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Ford's Latest Challenge: Revamping Lincoln

Monday, 3 Dec 2012 | 2:18 PM ET

Ford Motor Company (F), the second largest U.S. automaker, is rebranding its Lincoln luxury division. Ford decided to return the brand to its roots, at least in name: Lincoln will now be referred to as the "Lincoln Motor Company," its original moniker when Henry Ford bought the company in 1922.

Related: Bailouts of Chrysler Were Good for Ford Too: Alan Mulally

Ford CEO Alan Mulally announced the changes to the Lincoln brand in New York City on Monday. The radically redesigned Lincoln MKZ mid-sized sedan is expected to start arriving at dealerships by the end of the month.

An ad blitz—in print, online and TV—follows, starting later this week and including, for the first time, a spot during the Super Bowl on Feb. 3. Not surprisingly Ford will be using Abraham Lincoln, the sixteenth president of the U.S., in some of its ads. He was the inspiration for the company's name when Henry Leland founded it.

Related: Mulally to Lead Ford Until at LEast 2014, Mark Fields Likely Next in Line

Lincoln is Ford's only luxury vehicle. Under Mulally, who took over as CEO in September 2006, the company downsized its luxury brand portfolio that included Jaguar, Land Rover and Aston Martin. Lincoln was the top-selling luxury sedan in the U.S. in the 1990s but now trails Cadillac and accounts for just 3% of Ford auto sales today.

Ford has other challenges besides disappointing sales of its Lincoln brand. The company just announced it was recalling about 65,000 2013 Escape SUVs and almost 15,000 2013 Ford Fusions because of potential engine fire hazards. This is the fourth recall of the Escape this year and the third in the last two months.

"It is important that affected customers not ignore this recall and contact their dealer as soon as possible," according to a press release on the Ford Motor Co. site. The company says the recall is voluntary and no injuries have been reported. But it admits "there is no solution to the problem at present. "

Ford was the only U.S. automaker that did not take a government bailout. Not taking taxpayer money "generated a lot of goodwill with a lot of consumers, but at the end of the day people want to buy a car they feel good about and right now they're not feeling so good about Ford cars," says The Daily Ticker's Aaron Task.

Henry Blodget says he isn't worried. "Ford will get past this," he notes. "They're doing the right thing. Recall, fix them, back on the market. This will be old news in a few months."

Ford reported Monday that sales in North America last month rose 6.5% from a year ago to 177,673 vehicles. The company said it plans to build 750,000 vehicles in the first quarter—11% more than in 2011. In contrast, GM said November sales rose 3.4% and Chrysler sales were up 14%.

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