Cost of Closing Mercury: 2 Billion Dollars

[wescoent]

http://seekingalpha.com/article/84114-why-...cy?source=yahoo

 

Further verifying what I've been saying...

[battyr]

http://seekingalpha.com/article/84114-why-...cy?source=yahoo

 

Further verifying what I've been saying...

 

I see value in consolidating the number of brands that GM has. That would be a marketing issue. I see little value in breaking up GM. A company like Saab or anyother GM division, could not survive today without sharing development cost with GM. GM needs to go further and start sharing platforms and other development cost with other Non-GM companies.

 

The one thing they could do is break the US division into a separate company. They if the US division goes bankrupt, they can get rid of the pension liabilities and still save with sharing development cost with the rest of the world.

[pcsario]

Who said Ford needs to kill it ala Oldsmobile? The plan is to just let it die.

 

Recent musings from suppliers were clear enough: Nothing is being spent for '11 and beyond.

 

Nothing... only Ford and Lincoln are getting $$$.

[TStag]

I see value in consolidating the number of brands that GM has. That would be a marketing issue. I see little value in breaking up GM. A company like Saab or anyother GM division, could not survive today without sharing development cost with GM. GM needs to go further and start sharing platforms and other development cost with other Non-GM companies.

 

The one thing they could do is break the US division into a separate company. They if the US division goes bankrupt, they can get rid of the pension liabilities and still save with sharing development cost with the rest of the world.

 

I agree I think it's the bvious thing to do. Split Cadillac, Chevrolet, Holden, Opel/ Vauxhall and maybe Saturn into one company and then split the other brands into another division. Then simply split the two entities and distribute new shares in both companies to Shareholders. Then just let the likes of Pontiac and co get on with it, at which point they will either go bust or find a new owner (probably Chinese). Personally speaking I think it's the most realistic option left.

[NickF1011]

I agree I think it's the bvious thing to do. Split Cadillac, Chevrolet, Holden, Opel/ Vauxhall and maybe Saturn into one company and then split the other brands into another division. Then simply split the two entities and distribute new shares in both companies to Shareholders. Then just let the likes of Pontiac and co get on with it, at which point they will either go bust or find a new owner (probably Chinese). Personally speaking I think it's the most realistic option left.

 

How the hell is that anything CLOSE to being OBVIOUS? The brands are so interwoven on every level of engineering, marketing, management, and sales that it would be damn near impossible to "split" anything. If GM gets rid of any brands, they are FAR more likely to just CLOSE them than worry about the logistical nightmare a sale would entail.

[Joe771476]

Isn't every Mercury a clone of a Ford? So why does it lose money? It's coming down the assembly line anyway! What is so costly as to just put a Mercury badge on it? If you want it to fail, just stop advertising it. But that would be a shame, since Jill is hot in the latest Mercury ad. Keep badging some Fords as Mercury forever and avoid the franchise closing costs!

[saintlaz1]

Isn't every Mercury a clone of a Ford? So why does it lose money? It's coming down the assembly line anyway! What is so costly as to just put a Mercury badge on it? If you want it to fail, just stop advertising it. But that would be a shame, since Jill is hot in the latest Mercury ad. Keep badging some Fords as Mercury forever and avoid the franchise closing costs!

 

Mercury doesnt lose money its pure profit!!! they hardly spend money on ads now a days. Whoever writes that Mercury loses money is an idiot.

[Ron W.]

Mercury doesnt lose money its pure profit!!! they hardly spend money on ads now a days. Whoever writes that Mercury loses money is an idiot.

 

Got proof?

 

While I agree with the panther mafia (p71, armada etc) that the "panther" is probably the most reliable F/L/M product out there for whatever reason F/L/M has aparently decided it's time for them to go.

 

It's my opinion that if they make money they would not be canceled.

[TStag]

How the hell is that anything CLOSE to being OBVIOUS? The brands are so interwoven on every level of engineering, marketing, management, and sales that it would be damn near impossible to "split" anything. If GM gets rid of any brands, they are FAR more likely to just CLOSE them than worry about the logistical nightmare a sale would entail.

 

It's not as difficult as you suggest. So what if nearly every component is the same? It is possible to strike up a deal to license technology between the companies. Indeed Land Rover and Rover were fully integrated with each other, sharing lots of components, common marketing team, management, engineering and sales. But when Ford took over Land Rover it managed the split. Rover got the engineering center at Longbridge and marketing for Rover was outsourced. Rover supplied engines and components to Land Rover. The Land Rover Freelander was based on the Rover Maestro for peats sake!

 

The things is this option is in the Shareholders interests. They avoid having to pay off dealers, they get shares in the good part of the business and they may even be able to sell the rest to the Chinese.

 

What other options are there? Only a fool would lend GM money under current circumstances and chapter 11 would destroy shareholder value.

 

The future of GM will now be determined by shareholders not car fans like us.

[saintlaz1]

Got proof?

 

While I agree with the panther mafia (p71, armada etc) that the "panther" is probably the most reliable F/L/M product out there for whatever reason F/L/M has aparently decided it's time for them to go.

