Mullay: Ford needs to become one global company

[RichardJensen]

If there is anyone on this board that I expected to understand volume vs. profit I thought it would be you RJ. I'm guessing that dealers make more money selling a $40,000 Volvo S80 than selling a $20,000 Milan. You don't need to replace volume, you need to replace (or increase) profit. Volvo would do that vs. Mercury.

 

Ford is trying to close dealerships, right? Why not kill off Mercury, revise Lincoln's lineup (cheaper derivatives of Town Car & MKZ/MKX) to bolster Lincoln-brand sales, and partner Lincoln with Volvo, Mazda, Jaguar, LR, AM, Ford...someone - anyone! Close the dealerships that either choose not to restructure or that are redundant in the market.

 

I said this before and never got your opinion on it: Mercury is more Plymouth than Oldsmobile. There is no reason to believe that it would cost Ford billions to shutter the brand. Invest Mercury's PD & Mkt budgets back into Ford & Lincoln. The result? Better cars.

 

I'm glad Mulally's there, that's for sure.

 

Scott

1) I understand volume vs. profit to this extent: If you can't sell enough S80s to make the same amount of profit off the sale, parts, and service, as you would off Mercury Milans, then you're a net loser, especially when you consider the investment required to obtain the franchise in the first place. Consider that while Volvo's dealership network is arguably under developed, it is not so underdeveloped that a city like Omaha, which has one Volvo dealership, one BMW/Jaguar/Land Rover dealership, one Mercedes dealership, one Lexus dealership, one Acura dealership, one Infiniti dealership, and five LM dealerships (within about 10 miles of Omaha). Should Ford buyout the Volvo dealership? or the 5 LM dealerships? Surely Omaha (metro: 700k give or take) is not big enough to support TWO Volvo dealerships.

 

Then you have small town FLM dealerships. Within an hour of Sioux Falls, SD (metro: 210k), you have no less than four FLM dealerships. Would these dealerships all support Volvo franchises (let alone Jaguar or Land Rover), would all four of these dealerships support Mazda franchises when there are already two Mazda franchises within an hour's drive? You would end up with as many Mazda franchises, almost, as there are Ford franchises.

 

No matter how you slice it, killing Mercury involves forced consolidation, and forced consolidation is expensive.

 

2) Unlike Plymouth vis a vis Chrysler, Mercury has a better educated, wealthier, and ethnically different demographic than Ford. That alone argues for its continuance, apart from the excess of costs required to force consolidation on a dealership network that would resist it.

Edited November 11, 2006 by RichardJensen

[jlsaylor]

If Mercury does get the axe then I fear what we have in Mulally is a simple hatchet-man brought in to slash costs and not somebody with a lot of ideas. And right now, Ford needs good ideas if they are going to survive in the long term more than simple cost cutting.

 

I say this because Mercury provides the perfect opportunity for Ford to move into the obviously untapped mainstream, rwd market that the 300C convinced everyone exists...before that car became a 35k+ car that is. I agree that there is a market here, and must assume that if there exists an unsatisfied market wanting full-size, 30k+ sedans what must the market wanting an affordable, 3-Series sized rwd sedan must be like? (4-door version of Mustang's D2C platform with Control-Blade IRS anyone)

 

There is obvious opportunity here to turn Mercury into an affordable, rwd brand accross the line while leaving Ford to produce the large volume, fwd sedans they need to be concentrating on. Don't get me wrong, I don't mean that Ford should be deprived of rwd product, but to replace vehicles like the Fusioon or Focus with rwd vehicles would obviously be a mistake since the volume for rwd vehicles in these segments is simply unlikely to ever rival the huge demand vehicles like the Accord and Cmary enjoy. But there is obviously demand for these vehicles if on a more limited scale.....

 

Which is, of course, why building compact and mid-size rwd sedans under the Mercury banner would be a great idea...and an absolute coup in the car would given the fact that no other brand currently does the same. This possiblity looks even better when you consider that the same could help support a Lincoln move back to proper, rwd luxury cars through greater component sharing, etc.

 

A new, rwd Capri could be shared by Ford of Europe and Mercury in the U.S. An affordable, 3-Series sized sedan could be shared with Ford Australia and, after being perfected in these markets, could be sold in Europe and other markets through Ford dealers...possibly even with a Mercury emblem on it. (preferably the god's head emblem thank you)

A large, rwd Mercury sedan could provide the perfect platform-mate to a revived Lincoln Continental offering cost advantages for both cars.

