The new head of Lincoln talks SUVs, China, electrification, and more
Most people don’t know Joy Falotico who spent 29 years at Ford Credit, quietly climbing the ranks to chairman and CEO. But in a management shakeup at Ford, effective March 1 she found herself in the spotlight with two new big jobs—Ford chief marketing officer and president of Lincoln Motor Company—while remaining chairman of the board at Ford Credit. Falotico was still quite new to her duties when Motor Trend sat down with her at the New York auto show, where she unveiled the Lincoln Aviator SUV concept.
Motor Trend: You have many new duties. How will you juggle it all?
Joy Falotico: So I am the President of Lincoln, I’m the CMO [Chief Marketing Officer] for Ford Motor Company, and I still am chairman of the board at Ford Credit. I’m super excited to be joining the Lincoln team at this time and also working with Ford as a CMO. Ford is such an iconic brand, so they’re both two really great opportunities. And you know, being the CEO of Ford Credit, I’ve learned to juggle a few things, so now I’m juggling a couple more.
MT: You also have the job of chief brand officer with the departure of Musa Tariq. Will you replace him?
JF: The brand job reports to me, so I’m taking over. When he left, his team now is just reporting directly to our other team. So I’ll take over for that.
MT: Even more to juggle.
JF: Yes, absolutely. It’s a mouthful of titles. And a lot of responsibility.
MT: Does any of it go away? Perhaps the Ford Credit duties?
JF: I’m sure over time that’ll go away. It’s probably more of a transitional role, and obviously being there for 29 years, it’s something that I can pick up and do quite quickly. We have a great team at Ford Credit. So I’m just providing insights and support and leadership through the transitioning of the new CEO David McClelland.
MT: What are your priorities with Lincoln?
JF: The first priority is to really continue to build on the momentum of the transformation. So [former Lincoln CEO] Kumar [Galhotra] has really brought the vision to life with some great new products and pairing that with client ownership experiences. My priority is to continue to build on that product lineup. We announced that we are going to have two new utilities. This is just one of them [Lincoln Aviator], so we have another one to come. And we have four new vehicles around the corner. So getting those vehicles in the pipeline and getting them to market is clearly a priority.
MT: They will be a combination of new nameplates and next-generation models?
JF: Yeah. It’s safe to assume that. The other part is around the ownership experience and in continuing to incubate those new experiences and learn what is working and makes sense and then launching and expanding it globally. Just like we do with pick-up and delivery service and click-to-purchase. And right now we have the luxury subscription in pilot mode, and we got a few more things in the pipeline that we are working on.
MT: When does the luxury subscription go from pilot mode to real mode?
JF: Right now we’re piloting in San Francisco and West L.A. We just added preowned 2017 model years. So it’ll depend on how much volume we see out of that, and we’ll talk about the opportunity to scale that. So we still have more learning to do and some more planning before we consider expansion, but we are working with our dealers on this. First we have to fine-tune that business model. We’re really cocreating it with customers, and we’re taking their insights and tweaking the product and looking to see the viability of it and how does it scale.
MT: Is that something that could happen this calendar year, or do you think it would take longer than that?
JF: I think it would take longer than a calendar year to scale it nationally, but I think we’ll get a lot of good insight through the end of the year. We’ll know a lot by the end of the year, and then we’ll look at what it takes to bring it to scale and the business model around it. We’re encouraged by the fact that we see consumers that are new coming to the brand, so that’s positive for us.
MT: Navigator is helping with that.
JF: Definitely! So we want to continue to build on that. We are so thrilled with the momentum on that, and you know sales were up 60 percent in February. We want to continue to build on that.
MT: How well do people remember the Aviator name, and how much do you have to educate and promote it?
JF: We did a lot of research on this before we brought back that name, and we were so pleased to find that there is a lot of brand equity in that Aviator name. So we’ll certainly want to communicate that it’s back, and we’ll want to tie it to the beautiful aeronautical-inspired design that you see on the Aviator. But we are very pleased that it is very well known and has a lot of equity in that name. I even heard from a dealer out here that he has customers that are still holding on to their 2004 Aviators because they still loved it.
MT: It was only offered for a few model years.
JF: Yes, it was 2003 through 2006. Small window. But it was a car that was popular, and the name has a lot of equity. So we’ll certainly be promoting it, but we’re glad people already know what we are talking about.
MT: The name almost has more equity than the vehicle itself.
JF: With this new vehicle, I think we’ll change that.
MT: This is a different vehicle from the original body-on-frame Aviator.
JF: This is a new [rear-drive] four-wheel-drive architecture, and you can just tell by the stance of the vehicle and the proportions what they can do with the design. And with all that’s changed over the years with technology, this is a far superior vehicle.
MT: The new platform is important to Lincoln because it can go rear-drive, all-wheel drive, and even front-drive.
JF: You can certainly do different things with this platform, and when we talk about the four new vehicles, you can imagine that we will be looking at opportunities to leverage it.
MT: Except Navigator, does virtually everything else end up on this platform?
JF: I wouldn’t say that necessarily. We certainly still have the MKC that’s very important in a growing segment.
MT: The MKC doesn’t migrate to this platform?
JF: I don’t have anything to say about that right now.
MT: Is this scalable enough to go that small?
JF: We don’t have anything to say on that right now. Of course, in ’17, we had our all-new Continental and our all-new MKZ, as well, and they’re different platforms.
MT: Continental will be the last vehicle to be redone and migrate to the new platform?
JF: But it was the first expression of the full design.
MT: Design-wise, yes. But engineering-wise it was still on an old platform.
JF: We are looking at other things that we can do with Continental, and we’ll have more to say about that later.
MT: At the 2017 L.A. Auto Show we were told a new name for the MKC was coming soon. When will that happen?
