Ford Said to Plan End of Forgotten Mercury

[twintornados]

Bottom line is that the only entity that will close Mercury will be the Ford Family....any one "outside" of the company will have no role in the decision as Mercury is "Edsels' brand"...he built it from scratch and as such...Mercury holds a special place in the hearts of any Ford family member...now, they need to direct the people they hired to run the company to fix Mercury and give her the product she deserves.....I am "on the cusp" of getting ready to buy a new car to replace my Fusion...and trust me, Mercury is my next purchase.

[boominup]

Bottom line is that the only entity that will close Mercury will be the Ford Family....any one "outside" of the company will have no role in the decision as Mercury is "Edsels' brand"...he built it from scratch and as such...Mercury holds a special place in the hearts of any Ford family member...now, they need to direct the people they hired to run the company to fix Mercury and give her the product she deserves.....I am "on the cusp" of getting ready to buy a new car to replace my Fusion...and trust me, Mercury is my next purchase.

 

I can vouch for the quality of my Mercury Milan. ZERO DEFECTS after 1 1/2 years of ownership in New England. We enjoy it everytime we get into this car! Good Work, Ford Motor Co.!!

[Anthony]

As soon as Ford became the new Mercury (brought upscale) they were doomed. Unless they are ready to bring Lincoln even higher upscale, there is no room for an intermediate brand (unless it has a defined niche which is not almost-near-luxury).

[jasonj80]

Where did that figure come from?

 

How much do you think it costs to maintain a brand? New product development - even a new top hat is going to run $150-200 million, dealer marketing support, National advertising support, program managers.

 

This all came up again because the Milan and Mariner replacements are about to the point where they would move from the drawing board to production. It will cost a few sales if they do kill it, but is it worth the cost - even if it is break even. Mercury sold 32,552 through April take away the Mount, GM and Sable and you're down to moving a adjusted season rate of 60K units. Now do you try and spend money on those new top hats along with spend another 100 million in marketing just launch the Tracer. It also allows a few more production units of the Fusion.

 

Kill Mercury get it over with - if you really want it make it the top trim level for a Ford.

[jpd80]

As soon as Ford became the new Mercury (brought upscale) they were doomed. Unless they are ready to bring Lincoln even higher upscale, there is no room for an intermediate brand (unless it has a defined niche which is not almost-near-luxury).

My opinion only:

Lincoln cannot be taken higher, it is not seen as a true luxury brand and associated snob value of a BMW, Jaguar, Mercedes Benz, Audi....

So Lincoln is pinned at some finite upper point below those vehicles and must therefore extend downwards enough to capture people who have graduated form entry level domestic and Asian brands. To achieve that Ford has to reposition itself as the base brand somewhere between Chevrolet and Buick by using the Titanium brand and repositioning Lincoln between Buick and Cadillac. That way, Ford stands to capture a even greater number of higher series sales and Lincoln benefits by lowering it entry point to people who aspire to own one......

 

I suspect that Ford wants to have one upper series brand, the cost of return on Mercury sheet metal is far less than Lincoln even though they sell in similar numbers...

So extending Lincolns range downwards and extending Ford's range upwards seems logical and probably makes economic sense to the accountants. It all depends on how Ford and Lincoln's customers see the move and whether Mercury customers would want to switch to an entry level Lincoln and get some real brand distinction....

Edited May 29, 2010 by jpd80

[saintlaz1]

Bottom line is that the only entity that will close Mercury will be the Ford Family....any one "outside" of the company will have no role in the decision as Mercury is "Edsels' brand"...he built it from scratch and as such...Mercury holds a special place in the hearts of any Ford family member...now, they need to direct the people they hired to run the company to fix Mercury and give her the product she deserves.....I am "on the cusp" of getting ready to buy a new car to replace my Fusion...and trust me, Mercury is my next purchase.

 

Well i certainly hope this is the case, Mercury deserves to live, even though Ford has straved it of products it keeps selling. People want Mercury's! the combination of style and quality cannot be beat.

[7Mary3]

If Mercury is not going to have any exclusive platforms and all the dealers will be consolidated into F-M-L stores, there is no reason to keep Mercury. That having been said, I hope Mercury stays. Mercury's greatest weakness has always been it's lack of distinctive. The best remembered Mercury was the early Cougar, and I think that was because even though it was based on the Mustang, it was different enough that it was perceived as a unique car. I will admit I was always fond of the Torino-based Cougars too.