 

And this could be an area where the Ford brand could benefit by possibly replacing the five-Hundred with a large, rwd sedan...badge it as a Galaxie, offer it in 4-dr sedan, 2-dr fastback, and 2-dr retractable hardtop guise and it could give a much needed does of image to the Ford lineup. The same could also allow Ford to reposition the Fusion more directly against the Camry and Accord, offering a broader range of offerings in terms of price and appointment, and likely eliminating some of the cross-shopping that likely occurs between the Fusion and Five-Hundred.

 

I'm afraid that what we may be seeing is somebody more concerned with getting out of markets Ford is currently playing in but failing miserably at, than expanding the brand into markets ripe for development. I sincerely hope that I am wrong.

Edited November 11, 2006 by jlsaylor

[IPITYDAFOOL VIRUSFREE]

If Mercury does get the axe then I fear what we have in Mulally is a simply hatchet-man brought in to slash costs and not somebody with a lot of ideas. And right now, Ford needs good ideas if they are going to survive in the long term more than simple cost cutting.

 

I say this because Mercury provides the perfect opportunity for Ford to move into the obviously untapped mainstream, rwd market that the 300C convinced everyone exists...before that car became a 35k+ car that is. I agree that there is a market here, and must assume that if there exists an unsatisfied market wanting full-size, 30k+ sedans what must the market wanting an affordable, 3-Series sized rwd sedan must be like? (4-door version of Mustang's D2C platform with Control-Blade IRS anyone)

 

There is obvious opportunity here to turn Mercury into an affordable, rwd brand accross the line while leaving Ford to produce the large volume, fwd sedans they need to be concentrating on. Don't get me wrong, I don't mean that Ford should be deprived of rwd product, but to replace vehicles like the Fusioon or Focus with rwd vehicles would obviously be a mistake since the volume for rwd vehicles in these segments is simply unlikely to ever rival the huge demand vehicles like the Accord and Cmary enjoy. But there is obviously demand for these vehicles if on a more limited scale.....

 

Which is, of course, why building compact and mid-size rwd sedans under the Mercury banner would be a great idea...and an absolute coup in the car would given the fact that no other brand currently does the same. This possiblity looks even better when you consider that the same could help support a Lincoln move back to proper, rwd luxury cars through greater component sharing, etc.

 

A new, rwd Capri could be shared by Ford of Europe and Mercury in the U.S. An affordable, 3-Series sized sedan could be shared with Ford Australia and, after being perfected in these markets, could be sold in Europe and other markets through Ford dealers...possibly even with a Mercury emblem on it. (preferably the god's head emblem thank you)

A large, rwd Mercury sedan could provide the perfect platform-mate to a revived Lincoln Continental offering cost advantages for both cars.

 

And this could be an area where the Ford brand could benefit by possibly replacing the five-Hundred with a large, rwd sedan...badge it as a Galaxie, offer it in 4-dr sedan, 2-dr fastback, and 2-dr retractable hardtop guise and it could give a much needed does of image to the Ford lineup. The same could also allow Ford to reposition the Fusion more directly against the Camry and Accord, offering a broader range of offerings in terms of price and appointment, and likely eliminating some of the cross-shopping that likely occurs between the Fusion and Five-Hundred.

 

I'm afraid that what we may be seeing is somebody more concerned with getting out of markets Ford is currently playing in but failing miserably at, than expanding the brand into markets ripe for development. I sincerely hope that I am wrong.

1 sentence. Lexus will shit on Mercury everytime it tries. Mercury can mnot price a car over 34 grand and expect sales. Ford cant price a car over 26 grand and expect sales. 8 thousand dollars and the same car is not enuff for a division. If u dont understand the logic Here is the example. Toyota Camry and Toyota Avalon. Does that Avalon have Another Name in front of it other than Toyota. NO. Upscale Lexus ES is same base platform I believe but These 3 cars Are Not called Triplets. Milan,fusion, Zepyhr are the same. Ford and Lincoln no room for Mercury. Just make a special edition Mercury and call it a rap. Cougar or Capri.

[waymondospiff]

No matter how you slice it, killing Mercury involves forced consolidation, and forced consolidation is expensive.

