Lincoln Building Models in China? - Page 2 - Ford Inside News Community
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post #11 of 15 (permalink) Old 06-11-2016, 01:39 PM
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Re: Lincoln Building Models in China?

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Originally Posted by zipzoomflyfast View Post
Building Lincoln's in China saves the 25% import tax...that should make them more affordable and that means more sales in China!

More sales in China means more fun Lincoln's in the USA.
The answer isn't to build them there in order to avoid the 25% tax, the answer is to add a 25% tax to all high dollar imports from China until such time as China stops this bs. But no, Obama and next, Clinton will ignore that and continue vilifying American rich people, all while their policies create more and more poor in America, and more and more rich in China!!!
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post #12 of 15 (permalink) Old 06-11-2016, 02:02 PM Thread Starter
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Re: Lincoln Building Models in China?

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Originally Posted by zipzoomflyfast View Post
Building Lincoln's in China saves the 25% import tax...that should make them more affordable and that means more sales in China!

More sales in China means more fun Lincoln's in the USA.
True....if Lincoln started local production and pulled the price down 5% it would increase their competitiveness while increasing profitability at the same time. What I have noticed that for the German brands and Cadillac, even when they start manufacturing in China, the price does not drop by a significant margin. But it does offer more room for 'incentives' in the region.

This I think is because of China's profit sharing(required partnerships) rule, that keeps the price high to keep margins high, so after China takes their cut, it's still profitable for the foreign automaker to do business in China. Which is why we don't hear much about high import pricing in China, because it's China that makes it so.
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post #13 of 15 (permalink) Old 06-12-2016, 03:21 PM Thread Starter
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Re: Lincoln Building Models in China?

Ford Motor Company's Production Dilemma in China
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As the saying goes, one man's trash is another man's treasure. And while investors and folks at Ford Motor Company (NYSE:F) alike will hate that phrase in regard to the Lincoln brand, there is some truth to it. Consider that until recently Lincoln sales were in a steep and unrelenting downward spiral since the brand's peak in the late 1990s. Ironically, despite its slowing sales and its vehicle innovation stagnating in the U.S. until recent years, Lincoln's brand image is highly regarded in China.

"It's different in the U.S. than in China," Kumar Galhotra, head of Lincoln, said of the brand's standing in a January interview with Bloomberg. "In China, our heritage plays very strong. Our favorable opinion in China is actually ahead of Lexus and on the factor of prestige, we're actually ahead of Audi."

Because of that, and the fact that China's luxury auto market is expected to overtake the U.S. to become the largest in the world sooner rather than later, there are some serious changes being considered with Ford's luxury lineup.

To import, or not to import

Naturally, producing vehicles in a multitude of different markets across the globe comes with challenges distinct to each market. In China, for instance, the automakers have a decision to make when it comes to production versus import. On one hand, if you produce vehicles in China, you can avoid a 25% tariff that comes with importing vehicles. But that comes with a catch: To produce vehicles in China, you must partner up with a Chinese company to form a joint venture.

Ford has a joint venture, CAF, to produce non-premium passenger vehicles, in which it has a 50% equity investment. It also has two similar joint ventures, JMC and CFME, which produce trucks and commercial vehicles, and engines, respectively. Ford has a 32% equity investment in JMC and a 25% equity investment in CFME.

Meanwhile, as Ford is gearing up to accelerate sales of its luxury Lincoln lineup in China, it's currently paying the import tariff but reaping 100% of the rewards for those vehicles. That's working so far, but Lincoln's story in China is still in the early stages. If it's going to turn into a major player, the automaker will need to produce vehicles in the region.

Here is a good sign for investors hoping for Lincoln's success to take off in China: It appears Ford is already discussing with its Changan Automobile Group partner about producing Lincolns in Chongqing as soon as 2018.

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post #14 of 15 (permalink) Old 06-12-2016, 03:40 PM Thread Starter
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Re: Lincoln Building Models in China?

^...25% tax that's passed on to the consumer, or give up 50% of the entire business?

My thought is that with the higher margins on luxury vehicles, and Lincoln's higher 'status', Lincoln can do well with ongoing imports. I also think a large part of that 'status' is that Lincoln is made in America. Like Mustang. Producing American Luxury in China, by the Chinese would take away much of the status.

Also, Lincoln pricing in China is currently on par with their locally partnered import competition. The difference is that Lincoln maintains all profits, along with intellectual property, while the imports have a 50% stake and must share intellectual property as well. Corporate secrets being sold/stolen has to be a nightmare in China already.

With continued imports, Lincoln would also increase production in the US and Canada.

Lincoln can then promote the American Made, American Luxury of Lincoln.
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post #15 of 15 (permalink) Old 06-14-2016, 05:13 AM
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Re: Lincoln Building Models in China?

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Originally Posted by Bloggin View Post
^...25% tax that's passed on to the consumer, or give up 50% of the entire business?

My thought is that with the higher margins on luxury vehicles, and Lincoln's higher 'status', Lincoln can do well with ongoing imports. I also think a large part of that 'status' is that Lincoln is made in America. Like Mustang. Producing American Luxury in China, by the Chinese would take away much of the status.

Also, Lincoln pricing in China is currently on par with their locally partnered import competition. The difference is that Lincoln maintains all profits, along with intellectual property, while the imports have a 50% stake and must share intellectual property as well. Corporate secrets being sold/stolen has to be a nightmare in China already.

With continued imports, Lincoln would also increase production in the US and Canada.

Lincoln can then promote the American Made, American Luxury of Lincoln.
The problem being that the 25% tariff effectively prices Lincoln out of reach of most intended buyers.

It's really a Dutch auction but I'm thinking that if the sales numbers are there to be had, why not add incremental products to existing lines and reap the benefits. MKC, MKZ and Continental are all possible.
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