Ford Said to Plan End of Forgotten Mercury

[mustang84isu]

Ford had all but made an official announcement of the Tracer early this Spring. They were even tweeting about it. Suddenly, the Tracer was pulled from the NY Auto Show That should have been our clue that something was up.

 

I may be mistaken, but I don't ever remember the Tracer being officially announced for the NY Auto Show. People here were speculating it, but that's as far as it went. It doesn't come out until next year anyway, so it made little sense for it to be at New York.

[Anthony]

An impending car launch means nothing in this regards. Its always the lesser of two evils. I'm not saying that they are closing up shop or not, but there were a couple Saturns that were within a year of launch before they were closed down. The next Gen Vue and the Astra come mind.

 

Ford will continue to monitor the funds they outlay to differentiate and advertise Mercury vehicles against the cost. If Mercury does not bring in money, they won't keep it. If it does, they will.

[FordBuyer]

An impending car launch means nothing in this regards. Its always the lesser of two evils. I'm not saying that they are closing up shop or not, but there were a couple Saturns that were within a year of launch before they were closed down. The next Gen Vue and the Astra come mind.

 

Ford will continue to monitor the funds they outlay to differentiate and advertise Mercury vehicles against the cost. If Mercury does not bring in money, they won't keep it. If it does, they will.

 

 

Fox News in Detroit reported the story and then followed by saying they asked Ford officially if story was true, and Ford said they are not considering closing Mercury. However, I don't believe Ford will invest big money in Mercury as long as they owe many billions of dollars and remain in subprime financial status. I figure they will just keep Mercury limping along until they either become investment grade again or Mercury sales have become so miniscule as to not be worth keeping alive anymore. The big negative for Mercury with this rumor is that it just keeps on getting harder for Mercury dealers to sell their few remaining products. I would have no problem buying a used Mercury product, but not new with this story hanging over its head.

 

With Mounaineer gone this year and Grand Marquis gone next year, and no Explorer or Taurus versions, I personally don't see how Mercury survives. I guess a compact Tracer could keep Mercury going for a few years, but that is it. Again, I don't see how Ford justifies spending billions on new tophats for Mercury products when $30 billion in debt. Marketing costs alone would be in the billions if Ford is to market the Mercury brand in meaningful way.

[FordBuyer]

IMO, it would not be smart for Ford to announce the ending of Mercury even if they decide to do just that. Just keep doing what they are doing....limping along with a few products to keep Lincoln/Mercury dealerships in business and hopefully not lost money. The new Tracer should make up for lost Grand Marquis sales next year. And Ford can't afford to lose any revenue right now. Ford should just let its actions telegraph what it's doing, not its words. The writing will be on the wall when Ford doesn't announce a Mercury version of the next generation Fusion off of Mondeo platform.

[fordtion]

NBC News tonight reported about dropping Mercury. So someone in the Ford camp is leaking this to the press. I can't understand why NBC would have this as part of their news tonight??? Anything Ford I guess..

 

I also would like to see Mercury hang on, owned many GM and liked them.

[AlRozzi]

As a perennial Ford hopeful, I can think of two possible strategic scenerios for ending Merc.;

 

1) is unlikely, but if the Volvo sale has hit a snag, keeping it and ending Merc could work out financially. The $1.7B sale price is equal to or less than the cost of updating the Mercury brand. Besides, Volvo sales are way up and is actually beginning to generate a profit.

 

2) even better than number 1 is creating a new luxury brand. Lincoln has too many dealer franchise outlets to yield a retailing experience similar to luxury brands from Asia, (i.e. Lexus) and Mercury further hinders the effort. Therefore, end Mercury in the short run, merge Lincoln retailers with Ford in the medium term and longer term create a new, upscale/premium brand above Lincoln and establish a separate franchise for the brand with numbers closer to Acura/Lexus.

 

Yes, a dream...I know.

[silvrsvt]

Again, I don't see how Ford justifies spending billions on new tophats for Mercury products when $30 billion in debt. Marketing costs alone would be in the billions if Ford is to market the Mercury brand in meaningful way.

 

Lay off the crack pipe...a new tophat doesn't cost Billions nor does making a Mercury look different from Ford either.

 

NBC News tonight reported about dropping Mercury. So someone in the Ford camp is leaking this to the press. I can't understand why NBC would have this as part of their news tonight??? Anything Ford I guess..

Slow news day?

[2b2]

IMHO, it's a slow news day...

and maybe some of the GoodGuys** at FoMoCo would like to force the issue - I've had a feeling there's been a bit of a "disagreement" about Merc for quite some time.