[jpd80]

If Mercury is not going to have any exclusive platforms and all the dealers will be consolidated into F-M-L stores, there is no reason to keep Mercury. That having been said, I hope Mercury stays. Mercury's greatest weakness has always been it's lack of distinctive. The best remembered Mercury was the early Cougar, and I think that was because even though it was based on the Mustang, it was different enough that it was perceived as a unique car. I will admit I was always fond of the Torino-based Cougars too.

There's roughly 1700 Mercury Lincoln dealers, less than 300 of them do not also have a Ford franchise. I'm pretty sure that Mark Fields has been working with dealers to progressively reduce those free standing Mercury Lincoln dealerships.

Ford's future plans may already be further along than most people are aware of....

[RichardJensen]

How much do you think it costs to maintain a brand? New product development - even a new top hat is going to run $150-200 million, dealer marketing support, National advertising support, program managers.

 

1) The unique Mercury tooling doesn't come close to $150-200M in costs. That amount of money will pay for almost totally unique sheet metal. All Mercury gets are hoods, decklids and bumpers.

 

2) The dealership support offices were consolidated between Ford, Mercury, and Lincoln about five years ago.

 

3) Your estimate of $100M in marketing costs for a new Tracer is wayyyy off. Ford spent about $350M total on the Fusion from 2005-2008 ( http://adage.com/art...ticle_id=134986 ). They wouldn't spend $100M to launch the Tracer.

Edited May 30, 2010 by RichardJensen

[RichardJensen]

There's roughly 1700 Mercury Lincoln dealers, less than 300 of them do not also have a Ford franchise.

Ford will have to pay EVERY dealer to axe Mercury, regardless of whether or not they have a Ford franchise.

[akirby]

My opinion only:

Lincoln cannot be taken higher, it is not seen as a true luxury brand and associated snob value of a BMW, Jaguar, Mercedes Benz, Audi....

 

I don't share that opinion. I think Lincoln can be taken a bit higher with at least one higher end platform, maybe 2 and 2 or 3 additional vehicles with everything fitting in the range from $35K - $65K. They have the drivetrains and amenities now.

 

People pay over $50K now for Ford pickups. With the right styling, drivetrains, options and performance I think they could compete with the middle of the European brands.

[jpd80]

Ford will have to pay EVERY dealer to axe Mercury, regardless of whether or not they have a Ford franchise.

Or they could just let them fade away by denying them new products....

 

Let's do the math,

April: 9,218 sales divided by 1,700 dealers.

That's not even averaging six car per dealership and without Grand Marquis, it down to four....

Edited May 30, 2010 by jpd80

[RichardJensen]

Or they could just let them fade away by denying them new products....

Nope. Cancel the brand officially and pay buyouts or effectively cancel the brand and get sued.

 

Either way, it absolutely positively will cost Ford money to close Mercury.

[twintornados]

...I will admit I was always fond of the Torino-based Cougars too.

My 1976 Montego MX is likewise based off the Torino...it is now progressing nicely through a frame up restoration and will be going to paint within a month....

[jpd80]

Nope. Cancel the brand officially and pay buyouts or effectively cancel the brand and get sued.

 

Either way, it absolutely positively will cost Ford money to close Mercury.

The real question is how much to close Mercury down and would Ford

make more out of higher Titanium series sales and an extended Lincoln

range. Offering LM dealers a newer portfolio of Ford and Lincoln products

could work out even better for everyone, rather than sticking with Mercury...

 

Having a good relationship with dealers goes a long way towards

developing a plan going forward, long before lawyers and suing

companies for losing sales on less than six cars a month....

 

This is my opinion only and far from being a certainty.

I'd also love to be proven wrong by Ford announcing a few new Mercury products...

Edited May 30, 2010 by jpd80

[syrtran]

A few points:

 

1. The original article is from Bloomberg, whose track record of predictions of Ford's future products is laughable. All the other articles are just cut-and mix-around-and-paste versions of Bloomberg's article.

 

2. Mercury is not a separate unit inside Ford. It's part of of the Lincoln Mercury Division - a single fiscal entity. It shares advertising and development costs and revenue with Lincoln.

 

3. Mercury also has no (or almost no) independent dealerships - they're either Lincoln-Mercury or Ford-Lincoln-Mercury (or the odd Ford-Mercury) dealerships.

 

4. Mercury vehicles have almost always been re-skinned Fords. Occasionally, there's also been a slight wheelbase increase.

 

5. As has been pointed out several times in this thread, it would probably cost Ford more to shut Mercury down than it will to make the Tracer off the Focus (a move which should give Mercury back some of it's sales numbers).