 

2) Unlike Plymouth vis a vis Chrysler, Mercury has a better educated, wealthier, and ethnically different demographic than Ford. That alone argues for its continuance, apart from the excess of costs required to force consolidation on a dealership network that would resist it.

Ford is already "forc[ing] consolidation." This is nothing new. Killing Mercury allows Ford to revise its consolidation plan. Nothing more, nothing less.

 

Especially in places such as the Upper Midwest where F-L-M dealers already exist, killing Mercury leaves a F-L dealer. No real loss. Especially where most consumers shopping F-L-M only buy a Montego vs. a Five Hundred because of the three D3s on the lot the Montego is the right color.

 

If Mercury does get the axe then I fear what we have in Mulally is a simply hatchet-man brought in to slash costs and not somebody with a lot of ideas. And right now, Ford needs good ideas if they are going to survive in the long term more than simple cost cutting.

 

I'm afraid that what we may be seeing is somebody more concerned with getting out of markets Ford is currently playing in but failing miserably at, than expanding the brand into markets ripe for development. I sincerely hope that I am wrong.

Being a "hatchet man" and being an "idea man" are not incompatible. Ford needs to 1. cut costs and 2. offer new products. Offering new products alone won't change the huge cost burden - both production & international "fiefdoms" in PD - hurting Ford's bottom line. And only cutting costs won't drive sales of mediocre products.

 

Mulally cut costs by slashing the workforce and expenditures at Boeing Commercial Airplanes after Sept 11th. But he also led & directed development of the B777 (fastest selling widebody of all time...until now), the B737-NG (best selling Western jet), and the B787, a revolutionary product that is giving Boeing headaches. Why headaches? Because they can't make them fast enough! Reports have stated the earliest production slots at Boeing are for 2014. So, evidence is that Mulally can drive efforts to both reduce costs & lead new product development.

 

Scott

[jlsaylor]

1 sentence. Lexus will shit on Mercury everytime it tries. Mercury can mnot price a car over 34 grand and expect sales. Ford cant price a car over 26 grand and expect sales. 8 thousand dollars and the same car is not enuff for a division. If u dont understand the logic Here is the example. Toyota Camry and Toyota Avalon. Does that Avalon have Another Name in front of it other than Toyota. NO. Upscale Lexus ES is same base platform I believe but These 3 cars Are Not called Triplets. Milan,fusion, Zepyhr are the same. Ford and Lincoln no room for Mercury. Just make a special edition Mercury and call it a rap. Cougar or Capri.

 

Who said anything about Mercury competing with Lexus? In fact, I think your assumption that I intended for Mercury to compete with Lexus indicates how pre-conceived notions dictate what we think about car companies. I'm talking about rwd cars with style and performance that don't require the kind of money Lexus or BMW asks. This is exactly what Chrysler did with the 300 and that car was a raging success...until they insisted on continually kept bumping the price to the point that nobody would pay for it. And in my scnario the positioning of Mercury relative to Ford and Lincoln means very little since they would be building cars fundmaentally different, for the most, part than either of those brands.

 

Assume that the next Mustang GT will employ the IRS originally intended for that platform, that Mercury offers a 3-Series sized sport sedan with good styling based on that same Mustang which offers a 350-400hp V-8 starting under 30k, and then try to argue that this wouldn't sell well if executed properly........you'd just end up looking silly because there would obviously be a market for that. As for competing with Lexus.....we would be looking at a sport sedan which offers a V-8, far more power, and if done correctly some mean Detroit muscle-inspired style for less than Lexus asks for an I250. Even though these would hardly be direct competitors I could see that Mecury sedan causing a major problem for brands like Lexus and Infiniti much more readily than I could see potential purchasers raising their noses at that same Mercury in droves. The problem is execution, not price range. Build a car people want to buy and they'll do so...it is that simple.

 

As for you assumptions about what price ranges Ford and Mercury can sell cars in. The Mustang GT starts above your price cap for Ford products and it is, arguably, the most successful North American car launch in more than a decade with demand for GT's remaining quite good and well above that of any other car Ford produces. Again, build a car people want to buy and they will do so. We have far too much corporate "within the box" thinking in this day and age...and the fact that nobody can think of the huge potential advantages that the Mercury brand could provide displays this in spades.

Edited November 11, 2006 by jlsaylor

[RichardJensen]

Ford is already "forc[ing] consolidation."

