Industry Trend Analysis - Lincoln's Production Plan Ups Luxury Car Market Competition - MAY 2017

BMI View : Lincoln ' s plan to start producing luxury SUVs in China by late 2019 will enable the American carmaker to reduce its logistics and shipping costs and improve its speed to market, allowing the company to compete more effectively in the luxury car market alongside offerings from BMW, Cadillac and Mercedes-Benz.

In March 2017, Ford Motor Company announced that its luxury unit Lincoln will start producing luxury sport utility vehicles (SUVs) in China by late 2019. Ford plans to use an existing assembly plant that it jointly operates with Changan Automobile Co Ltd in the city of Chongqin to produce the Lincoln vehicles. The move to produce locally is expected to complement continued imports of Lincoln vehicles from North America, according to a statement released by the automaker.

With details on production volumes unavailable and Lincoln currently looking to produce only SUVs to meet demand in the Chinese market, where it sold a total of 32,558 vehicles in 2016, we believe that future announcements on output levels will not have a meaningful enough impact to warrant an upwards revision of our outlook for car production in China. We currently forecast passenger car production to average annual growth of 6.5% over our 2019-2021 forecast period, reaching 33.2mn units by the end of 2021.

No Significant Impact From Lincoln SUV Production
China - Passenger Car Production, Units
f = BMI forecast. Source: National Sources, BMI

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