Top Row, Lincoln Black Label Navigator Bottom Row Cadillac Escapade
By Phoebe Wall Howard, Detroit Free Press
Detroit knows big SUVs. It knows how to make ’em. It knows how to sell ’em.
Automakers based in Detroit or Dearborn have built nearly one of every three large luxury SUVs sold this year.
Still, orders for the Lincoln Navigator and Cadillac Escalade continue to roll in.
Large luxury SUV sales have grown 12.5% through March compared with the same time last year. While a relatively small segment, the vehicles deliver the biggest profit margin.
“They’re money machines,” said John McElroy, a longtime industry observer and TV host of “Autoline.”
In fact, the segment is growing more than six times faster than light vehicles.
Lincoln is unable to fill the orders as fast as they come in, so the company doesn’t have a clear picture of the Navigator’s full potential at this point.
“These two truck-based SUVs are really at the heart of what Detroit has done well,” said Brian Moody, executive editor of Autotrader. “Big trucks, lots of power. Five years ago, I thought Lincoln wasn’t ever going to get it. I feel like someone finally said, ‘We’ve got to stop chasing other people and be who we are.’ In life, isn’t that always the best advice?”
Prices are setting records for Ford Motor Co.
The average transaction price for the 2018 Lincoln Navigator topped $80,000 per vehicle in March, showing strong growth, noted Erich Merkle, U.S. sales analyst for Ford.
Plus, Ford and General Motors make an even higher return on their investment because the companies run massive production of full-size trucks that share a platform and mechanical components with the SUVs.
“The luxury SUV was originally a product of Detroit. Now they’re standing their ground and digging in their heels,” said Dave Sullivan, a product analysis manager at AutoPacific Inc. “It’s just not something any Asian or European brand could pull off. They just can’t get away with some of the more brash, in-your-face, larger-than-life styling that the Detroit brands do.”
During the first three months of 2018, shoppers purchased 40,521 large luxury SUVs, up from 36,008 a year earlier. Escalade saw 8% growth while Navigator jumped 63%. With the addition of the Range Rover Velar, Land Rover sales jumped 39% in the large luxury SUV segment. The Infiniti QX80 is the only other model experiencing an increase, at 5%.
At the same time, sales have fallen for the Mercedes GLS, Lexus LX, Range Rover and Range Rover Sport.
The Detroit 2 appear to be getting stronger.
“Since the Ford F-150, Chevrolet Silverado and GMC Sierra are such high-volume products and economies of scale are easily achieved, this gives the American automakers a significant advantage over the competition when it comes to research and development,” said Jessica Caldwell, executive director of data strategy at Edmunds.
With “full credit to Lincoln,” the Navigator launch has focused attention on the full size luxury SUV segment and Escalade has benefited, said Jim Cain, senior manager of sales reporting at General Motors. Anytime there’s growth in luxury, it reflects overall consumer confidence in the economy, he said.
Meanwhile, the new Navigator has redefined Lincoln.
“The redesigned Lincoln Navigator is the hot new vehicle for shoppers who like their SUVs large, luxurious and eye-catching, which is a problem for the long-reigning champion in that category, the Cadillac Escalade,” Caldwell said.
“While Cadillac is working hard to shift their development from cars to SUVs, the new Lincoln SUVs have gained an edge quickly and pose a much larger threat to the burgeoning Cadillac utility lineup than anticipated.”
In March 2017, only 8% of Escalade shoppers also looked at Navigator. Last month, 22% of Escalade customers also looked at Navigator, Edmunds data shows.
Meanwhile, the Navigator shopper statistics remained constant.
In March 2017, 14% of Navigator shoppers also looked at Escalade. Last month, 15% of Navigator customers also looked at Escalade.
Now Cadillac is offering $10,000 discounts to Escalade owners through May 2018 to “keep them in the family,” Cain said. The sum is considered notable and comes in the last year of production for the current model of Escalade.
General Motors is watching Navigator carefully. One analyst compared the intense competition to the legendary battle between the Ford Mustang and Chevy Camaro.
Adam Jonas, head of global auto research for Morgan Stanley, estimated the Escalade creates about $1 billion in profit for GM annually.
No question, Navigator is wooing customers from competitors.
Kirk English, a retired supermarket store director from Reno, Nev., is waiting patiently for delivery of the $81,205 black velvet Navigator Reserve he ordered in mid-January.
“The Navigator was built Feb. 5. I have contacted Lincoln to get my ‘toy’ out of Kentucky and into California,” English said. “I had to drive to California to buy my Navigator because there is no dealership in Reno. Hopefully this will be resolved soon.”
Don Sadler, a communications executive from Miami, reports the delivery delay is over for his $92,495 Navigator Reserve L. Celebration may include a road trip to Key West, “and a vodka rocks is definitely on the agenda.”
Lincoln spokeswoman Angie Kozleski, who acknowledged delivery delays due to a national rail car shortage, said, “We’re working to get our vehicles into the hands of customers and dealers as fast as possible.”
Navigator is built in Louisville, Ky., while Escalade is manufactured in Arlington, Texas.
Fiat Chrysler is developing a large luxury SUV expected to be called the Jeep Grand Wagoneer in an attempt to capture a piece of the action.