 

It's my opinion that if they make money they would not be canceled.

 

I dont think I would need to produce any, they are not making different cars on any level, the cost for them to have different grills, lights, etc.. is minimal and they make it up in the sale when the price of a mercury is over that of a ford.

 

So do you have proof to the conterary?

[Mark B. Morrow]

Isn't every Mercury a clone of a Ford? So why does it lose money? It's coming down the assembly line anyway! What is so costly as to just put a Mercury badge on it? If you want it to fail, just stop advertising it. But that would be a shame, since Jill is hot in the latest Mercury ad. Keep badging some Fords as Mercury forever and avoid the franchise closing costs!

 

 

At present Every Mercury model is a variation or trim package, if you prefer, on a Ford model. Mercury has no separate assembly plants and the engineering of the platforms are the same. The only cost to making Mercury cars is whatever goes into designing and making the Mercury specific grilles, hoods, bumpers, trunk lids taillights and interior trim. There is also the cost of Mercury sales brochures, dealer items and advertising. The cost is minimal in the grand scheme of things and Mercury does give the public an alternative to Fords that some find more appealing. Mercury has had a higher level of customer satisfaction Lincoln-Mercury dealers.

 

GM has the same issue but spread across more lines. The Lambdas for instance are built in the same plant as are the Cobalt/G5.

 

I would hope that Mercury stays around long enough for Ford to get its house in order and then maybe Mercury can get some investment and some new and unique products.

[Ron W.]

So do you have proof to the conterary?

 

 

Nope, that's why I used the word opinion.

[FordFanForEver]

Got proof?

 

While I agree with the panther mafia (p71, armada etc) that the "panther" is probably the most reliable F/L/M product out there for whatever reason F/L/M has aparently decided it's time for them to go.

 

It's my opinion that if they make money they would not be canceled.

 

If Mercury was not making money, they would be gone by now...

[FordFanForEver]

At present Every Mercury model is a variation or trim package, if you prefer, on a Ford model. Mercury has no separate assembly plants and the engineering of the platforms are the same. The only cost to making Mercury cars is whatever goes into designing and making the Mercury specific grilles, hoods, bumpers, trunk lids taillights and interior trim. There is also the cost of Mercury sales brochures, dealer items and advertising. The cost is minimal in the grand scheme of things and Mercury does give the public an alternative to Fords that some find more appealing. Mercury has had a higher level of customer satisfaction Lincoln-Mercury dealers.

 

GM has the same issue but spread across more lines. The Lambdas for instance are built in the same plant as are the Cobalt/G5.

 

I would hope that Mercury stays around long enough for Ford to get its house in order and then maybe Mercury can get some investment and some new and unique products.

 

I think all the Mercuries look better than there Ford siblings.

[FordFanForEver]

In my opinion, Mercury is doing far better than Buick and Saturn and those are brands Mercury competes with.

[Ford Jellymoulds]

I agree I think it's the bvious thing to do. Split Cadillac, Chevrolet, Holden, Opel/ Vauxhall and maybe Saturn into one company and then split the other brands into another division. Then simply split the two entities and distribute new shares in both companies to Shareholders. Then just let the likes of Pontiac and co get on with it, at which point they will either go bust or find a new owner (probably Chinese). Personally speaking I think it's the most realistic option left.

 

Pure T-Stag speculation.

 

Automaker’s management confronts growing speculation over brandsDETROIT - General Motors Corp is not planning a sale of any of its brands other than the Hummer line of SUVs, GM's North American sales chief said in an e-mail to the automaker's U.S. dealers.

 

Mark LaNeve, GM's vice president for North American sales and marketing, said none of GM's brands other than Hummer were up for sale or being considered as candidates for closure, despite growing speculation to the contrary.

 

 

http://www.cnbc.com/id/25592234/for/cnbc/

[mlhm5]

Mercury would not be profitable as a stand alone company, and Ford won't sell the name.

 

Mulally is not going to throw any of Ford's remaining cash down that chute, and if Lincoln cannot keep the LM dealers profitable, they will simply go out of business.

[TStag]

Pure T-Stag speculation.

 

Automaker’s management confronts growing speculation over brandsDETROIT - General Motors Corp is not planning a sale of any of its brands other than the Hummer line of SUVs, GM's North American sales chief said in an e-mail to the automaker's U.S. dealers.

 

Mark LaNeve, GM's vice president for North American sales and marketing, said none of GM's brands other than Hummer were up for sale or being considered as candidates for closure, despite growing speculation to the contrary.

 

 

http://www.cnbc.com/id/25592234/for/cnbc/

 

Really GM seems uncertain......see: http://www.thetruthaboutcars.com/category/news-blog/

 

But yes I'm speculating that they may invoke a common business practice. I've seen it many times already in similar circumstances. British Telecom got in a huge financial mess and split its mobile phone business from it's Land line business. It saved both parts of the company and fixed their massive debt burden. ITV did something similar with ITV digital. I admit they are different typesof business but the priciples are the same and transferrable.