No, they're not. They're aiding consolidation, by discounting loans to purchase dealers and putting 'incentive' money on the table in amounts far smaller than what it would cost to shutter a dealer outright.

 

Also, where you take away a franchise, you have to pay money. You can't look at a dealership that has FLM, and say, "well, you hardly sell any Mercuries, so....", you always have to get out your checkbook, and for these FLM dealership, it costs Ford next to nothing in administrative and sales support, for this dealer to carry Mercury.

 

Further, given that the demographic of Mercury customers is SO different from Ford, you cannot reasonably expect the bulk of Mercury buyers to buy Fords, therefore you really are giving away volume, and you are driving away wealthier customers than you draw with your Ford brand. Doesn't make sense to me.

[waymondospiff]

Assume that the next Mustang GT will employ the IRS originally intended for that platform, that Mercury offers a 3-Series sized sport sedan with good styling based on that same Mustang which offers a 350-400hp V-8 starting under 30k, and then try to argue that this wouldn't sell well if executed properly........you'd just end up looking silly because there would obviously be a market for that. As for competing with Lexus.....we would be looking at a sport sedan which offers a V-8, far more power, and if done correctly some mean Detroit muscle-inspired style for less than Lexus asks for an I250.

I agree that a Mustang-based sedan is such a "well, duh!" move that I can't explain why Ford hasn't jumped on it. However, it wouldn't come close to a BMW 3-Series - it'd be much larger and much heavier. But it'd still be oddles of fun...and a decent seller to boot.

 

Further, given that the demographic of Mercury customers is SO different from Ford, you cannot reasonably expect the bulk of Mercury buyers to buy Fords, therefore you really are giving away volume, and you are driving away wealthier customers than you draw with your Ford brand. Doesn't make sense to me.

Mercury appeals to whom? Could it be covered by Ford? Is it covered by Mazda? Volvo? Jaguar? Spending millions upon millions to differentiate 30K Milans per year and then market them doesn't make sense. Could Ford use that same money to improve the Fusion and increase marketing? Would sales increase 30K units per year? If so, then what is the reason for Mercury? That's the question (hopefully) being asked in Dearborn right now.

 

And how many dealers would demand compensation if Mercury were killed off and they received better products that would sell better? I believe you're looking at this in a very strict traditional way - Ford needs to think (and I believe is thinking) outside the box. What is Mercury's value to Ford? I don't believe "keeping an unviable brand (Lincoln) viable" is a true value for Ford.

 

Corporate greed. I hope the guy chokes on it.

Define "greed." Anyway, the people with housing overlooking a forest have every right to purchase that land at fair market value and preserve it as woods. Otherwise, if it isn't owned by them what right do they have to dictate what is built there?

 

Scott

[IPITYDAFOOL VIRUSFREE]

Who said anything about Mercury competing with Lexus? In fact, I think your assumption that I intended for Mercury to compete with Lexus indicates how pre-conceived notions dictate what we think about car companies. I'm talking about rwd cars with style and performance that don't require the kind of money Lexus or BMW asks. This is exactly what Chrysler did with the 300 and that car was a raging success...until they insisted on continually kept bumping the price to the point that nobody would pay for it. And in my scnario the positioning of Mercury relative to Ford and Lincoln means very little since they would be building cars fundmaentally different, for the most, part than either of those brands.

 

Assume that the next Mustang GT will employ the IRS originally intended for that platform, that Mercury offers a 3-Series sized sport sedan with good styling based on that same Mustang which offers a 350-400hp V-8 starting under 30k, and then try to argue that this wouldn't sell well if executed properly........you'd just end up looking silly because there would obviously be a market for that. As for competing with Lexus.....we would be looking at a sport sedan which offers a V-8, far more power, and if done correctly some mean Detroit muscle-inspired style for less than Lexus asks for an I250. Even though these would hardly be direct competitors I could see that Mecury sedan causing a major problem for brands like Lexus and Infiniti much more readily than I could see potential purchasers raising their noses at that same Mercury in droves. The problem is execution, not price range. Build a car people want to buy and they'll do so...it is that simple.

