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Cadillac (GM) Investor's Presentation


Anthony

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Lincoln's transaction price is barely in the luxury spectrum, and they sell the fewest of all luxury makers. That has to be a very hard business for Ford to make money on right now although it does explain why they are spending so little.

 

I am surprised to see Caddy is commanding the biggest ATPs in the US, and they certainly sell far more vehicles than Lincoln, especially globally.

 

I'm sure Lincoln will get some help with Continental and Navigator, although Continental is relatively cheap.

Edited by BORG
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Lincoln's transaction price is barely in the luxury spectrum, and they sell the fewest of all luxury makers. That has to be a very hard business for Ford to make money on right now although it does explain why they are spending so little.

 

Making money on luxury cars is something Ford hasn't figured out how to do. Even the most prolific luxury car ever produced by Ford, the '56 - '57 Continental Mark II, lost money. When Ford owned Jaguar, they never managed to keep that brand consistently profitable either. I think the cost cutting measures Ford applied actually made things worse for Jaguar's profitability.

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Making money on luxury cars is something Ford hasn't figured out how to do. Even the most prolific luxury car ever produced by Ford, the '56 - '57 Continental Mark II, lost money. When Ford owned Jaguar, they never managed to keep that brand consistently profitable either. I think the cost cutting measures Ford applied actually made things worse for Jaguar's profitability.

 

Lincoln has always had a problem with consistency and commitment from Ford and it's going to be quite a trick if they can finally nail it down. I am growing more skeptical with costumer indifference to their efforts thus far but obviously this is going to be a very slow process.

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Lincoln has been profitable for years because they're keeping ATPs relatively high without huge discounts and by using existing high volume platforms.

 

ATPs are actually lowest in the industry but appropriate for their level of investment and sales. It's incredibly difficult to exist as a non-global luxury brand like Lincoln right now, China has to change that so they can start getting the money to invest and bring up sales and pricing.

 

The average price of a car in the US is now $33,560, Lincoln ATPs around $36 -37K. Caddy is at around $53K on far greater sales. That's a dismal stat for Lincoln since that falls just above their lowest sticker price.

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Lincoln made lots of money in the 70's, 80's, and 90's selling tarted up LTD's and Thunderbirds. I don't think Lincoln ever made a lot of money using unique platforms.

 

Lincoln is reinforcing this strategy going forward and returning to better surface differentiation. We saw this in the 80's with shared platforms and alternative drivetrains and suspension. The experience is uniquely different to the customer but from a competitive standpoint it's clear Lincoln is really old-fashioned.

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The average price of a car in the US is now $33,560, Lincoln ATPs around $36 -37K. Caddy is at around $53K on far greater sales. That's a dismal stat for Lincoln since that falls just above their lowest sticker price.

 

Please cite the source for that claim. MKX is at $48K and we know Navigator is higher and MKC has to be at least $36K not to mention Continental. MKS and MKT are too low in volume to drag it down that low.

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A segment Lincoln originated with Navigator, which they still have btw.

Yes I know. But the Navigator has quite obviously been neglected for decades and sells in far lesser volume than the Escalade, for less money. That was my point....Caddy sells more, for much more, helping to skew Cadillac upward compared to Lincoln. I'm not saying it's unwarranted or whatever, just stating a fact to account for the large amount of the discrepancy between the two. The new Navigator should begin to pull Lincoln upward both in volume and in ATPs.

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Well that says the source is JD Power so maybe it is accurate but that doesn't make sense to me given the MKX, MKC and Navigator prices and sales volumes. Maybe MKS and MKT incentives and subsidized leases are dragging it down.

Yeah it doesn't make much sense. MKC and MKZ start around $33, MKX at $38, MKT around $43, and Navi around $63. MKS I think was around $38, whereas Conti is near $45.

 

I guess the MKC and MKZ skewed Lincoln down, as they are the highest volume models.

 

Really, you could split C and X as their sales have been about equal. But even then, I'd guess that'd put it in the mid $40s

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Lincoln probably sells more of the cheaper models than other luxury brands with very few high-ticket items to offset the low end. Lincoln also sells quite a few of its vehicles to A/Z Plan employees in Michigan which I'm sure may skew them down even further. Caddy ATPs will likely continue to grow with the success of the CT6. One thing is for sure, Caddy is bringing in a TON of money right now which accounts for GM's higher ATPs and profits. It's also helping to fund advanced research into autonomous tech which is something Ford wants out of Lincoln profits.

 

I've always wondered how many of Lincoln sales were to Ford employees and in Michigan.

 

As for heavily discounted vehicles, the MKZ tends to get the most incentives, you can get those very cheaply.

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ATPs may be high, but sales keep dropping. At a certain point, high ATPs can't overcome increasingly lower volume (at least in the sense of justifying huge amounts of future development dollars).

 

That's not true at all, Caddy sales are up HUGE from a global perspective. They sell more cars in China than Lincoln sells in the US (over 100,000).

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