Ford to kill off Mercury brand
The Dearborn automaker announced Wednesday that it was killing the 72-year-old brand by year's end, ending years of speculation about its future. In the documents delivered to dealers Thursday, Ford informed dealers that Mercury will officially be discontinued Dec. 31.
According to copies of documents obtained by The Detroit News, Ford is basing its buyout offer on the average number of Mercury vehicles — excluding large fleet orders — sold by each dealership in 2007, 2008 and 2009. Ford also will replace Mercury signs with new Lincoln displays.
05/28/10 In a reversal from just a few months ago, Ford Motor Co. is preparing to kill its mildly up-market Mercury brand so it can more intensely focus scarce investment dollars on its Blue Oval and Lincoln luxury marques. The move, if approved, also would enable Ford to winnow its dealer network, a politically fraught exercise company executives would be forced to manage.
The Dearborn automaker says its plans for Mercury "haven't changed. Like any good business, we are constantly assessing our portfolio," Ford said in a statement. "If things change, we'll let you know."
But they already have changed, if not officially. Earlier this year, Ford told the National Automobile Dealers Association that it planned to introduce in 2012 a compact car based on the Ford Focus, and the car was expected to be shown last month at the New York Auto Show. The car was pulled from the event.
Ford is aggressively touting its all-new Explorer, a radical makeover of the iconic SUV that revived Ford in the early '90s and set the stage for a blistering run through the decade. There is no new Mercury Mountaineer, a mate to the Explorer.
The Sable sedan died with the rebirth of the Ford Taurus. The Grand Marquis, the quintessential Mercury luxo-boat, is poised to be euthanized, leaving only the Milan midsize and the Mariner compact SUV as surviving products in a lineup that accounts for an increasingly small share of the vehicles sold by Ford overall and through its Lincoln-Mercury sales channel.
And Mercury has long been a target of CEO Alan Mulally, whose deliberate campaign to simplify Ford's operations and focus resources on fewer brands under his "One Ford" plan never really envisioned a future for Mercury.
In Washington on Thursday to meet members of Michigan's congressional delegation, Mulally said "we continue to evaluate all of our models and all of our brands, but we have nothing new to announce today."
Still, the signs are mounting that Mercury is terminal, the victim of a methodical rationalization that already has broomed Aston Martin, Jaguar, Land Rover and Volvo from Ford's portfolio. The end of Mercury, founded in 1939 by scion Edsel Ford, would stand as Mulally finally getting his way — whatever the sales figures.
Through April this year, Mercury outsold Lincoln 32,552 vehicles to 29,689. In 2009, the four-vehicle Mercury lineup outsold the six-vehicle Lincoln range, underscoring a principle argument that has kept Mercury alive, despite plunging sales over the past decade: Kill the brand and some Lincoln-Mercury dealers likely won't survive.
"That would not be good news," said Brad Black, general manager of Downtown Ford Lincoln-Mercury in Canton, Ohio. "It's going to put some Lincoln-Mercury dealers in a hurt. I just came back from a meeting in Detroit three or four weeks ago and Lincoln-Mercury didn't get mentioned, not once."
Added Chris Lemley, owner of several Lincoln-Mercury dealerships in the Boston area: "If it's true, they've been lying to us for the past two years. Anything you can say about Mercury, you can say about Lincoln."
Meaning the rap about Mercurys being nothing more than tarted-up Fords can be just as easily leveled at Lincoln, whose rejuvenated lineup generally is considered to be struggling to meet expectations. That's why the death of Mercury, if approved by Ford's directors, is certain to be questioned.
Without Mercury production volumes, less capacity would be used in Ford plants, driving up fixed costs. Without Mercury sales volumes, some stand-alone Lincoln-Mercury dealers would be certain to struggle, forcing some to combine with nearby Ford stores and close up shop altogether. Without Mercury, Ford would lose nearly a point of U.S. market share.
"Shutting down Mercury eliminates a distraction," said Jeremy Anwyl, CEO of Edmunds.com. "Mercury is a brand that has lost its meaning in the American automotive marketplace and it isn't worth trying to change that."
But Mercury has been effective since its 2005 makeover in attracting women buyers who otherwise wouldn't consider the Ford-brand vehicles underpinning Mercury. The difference, though, is that the public posture of today's Ford and its Blue Oval vehicles is sharply different than just a few years ago.
Ford's lineup is fresh, winning rave reviews and is expected to rank among the freshest in the industry over the next few years, according to an influential report issued by Merrill Lynch. Ford's making money again. It avoided bankruptcy; it isn't bound by the strictures of being on the federal dole; it didn't take the PR hit that comes with injections of taxpayer money.
And Ford's revival under Mulally is answering whether Detroit can muster the mettle to compete. It can, as much as it can make the gutsy calls that are sure to draw fierce reaction from dealers and customers opposed to the decision.
Now's as good a time as any for Ford to finally choose whether Mercury lives or dies so the parent can get to the business of growing again. A truth of Detroit's unraveling over the past 18 months is that the elimination of ancillary brands — Saturn and Saab, Hummer and Pontiac — can be a lot less traumatic to the core business than originally feared.
Mercury needs a verdict. Stringing along dealers with unfulfilled promises and declining production and offering customers winnowing choices isn't an effective recipe for winning new business. Which is what today's Ford is all about. Detroit News