Is Ford Readying Mercury's Obituary?

May 27, 2008
‘49 Mercury

‘49 Mercury

Is Ford finally getting ready to write off its ailing Mercury division?

As regular readers will recall, that’s a question that’s come up more than occasionally in recent years, and it’s become even more of an issue with Kirk Kerkorian on the scene. The billionaire investor – who is now one of Ford Motor Co.’s largest shareholders – has suggested, through his front man, Jerry York, that both Mercury and Lincoln be abandoned.

There’s little question that Mercury is in serious trouble. The division’s sales are minuscule,, reflecting a serious lack of fresh product and an image that can be described, at best, as “fuzzy.” Among younger buyers, you might say, “invisible.”

That’s worrying many Mercury dealers, and not surprisingly. They’ve typically invested millions in their stores and would like to achieve a reasonable rate of return. So what they’re looking for is a reasonable commitment from Ford – a clear plan for the Mercury brand, backed up with a clear timetable for rolling out new products.

Early this year, the Lincoln Mercury National Dealer Council requested a clear outline from Ford. And the automaker originally promised to give it to them in April, dealers tell the Detroit News, though the automaker insists no such meeting was scheduled. Company officials do plan, now, for a meeting with dealers in September.

“The company is in the process of developing a strategy and has committed to communicating this plan to the Lincoln Mercury dealer network,” the retailer group announced in its newsletter.

Over the years, Ford has taken a sort of manic-depressive approach to the Mercury brand. Former CEO Jacques Nasser hailed the last version of the Mercury Cougar as a sign of the hip, youth-oriented models to come. But then, insiders say, the executive decided to kill off the brand by starving it of product. When Nasser was forced out, family scion Bill Ford indicated he would rebuild Mercury, but senior executives have said that they would likely provide only a handful of products to the brand. Three models would hardly sustain a retail network, dealers lamented, though Ford’s new corporate marketing czar, Jim Farley, suggested that a reinvigorated Lincoln brand would keep showrooms humming.

Traditionally, Ford has defended Mercury by insisting it attracted a more affluent buyer who would normally not turn to the Ford Blue Oval. And even though Mercury sales were always modest, compared to its mainstream sibling, the added volume helped keep the company’s assembly plants operating at or near capacity.

But these days, potential buyers don’t want just rebadged Ford products. Even with its chrome brushguards and trim, it’s difficult to disguise the fact that the Mercury Mariner is little more than a gussied-up Ford Escape. Developing significantly different product is costly and resource-intense. If anything, the cash-strapped Ford Motor Co. is hoping to cut product development expenses by consolidating efforts between its North American and European operations.

Last week’s grim announcement by current Ford CEO Alan Mulally only seemed to make Mercury’s fate seem bleaker. The former Boeing executive announced that the current fuel crisis and economic downturn have forced Ford to serious revise its turnaround plans. The automaker is slashing production and speeding up the trans-Atlantic product development merger. The anticipated return to profitability, in 2009, has been postponed – Mulally wouldn’t say till when – and though he said there were no plans for new plant closings, Mulally also refused to rule that option out.

Barring a serious breakthrough in strategy, the options for Mercury seem minimal, at best.

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