Ford readies to revamp Lincoln yet again to save brand

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Updated 07 December 2012
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Ford readies to revamp Lincoln yet again to save brand

DETROIT: After failing numerous times to revamp its lagging Lincoln brand, Ford Motor Co. is preparing to try yet again with a new compact crossover aimed at younger drivers looking for a finely crafted but low-key luxury car.
The Lincoln MKC, will be previewed as a concept at the Detroit auto show in January and should reach US dealers in early 2014, according to people familiar with the matter.
The MKC is the second of four core models that Lincoln will pitch to an growing market insiders call “discreet luxury,” epitomized by fashion labels such as Paul Smith and Bottega Veneta that avoid overt symbols of wealth.
But auto experts say Ford will find it difficult to overhaul and reposition an ageing brand broadly viewed as musty. It also faces competition in the luxury compact market from BMW AG’s, Honda Motor Co’s Acura RDX and others.
“What they always forget about is that brands carry baggage,” said John Wolkonowicz, an independent auto analyst and historian. “You can’t just push a magic button and the baggage is gone, and suddenly Lincoln can be anything I want it to be.”
Ford says this overhaul will be different because it has pruned its brands since 2006. Selling Volvo, Jaguar/Land Rover and Aston Martin leaves ample resources to focus on Lincoln and distinguish it from Ford, company executives have said.
Lincoln, which Ford purchased 90 years ago, was the top-selling US luxury car in 1998, but has since tumbled into eighth place. Its sales have declined from a peak of more than
231,000 in 1990 to just under 75,000 in 2012. Daimler AG’s Mercedes-Benz, the top-selling luxury brand, has sold about three times more vehicles than Lincoln this year.
The average Lincoln buyer is 65 years old. Ford wants to lower that to 57 and raise the target average income by more than 50 percent to nearly $ 160,000 a year.
The redesigned 2013 MKZ midsize sedan, which arrives at dealers later this month, is the first of the new Lincoln lineup. Before it left the studio, the MKZ was reworked by
40-year-old chief designer Max Wolff, who was lured to Lincoln from Cadillac in January 2011.
The MKC crossover will be the first Lincoln model completely designed by Wolff, whose projects at rival General Motors Co. included the popular 2013 Cadillac XTS.
Under Wolff, designers are crafting a new look aimed at younger consumers “who enjoy fine things, but are not overt ‘badge-wearers,’” said a Ford executive familiar with Lincoln’s evolving game plan.
Wolff is also overseeing the styling of two other Lincolns — the redesigned 2015 MKX midsize crossover, due in the autumn of 2014, and the redesigned 2016 MKS full size sedan, expected in the spring of 2015, according to two industry analysts familiar with the plans.
“What’s good is Lincoln’s push to differentiate itself from Ford,” said Sam Stevens, a dealer for Stevens Auto Group in Milford, Connecticut. “Why would you buy (Lincoln) if you can buy the same thing on the floor for less?”
Ford declined to confirm its $ 1 billion investment in the Lincoln brand or its planned compact crossover.
The No. 2 US automaker renamed the brand the Lincoln Motor Co. recently and announced a Super Bowl spot to show off its new vision.
Lincoln is also considering — but has not approved for production — several products in addition to the four core models, said the analysts familiar with Ford’s line-up.
For 2016, a luxury rear-wheel-drive coupe could share its underpinnings with the Ford Mustang and could be assembled at Ford’s Flat Rock plant in Michigan.

Ford says its new Lincoln lineup could draw about a quarter of the US premium car market now up for grabs as the economy recovers.
“They are looking for something new,” said Jim Farley, head of global marketing and the Lincoln brand, in an interview with Reuters Television. “They really don’t have a brand
out there that really talks to them individually.”
But Wolkonowicz and other experts said the Lincoln lineup still does not have a “design signature” such as the sharp, more aggressive look Wolff helped refine at Cadillac.
“Lincoln’s image is lagging behind, compared to its actual product line,” said TrueCar.com analyst Jesse Toprak. “The product is the best they’ve had, but people make decisions based on the image of the brand.”
Although they are being extensively redesigned, the 2015 MKX and the 2015 MKS will share the same midsize platform with the 2013 MKZ and its sibling, the 2013 Ford Fusion, according to the analysts familiar with Lincoln’s plans.
The new MKC will share its basic underpinnings with the Ford Escape, which is built on a version of the company’s global compact platform.
In addition to those four core products, Lincoln plans to introduce a mildly revised version of its big Navigator utility vehicle in the autumn of 2013, said a company executive familiar with the brand’s launch schedule.
The 2014 Navigator is expected to use Ford’s powerful EcoBoost V6 engine instead of the current 5.4-liter V8, but will retain its truck-based body-on-frame architecture and ample size. Another carryover model is the MKT full size crossover, which received a modest update earlier this year, but is not slated for any major changes over the next three years, according to the analysts.
Lincoln is considering a near-luxury compact sedan which, like the MKC crossover, would be based on the global compact platform, for 2016 or later.
If approved, the small sedan likely would be sold in the US and China, where the brand is being launched in 2014, said a company executive familiar with Lincoln’s plans.