 

6. Ford executives have been clear about what's going on with Mercury: "Our plans haven't changed." This is the exact same non-answer they gave before they announced the new Tracer. There's a not-so-subtle hint there.

 

7. The reason Mercury exists, at least since World War II, has been to prop up Lincoln dealers. The point of Mercury is to keep Joe Sixpack from walking out the door and heading to the VW dealer next door when he finds he's a little too "fiscally challenged" to own a Lincoln. All the talk of Mercury being "mid-level" between Ford and Lincoln has just been marketing-speak. Mercury cars have almost always been about the same luxury and price as the equivalent Ford with options.

 

The situation hasn't changed for Mercury in more than fifty years, except for, IMO, some really stupid decisions by some brain-dead execs to eliminate some vehicles from the L-M showroom. Cutting out the Tracer and Sable did nothing to improve Ford's bottom line. (and there needs to be a Cougar!)

Edited May 30, 2010 by syrtran

[RichardJensen]

The real question is how much to close Mercury down and would Ford

make more out of higher Titanium series sales and an extended Lincoln

range. Offering LM dealers a newer portfolio of Ford and Lincoln products

could work out even better for everyone, rather than sticking with Mercury...

 

Having a good relationship with dealers goes a long way towards

developing a plan going forward, long before lawyers and suing

companies for losing sales on less than six cars a month....

 

This is my opinion only and far from being a certainty.

I'd also love to be proven wrong by Ford announcing a few new Mercury products...

Here's one seat of the pants calculation:

 

Assume the typical dealer averages $500 profit from the sale of the car, $1000 from the financing, $500 from the sale of F&I add-ons, and $40 per service visit times 15 service visits over the course of the five year warranty ($600). Call that lost service revenue $500 factoring in the present value of those service visit profits that will occur in the future (it's about $493 @ 4% interest).

 

The typical sale, thus (by these spitball calculations) generates about $2500 in profit.

 

Now figure that 40% of Mercury sales would be Ford or Lincoln sales.

 

Take 60% of last year's 90,000 Mercury sales, for 54,000 lost sales, and that's $140,000,000 in lost profit for the first year.

 

Now figure that Ford will need to pay a certain amount to anticipate lost sales the second and third years; say you discount that total by 33% per year, and you've got $93M the second year, and $46.6M the third. That's a total of $280M to shutter Mercury.

 

Now assume that Ford will have to kick out some co-op money to buy advertising to help replace that lost volume (bear in mind this assumes that 60% of those Mercury sales are gone permanently, and that dealers will expect Ford to help them replace that volume).

 

Call that $5,000 per month per dealer, over a three year period. That's $306M.

 

Add up the advertising and the payment for lost profits, and you've got close to $600M to wrap up Mercury ($586M).

 

All that (per this estimate) to close a brand that is turning a profit, and which brought about 56,000 customers to Ford last year that they would not have otherwise had.

 

IMO, Titanium trimmed Fords vs. Mercury is a false dilemma. It implies that you cannot have one without having the other.

 

The reality is that Mercury does not need exclusive trim/options to be differentiated from Ford. What it needs is different marketing, and enough of a difference in feel and appearance to draw different buyers. Right now, with as minimal difference as it is possible to imagine (short of the Iacocca Chrysler/Plymouth/Dodge years), Mercury is still drawing over 50% of its customers from outside the Ford family.

[jpd80]

Add up the advertising and the payment for lost profits, and you've got close to $600M to wrap up Mercury ($586M).

 

All that (per this estimate) to close a brand that is turning a profit, and which brought about 56,000 customers to Ford last year that they would not have otherwise had.

 

IMO, Titanium trimmed Fords vs. Mercury is a false dilemma. It implies that you cannot have one without having the other.

 

The reality is that Mercury does not need exclusive trim/options to be differentiated from Ford. What it needs is different marketing, and enough of a difference in feel and appearance to draw different buyers. Right now, with as minimal difference as it is possible to imagine (short of the Iacocca Chrysler/Plymouth/Dodge years), Mercury is still drawing over 50% of its customers from outside the Ford family.

OK, agree that Mercury does make a profit, brings in customers who

wouldn't otherwise buy Ford product - so why hasn't Ford supported

them with more products?

(Focus, Edge, Sable and possibly Cougar)

 

I guess I'm frustrated looking from afar and seeing Ford doing the minimum

with Mercury, it deserves to have more product support from Ford....

 

I should know better because we get these same stories resurfacing every 12 months or so...

