Debate: Did Ford pull the plug on Mercury prematurely?

[xr7g428]

I just don't see how that was Mercury. There was nothing even semi-luxurious about them that you can't now get on a Ford-branded vehicle.

 

Why did buyers pick Mercury instead of Ford? What did they see?

 

But would you need to sell the same colors under a different brand name to make it more appealing?

 

Because to a buyer, there is a difference between metallic gray, and the exact shade they use on the Dallas Cowboys foot ball helmets, even if it exactly the same color. Take a can of paint, and put Martha Stewart's picture on the can and the value to consumers goes up if they care about Martha Stewart.

 

Did you really just use the Ridgeline as an example of why Mercury should have stayed?

 

No. I used that as an example of a brand understanding the values of its customers.

 

To me and most people it said "I like Fords with different grilles."

 

LOL! Such insight. Did any one ask the Mercury buyers what they thought? Richard hinted at the possibility that this decision was not the product of consumer research. There doesn't seem to be much to indicate that it was anything but an autocratic decision.

 

I'm sure there was plenty of cost benefit analysis going on. We, the public, are not privy to such information

 

For a publicly traded company, we really are hearing nothing. Everything you are saying about the board is just conjecture.

[xr7g428]

I think JPD hit on a vital consideration:

 

The market isn't rebounding well, and Mercury might not pass the 'stress tests' Ford is demanding.

 

 

I don't reject this at all, in fact I hope that is the case. but we have nothing to go on.

[RichardJensen]

Richard, you might recall better than I but didn't Mulally say something about SAAR and keeping brands,

if it fell below certain levels, products like J/LR and then Volvo go away?

I wonder if that SAAR level is now pointing right at Mercury and empowering Ford to stop producing it

and concentrate on Ford brand only (Lincoln excepted).

 

I don't think they ever laid out their business processes that openly.

 

Nor do I hope that there was a mindset there that said, "hey, the numbers now support doing what we want to do anyway" ('empowering Ford to stop producing Mercury').

 

I think that, at the highest levels of this business, you need to keep a darn close watch on your prejudices and your predilections. Why?

 

Because if you say (for instance), "Will no one rid me of this turbulent priest?" you might find someone willing to interpret your words a certain way and act accordingly.

 

In short--even if you do your best to avoid a culture of sycophancy, which Mulally has apparently done--people (being people) will generally try to shield you, the boss, from unpleasant things--including the flaws in your logic, and the depth and extent of your prejudices.

Edited July 10, 2010 by RichardJensen

[jpd80]

I don't think they ever laid out their business processes that openly.

 

Nor do I hope that there was a mindset there that said, "hey, the numbers now support doing what we want to do anyway" ('empowering Ford to stop producing Mercury').

 

I think that, at the highest levels of this business, you need to keep a darn close watch on your prejudices and your predilections. Why?

 

Because if you say (for instance), "Will no one rid me of this turbulent priest?" you might find someone willing to interpret your words a certain way and act accordingly.

 

In short--even if you do your best to avoid a culture of sycophancy, which Mulally has apparently done--people (being people) will generally try to shield you, the boss, from unpleasant things--including the flaws in your logic, and the depth and extent of your prejudices.

 

OK turn that mind set around a little by looking at it this way, perhaps

low SAAR levels in USA as well as globally and Europe mean that the:

 

1) Funding for next product cycle for J/LR vehicles was not there

we may be forced to sell otherwise Ford cash reserves are in jeopardy

 

2) Funding for next product cycle to revive Volvo vehicles was not there

we may be forced to sell otherwise Ford cash reserves are in jeopardy

 

3) Ford spending money on increasing Mercury's presence through more

products means reduced spending on Titanium series Fords or maybe

just essential product spending in general...

 

 

Perhaps each decision was forced upon Ford due to financial constraints,

not because they gleefully wanted to shed away billion dollar brands...

When your back is to the wall, the priority must be on ensuring that the main brand survives,

without sufficient sales of Ford products and revenue, none of the other brands matter....

Edited July 10, 2010 by jpd80

[RichardJensen]

Cash conservation may have played into it, but the time involved in bringing JLR & Volvo into the sort of corporate structure that Mulally envisioned may have entered into it as well (neither Volvo nor JLR would be permitted separate powertrain & platform engineering units--they would need to consolidate under Kuzak & Ford Motor).

 

The time required of executives to oversee a painful dismantling of JLR's independent engineering units may have been deemed more important than the cash required to do so.

