Reports Say That Ford is Ready to Kill Mercury
By Chris Haak
Since Mercury’s new-product fountain seemingly dried up several years ago, there has been speculation from time to time that Ford was considering shuttering its Mercury brand. Each time, Ford denied that the rumors were true and promised that Mercury’s future plans would be clarified at some point down the road. According to a report that first surfaced from Bloomberg, Mercury may now have reached that fork in the road where its future must be decided, and the future may not be bright for the brand that once brought personal luxury to Ford, and now brings marginally tarted-up Fords with waterfall grilles to the market.
Meanwhile, the maintenance of the Mercury brand appears at its face value to be contrary to Ford CEO Alan Mulally’s strategy of focusing most resources on the core Ford brand worldwide and divesting itself of distracting niche brands such as Mazda, Jaguar, Land Rover, Aston Martin, and most recently, Volvo. Although Ford announced just this past January 2010 that Mercury would receive a new Lynx based on the 2012 global Ford Focus, the brand’s current lineup is about to shrink to two cars after the demise of the geriatric Grand Marquis and unloved Mountaineer SUV. The remaining models will be the Milan midsize sedan (a rebadged Ford Fusion) and the Mountaineer crossover (a rebadged Ford Escape).
If Ford plans to do something with Mercury, the timing seems good. Like some of Detroit’s other recent dead brands littering life’s highway (Plymouth in 2001, Oldsmobile in 2004, Saturn and Pontiac in 2009, and Hummer in 2010), the brand has fallen hard from peak sales. In 1978, Ford sold 579,498 Mercurys, and in 2009, it sold just 92,299 vehicles. Mercury sales are up so far in 2010 as the auto market begins its recovery, but its sales gains lag Ford Motor’s overall gains. The aforementioned crossroads that Ford finds itself with Mercury means that the company will either have to come up with new models for Mercury (meaning product-development and marketing expenses) or pull the plug on the 71 year old brand.
Edsel Ford, son of Ford Motor Company founder Henry Ford, created the Mercury brand in 1939 during the waning days of the Great Depression as a mid-price brand between low-cost Ford and high-zoot Lincoln. Until recently, the biggest obstacle to eliminating Mercury has been the Ford family’s reverence for Edsel. They didn’t want to euthanize Edsel’s brainchild, and since the family holds about 40 percent of the corporation’s voting stock, weren’t really required to.
The family’s interests are represented within the company by Executive Chairman Bill Ford (Henry Ford’s great-grandson), and Elena Ford (Henry’s great-granddaughter). Bloomberg’s sources noted that the family is now in support of the move, and that Elena, while initially opposed to the move, has come to accept Mr. Mulally’s recommendation. (Elena Ford was once in charge of Mercury marketing, so she may have a personal interest in the brand beyond family loyalty to Edsel that influenced her earlier opinion).
Should this story prove true (Ford spokespeople neither confirmed nor denied that it was true, only saying that an announcement would be made if anything changed), the move would likely have a more profound impact on some dealers than it would on Ford itself. Mercury sales only comprised 1.9 percent of Ford Motor Company’s global sales in the first quarter, which may have encouraged the family to act now in the best interest of the overall business rather than out of sentimentality. Mercury held 0.9 percent of the US market through April 30, which is the same share it held a year ago.
Ford-Lincoln-Mercury dealers – those that carry all three brands – are likely to see little negative impact from a shuttered Mercury, since every Mercury has a Ford counterpart that shares basically all features aside from minor trim variations. More complicated is the situation with Lincoln-Mercury dealers that do not have a Ford franchise, because Mercury is currently those dealers’ volume brand. Ford’s plans reportedly call for L-M dealers to close or with Ford dealers to fill out the lineup.
The bad news for Lincoln-Mercury dealers doesn’t end with Mercury’s potential demise, either. The Wall Street Journal is reporting that the Lincoln brand is also under “an intense review” because the brand’s relatively new lineup hasn’t resonated well with buyers. In fact, the differentiation between several Lincoln models and their Ford counterparts is closer to the historical differentiation between Ford and Mercury. For example, the Taurus and MKS don’t share sheetmetal, but share platforms, some powertrains, and many features. It’s the same story with the MKT and Flex, MKZ and Fusion, and MKX and Edge. The differences between the current Lincoln lineup and and the Ford lineup – where there is platform sharing – reminds one of the 1967 Mustang vs. the 1967 Mercury Cougar. If Lincoln would also happen to go away, then the “merge with a Ford dealer or go out of business” concept takes on a much greater sense of urgency.