Mercury Showing Signs of Life?

February 11, 2002

Mercury Versus Edsel (2/10/2002)

If sales are strong, profits keep rolling in and dealers remain happy, why do so many observers keep predicting the demise of Ford Motor Co.’s Mercury division?

It certainly doesn’t help that Chairman and CEO Bill Ford has given the division’s new management team just 90 days to pull together a credible plan for keeping Mercury in business. Neither have the skeptics been completely assuaged by the frequent comments of support lent by Ford’s senior management. Mercury, “is a brand that will continue to play a significant role in Ford Motor Co. and its future,” declared Ford Chief Operating Officer Nick Scheele during a Chicago Auto Show news conference.

Long eclipsed by its larger sibling, the Ford “oval” division, and operating in the shadow of the luxurious Lincoln brand, Mercury is a marque with virtually no market identity. There was a time, years back, when its product had cachet, and commanded a premium over the mainstream Ford line. But Mercury hasn’t really had a lucid brand image since the days when James Dean drove a souped-up Merc in the classic teen angst film, Rebel Without a Cause.

With rare exception, Mercury products are rebadged Fords. The Mountaineer sport-utility vehicle is a slightly more elegant version of the mainstream Ford Explorer. But on the whole, Mercury markets a hodgepodge of vehicles aiming to appeal to a grab bag of buyers. There’s little in common between the edgy Cougar coupe and the sedate Grand Marquis. And as a result, one company insider recently conceded, “Mercury has fallen off the radar screen for most buyers.”

Opposite lock

That’s not to say the division is in deep and immediate trouble. Quite the opposite.

Since Mercury seldom gets anything unique—the Cougar is a rare exception—investment costs are low. Comments made by Scheele and other Ford executives appear to confirm reports that the brand earned $1 billion or more last year. That’s a lot of money for Ford, which is facing its worst financial crunch in more than a decade. And it helps offset the hefty investments the company is making in Lincoln and its other luxury brands. (Along with Lincoln, Mercury operates as part of Ford’s high-line unit, the Premier Automotive Group, or PAG.)

Mercury not only provides cash for Lincoln, but it also helps support the upscale division’s dealers. Lincoln alone simply wouldn’t have the volume to keep all its showrooms open, stresses Brian Kelley, who was recently appointed president of Lincoln-Mercury.

Together, the two brands operate out of the new PAG tower in the Los Angeles suburb of Irvine. The move from Ford’s corporate headquarters in Dearborn, Mich., four years ago was designed to give Mercury’s planners, designers and engineers a sense of the competition they face. In import-oriented California, the Mercury badge is only a bit more common than polar bears.

Lincoln is undergoing its own transformation, and the Continental concept vehicle shown at January’s Los Angeles Auto Show provided a good hint of what’s to come. The luxury marque has an assortment of new cars and trucks rolling out between now and mid-decade, and the slab-sided sedan, reminiscent of the legendary 1962 Lincoln Mark II, will serve as a blueprint for future models, hints Kelley.

But while “The Lincoln strategy is clear where we’re heading,” Kelley admits, “We need more work on Mercury.”

Killing fields

2002 Mercury Marauder Convertible concept

2002 Mercury Marauder Convertible concept

That isn’t to say the division is standing still. A high-performance version of the Grand Marquis, dubbed the Mercury Marauder, hits the road with tires spinning later this year. And at the Chicago Auto Show this month, the automaker unveiled a convertible version that could follow the Marauder into production. Product chief Al Kamerer notes that three new products were recently added to the Mercury production schedule, and Scheele said the division would likely get six new models over the coming five years.

But everything is up in the air pending the upcoming review by Chairman Bill Ford. To sell their plan for the future, the Mercury team will have to deal with some fundamental questions. For one thing, notes Kamerer, should Mercury simply continue to rebadge Ford products? Or should it share unique platforms with Lincoln, or perhaps one of the other PAG brands, such as Volvo? Would it require some unique “halo” vehicles to add luster to the brand, much like Ford’s new Thunderbird?

At least a few key decisions have already been made. As part of the turnaround plan announced on January 11th, Mercury will kill off the slow-selling Cougar, along with the Villager minivan. Mercury officials say a replacement minivan is in the works.

And the Cougar may be back, as well, possibly sharing platforms with the next-generation Ford Mustang. Codenamed S197, it could hit Mercury showrooms by the 2006 model-year.

Taking Ford officials at their word, there seems little interest in killing off a brand that is still quite profitable and still one of the better-selling nameplates in the U.S. market. But success can turn sour in a hurry, cautions Jim Hall, a strategist with the automotive consulting firm, AutoPacific Inc. “What’s profitable now may not be this time next year.”

Oldsmobile was one of the most successful brands in the U.S. in the early 1980s, its Cutlass Supreme the single best-selling nameplate on the market. But it also lost identity, was starved for competitive product, and slipped off the consideration list of most American buyers. In December 2000, General Motors announced Olds would be phased out by mid-decade.

For the moment, reports of Mercury’s demise are, to paraphrase Mark Twain, greatly exaggerated. But Ford executives aren’t willing to let Mercury face a slow death. And that means the plan being put together this winter will determine Mercury’s long-term outlook.

To Hall, Mercury’s lack of image may not be a problem. “That can also be a plus” because Mercury has plenty of room to craft itself a new identity. The challenge, he asserts, is that “You have to prove to customers that you’re really different.” In a crowded market, “you can’t just do it with advertising. It is going to take product, and the right product for what they want to make Mercury into.”

With Ford Motor Co. in deep financial straits, the question is whether there’s enough money in pocket to give Mercury what it needs.

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