 

JLR's projections, as well as the projections of Ford overall, were too rosy in the middle of the Bill Ford tenure. By the time he was looking outside for help, JLR needed to be overhauled. It's something that I didn't quite grasp at the time, but understand now.

 

Essentially, JLR wasn't in 'maintain' mode when Mulally was hired on--at least it wasn't according to Mulally's philosophy on how the company should be run. That meant it was time to fish or cut bait with them, and well, here we are today.

Edited July 10, 2010 by RichardJensen

[Ford Jellymoulds]

I think JPD hit on a vital consideration:

 

The market isn't rebounding well, and Mercury might not pass the 'stress tests' Ford is demanding.

 

What about a Lincoln stress test the ball made a hole in the sales floor they were down in June, as Mercury's ball bounced did it not Richard?

 

 

 

[RichardJensen]

Mercury's ball bounced did it not Richard?

Without knowing the breakdown between fleet and retail, you might as well try landing a Cessna with your eyes shut.

[Ford Jellymoulds]

Without knowing the breakdown between fleet and retail, you might as well try landing a Cessna with your eyes shut.

 

 

What is ILS used for then playing Tetris Richard?

 

http://www.youtube.com/watch?v=kPyZdxguIjE

 

 

[jpd80]

JLR's projections, as well as the projections of Ford overall, were too rosy in the middle of the Bill Ford tenure. By the time he was looking outside for help, JLR needed to be overhauled. It's something that I didn't quite grasp at the time, but understand now.

 

Essentially, JLR wasn't in 'maintain' mode when Mulally was hired on--at least it wasn't according to Mulally's philosophy on how the company should be run. That meant it was time to fish or cut bait with them, and well, here we are today.

 

Two things happened about that time in the mid 2000s,

1)J/LR had a huge warranty claim, approx $500 million mentioned in Ford quarterly results

2) Ford spent money on new assembly plant/infrastructure in the Midlands.

 

I think the combination of another Billion or so on top of sales that didn't materialize for Jaguar

left Ford deeply out of pocket. The red ink from PAG quarterly statements is compelling reading

made all the worse when you consider that Volvo was profitable and trying to support the other two....

Edited July 10, 2010 by jpd80

[syrtran]

What about a Lincoln stress test the ball made a hole in the sales floor they were down in June, as Mercury's ball bounced did it not Richard?

Bingo! We have yet another winner!

 

This is the one single thing that some of you are missing: Lincoln is now in the crosshairs. It currently does not have enough sales to justify its existence as a separate brand. Can it improve sales to at least be relevant? Does it have enough profit to justify being a separate financial entity? None of us can answer these questions, yet they are vitally important to the future of Lincoln.

 

You guys keep harping on "Does anyone else (besides US comps) have - or need - three brands?" and you also keep saying that Lincoln doesn't need Mercury, 'cause 1400 LM dealers are also Ford dealers, Well, the problem here is "Does anyone else (besides US comps) have their luxury brand share showroom space with its plebian brother?" You will be hard pressed to find a Nissan/Infiniti or Honda/Acura showroom, and you will definitely not see a Toyota/Lexus showroom (it's against Toy's dealer contract). Yet you seem to think Ford/Lincoln will work.

 

IMO, Lincoln has three or four years to prove it can stand on its own. That will give it enough time to get real new product and to see if that and the MCEs improve sales. If not, say goodbye to the boxed star. And, yes, I do think there's a chance we'll be here in four or five years with this same debate, only substituting "Lincoln" for "Mercury".

 

And I don't think AM's going to stick around long enough to "save" Lincoln. I'd bet he's already got other offers on his voice mail. Not only that, but Lincoln doesn't actually fit into "One Ford." It's not a global brand.

[syrtran]

Without knowing the breakdown between fleet and retail, you might as well try landing a Cessna with your eyes shut.

 

 

What is ILS used for then playing Tetris Richard?

ILS isn't automated. You still need your eyes open to see the I's. :P :D

[syrtran]

See? Even you can't define what makes Mercury different except that "it's not Ford". That's not a brand identity. I'm looking at it literally because that's how most customers will look at it. In a lot of cases, they are buying the vehicle. Not the brand. There is very little loyalty these days.

Nick, I'll take the words of those who have or would have (I include myself in the latter) bought a Mercury instead of a Ford over someone who seems to absolutely detest the idea of a "middle" brand in determining what Mercury customers would buy. I will restate that I believe that more than half of existing Mercury buyers will buy a Buick or a Honda or a Nissan over the equivalent Ford or Lincoln. They are not just "buying the vehicle," as they easily could have bought the Ford the first time. The Milan or Mariner gives them something a Fusion or Escape doesn't, even if it's just a false perception of "better" (which even more disproves your point).

