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Ford may develop new models as part of Lincoln brand revival

The Lincoln MKZ mid-size sedan is seen during a news conference in New York December 3, 2012. REUTERS/Shannon Stapleton
The Lincoln MKZ mid-size sedan is seen during a news conference in New York December 3, 2012. REUTERS/Shannon Stapleton

By Deepa Seetharaman

DETROIT (Reuters) - Ford Motor Co may branch out and develop new models for Lincoln in fast-growing vehicle segments as part of the second-largest U.S. automaker's latest attempt to revive the struggling luxury brand and boost its profits.

The company did not specify which vehicle segments it was targeting. But in a presentation to investors on Thursday, Ford showed in a chart that it expects the premium small-car and crossover segments to grow sharply by 2015.

Lincoln does not currently offer a small car, but a person familiar with the brand's strategy previously told Reuters that the Lincoln brand is considering a near-luxury compact sedan for 2016 or later.

At the Detroit auto show this year, Ford showed a concept version of the Lincoln MKC compact crossover that is expected to go on sale next year.

There are vehicle markets "that we're not playing in today that we can enter that are high-volume segments and growing fast," Matt VanDyke, who is in charge of Lincoln's development and day-to-day operations, said at an investor conference.

If approved, the small sedan likely would be sold in the United States and China, the world's largest auto market. It would compete against cars like General Motors Co.'s Cadillac ATS and the Mercedes CLA.

Lincoln accounted for a little less than 4 percent of Ford's U.S. vehicle sales last year. But the luxury market is expected to grow quickly in the United States and China. Luxury brands also confer a sense of status to automakers.

Lincoln was the top-selling U.S. luxury brand during the 1990s, at one point selling more than 230,000 cars a year. But sales have since tumbled amid inadequate investment, and the company sold 82,150 vehicles in the United States in 2012, making it the eighth best-selling luxury brand. In comparison, segment leader BMW sold 281,460 vehicles.

Ford is now trying to overhaul the Lincoln brand's musty image and boost sales by developing new models, starting with the MKZ sedan. The automaker also plans to launch the upscale brand in China in the second half of 2014.

But Lincoln's overhaul got off to a shaky start this year when quality and supply issues slowed the MKZ's roll-out. Dealers had expected the sedan by the end of 2012, but inventory reached "normal" levels only this spring.

Company officials said extra checks were needed correct fit and finish problems. Some MKZs were also missing parts due to parts shortages.

Lincoln sales were down 24 percent during the first quarter. But the brand gained momentum in April and May, and during the first five months of 2013, Lincoln sales were down 10.5 percent.

(Editing by Dan Grebler)

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