[RichardJensen]

Really GM seems uncertain......see: http://www.thetruthaboutcars.com/category/news-blog/

If you had any credibility left, citing TTAC would be a big mistake. However, seeing as you are, if nothing else, the 'court jester' (and darned unfunny at that), then feel free to cite them.

[FordBuyer]

Isn't every Mercury a clone of a Ford? So why does it lose money? It's coming down the assembly line anyway! What is so costly as to just put a Mercury badge on it? If you want it to fail, just stop advertising it. But that would be a shame, since Jill is hot in the latest Mercury ad. Keep badging some Fords as Mercury forever and avoid the franchise closing costs!

 

 

Isn't that what Ford is doing now?

[Anthony]

At present Every Mercury model is a variation or trim package, if you prefer, on a Ford model. Mercury has no separate assembly plants and the engineering of the platforms are the same. The only cost to making Mercury cars is whatever goes into designing and making the Mercury specific grilles, hoods, bumpers, trunk lids taillights and interior trim. There is also the cost of Mercury sales brochures, dealer items and advertising. The cost is minimal in the grand scheme of things and Mercury does give the public an alternative to Fords that some find more appealing. Mercury has had a higher level of customer satisfaction Lincoln-Mercury dealers.

 

Remember Plymouth was just rebadged Dodges and Chryslers (with the limited edition Prowler being the sole exception). Don't be so sure that model specific restyling advertising costs are as low as you think in keeping a brand solvent.

 

Year over year (over year) diminishing brand sales tend to make bean counters scratch their head of those trim pieces and ad budgets.

[RichardJensen]

Mercury Mariner/Milan/Sable sales are pretty flat year over year, and I believe they ended 2007 up or flat over 2006.

 

It's tough to argue that the core of your brand does not deserve to be maintained when they can eke out a collective gain in market share.

[focus05]

Well, I think the hope is that by the time Mercury dies, enough L-M dealers will either be merged or Lincoln will be high volume enough (at a RETAIL level), that the death of Mercury won't seem so bad. The models will slowly fade away one by one... Sable, then Mariner, then Milan, until all that is left is Lincoln. If they're making money, it won't matter if Mercury, at that point, stays or goes.

[taxman100]

Ford just bought out and closed my Lincoln-Mercury dealership.

 

They have been a Lincoln dealer for 54 years, and a Mercury dealer for around 50 years. The third generation owner is a pretty sharp guy, so if he was willing to sell out, he is reading something in the tea-leaves about the future.

 

I noticed their inventory has dwindled, and ceased advertising in the last month or two.

 

 

 

Dealer OKs Ford buyout

Ron Rush Lincoln-Mercury closes; 35 workers lose jobs

Tuesday, July 8, 2008 3:03 AM

By Braden Lammers

 

THE COLUMBUS DISPATCH

 

Ron Rush Lincoln-Mercury has closed after 54 years in business, a victim of dealership consolidation by Ford Motor Co.

 

The North Side dealership, in its third generation of operation by the Rush family, accepted a buyout offer from Ford, which owns Lincoln-Mercury. The move puts 35 employees out of work.

 

The consolidation is in response to Ford's worsening profit margins. The company has been closing dealerships in metro areas where it has multiple car lots in close proximity. Ford purchased the remaining 26 vehicles on the Ron Rush Lincoln-Mercury lot, at 2350 Morse Rd., before closing the dealership.

 

"There is not enough volume to go around to make dealerships profitable," said George Pipas, a Ford sales analyst. "Our dealers opened at a point in time when we had 20 (percent) to 25 percent of the U.S. market share. Now it's more like 14 (percent)."

 

The combined market share for Ford and Lincoln-Mercury in central Ohio is 12 percent, said Marisa Bradley, spokeswoman for Ford.

 

Sales at Lincoln-Mercury dealerships nationwide have been dismal. In June, sales were down almost 24 percent from last year, according to a Ford sales report.

 

The year-to-date sales totals for the Lincoln and Mercury brands are down 23 percent, totaling just over 129,000 vehicles.

 

"There is no target," Bradley said, on how many dealerships will close. "We match the demand with what the market share is … (and) figure out market by market."

 

The process is a voluntary one for dealers, Bradley said.

 

Even though Rush said he was still making a profit, faced with current market conditions and the offer of the buyout, he took the deal.

 

"It's good business," he said.

 

"If they ask a profitable store to close, they have to compensate us," Rush said. "Put it all together, it was a good financial decision for us."

 

Citing a confidentiality agreement Rush signed with Ford, he declined to comment on any details of the agreement.

 

The consolidation is the first for Ford in the Columbus area, Bradley said.

 

"This is not something you take lightly," Rush said on the decision to accept the offer.

[mackinaw]

Mark Fields was on Autoline Detroit back in May. He was asked about Mercury's future during the interview and answered very carefully, never talking about Mercury in the singular, but always as Lincoln-Mercury in the plural. I took this to mean that Lincoln had a future, and that Mercury perhaps doesn't. You can listen to the interview here and draw your own conclusions:

 

http://www.autolinedetroit.tv/show/1217