 

And please don't repeat, yet again, that there was no difference between Fords and Mercuries except grille and taillights because that's only been in the last 10-15 years (and is a sore spot to many Mercury fans). For the first 55-or-so years, there were many differences between most Mercuries and their Ford equivalents - including different wheelbases, suspension tuning, body panels, interiors, even rooflines. You couldn't even swap trunk lids between a 1995 Sable and a Taurus. Even today, the 2010 Mountaineer and Explorer have different door skins.

 

Oh, and there's lots of brand loyalty out there. Just go look at Toyota's sales for proof, or talk to a Subaru owner about an AWD Fusion, or try to talk a Honda owner into any other vehicle. There's just no loyalty for those brands that haven't been loyal to their own customers (see: Mercury).

[mercurymichael]

Honda has been very successful and Toyota also up until recently. But that's not the point.

 

The point is IF having 3 full line brands is a good business move then SOMEBODY else would have done it already.

 

If Toyota said they were inserting a new brand between Toyota and Lexus then they would be called nuts.

 

The only difference here is Mercury has history and a few loyal and emotional fans.

 

Actually Ford, Chrysler and GM have been very successfully with mulitple brands for decades. Toyota does have 3 brands and considering a 4th. VW, BMW both have 3 brands.

 

Bottom line this was Ford's decision and a poor one in my opinion. L/M was neglected for 20+ years. It will be very difficult to turn Lincoln around and without Mercury's additional volume, small as it may now be, L/M dealers will be severely hurt. Nice as Fords may be these days, buying a Lincoln at a Ford dealer is like buying a Cartier diamond at Zales.

[mercurymichael]

A lot of questions pointing to is this the best strategy for Ford?

Well, all I can say is that Ford is following the path of least clutter and distraction.

Frankly, Ford's recent history with trying to resurrect luxury brands is not good,

so bad indeed that it's walked away from the whole stinking PAG mess after spending

billions and finally admitting that they are no closer to a profit.

 

Luxury cars and add on brands are a pain in the ass, they appear to add more

high end products but cost a bunch in resources and money to implement.

 

Sometimes it's easier to give up on the whole mess and just build good Fords.

 

PAG is what got L/M in trouble to begin with. If they had invested the billions they wasted on washed up Euro brands in L/M instead, they would more than likely have had a very strong and diverse division rather than mediocre Ford clones.

[mercurymichael]

It's the closest to what a Mercury was based on what exactly? If you liked the Sable, the Taurus is undoubtedly the closest vehicle to it on the market. In fact, I'd say the Taurus is superior to the last Sable in every way based on your benchmarks - style, content, and price. Saying any other vehicle is more similar to the Sable is simply sour grapes at Ford over Mercury's demise.

 

I'd say the LaCrosse is superior to the Taurus. It is far better looking and that has nothing to do with grapes. It is an opinion however, just like your opnion that the new Taurus is better than the previous Sable. Quite franklin I would hope so, anything else would be regression.

 

Bottom line Nick, and for what ever reason you do not get this or refuse to accept it, not everyone wants to see themselves coming and going. I am always going to head for something that is a little more special than average.

[Ford Jellymoulds]

ILS isn't automated. You still need your eyes open to see the I's. :P :D

 

LOL Ha Ha very funny.

 

 

You forgot to bring the video over from the last page no way could the pilot could have landed without it.

 

http://www.youtube.com/watch?v=bzD4tIvPHwE

 

 

Captain eyes says yes, the computer says noooooh (Little Briton)

 

 

 

[akirby]

Actually Ford, Chrysler and GM have been very successfully with mulitple brands for decades.

 

Yep. And how did that work out for them the last 2 years? Which automakers entered or almost entered bankruptcy?

And exactly how much market share did those 3 brands enjoy over the last several decades? It's a lot easier to support multiple brands when you own 50% of a 17M unit market (8.5M vehicles) versus 17% of a 11M unit market (1.87M vehicles). See the difference??

 

Toyota does have 3 brands and considering a 4th. VW, BMW both have 3 brands.

 

Apples and watermelons. Scion is not in between Ford and Lincoln. They're a small niche brand appealing to a small consumer group - and not doing it very successfully. Same for VW and BMW. Nobody has 3 sequential brands.

