Four months after announcing plans to encourage dozens of dealers in the top 30 U.S. luxury markets to invest in standalone stores, Lincoln Motor Co. is temporarily postponing the program amid concerns expressed by some retailers.
The premium brand in August called for roughly 78 Ford-Lincoln dual dealerships to commit by next July to build separate Lincoln-only facilities, citing research showing an overwhelming number of luxury buyers prefer to shop in brand-exclusive showrooms. But some dealers have voiced worry over the pricey investment, and at least one state dealer group has publicly called on the company to amend rules that allow it to withhold profit margins from retailers who choose not to participate.
Greg Wood, Lincoln's sales and service manager, told Automotive News the company is still committed to eventually relaunching the program but that some tweaks are likely first.
"We've been notified from a number of various dealers around the country that speak candidly and directly with us on some of their concerns," Wood said. "We just want to take some time to listen to all our partners."
Lincoln communicated the news in a memo to dealers earlier this week, a copy of which was obtained by Automotive News. It stressed that delivering a "distinctive luxury experience" is still important to the brand, but it wants to "work with our dealer partners to better understand their questions and concerns and determine the right path forward."
Wood declined to elaborate on what tweaks may need to be made or what dealers were most concerned with, however it likely centers on penalties applied to those who don't buy in.
Lincoln had told dealers that if they fail to comply with a requirement that Ford and Lincoln dealerships have separate names, they won't receive a co-op reimbursement from the factory, which is about $100,000 a year per dealership, according to the California New Car Dealers Association, which last month wrote a letter to CEO Jim Hackett asking him to reconsider the demands. The association also said the commitment program allows withholding 3.5 percent of a store's margin if it continue to be dualed with a Ford showroom.
Brian Maas, the association's president, said he had not been contacted by Lincoln but that pausing the program "appears to validate everything we said in our letter."
Dealers who have begun building a standalone store are allowed to continue the process, Wood said. Since announcing the program in August, six dealers have opened new buildings with more than two dozen others underway.
Lincoln refers to the new showroom design as "Vitrine," a French word for a glass display case. The exterior of each store is defined by floor-to-ceiling glass windows that illuminate the vehicles inside at night.
It argues that virtually all dealers who build new stores see sales increases. Retail sales at the 72 standalone stores open before the program was announced had risen 48 percent from 2014 through 2017, compared with 18 percent for the brand overall.
Tom Roush Lincoln, which recently opened a vitrine store in Fishers, Ind., last month sold 51 vehicles, the most for a single month in roughly 10 years, Wood said.
"We're not deviating from the strategy long-term," Wood said. "Our intention is we will address this and make any necessary adjustments needed and continue on."
Melissa Burden contributed to this report.