 

 

** of course anyone who's against keeping Merc is not only STUPID & BLIND

but UGLY and EVIL too

[Anthony]

Just so everyone is on the same page as to what a tophat is:

 

From: http://www.thefreelibrary.com/Ford:+putting+on+the+top+hat:+commonality+as+a+business+practice+may...-a0200726321

 

At Ford, we view the top hat as being the upper body structure of the vehicle which is set on a common set of underpinnings. The upper body could be a number of variants from a crossover to a sedan or coupe," says Bruce Hettle, executive director of manufacturing at Ford, who points out that because they're reusing the base, they get economies of scale, but because of the different top hats, the customer gets extensive product differentiation.

 

Sounds simple, right? Think again. Implementing a comprehensive and successful top hat strategy requires a complete change in process from the start of design through to manufacturing job one. It isn't as simple as buying the latest PLM (Product Life cycle Management) software or flexible manufacturing cell.

[mackinaw]

I'm confused... Isn't there a new Tracer coming?

 

Tracer could be gone too. An article from a late edition of the Detroit Free Press, "Mercury had been expected to get a compact car, the Tracer, which had some believing the brand would live longer, but those plans are now in limbo, a person familiar with the discussions said."

 

Full article here:

 

http://www.freep.com/article/20100527/BUSINESS01/100527058/1318/Is-Fords-Mercury-brand-near-the-end-of-the-road?

[taxman100]

With Ford neglecting the Grand Marquis, of course Mercury is going to die. The Grand Marquis is Mercury, and no attempting to market to women or make Mercury some kind of restyled European Ford is going to replace the lost sales of what was Mercury's traditional buyer - middle class professional men with families.

 

Without the Grand Marquis, there is no reason for Mercury. Hence, the neglect of the Panther platform killed the entire division. That is why my Mercury dealer, who had sold them for 54 years, sold his Mercury dealer back to Ford and closed up back in 2008. He knew the market well enough to see how this would play out.

[silvrsvt]

With Ford neglecting the Grand Marquis, of course Mercury is going to die. The Grand Marquis is Mercury, and no attempting to market to women or make Mercury some kind of restyled European Ford is going to replace the lost sales of what was Mercury's traditional buyer - middle class professional men with families.

 

Hahahha the 1960's called and they want their cars back!

[Edstock]

With Ford neglecting the Grand Marquis, of course Mercury is going to die.

Seems you don't know very much about Mercury's history. At its high-point, the Comet was around 40% of Mercury brand sales. The brand can do very well without the GM.

[2b2]

Seems you don't know very much about Mercury's history. At its high-point, the Comet was around 40% of Mercury brand sales. The brand can do very well without the GM.

according to my records, Mercury's peak sales were in 1993 = 480,000+

AND as recently as 1999 Merc sold 438,000

&

Dear FoMoCo Board of Directors,

 

Guess what?

If you STARVE the Ford Brand - it will DIE OUT too!

 

Lincoln on the other hand won't ever be a Volume Brand no matter how many new vehicles it gets!!!

[Footballfan]

Alan "Howdy Doody" Mulally is a jerk. Is he anything other than an axe man?

 

Look at Lincoln sales through April:

 

MKZ: 7,374

MKS: 5,066

Town Car: 4,359

MKX: 7,278

MKT: 2,731

Navigator 2,881

 

That equates to just under 30,000 sales. Take out the ancient Town Car, and that number would drop to about 25K. I think that the MKS and MKT can qualify, at least for now, as sales failures. It is hard to float a dealer network on 75K a year. I would venture that BMW, Mercedes, Acura, Lexus, and Infinity would be outselling Lincoln with the others having a much smaller dealer network. This could even raise the spector of Lincoln being cut. I guess that would figure in Mulally's "One Ford" plan.

 

Bottom line: if you want to keep Lincoln, you better have Mercury.

[Marginal Economist]

Alan "Howdy Doody" Mulally is a jerk. Is he anything other than an axe man?

 

Look at Lincoln sales through April:

 

MKZ: 7,374

MKS: 5,066

Town Car: 4,359

MKX: 7,278

MKT: 2,731

Navigator 2,881

 

That equates to just under 30,000 sales. Take out the ancient Town Car, and that number would drop to about 25K. I think that the MKS and MKT can qualify, at least for now, as sales failures. It is hard to float a dealer network on 75K a year. I would venture that BMW, Mercedes, Acura, Lexus, and Infinity would be outselling Lincoln with the others having a much smaller dealer network. This could even raise the spector of Lincoln being cut. I guess that would figure in Mulally's "One Ford" plan.

 

Bottom line: if you want to keep Lincoln, you better have Mercury.

 

They would not float a Lincoln only showroom. They would dual the remaining Lincoln stand alone franchises with Ford stores. I think you'll find yourself loely in the Mulally bashing camp.

[Footballfan]

They would not float a Lincoln only showroom. They would dual the remaining Lincoln stand alone franchises with Ford stores. I think you'll find yourself loely in the Mulally bashing camp.