Edited May 30, 2010 by jpd80

[RichardJensen]

OK, agree that Mercury does make a profit, brings in customers who

wouldn't otherwise buy Ford product - so why hasn't Ford supported

them with more products?

They didn't get a Focus because Nasser was trying to kill Mercury back when the program started (Focus launched in NA round about the time that Ford pulled Mercury in Canada).

 

As to why they don't do anything more significant with Mercury?

 

It's because these programs now operate on a 'pay your way' basis: Mercury is profitable, but a significant differentiation between it and Ford would likely eliminate that profit margin, unless it significantly boosted sales (tough to do in this market).

 

With the Flex/MKT, there really isn't enough volume for a profitable Mercury (such a vehicle would probably sell at less than a quarter of the rate of the Flex), Ditto the Taurus.

 

However, there should be more than enough potential Mercury volume to justify a Mercury variant of any Ford product that sells over 12-15k units per month.

 

Hence there -should- be a Mercury Tracer. Not necessarily a Mercury Fiesta, as I don't think the Ford variant will sell at high enough volumes.

[RichardJensen]

Heck. The fact that Nasser was in favor of ditching Mercury is a pretty strong argument for keeping it.

[jpd80]

They didn't get a Focus because Nasser was trying to kill Mercury back when the program started (Focus launched in NA round about the time that Ford pulled Mercury in Canada).

 

As to why they don't do anything more significant with Mercury?

 

It's because these programs now operate on a 'pay your way' basis: Mercury is profitable, but a significant differentiation between it and Ford would likely eliminate that profit margin, unless it significantly boosted sales (tough to do in this market).

 

With the Flex/MKT, there really isn't enough volume for a profitable Mercury (such a vehicle would probably sell at less than a quarter of the rate of the Flex), Ditto the Taurus.

what about differentiation by way of Aussie Fords like Falcon and Territory?

Neither would have to sell in huge volume to be successful to FoA,

if the factory got 20K to 30K a year they would be ecstatic...

Might be a way to let the Indians off the reservation and

attract customers that wouldn't buy Ford NA products....

Edited May 30, 2010 by jpd80

[AlRozzi]

1) A few folks keep referring to Mercury buyers as an older group of buyers. Well guess what, check the population demographics and the nation (along with many other countries) are getting older. People aren't having as many children, but are living much longer. If I were a car exec, I would plan to market to those folks.

 

Or

 

2) Lincoln is just not selling in the volumn numbers as was hoped for. Maybe that was a mistake? Maybe Lincoln should have 3, very upscale models and the volumn should be with Mercury?

 

Yes, Ford brand moved up to Mercury price range, but Mercury could take Lincoln's place and Lincoln should move up.

 

Nasser and PAG caused LM's neglect. Forget the 10 year old plan for LM and restore the division to what it was.

Edited May 30, 2010 by AlRozzi

[silvrsvt]

All I have to say is that I'll be happy once the Panther winds up in the big automotive graveyard in the sky...then I don't have listen to these ridiculous arguments that their fans spout out...ok well I don't now, but they wont have to post either

[BORG]

It's hard to say what should be done with Lincoln because the potential for success is hindered by its narrow market appeal. Luxury is now a game for the young and Lincoln continues to target older and tradtional, all of which have been fading concepts for decades now. Lincoln simply can't survive by adding product that go after their existing customers, they are heading into failure. I thought Lincoln was on the right path when the MKX and MKZ debuted, affordable and trendy urban chic products with some uncommon flare, but now they are back to a very typical Lincoln approach which isn't going to attract younger customers. The MKT is also an odd design for a customer I'm not convinced is there (7-seater bustle back $55K wagon anybody, no?). The MKZ is crtical and Lincoln has utterly failed to take this product seriously and seems content to thinly disguise a Fusion, which itself is a mediocre cosmetic dinosaur in this very competitive market.

 

They keep treating their most import cars with the least investment, and "this is better than nothing" attitude is not going to endear Lincoln to younger customers who are far more savvy than the older clientele which just walk into the Lincoln dealership and think they are buying the best handicapped tag hanger money can get.

 

Ford just needs to be a heck of alot more ambitious, I'm not convinced they have what it takes to save Lincoln. (Mercury is gone of course)

Edited May 30, 2010 by BORG

[Pioneer]

The MKZ is crtical and Lincoln has utterly failed to take this product seriously and seems content to thinly disguise a Fusion, which itself is a mediocre cosmetic dinosaur in this very competitive market.