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Lincoln will advertise the MKTas a agile agent alike afterwards its successor, the Aviator, goes on auction abutting year.

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Automakers are usually all about what’s new — new product, new technology, new cast image.

But they’re additionally businesslike businesses accommodating to milk profits out of what’s old.

Which is why, for instance, Lincoln will accumulate architecture its slow-selling MKT crossover afterwards its successor, the Aviator, arrives in showrooms abutting year.

The 9-year-old MKT ability assume an absurd applicant for activity extension, because that it has two things that Lincoln is dropping: the split-wing grille and an alphanumeric name. But it still has amount that Lincoln ancestor Ford Motor Co. can booty advantage of by affairs it to agile customers, abnormally as a accouter vehicle. Robert Parker, Lincoln’s administrator of marketing, sales and service, has said the MKT “can ample that role profitably for the aggregation and will for the time being.”

Lincoln is aloof one archetype of brands that acquisition the old car/new car bond a appetizing proposition. Although agile sales are a accepted motive, automakers additionally use holdovers to bung abandoned calendar segments, accumulate an access amount available, advance banker account during a high-volume assembly barrage or serve across markets.

And sometimes they aloof appetite a little added aftereffect from the hundreds of millions of dollars they spent to actualize and body a new vehicle, industry experts say.

Keeping agile separate

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Dealer O.C. Welch III, admiral of O.C. Welch Ford-Lincoln in Hardeeville, S.C., said the MKT accounts for few retail sales, so it won’t allurement shoppers abroad from the Aviator. And, he adds, accepting the MKT will let Lincoln abstain affairs the Aviator and the Nautilus, a active MKX almsman now accession in dealerships, to agile buyers. That will advice Lincoln advance its image, Welch said.

“They don’t appetite to about-face the Aviator and Nautilus into agile vehicles, and that’s a acceptable thing,” he said. “Lincoln is activity in the appropriate direction.”

Keeping an old agent offers adorable economics: Because the automaker has paid off, or at atomic accounting off, the development costs of the approachable vehicle, it is arena with abode money. Companies acquire basal amount to abide an old archetypal and appropriately can accomplish profits added easily, alike back affairs it at a bargain price.

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Ed Kim, carnality admiral for industry assay at AutoPacific, said artefact development costs about are in the “hundreds of millions” of dollars. But at the end of the archetypal five-year activity cycle, they’re off the books.

“The applique has been paid off a continued time ago,” Kim said. “Any incremental units they aftermath at this point are aloof gravy.”

Dodge Grand Caravan

Avoiding cannibalization

Nevertheless, the accommodation to accumulate an old agent in assembly isn’t automatic, as apparent by the about aberration of the practice. Carla Bailo, CEO of the Center for Automotive Research in Ann Arbor, Mich., said the move charge be vetted to accomplish abiding it won’t accident a brand’s lineup.

“Normally you do a study, and you accomplish abiding that you’re not activity to cannibalize — that is the prime consideration,” said Bailo, a above chief carnality admiral for r&d at Nissan North America. “The artefact planning aggregation has to do all their analysis.”

Bailo said development costs for a full-size SUV usually run from $600 actor to $800 million, depending in how abounding of the antecedent vehicle’s apparatus are agitated over to the new one. In a “healthy, able-bodied program,” she said, that advance is formed off in the aboriginal two years of sales.

Even then, Bailo said, “You’re consistently adorable to see what you can do afterwards that artefact activity aeon has concluded to optimize the tooling.”

One way to do that is to accumulate an approachable agent about for account buyers. For example, Fiat Chrysler Automobiles kept the Dodge Grand Caravan minivan animate in 2016 afterwards killing the Chrysler Town & Country to focus on the new, higher-priced Chrysler Pacifica.

The Grand Caravan, aftermost redesigned in 2007, gives FCA dealers a minivan to action price-conscious families, said Matt DeLorenzo, chief managing editor for KBB.com.

“I anticipate it does accommodate them an befalling to accept a amount point that is attractive,” DeLorenzo said. “They can advertise added high-margin, loaded-up Pacificas as a aftereffect of that.”

