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Mulally Mum on Mercury’s Future

Executive Summary

The future of Mercury has been a hot-button topic for years, but Ford executives repeatedly have shown support for the premium brand.

Ford Motor Co. CEO Alan Mulally says he’s read reports about the decision to wind down the Mercury brand, but “there is nothing new to add.

“We continue to look at portfolio and brands and nameplates like any good business,” Mullay says in a conference call with financial analysts.

Reports indicate Ford’s board of directors could vote in July on whether to wind down Mercury.

Should the Mercury brand be axed, it would join the ranks of other discarded American icons such as Pontiac, Oldsmobile and Plymouth.

The future of Mercury has been a hot-button topic for years, but Ford executives repeatedly have shown support for the 71-year-old premium brand that fills the gap between the Blue Oval and Lincoln.

The auto maker also has said Mercury attracts more women buyers who are unlikely to otherwise consider a Ford product. But critics have argued Mercurys simply are rebadged Fords that offer little real value.

Last November, Mark Fields, president-The Americas, told Ward’s there was still life in the Mercury marque, although its position within Ford’s lineup was being altered.

“It used to be that Mercury was the volume piece of Lincoln-Mercury,” Fields said. “We’ve decided Lincoln will be that now. Our focus is to winnow down the Mercury lineup, concentrating on the Mariner, Milan and a C-based product.

“So it’s an important part of our brand stable, but we’re changing the emphasis on the Lincoln Mercury franchise in terms of where a lot of the growth and investment is going to come from,” he said.

Ford’s plans for Mercury have failed to materialize. The auto maker in January announced it would build a Mercury version of its new ’12 Focus C-car, but the vehicle never appeared at subsequent auto shows.

Since the original announcement, Ford officials have been mum on the future of the Mercury C-car, which reportedly was to be named Tracer. Without it, the already thin Mercury lineup would remain sparse.

The Mercury Sable twin of the Ford Taurus, was scrapped when the all-new ’10 Taurus debuted, and the Mountaineer SUV is slated to be discontinued when the ’11 Ford Explorer arrives.

Also departing the lineup is the Grand Marquis large sedan. Production will end this year.

Mercury’s lineup soon will consist of just two models – the Milan midsized sedan and the Mariner cross/utility vehicle.

According to a Ward’s product-cycle forecast, both models are scheduled for a redesign for the ’12 model year, with the new Mariner derived from Ford’s European Kuga CUV. Those plans now are unclear.

Mercury never has seemed a good fit with Mulally’s “One Ford” plan, which is centered on focusing the auto maker’s global resources on the core Blue Oval brand.

Since Mulally took the helm in 2006, he has orchestrated the sale of several Ford subsidiaries, including Jaguar Cars, Land Rover and Aston Martin Lagonda Ltd.

The sale of Volvo Car Corp. to China-based Geely Automobile Holdings Ltd. is due to be finalized later this year.

Accounting for upwards of 450,000 units in a given year during the 1980s and 1990s, Mercury sales have been falling like a rock over the past decade.

The brand posted its best year in 1984 with deliveries of 527,198 vehicles and a whopping 16.5% share of the auto maker’s 3.2 million sales, Ward’s data shows. But last year, Mercury accounted for 92,299 deliveries and a 6.2% share of 1.7 million Ford sales.

The brand has not accounted for more than 10% of Ford sales since 1999.

So far, Ford has fallen short in its efforts to turn Lincoln into the volume player of the Lincoln-Mercury lineup.

Through April, Lincoln sold 29,689 vehicles in the U.S., while Mercury delivered 32,552.

Ford spokesman John Stoll says there are about 1,700 Mercury dealers in the U.S., but all are coupled with other brands. He declines to reveal how many are paired with Lincoln or Ford.

Only one stand-alone Mercury dealer remains, Stoll says, and that is in the Middle East.

Some dealers believe doing away with Mercury would allow Ford to concentrate more on building up its Lincoln luxury brand.

Ron Boyer, president of Courtesy Ford, Lincoln and Mercury in Portland, OR, says while he has received no official confirmation, he thinks Ford should pull the plug on Mercury.

“In my opinion, Mercury should have gone away a long time ago,” he tells Ward’s. “Its volume does not support stand-alone facilities and it only cannibalizes sales of the Ford brand.

“Once Ford realized it may not have been the best idea because it stole profitability and long-term stability from the flagship Ford dealerships, they could do nothing to correct it due to franchise laws and lawsuits,” Boyer says.

“Today, so many Lincoln Mercury dealerships have closed, it allows Ford to dual the brands in many markets,” he says. “As a dual dealership, I hope Ford drops Mercury and focuses on making Lincoln a true luxury brand.”

Other dealers argue Ford has mismanaged Mercury.

“Too many times Ford and the Ford family have listened to the wrong people,” OC Welch III, president of OC Welch Ford Lincoln Mercury in Hardeeville, SC, tells Ward’s. “This again is one of those times. If your CEO has no passion for the brand, who does? When will they ever listen to the dealers?”

– with James Amend


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