It's much easier to build cars close to where customers are buying them. Lincoln, experiencing a surge of demand in China, is considering building cars right there in The Middle Kingdom.
Lincoln, Ford's luxury brand, is currently investigating the feasibility of moving some of its production to within China's borders, Reuters reports. The company plans to have 65 Lincoln dealerships in China by the end of this year, up from previous estimates of 60. The end of 2017 will see that number expand to 80.
When an automaker imports cars into China, it has to pay tariffs, which means its cars are more expensive than if they were built in China. However, any foreign automaker manufacturing in China must partner up with one of the country's domestic automakers in accordance with Chinese law. Volkswagen, Mercedes-Benz and rival General Motors all have joint ventures established.
Lincoln nearly tripled its Chinese sales in Q3 2016, selling 8,546 vehicles. That's well behind Cadillac's sales, which amounted to 12,500 units in September alone. Lincoln is hoping that the all-new, which heads to China in Q4, could give it another sales bump.
Nevertheless, barring the logistics of establishing a joint venture, it would be wise for Lincoln to set up a manufacturing effort in China. Its demand for luxury vehicles isn't as explosive as before, but it's still a major player in the global luxury market, and Lincoln can't afford to miss out.