Gulf companies challenged by debt and rising interest rates

Updated 22 April 2018
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Gulf companies challenged by debt and rising interest rates

  • Debt restructurings on the rise, but below crisis levels
  • Central Bank of the UAE has raised interest rates four times since last March

There has been an uptick in recent months in heavily-borrowed companies in the Gulf seeking to restructure their debts with lenders. Although the pressure on companies is not comparable to levels witnessed in the region following the 2008 global financial crisis, rising interest rates will eventually begin to have a greater impact, say experts.
Speaking exclusively to Arab news, Matthew Wilde, a partner at consultancy PwC in Dubai, said: “We do expect that interest rate increases will gradually start to impact companies over the next 12 months, but to date the impact of hedging and the runoff of older fixed rate deals has meant the impact is fairly muted so far.”
The Central Bank of the UAE has raised interest rates four times since the start of last year, in line with action taken by the US Federal Reserve. The Fed has signalled that it will raise interest rates at least twice more before the end of the year.
Wilde added that there had been a little more pressure on company balance sheets of late, although “this shouldn’t be overplayed”.
Nevertheless, just last week, Stanford Marine Group — majority owned by a fund managed by private equity firm Abraaj Group — was reported by the New York Times to be in talks with banks to restructure a $325 million Islamic loan. The newspaper cited a Reuters report that relied on “banking sources”.
The Dubai-based oil and gas services firm, which has struggled as a result of the downturn in the hydrocarbons market since 2014, has reportedly asked banks to consider extending the maturity of its debt and restructuring repayments, after it breached certain loan covenants.
A fund managed by Abraaj owns 51 percent of Stanford Marine, with the remaining stake held by Abu Dhabi-based investment firm Waha Capital. Abraaj declined to comment.

 

Dubai-based theme parks operator DXB Entertainments struck a deal last month with creditors to restructure 4.2 billion dirhams ($1.1 billion) of borrowings, with visitor numbers to attractions such as Legoland Dubai and Bollywood Parks Dubai struggling to meet visitor targets.
Earlier this month, Reuters reported that Sharjah-based Gulf General Investment Company was in talks with banks to restructure loan and credit facilities after defaulting on a payment linked to 2.1 billion dirhams of debt at the end of last year.
Dubai International Capital, according to a Bloomberg report from December, has restructured its debt for the second time, reaching an agreement with banks to roll over a loan of about $1 billion. At the height of the emirate’s boom years, DIC amassed assets worth about $13 billion, including the owner of London’s Madame Tussauds waxworks museum, as well as stakes in Sony and Daimler. The firm was later forced to sell most of these assets and reschedule $2.5 billion of debt after the global financial crisis.
Wilde told Arab News: “We have seen an increasing number of listed companies restructuring or planning to restructure their capital recently — including using tools such as capital reductions and raising capital by using quasi equity instruments such as perpetual bonds.”
This has happened across the region and PwC expected this to accelerate a little as companies “respond to legislative pressures and become more familiar with the options available to fix their problems,” said Wilde.
He added that the trend was being driven by oil prices remaining below historical highs, soft economic conditions, and continued caution in the UAE’s banking sector.
On the debt restructuring side, Wilde said there had been a “reasonably steady flow of cases of debts being restructured”.
However, the volume of firms seeking to renegotiate debt remains small compared to the level of restructurings witnessed in the aftermath of Dubai’s debt crisis.
Several big name firms in the emirate were caught out by the onset of the global financial crisis, which saw the emirate’s booming economy and real estate market go into reverse.
State-owned conglomerate Dubai World, whose companies included real-estate firm Nakheel and ports operator DP World, stunned global markets in November 2009 when it asked creditors for a six-month standstill on its obligations. Dubai World restructured around $25 billion of debt in 2011, followed by a $15 billion restructuring deal in 2015.
“We would not expect it to become (comparable to 2008-9) so barring some form of sharp external impetus such as global political instability or a protectionist trade war,” said Wilde.
Nor did he see the introduction of VAT as particularly driving this trend, but rather as just one more factor impacting some already strained sectors (e.g. some sub sectors of retail) “which were already pressured by other macro factors.”

FACTOID

Four

The number of interest rate rises in the UAE since March 2017.