 

As for you assumptions about what price ranges Ford and Mercury can sell cars in. The Mustang GT starts above your price cap for Ford products and it is, arguably, the most successful North American car launch in more than a decade with demand for GT's remaining quite good and well above that of any other car Ford produces. Again, build a car people want to buy and they will do so. We have far too much corporate "within the box" thinking in this day and age...and the fact that nobody can think of the huge potential advantages that the Mercury brand could provide displays this in spades.

I agree with this to a certain point. Mustang Gt and the whole Mustang mystique is the one thing No company can take away. How much time would it take to really bring these ideas to market. It will take the time that Ford may or may-not have. FORD and Mercury are too similar at this point. The 300 was considered A hip car and then once too many brothers tricked them out they became rather Old really quickly. Price didnt have anything to do with sales figures. There are a lot of people that have buying Mercedes/BMW/Lexus/Audi used autos. The glut of these cars that come off lease makes it a buyers market, consumers can get more bang for the buck. So Mercury also has to compete with Used Autos. I really dont think Getting rid of Mercury will have an effect positive or negative, unless its related to costs.

[RichardJensen]

Mercury appeals to whom? Could it be covered by Ford? Is it covered by Mazda? Volvo? Jaguar? Spending millions upon millions to differentiate 30K Milans per year and then market them doesn't make sense. Could Ford use that same money to improve the Fusion and increase marketing? Would sales increase 30K units per year? If so, then what is the reason for Mercury? That's the question (hopefully) being asked in Dearborn right now.

 

And how many dealers would demand compensation if Mercury were killed off and they received better products that would sell better? I believe you're looking at this in a very strict traditional way - Ford needs to think (and I believe is thinking) outside the box. What is Mercury's value to Ford? I don't believe "keeping an unviable brand (Lincoln) viable" is a true value for Ford.

1) http://www.detnews.com/apps/pbcs.dll/artic...0343/1148/rss25

 

Volvo sells for too much, and Mazda is too sporty. You couldn't sell a Miata from the same showroom as a Town Car. Neither brand is any kind of reasonable substitute for Mercury.

 

2) I am not looking at this in a 'strict traditional way' because I'm a strict traditional person. I'm looking at this as dealers I know will see it, and knowing that in most cases, the "M" in an LM or FLM dealership can't be replaced with ANYTHING because there's already a Mazda or Volvo dealership in the area. Dealers will demand money to cover the cost of adding a different marque, and they will demand money if they have Mercury pulled completely.

 

It's very easy to look at Toyota, and then look at Ford, and then assume that EVERYTHING Ford does differently from Toyota is 'wrong', and should be abandoned. This is an overly simplistic approach.

 

For instance, Ford has a ton of low volume rural dealerships throughout the upper midwest and South. Jac Nasser saw this as a point of difference from Toyota (and Honda) and decided to try and drive these dealerships out of business. Millions of dollars and an incredibly P'O'd group of dealers later, Nasser had accomplished precisely nothing of lasting value, unless you count the destruction of dealer goodwill as a good thing.

 

Al Giombetti now has taken the more broad minded and long-sighted view. Rural Ford dealerships keep Ford customers because they keep local business. They, essentially, keep Toyota out of rural areas, and this provides a measure of protection for Ford's trucks and SUVs which are more popular at rural dealerships.

 

A similar approach, IMO, is justified with Mercury. Rather than complain about how it drains this or that (because a case can certainly be made that small Ford dealerships impose extra costs on Ford), look at the different demographic that Mercury draws, and think, "Hey, without even trying, we get, every year about 50,000 or so customers that wouldn't even consider buying a Ford, and we get wealthier buyers that are more inclined to purchase profitable optional eqiupment, let's figure out a way to keep these customers and keep them happy".

 

You can consider Mercury to be a cost, and spend a fortune trying to get rid of it, or you can realize it as an asset and invest in it.

Edited November 12, 2006 by RichardJensen

[RileyWells]

Theoretically speaking, Ford could kill Mercury much easier and cheaper than it was for GM to kill Oldsmobile. Mercury's are now sold primarily at L/M dealers and at some rural Ford dealers. After a brief search, I could not find a single stand-alone dealer for Mercury. You could easily phase out Mercury by allowing Lincoln to go down market and letting Ford go upmarket. The only vehicles Mercury have that Lincoln doesn't is the Mountaineer, Mariner and the soon-to-be-discontinued Monterrey. All they have to do is design the next gen Explorer & Escape to be Lincoln's. They could easily phase Mercury out within the next 3 to 5 years without anybody noticing. And if losing Mercury is that big of a deal to the bigger L/M dealers, let them have a Volvo and/or Mazda franchise to pick up the slack. Is there really such a thing as a "loyal" Mercury customer?