 

Consolidating Licoln Mercury and Ford franchises would cost billions, probably a lot more than it would be keeping Mercury.

[jpd80]

The other factor: Those sales are gone.

 

About half of those sales are gone when $29K Grand Marquis finishes late next year.

So when Mercury Tracer arrives, it will have to sell roughly double to replace the GM's income.

Although, Ford is again replacing a redundant product by increasing production at another Ford plant.....

 

I still wonder whether a Titanium series of Ford vehicles could replace Mercury,

Ford's image and buyer demographic is changing so maybe Mercury's is too....

 

 

Edit,

We go through this every year when the press becomes convinced that

Ford will axe Mercury or Lincoln, it goes on for about two months until the

summer figures proves them all wrong...

Edited May 28, 2010 by jpd80

[jpd80]

Consolidating Licoln Mercury and Ford franchises would cost billions, probably a lot more than it would be keeping Mercury.

 

A lot of Lincoln and Mercury dealerships are already partnered up

and let's face it, LM account for about 12% of Ford's total sales.....

So in terms of dealerships, they're not necessarily thick on the ground...

Edited May 28, 2010 by jpd80

[lfeg]

In my casual observations, only about 25% to 30% of Lincoln-Mercury dealers are co-located with Ford dealers. There are quite a few stand alone Lincoln-Mercury stores that are owned by organizations that also own Ford and other brands stores. And a good number of stores that are owned by groups with no nearby Ford stores.

 

OK, so if Mercury goes away, how long can most of the stand alone Lincoln dealers last? With just the Lincoln line up, not many in my opinion. And integrating Lincoln in to Ford stores might not work to well, as for a brand that wants to enhance their perception as a luxury brand, trying to do that in an atmosphere of mid and entry level vehicles will be hard. (there is a reason thet BMW has most Mini dealerships separate from the parent brand dealerships)

 

I am afraid that without Mercury, Lincoln will eventually become to Ford what Scion is to Toyota, and it will never get back to its luxury car roots.

[RichardJensen]

Contrary to what some may think, I doubt that the Grand Marquis is the most profitable vehicle in the Mercury range.

 

Further, I question the business assumptions involved in terminating Mercury. Ford does not have the advantage of a section 363 bankruptcy proceeding with which to railroad its dealers.

 

Killing Mercury means payouts to dealers, and the explanation forwarded by the WSJ (or was it Bloomberg) that Ford 'hopes' to encourage dealers to consolidate is incredibly unrealistic. I just don't see L-M dealers OR F-L-M dealers rolling over for this one.

 

---

 

At the same time that no business decision should ever be final, one should avoid trying to force elegant theories onto messy reality.

 

"One Ford" is a fine slogan, and a nice talking point, but it may not be the most cost effective scenario.

 

Consider: Ford got money for AM, Volvo, Jaguar, and Land Rover.

 

Ford will -pay- money to wind down Mercury.

 

That alone suggests that "One Ford" should be held up to a cold-blooded business analysis in this instance.

[jpd80]

Contrary to what some may think, I doubt that the Grand Marquis is the most profitable vehicle in the Mercury range.

 

Not sure you meant me but I never said profit, I said revenue.

Once the GM goes, that's about 3,000 sales/month and at about $30K retail a pop,

that's about $900 million in sales but how much of that is profit is anyone's guess...

Edited May 28, 2010 by jpd80

[silvrsvt]

Consolidating Licoln Mercury and Ford franchises would cost billions, probably a lot more than it would be keeping Mercury.

 

The thing is that in my local observation that most standalone LM dealers are now either closed or consolidated with a local Ford dealership, or they are Mazda or even Mitsubishi dealers also.

 

 

Seems like the economy helped Ford in that regard.

 

 

[jpd80]

Let's not forget this is coming from journalists getting anxious that Ford hasn't revealed

details of the "Tracer" yet or a "Mountaineer" replacement on the new Explorer.

They're looking at the loss of the GM and saying Mercury is being starved of product...

 

These guys may be spreading stories to try and smoke out a comment from Ford...

Edited May 28, 2010 by jpd80

[RichardJensen]

Not sure you meant me but I never said profit, I said revenue.

Once the GM goes, that's about 3,000 sales/month and at about $30K retail a pop,

that's about $900 million in sales but how much of that is profit is anyone's guess...

A few things:

 

- revenue is nothing to dealers and nothing to Ford.

 

- you're not one of those people that continually spitballs some ridiculously low number for panther vehicle cost, to generate some bizarre profit figure for the panthers. Those are the people I was talking about.

 

- if the GM has even 30% retail volume in any given month, I'd be surprised, and I'd be surprised if the ATP is over $30k on that thing. I'd venture to guess it's $25k or south.