Lincoln is going through a transition period on a number of fronts.
The luxury brand is preparing its retail network for a pivot to electric vehicles, even if they won't be available for a couple years.
It's attempting to evolve its design direction, previewing that future with two concepts unveiled last year.
And it just added new leadership, as retiring President Joy Falotico gave way to Dianne Craig, formerly president of Ford Motor Co.'s international markets group.
Chris Poulos, chairman of the Lincoln National Dealer Council, believes Lincoln is headed down the right path.
Poulos, who is general manager of West Point Lincoln in Houston, said the company could be more transparent with its retail network, but noted dealers are happy with its lineup of gasoline and hybrid vehicles and look forward to the coming EVs.
Poulos, 55, spoke with Staff Reporter Michael Martinez about the brand's 2023 outlook, pivot to electric vehicles and product portfolio. Here are edited excerpts.
Q: How was 2022 for Lincoln dealers?
A: I think 2022, as far as years go, was not bad. The past couple of years have been challenging for different reasons. I can't say the supply chain issues are over, I believe there's still some of that out there. It's hard to know where your next challenge will come from. But at least to this point we've weathered the storm pretty well.
How has Lincoln's communication been regarding inventory levels and supply chain challenges?
They've been as transparent as they can be. I think some of these things come up on the fly. I dread the calls when it's someone telling us there's a delay, but they've been pretty forthright in telling us what to expect, level-setting those expectations near-term and long-term, to at least give us a way to game-plan going forward. They're doing their best to give us as much data as possible.
What's your outlook for 2023? Do you think Lincoln sales will increase?
I do believe that. I think we'll be in a significantly better inventory position. We've asked to focus on production and make sure we get our unfair share of production if at all possible. The company is supportive of trying to get us some incremental production if possible. I think it's going to be better. The challenge is not on the production side or the company side, it's more on the economic side. There's so much talk about headwinds in the economy that it does create some cause for concern. I try not to listen to it, because if I lose my focus — to maintain sales and create the revenues we need to be profitable — then everybody else loses focus as well.
How can dealers maintain the high profit levels of recent years?
With increased supply there will be some erosion of margin, but through this whole process dealers and clients have been a lot more comfortable going with the flow. If we're as transparent as we can be about the deal, it seems to be less of a confrontational atmosphere right now. There still seems to be a willingness of the client to be pretty easy-going at this point. There is opportunity for these profits to remain.
How are rising interest rates affecting sales and financing?
It does not impact the client who's buying a $100,000 vehicle. And maybe even those $70,000 or $80,000 vehicles. They'll just write me a check. But to me, the client that's impacted the most is the entry-level new-car client, someone who's buying a $25,000 or $30,000 vehicle, and the pre-owned client. If you're looking at a used car you're trying to save on that depreciation, that initial depreciation on a new car, and when you give all that up to interest rates, it takes a dent out of what your plans were. If we can't get good rates in the marketplace, we have to look to our captive to try and subvene some of these rates and offset the cost of doing business because of rates.
The Corsair was Lincoln's top- seller in 2022. What's the most important product right now for Lincoln dealers?
It varies by region. I think Corsair and Nautilus are critical for all of our success, but there are parts of the country that do better. In Texas, for instance, Aviator and Navigator are high-demand vehicles for us. We've tried to focus over the last 180 days to get better at selling Nautilus and Corsair, because that's what we've had the most of, and it's made us better as a store. All in all, I'm pleased with the four products we have in that they all have the capacity and design to be volume vehicles for anybody. I'd say we're in a pretty good place for where our lineup is right now.
What's your main message to the company and other dealers as your term as chairman begins?
If the last two years have taught us anything, it's taught us to be nimble and to be ready for any possible pitfall. It's made for a much smarter dealer body. There's always going to be disrupters in this industry. But you don't have to be the lead disrupter to win. In the end, those who have a very consistent path and stay the course, stay true to their roots, are going to win.
Manufacturing cars isn't easy; it's hard work and it takes a team of aligned people on the ground, and that's what dealers are. We can't lose sight of that. Clients need a human touch. The ones I meet are pretty social. I feel it's really important we reevaluate and remind ourselves about the importance of auto dealers and the role they have in the whole process. It takes the retailers and the manufacturers holding hands to make this thing work.
The previous dealer council chairman, Bill Dawes, wanted Lincoln to be more transparent on product plans. Have Lincoln leaders improved in that area?
