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California Dreamin'

Just a few years after a brave experiment  to invigorate the ailing Lincoln and  Mercury brands with a dose of the foreign  brand mania of California, most of the executives  are returning to Dearborn. The only obvious  beneficiaries of the cross-country round  trip are the relocation companies who handled  the moves. Neither Lincoln nor Mercury  have seen any improvement in their absolute  or relative performance, especially in sedans,  which are the most important near luxury  and luxury models. 

 The idea of consolidating all of Ford’s  domestic and foreign premium brands into  one very costly new office building in Irvine,  Calif., is just another failed initiative that  missed the point entirely. Moving Jaguar,  Volvo and Land Rover into the same building  has also produced little benefit to any of the  brands. At the same time, the relocation separated  the European brand executives by at  least eight time zones from engineering and  production facilities. 

No one denies that California remains the  hotbed of vehicle trends, where foreign  brands account for more than 50 percent of  the market. Remaining in tune with the consumers  in this car-dependent state has been  the hallmark for success among Asian and  German car companies. The arrogance of  the Big Three toward the California marketplace  in the ‘70s and ‘80s made it easy for  foreign conquest on the west coast. But it  isn’t obvious that establishing headquarters  offices in California was the answer. Paying  attention to what customers want has separated  winners and losers in California and  throughout the country.  Not all Japanese carmakers are powerhouses  despite being located in California.  Mazda continues to lag behind Toyota and  Honda as do Suzuki, Mitsubishi and Isuzu. 

 BMW remains a solidly German company  with a North American headquarters in New  Jersey, yet it has successfully expanded its  customer base with two passenger sports  cars, the X5 crossover, the new high tech 7-series and now the sold-out Mini. California is  crucial to its success but it hasn’t had to  house them in Orange County to appreciate  the needs of these consumers.

 Wolfsburg, Germany, is geographically  and culturally about as far removed from  the sun-bathed beaches of southern  California as you can get. Nevertheless, VW  has staged an impressive comeback  despite having its Michigan headquarters  within shouting distance of the Big Three.  Less than a decade ago, one wondered if  VW would remain in the U.S. because its  model line-up was out of touch with the  marketplace. Once it fixed the cars, sales  rebounded.

 The relocation of Lincoln and Mercury to  California may have opened management’s  eyes to the fact that the brands had little  presence on the freeways. But the shock of  being irrelevant in the country’s largest marketplace  should have resulted in the only  thing that mattered — new and better models.  But that hasn’t happened. Lincoln has  not figured out how to produce an attractive  luxury sedan for the private market and  Mercury seems relegated to assembling  slightly modified Ford models instead of  striking its own identity.  The only thing that matters to California  consumers is the car. That’s the only thing  that matters to shoppers anywhere in the  United States. The domestic auto industry  has done enough damage to itself with  superficial nonsense such as Ford’s  California Odyssey. It’s time to stop wasting  money on things that don’t matter and spend  the money where it counts.

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Sat. June 3rd, 2023

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