 

Could Mercury have survived as a niche brand like Scion or Mini? Sure, given the right products. Does that mean it's worth the investment Ford would have to make to do it, versus what they're currently planning to do with Lincoln? Only Ford knows that and they've already chosen.

 

 

Ford can't look at the past because the market is totally different and what worked 15 years ago won't necessarily work today. And they can't look at it from the standpoint of "can we keep Mercury" - they have to make a business decision as to where they want to be in 5 years and what it takes to get there.

 

There are 2 possibilities - they wanted to get rid of excess dealers and finally had the cash to buy them out so closing Mercury was a way to force that to happen now. Possible but not likely.

 

Or they have a 3-5 yr business plan for Ford and Lincoln and they can't do what they want and continue to support Mercury. Resources are always limited.

 

Anyone who bought a Mercury because it seemed "better" than a Ford the last 15 years is simply delusional. Some may have preferred their L/M dealer over the Ford dealer but that's a dealer issue not a product issue.

 

We haven't seen the entire plan for Lincoln - just some tidbits on products and features. Back in 2001 or so the plan was for Lincoln to have a separate showroom even in the Lincoln/Mercury dealerships. I expect that is the new plan going forward although I'm not sure how they'll make that happen in some of the smaller dealerships.

[NickF1011]

I will restate that I believe that more than half of existing Mercury buyers will buy a Buick or a Honda or a Nissan over the equivalent Ford or Lincoln.

 

I think Ford has taken that into account and has simply said "Fine, let them buy a Honda or Nissan." Ford is growing without the need for a third entirely separate brand that does nothing but keep only a couple thousand quirky customers in the fold. They likely figure they'll make more money growing the Ford brand and increasing the quality of the Lincoln brand instead.

[NickF1011]

I'd say the LaCrosse is superior to the Taurus. It is far better looking and that has nothing to do with grapes. It is an opinion however, just like your opnion that the new Taurus is better than the previous Sable. Quite franklin I would hope so, anything else would be regression.

 

Bottom line Nick, and for what ever reason you do not get this or refuse to accept it, not everyone wants to see themselves coming and going. I am always going to head for something that is a little more special than average.

 

So who's to say that a new Mercury Sable wouldn't be as nice as the LaCrosse either? Considering it would just be a Taurus with a different grile and tail lights, then I doubt it would be. Either way, you'd be buying the Buick instead of a Ford Motor Company product.

[syrtran]

Yep. And how did that work out for them the last 2 years? Which automakers entered or almost entered bankruptcy?

I'm going totally off-topic and irrelevant, but it seems a lot of people don't realize that GM was forced into bankruptcy. Waggoner is gone simply because he refused it. (I'm not arguing that declaring BK didn't help GM)

 

BTW, it also seems that many people (especially over at Autoblog) don't realize that nearly all the things that are now turning GM around, with the possible exception of closing Pontiac, were started under RW, including the Volt, CTS-V coupe, and Cruze, the head-to-toe revamping of Buick, and the removal of hundreds of unneeded dealerships. The one thing that Waggoner couldn't do that BK allowed was getting rid of the fiefdoms on the board (but it's starting to look like new ones are forming).

[jpd80]

I'm going totally off-topic and irrelevant, but it seems a lot of people don't realize that GM was forced into bankruptcy. Waggoner is gone simply because he refused it. (I'm not arguing that declaring BK didn't help GM)

 

BTW, it also seems that many people (especially over at Autoblog) don't realize that nearly all the things that are now turning GM around, with the possible exception of closing Pontiac, were started under RW, including the Volt, CTS-V coupe, and Cruze, the head-to-toe revamping of Buick, and the removal of hundreds of unneeded dealerships. The one thing that Waggoner couldn't do that BK allowed was getting rid of the fiefdoms on the board (but it's starting to look like new ones are forming).

 

I'm going to go out on a limb here and say that GM haven't really changed a thing.

Waggoner was in charge when GM ran out of cash, his buddies cobbled together a plan to reduce GM's

production by a scant 15% and painted sunshine lollypops and rainbows for the government to read.

All so that GM could keep doing what ita always done, over produce and cover up with incentives.

I fail to see how 10,000 Volt or CTS-V Coupe or even Cruze will be game changers for GM.

What GM needed was replacements for its mid and large sized FWD products, something paralysed by Zeta.

 

By comparison, Ford has reduced it production capacity and employees to about 50% comapred to 2005,

they now make slightly less vehicles than GM, have more debt for sure but far less strings attached...

