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Fire-Sale Deals On 2010 Mercury Vehicles? Probably Not

July 16, 2010
You’ve probably heard the news; Mercury is no more. Ford Motor Co. (NYSE:F) is in the process of shuttering the brand and focusing more efforts toward Lincoln, and after this fall it’ll be history.

Meanwhile, most Mercury models of recent history have been slightly restyled, slightly repackaged, near-clones of Ford models—and vehicles from a discontinued brand shouldn’t be worth as much—so why not try the Mercury dealership for a money-saving deal?

Unfortunately, that logic doesn’t seem to apply—at least not yet—and if you head to your local Mercury dealership the deals aren’t exactly going to be steals.

The reason why the tantalizing deals on discontinued Mercury models just aren’t out there is that there aren’t very many of them sitting on vehicle lots. “There’s not a whole lot of inventory,” explained Jesse Toprak, vice president for industry trends for the pricing intelligence firm TrueCar. Toprak elucidated that Ford has been doing a great job controlling Mercury inventories, even before the announcement to discontinue the brand.

No major clearance push, probably no need for one

Pontiac On Sale

Pontiac On Sale

Since the company didn’t produce too many Mercury vehicles, there’s no relative panic to clear them off lots, as there arguably was just last year on some models from Pontiac and Saturn.

Toprak says that most car shoppers know that Mercury models are essentially just repackaged Ford models, and while that might not have helped sell more Mercurys it will end up helping them in the end as buyers won’t have any hesitation in snapping up modest deals on these vehicles. With Saturn especially, he said, the brand “stood more by itself,” with more shoppers unsure that the products (and Saturn’s style of service) would be supported after the sale.

The numbers aren’t showing much of a change. The Car Connection had TrueCar look at transaction prices for Mercury models over the past four weeks, after the announcement to discontinue Mercury was out, and among all 2010 Mercury vehicles, the average transaction price since the June 2 announcement has gone down slightly, from $25,677 in the four weeks prior to $24,915 in the four weeks after. That’s less than three percent so far, and Toprak says that while factory incentives haven’t changed, there might be a little more pressure than usual from shoppers who come in expecting to get a great deal—as well as a few dealerships that’ll close with the brand and want to move vehicles.

2010 Mercury Milan

2010 Mercury Milan

Currently, on a 2010 Mercury Milan Premier, stickering at $25,725, TrueCar says that the average price is $22,573 and a good price on the Milan Premier would be less than $22,697.And on a 2010 Ford Fusion SEL, which costs $25,380, TrueCar shows an average price of $25,503 and a good price of less than $22,624. So while you might get a slightly larger discount on the Mercury, it’s not yet to the point where it displaced Ford’s otherwise slightly lower sticker prices.

“Don’t expect to see major differences,” Toprak said, adding that currently Mercury models are offered with the exact same incentives as their equivalent Ford models. There might be a model or two with slightly higher incentives later, in the fall, but certainly not double or triple the Ford incentives.

Used-car shoppers, take note—you could get a deal

2009 Mercury Mariner

2009 Mercury Mariner

Toprak says that what bears some differentiation is what’s happening to Mercury on the used market. While the deals still aren’t that remarkable on the new-car front, late model used Mercurys are significantly reduced. Although TrueCar doesn’t officially track used-car prices, it’s observed that they’re down five to ten percent on Mercurys a year or more old. So on a 2009 Mercury Mariner Hybrid, for instance, you’re likely to save $2,000 or more versus the equivalent 2009 Ford Escape Hybrid—and what the Mariner Hybrid cost before Mercury’s announced demise.

And even then, resale values might settle back near predicted levels after the negative news impact fades and the public is reassured that the brand is indeed still fully supported. Resale and residual value market authority ALG predicts that Mercury-brand vehicles, over the next three years, will only lose an additional 2.5 to 3 percent off its original MSRP than it would have otherwise.

There were certainly plenty of brands for ALG to study. The firm included previous value curves for Eagle, Plymouth Oldsmobile, and Isuzu in its predictions, and found that vehicles under most of these brands were undervalued for the first one to three years after the brand’s cancellation, then not significantly less. The typical impact on residual/resale values has been typically about five percent across those brands but has been as high as ten percent.

But no matter what, Toprak cautioned, if you’re looking for a new vehicle you’re probably better off striking a deal this summer, not waiting around until fall thinking that the deals on Mercury models are going to get bargain-basement cheap.

“Mercurys aren’t going to be the steal, not the fire sale that some shoppers expect.”

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