DETROIT — Underscoring Southern California's growing importance as an automotive trendsetter, Ford Motor Co. on Thursday announced plans to move its Lincoln Mercury headquarters to Irvine.
The surprise move is a bold attempt by Ford to reinvigorate the moribund Lincoln and Mercury vehicle lines by immersing key sales, marketing and product development executives in California's creative culture.
Although important symbolically for Southern California, which has emerged as a leading center of automotive design and marketing, the new headquarters will have no more than 150 employees.
Ford becomes the first Big Three auto maker to move a vehicle division headquarters outside of Michigan. In doing so, it is making an important statement that the best ideas don't always come from Detroit.
"This is radical and unprecedented for a domestic auto maker," said Wes Brown, an analyst for Nextrend, an auto consulting firm in Thousand Oaks.
Jim O'Connor, general manager of Lincoln Mercury, said the move will give the division more independence from Dearborn-based Ford to develop new designs and products that will appeal to younger import buyers.
"We want a whole new mind set," he said. "We are challenging prior assumptions and thinking differently."
Lincoln Mercury's headquarters is in downtown Detroit. No workers will be laid off there, but they will be given the option of relocating or being reassigned in Michigan.
Ford already has a design studio in Valencia and has assigned several designers to work on development of new Lincoln and Mercury vehicles for global markets, officials said. Lincoln and Mercury manufacturing operations are not affected by the move.
Lincoln Mercury joins a host of Japanese and Korean auto makers who have made Southern California home for their U.S. sales operations. Nearly every major auto maker has a design center in the Southland.
A 1996 study by UCLA estimated that the auto industry supports nearly 100,000 non-dealership jobs in the state. California accounts every year for approximately 10% of the nation's new car and truck sales--about 150,000 vehicles--and has long been regarded as an important arbiter of auto design, styling and other trends.
Major auto makers spend millions of dollars every year in California on marketing research in an effort to fathom what fickle customers fancy in new vehicles.
"We chose California because it is a place where so many automotive trends are born," said James Rogers, Lincoln Mercury marketing manager. "We felt that moving here would give us a window on what is new and fresh in the automotive world."
Japanese auto makers have often tuned into customers' wishes better than GM, Ford and Chrysler, allowing them to capture about half the market in California. Nowhere is that more apparent than in the luxury car market, where the Japanese and Europeans made huge inroads throughout the 1990s.
Dealers said that Ford had gotten complacent about Lincoln Mercury, allowing the designs to get stale. The move to California signals to them a commitment by Ford to stick with the brands.
"This is very positive," said Paul James, president of Tustin Lincoln Mercury. "This is putting a stake in the ground saying: 'We are here and here to stay.' "
In 1990, the Big Three held 54% of the U.S. luxury car market, according to Jacobs & Associates, a Rutherford, N.J., consulting firm. Today, they hold less than 35%.
The biggest losers have been Cadillac and Lincoln, once considered the epitome of high taste among U.S. car buyers. But last year Cadillac accounted for just 14% of the luxury market and Lincoln 11%.
In the last two years, both GM and Ford announced major programs to restore the lost luster of their luxury lines. They have introduced new products designed to appeal to younger buyers but have met with limited success.
Lincoln Mercury sales were up 2.6% in 1997 in a flat market. But car sales were down 4% and truck sales up 38%, thanks to hot sales of the new Lincoln Navigator sport utility vehicle.
Lincoln and Mercury are both on the wrong side of the demographic curve, with their owner base largely in their 50s and 60s. To survive, the car lines must attract more baby boomers, who now are wedded to foreign brands.
Lincoln has introduced new products like the Navigator, the first truck to carry the Lincoln badge. It also has freshened its mainstay Town Car and Continental in an effort to keep loyal owners while attracting new ones. Later this year, it plans to introduce a new entry-level luxury sedan priced between $30,000 and $40,000.
Mercury also is trying to differentiate itself more from the Ford division. Most of its products now are copies of Ford models. The Sable is a Taurus knockoff; the Tracer a copy of the Escort. But this spring Mercury is bringing back its sporty Cougar, which has no counterpart at Ford and is aimed at a 25-39-year-old clientele.