Ford is now on the cusp of something really great, volume products on unified platforms around the globe...

 

 

Last months sales:

GM 196K

Ford 179K

 

US Employees

GM 103K

Ford 50K

 

Retirees:

GM 377K

Ford +200K

[2005Explorer]

Considering it would just be a Taurus with a different grile and tail lights, then I doubt it would be.

 

If you go back to 1986 the Sable had very different styling then the Taurus. In fact, the Sable shared very little sheet metal with the Taurus until later in it's life. Even when the oval versions came out the Sable was quite different then the Taurus. The Sable became a clone with only a different grille and tail lights when the last version (based on the Five Hundred) was introduced.

 

With all of that said sometimes I worry that Mulally's real objective is to clean up Ford until it is downsized enough to look attractive to other automakers. I know a few years ago Ford was considering merging with another company, but then decided they would work on profitability first. Once Ford is downsized enough and profitable enough it is going to be very attractive to other companies like Nissan-Renault or even Toyota. It seems the family (right down to Henry III) is still quite interested in maintaining the company status quo, but money talks and Nissan or Toyota would love to be selling the F-Series.

 

I'm not saying it's going to happen, but after watching corporate merger after corporate merger it is something that concerns me a little bit. Once a Ford isn't built by the Ford Motor Company it's no longer a Ford and just a brand and as a brand Ford means little without Henry's company behind it.

[NickF1011]

If you go back to 1986 the Sable had very different styling then the Taurus. In fact, the Sable shared very little sheet metal with the Taurus until later in it's life. Even when the oval versions came out the Sable was quite different then the Taurus. The Sable became a clone with only a different grille and tail lights when the last version (based on the Five Hundred) was introduced.

 

And even with all those differences, it was no better a car.

 

With all of that said sometimes I worry that Mulally's real objective is to clean up Ford until it is downsized enough to look attractive to other automakers. I know a few years ago Ford was considering merging with another company, but then decided they would work on profitability first. Once Ford is downsized enough and profitable enough it is going to be very attractive to other companies like Nissan-Renault or even Toyota. It seems the family (right down to Henry III) is still quite interested in maintaining the company status quo, but money talks and Nissan or Toyota would love to be selling the F-Series.

 

I'm not saying it's going to happen, but after watching corporate merger after corporate merger it is something that concerns me a little bit. Once a Ford isn't built by the Ford Motor Company it's no longer a Ford and just a brand and as a brand Ford means little without Henry's company behind it.

 

Sounds like a stretch of a conspiracy there. Ford merging with a foreign automaker would make it surrender the one thing that is responsible for its biggest gains recently: American ingenuity and independence.

Edited July 12, 2010 by NickF1011

[akirby]

With all of that said sometimes I worry that Mulally's real objective is to clean up Ford until it is downsized enough to look attractive to other automakers. I know a few years ago Ford was considering merging with another company, but then decided they would work on profitability first. Once Ford is downsized enough and profitable enough it is going to be very attractive to other companies like Nissan-Renault or even Toyota.

 

Ford is making long term changes, not short term. These aren't the types of moves you make if you're just putting on mascara and lipstick to make yourself more attractive to potential buyers. Trust me - I suffered through that with a fortune 100 company.

 

Besides - where are these other companies going to get the money to buy Ford? Not happening anytime soon.

 

Mulally isn't downsizing - he's rightsizing. Yes it's cliche but in this case appropriate. He's only cutting back production to meet demand and to get rid of unprofitable vehicles. OTOH he's ADDING new vehicles like the Fiesta and Transit Connect and making huge investments in new powertrains and infotainment.

 

It's called running a business. As opposed to being a charity provider keeping a bloated dealer network and production facilities on life support at the expense of profits.

[silvrsvt]

If you go back to 1986 the Sable had very different styling then the Taurus. In fact, the Sable shared very little sheet metal with the Taurus until later in it's life. Even when the oval versions came out the Sable was quite different then the Taurus. The Sable became a clone with only a different grille and tail lights when the last version (based on the Five Hundred) was introduced.

 

 

You might want to brush up on your styling...the only different hardpoint on the Sable was the C-pillar (which was the fad in the 1980's with Mercury being different then Ford...I truly wonder how much that cost to change)..all the other changes where done in plastic, which is much cheaper then new sheet metal stampings...but not as distinctive. The Sable was about as different as the MKZ is vs the Fusion...and everyone complains about the MKZ not looking different enough vs its lesser sibling.