I would be aligned with Bill's statement. Clearly we don't have a whole lot of information about the future at this point. We need to know more. I will say, Dianne Craig's been in the job for 60 days and I think we have a great relationship. She was very willing to talk and engage. We talk weekly about what we need and where we're going.
Lincoln debuted two concept vehicles in 2022. What, if anything, do you hope makes it into a production vehicle?
Design is everything. Those types of edgy, sporty designs are awesome. Eye appeal is so critically important in our industry. I'm hopeful that as vehicles are developed, we are reminded that they don't just have to act cool on the inside, they have to look cool on the outside. We need something still that's eye candy for the client. Even with as expensive as luxury vehicles are getting, it's still an impulse buy. It's something where someone says, "I have to have it." In the end, I want to make sure we have very elegant, stylish vehicles that have a completely new take on what luxury is all about.
Is Lincoln moving too slowly on EVs?
Looking at what's going on right now with Tesla and their challenges with sales and battery production … it's great to be on the cutting edge of new technology, but it's even better to be at the right point in time for that technology. Today, seeing where the market has gone, and I know there's still a lot of range anxiety out there, there's probably a point where that whole mindset turned a little bit where, yeah, we're going to EVs, we're going down this path, but let's not go down this path too quickly because you can outrun everything you need to support that EV. I really don't think we're there yet. There's a lot of work that needs to be done municipally to give long-term comfort to clients who buy EVs. I'd say my opinion has changed a little bit. A year ago I thought, "We're so far behind, what are we doing?" But today I think we're probably about in the right place.
What's been the reaction to the Lincoln dealer EV certification program?
It's a very polarizing point. But it should be no surprise to anybody that there's going to be some requirements. Other manufacturers are going to go down the same road. After the first announcement of the program, obviously there was some cause for concern, but I think the company's been flexible trying to work as partners with the dealer body to make sure we right-size this thing. It's kind of a ping-pong game until we find some equilibrium but I think we'll get there. It sounds treacherous for some dealers, and I get it. I don't feel they're trying to create haves and have-nots. They're just trying to ensure their retailers meet what client expectations are going to be.
Is it fair for Lincoln to ask for this level of investment, given our reporting that it doesn't plan to launch its first EV until the end of 2024?
That's where I think there needs to be some flexibility on the company's part. But look, if we all try to get charging stations all at the same time … I remember when we did our initial EV addition at my Buick-GMC store. There were six-month delays on transformers. Level 3 chargers weren't available. There were delays for the whole process. If you start the process too late, and then there's delays, you're stuck and in a bad place. I do think there's some thoughtfulness that's gone into the timing. It does seem like it's early, but I also can understand what the pitfalls would be if they don't start early.
Lincoln expects consolidation to continue, albeit slowly. Is the network at the right size?
It comes down to throughput and profitability. The company's really focused on brand-exclusive stores and enhancing their Vitrine footprint. I think a lot of the consolidation will happen naturally. We obviously want dealers who are aligned with where Lincoln wants to be as a brand. To be luxury, be brand-exclusive. That's critically important.
What are your priorities as council chairman?
Production is No. 1. Making sure we can get our share of production. We've got to continue the conversation of quality and improve where we stand on quality. Marketing is going to be the key to how we go forward. Since we're going down this EV path, we want this transition to be smooth not only for our clients, but with our dealers. That has to come with collaboration between the company and council. I think there's still some work that needs to be done there.
What's the relationship like between Lincoln and its dealers?
I think that relationship needs some massaging. We've got to be treated as a trusted partner with the manufacturer, and part of that trust is transparency on their part. As that transparency improves, then they'll gain our trust. I'm brutally honest [with company executives], and I'm sure some of what I tell them they don't want to hear. But they're not dismissive. They want to work to get better. I think they see an opportunity to really, really make a mark in our industry, specifically at Lincoln.
It's a small sample size with Dianne Craig, but early returns tell me she's going to work her tail off to make Lincoln something we'll all be very proud of. I look forward to working with her to get there.
Is Ford Motor Co.'s commitment level to the Lincoln brand where you want it to be?
It's improved. I don't think we're there yet. We need a very clear-cut vision, not just for the dealers but the company personnel as well. Everybody needs to know, what is Lincoln all about? What is our nirvana and how do we get there? They're really good at telling us what we need to do, but I'm not sure that message is as clearly conveyed to the rank-and-file within Lincoln and I think that needs to be improved upon.
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