JF: I can tell you it’s not going to be this year. But we are refreshing the MKC this year.
MT: The new name doesn’t come with the refresh?
JF: The new name does not come with the refresh. The MKC is coming in May and June, and to your point the new name doesn’t come with it.
MT: Will you change MKZ to Zephyr?
JF: We will change MKZ to a name, but the timing is still open.
MT: The other area important to Ford, including Lincoln, is electrification.
JF: Absolutely. Electrification is important because there’s new technology around it, and all luxury buyers want the latest technology. And the way we’re approaching it, with a plug-in hybrid or hybrid, you don’t have to worry about range anxiety. Luxury customers don’t want to deal with that. But at the same time they might want to do the right thing for the environment, and they might want a hedge on increasing gas prices. So it provides all of that for luxury buyers. The other main, real driver around electrification for us is China with the regulatory requirements. So we’ll be looking to electrify the lineup globally.
MT: Will Lincoln set itself apart from Ford by offering electrified versions across the lineup?
JF: Yes, it will be. It’s across the lineup, and it’s all about the new technology. The other piece of it is it fits right into our brand DNA. We’re calling it a “quiet flight” because with the electrified powertrain, that’s how quiet it is. You don’t even hear the car, so it fits right into what we’re doing with the brand and the DNA so that you know you’re in a Lincoln.
MT: Will it vary by model whether it is a hybrid, plug-in hybrid, or full EV?
JF: At this time we’re not making any announcements on that, but we’re starting with the plug-in hybrid while technology evolves on the BEVs.
MT: There will be a pure Lincoln EV at some point?
JF: Anything’s possible.
MT: China’s picking up, and you are increasing your dealers there?
JF: This is our third year with Lincoln in China, and we’ve had growth in our volume every year. Continental sales were up 69 percent in February, year over year, after launching the car last year. You can have a chauffeur driving you over there, so it’s a very important vehicle.
MT: Aviator will also be sold in China?
JF: It will, and Aviator really has a unique use case in China because of the electrification and also the fact that you have multigenerational families purchasing vehicles, and they need that third row. The parents or the in-laws have stature equal to the owner of the vehicle or the driver, so they need that luxurious back seat, as well, and they need that headroom. It’s so important. All of that design, those cues, and those luxury touches, were informed by the Chinese customer. This vehicle really works for China and the U.S. equally.
MT: Is the Aviator a ’19 or ’20 model year?
JF: We have not announced the model year yet, but it will be coming out next year.
MT: Are you still deciding on a model year, or have you decided but are not saying?
JF: We know.
MT: It will be built at the Chicago assembly plant?
JF: We haven’t announced that either, actually. We’ll have more to say about that later.
MT: You have not released specifics about engines and electric range but what do you think the customer expects out of a plug-in? Do you only need 30 miles (48 km) of pure EV range, or is there a higher expectation?
JF: We’re not confirming anything, but where technologies are advancing, I don’t think a 30-mile (48-km) range would be acceptable to the customer. Especially in a vehicle for a family that’s traveling. So I think they should expect more than that. We’ll look to be competitive. There will also be a performance element to it.
MT: Does Aviator have the potential to be your best-seller in the U.S.?
JF: If you look at the fact that there were 585,000 vehicles sold in that segment last year and the fact that it is the largest segment in the utility space and it is growing, it certainly does. The only thing that I would temper that with is the fact that the Nautilus [formerly MKX] is in the same segment. And one’s a three-row and one’s a two-row, so we’ll be selling both of those vehicles in that same segment. But we do expect it to have some volume behind it.
MT: Are people going to be confused by having Nautilus and Aviator in the same segment, or do they reach different customers?
JF: It’s our job to make sure that consumers are informed of the differences: a two-row versus a three-row and the fact that the Aviator is newer because it is coming out next year versus [Nautilus] this spring. Aviator has some different technology, such as the phone as key. And it’s got the suspension preview, and it’s got reverse brake backup assist, so there’s some new technologies on the Aviator that are not on the Nautilus just because of the difference in the production cycle.
MT: Aviator is the first vehicle on the new rear-drive platform, whereas Nautilus is a refresh on the existing MKX platform.
JF: That’s correct. So the stance is different, and there is more room in the back of the Aviator.
MT: When Lincoln first introduced hybrids with the MKZ, the gas engine and hybrid versions were the same price. Any plans to offer a single price for the Aviator given that plug-in technology is more expensive?
JF: We’re not talking about the pricing strategy yet for Aviator, but to your point about what we did on the MKZ hybrid, the customer acceptance and knowledge around hybrids wasn’t as great as it is today. It was a different time, so it made more sense to have exact price parity even though the cost of ownership is going to be cheaper with that hybrid. So it should command a premium, but back then there wasn’t enough customer acceptance or knowledge, and we probably didn’t communicate enough on the savings on cost of ownership. Today we are looking at electrification for performance and other benefits for the consumer.
MT: It was more of an mpg thing before. But is there widespread awareness now?
JF: Ford is actually the No. 2 seller of hybrids in the United States behind Toyota. And we sell a significant volume. I do think we can do a better job of informing customers of the benefits of the total cost of ownership so they can factor that into the equation when they’re looking at their budgets and what they can afford in a vehicle.
MT: Is a plug-in considered a plus or a minus in today’s consumer mind?
JF: I think the issue is range anxiety, and that’s why we’re pairing them with a traditional engine so you completely remove that. And the infrastructure has to grow. It was almost nonexistent when we introduced the MKZ. It has to continue to grow, and we think it will.
MT: Will you roll out the Aviator’s phone-as-key feature across the Lincoln lineup in the future?
JF: We haven’t made that call yet, but we’ve invested in that electrical architecture, and if we see that our consumers love it, that’s something we’ll certainly look at.