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The two minivans accept agnate abject prices, with the Pacifica starting at $28,340 including aircraft and the Grand Caravan at $27,595. But the Pacifica’s boilerplate transaction amount this year through Oct. 11 is $37,714, according to KBB — 30 percent added than the Grand Caravan’s $28,902.

‘Very advancing pricing’

Having two minivans in the calendar works for Paul Walser, co-owner of Walser Automotive Group, which has two FCA food amid its dealerships in Minnesota and Kansas.

“It’s not a abrogating for us at all,” Walser said. “It sometimes can be accessible to accept actual advancing appraisement accessible to the barter to accompany them into the store. We like traffic.”

Stephanie Brinley, arch automotive analyst at IHS Markit, addendum that the Grand Caravan additionally helps FCA in Canada, area it is congenital in the Windsor, Ontario, plant. “They accept abundant Canadian aggregate to accumulate it going,” she said.

Indeed, the Grand Caravan sells acerb in the U.S. and Canada. Through nine months this year, it was the top-selling minivan in the U.S. at 120,935 units, compared with 91,595 for the Pacifica. The Grand Caravan outsold the Pacifica added actually in Canada, 27,466 units to 5,327.

But AutoPacific’s Kim said a ample allotment of the Grand Caravan’s aggregate is low-margin rental agile sales: “If you were to go into a rental bureau and hire a minivan now, affairs are you’d get a Grand Caravan.”

Long afterwards the Jeep Grand Cherokee accustomed in showrooms, Chrysler kept the XJ Jeep Cherokee on the bazaar as a account option.

Genius or luck?

Sometimes the entry-pricing artifice pays off added than an automaker expects. The archetypal case is the XJ Jeep Cherokee, which Chrysler larboard on the bazaar as a account advantage afterwards its replacement, the Grand Cherokee, hit showrooms in 1992. The old Cherokee kept selling, and Chrysler kept authoritative it, until 2001.

Pricing was allotment of the appeal, but the XJ Cherokee additionally retained a afterward amid Jeep traditionalists with its rugged, squared-off design.

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“I don’t apperceive if it was ability or a achievement of luck, but that old Cherokee got a additional charter on activity and awash a ton of units,” Kim said. “It went on for about a decade afterwards it was activity to be killed. Alike today, good-condition XJs are absolutely approved after.”

Other automakers accept kept old models animate as placeholders. Afterwards the redesigned Rogue debuted for the 2014 archetypal year, Nissan kept affairs the old adaptation as the Rogue Select in the 2014 and 2015 archetypal years afore replacing it with the Rogue Sport.

Likewise, Volkswagen launched a redesigned, beyond Tiguan aftermost year but has kept the old adaptation in food as the lower-priced Tiguan Limited. AutoPacific’s Kim said VW is accepted to accompany out a new baby crossover in 2020, but in the concurrently the Tiguan Limited allows the cast “to abode that entry-crossover amplitude that is demography off appropriate now.”

Regulatory costs

But there are times back befitting an old agent on auction isn’t the acute move, admitting lower assembly costs.

FCA took the abnormal footfall of afterlight the Grand Caravan aftermost year to accommodated U.S. requirements for bigger side-curtain airbags — a admeasurement of the vehicle’s continuing appeal. Usually, Bailo said, any cogent advance to accommodated new standards would bore affairs to extend a vehicle’s production.

As allotment of the antecedent assessment, she said, “You’re asking, ‘What’s it activity to booty to accumulate it from a fuel-economy standpoint, from a assurance standpoint. Can you Band-Aid it?’ ”

DeLorenzo said some cartage abridgement a assisting submarket such as the MKT’s accouter trade. In that case, he said, “it’s bigger apparently to aloof airing away.”

A cast additionally charge booty affliction that the holdover artefact doesn’t backbite from its all-embracing lineup. As continued as the MKT is carefully fleet, DeLorenzo said, that’s not a problem.

But with its last-generation administration and alphanumeric name, it shouldn’t be in Lincoln showrooms, he said.

“I anticipate that’s one of the dangers, if you’re befitting the old classification around,” DeLorenzo said. “The MKT absolutely would stick out like a abscessed thumb.”

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