vehicles from one market to another, Falotico says it will likely end up building the same models in both countries. “It’s about ensuring our competitiveness with the pricing given the tariff headwinds.” Lincoln, as well as other luxury brands, have banked on the Chinese market as a critical element to their growth plans.
Lincoln just unveiled the new Aviator at the 2018 LA Auto Show. That is one of the SUVs the company plans to also launch in China next year, alongside the new Nautilus.