Ford’s Lincoln Threatened By Tariffs

The Wall Street Journal ran an article about which car models sold in the US faced the most significant risk of higher manufacturing costs because of tariffs. Most models on the list were built by German and Chinese companies. An exception was Ford’s (NYSE: F) Lincoln Nautilus, which was made in China. According to the paper, the model’s sales bring about one-third of Lincoln’s total. Lincoln is already in trouble because it has a tiny part of the US luxury category.

Lincoln’s position among luxury car brands in the US is such that it dares not raise the MSRP for fear of losing unit sales. Last year, Lincoln’s US sales were 104,823. BMW led the luxury category at 371,346, followed by Lexus at 345,669, Mercedes at 324,528, Audi at 196,576, Cadillac at 160,204, and Acura at 132,367.

Lincoln has to worry about consumer perception. In Consumer Reports’ “Which Brands Make The Best Cars,” Lincoln ranks 24th out of 32. In the J.D. Power
In the “2024 U.S. Initial Quality Study,” Lincoln ranked 25th out of 31 brands. Lincoln does not have the brand power to increase prices, even if it wants to.

According to Ford, Lincoln sales fell a stunning 20.5% to 6,754 in February. Sales of Nautilus, its best-selling model, dropped 26.9% to 2,482. Eroding sales are another reason a price increase to offset manufacturing costs is virtually impossible.

Ford CEO Jim Farley recently said, “Let’s be real honest: Long term, a 25% tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we’ve never seen.” China tariffs will likely be less than that, but Farley makes the point.

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