Ford Says It Will Shrink Lincoln Dealer Network

DEARBORN, Mich. — Ford Motor Co. plans to drop 175 dealers from its network of Lincoln retailers over the next two years in a bid to improve profitability for the remaining franchisees and strengthen the brand's competitive position in the luxury-car business, reported The Wall Street Journal.

The reductions will be aimed at major metropolitan markets where Lincoln dealers often compete as much with each other as with dealers selling other upscale makes. The move is part of a broader strategy by the auto maker to revive Lincoln, which has seen its sales decline steadily over the last decade.

Mark Fields, Ford's president of the Americas, told reporters Tuesday that the company would start culling Lincoln dealers by offering voluntary buyouts in meetings with dealers over the next 100 days.

Roughly 1,200 dealers sell Lincoln vehicles across the country, three to four times as many as the number selling rival brands such as Lexus and BMW. Mr. Fields declined to say how many dealers would be targeted for closure, adding that they would be drawn from Lincoln's roughly 500 dealers in 130 major metropolitan regions as well as its nearly 700 dealers in more rural areas.

Culling dealers, a move also made by General Motors Co. and Chrysler Group LLC, is aimed at allowing the remaining ones to be more profitable and invest in their properties.

At a meeting with dealers at Ford headquarters here, Ford executives said they hope to reach a mutual decision to cut 175 dealerships in the 130 metropolitan markets by the fall of 2011, according to a person familiar with the matter. The dealers in those markets account for about 76 percent of Lincoln sales.

"We asking dealers to think with their head and their heart," Fields told reporters.

Dealers who remain will be expected to spruce up their showrooms—one Ford executive estimated that only 25 percent of Lincoln dealers have sufficiently renovated dealerships.

Jim Farley, Ford's global vice president for sales and marketing, said that new dealership amenities could include loaner cars and car washes, considered staples of the luxury service-and-repair experience.

At greatest risk may be standalone Lincoln Mercury dealers who don't sell Ford cars and trucks because the company is shutting down Mercury production this year.

On Monday, Ford Chief Executive Alan Mulally told the gathering Lincoln dealers that he intended to take the same focus to turning around the upscale brand as he did in reviving the company's core Ford division, a person familiar with the matter said.

The company plans to launch seven new or redesigned Lincoln models over the next four years.