 

Well, there is at least one loyal Mercury customer, no wait, make that two. Myself and my Father in law.

Why? Two important reasons.

1. Mercury provides at least some distinction from the ubiquitous Fords.

2. The L/M franchises I have dealt with are far better in service and customer attention than any Ford dealer in my experience.

If Mecury vanished, so would I unless there was an affordable line of Lincoln products.

 

2002 Mountaineer, 2006 Milan.

[jpd80]

Do you think Mercury has lost its identity a little? Does ford need to have more distinction between it and Mercury models?

[Motownr]

As a participant in both the Olds termination and the ongoing PBG restructuring, my $.02.

 

There is no chance that closing Mercury can be done 'on the cheap.' The rules governing franchise termination are at the state level, and GM found itself facing lawyers at the local level everywhere it turned. There are still a number of cases pending around the country. Richard is correct: canning just Mercury would be costly and massively disruptive.

 

Based on that lesson, GM's taking a different tack with PBG. I don't think they even know if the strategy can work, but it clearly is MUCH easier and cheaper for them to merge two brands on life support with GMC, a comparatively strong brand.

 

Personally, I think the most logical strategy for Ford is to replicate what GM is trying to do with PBG and what DCX is trying to do with Alpha (CJD). I have no idea how standalone LM dealers are surviving right now; every one I know is on life support. By making it clear that both Lincoln and Mercury are going to become more targeted brands that 'bracket' the Ford brand, Mullaly will start a mad rush to consolidate. Ford will likely have to financially assist some deals, but the cost for GM has not been overly onerous.

[matthewq4b]

We have been over this chopping Mercury thing befor.

 

If Mercury goes so will it's sales Mecury buyers will not move into Ford's.

 

When Merc was cut here those sales just vanished Ford or Lincoln did not pick them up.

Of all the Former Mercury buyers I know not a single one moved in to Ford or Lincoln After they were no longer avalible. A couple did move in to Mazda's but what would be better Mazda sales or Mercury sales? In fact the used U.S Mercury's that do manage to end up here commamnd a preimium on the used car market, and they get it.

 

Mercury has enough of a sales base to justify it's exsistnace, these are esentually just rebadged Ford's but with enough individual identity to appeal to a different consumer.

 

The addtional costs of keeping Mercuy far out weigh the savings with cutting it.

 

Ford is in a enviable postion with Mercury. Mercury unlike Ford has a much better perceived reputation for quality product ya I know they are just rebadged Fords, But might as well exploit the percevied impression.

 

Unfortunetly Ford has not invested in Mercury to any degree.

 

If Mually cuts Mercury with trying to realize it's full potential then he is not the brain child every one claimed he is.

Nobody can say Ford has properly exploited or invested in the Mercury brand in the last 15 years.

 

If the proper attention is given to Merc and it does not appear to be making signifigant gains then chop it.

Ford has a UNQUE opportuninty with Mercury to gains sales that they never would have had a hope hell in getting other wise. Even now still there are people here that veiw Mercury in a totoally different light than Ford.

 

Where Merc could really shine is in the higher end compacts. These cars would not be saddled with the issue of a 25k plus compact Ford. But a 25K plus compact Mercury is a different story. As it is not a Ford and will not be assosiated with the entry leval Ford units.

 

There are people that do want higher end compacts either cause they do not like big cars, suvs or what ever. Keeping Mercury gives you a vehical to cater to these people with out the stigmatism of the entry leval Ford units.

 

Mercury will never be a high a volume name plate as Ford is. But the profits per unit (since they are just rebadges and priced higher) have traditionaly been higher than Ford.

 

Cutting Mercury with out at least trying to make it viable is a stupid mistake.

If the money that has been flushed at Jag had been invested in Mercury and Lincoln. This would be a non topic and FML would be in way better shape than they are today.

 

With the right leader ship Mercury could become a fairly high profitable niche name plate for Ford.

 

 

 

Matthew

[RichardJensen]

If Mercury goes so will it's sales Mecury buyers will not move into Ford's.

Exactly. It is not as though Mercury buyers are unaware of Ford products...

 

the ongoing PBG restructuring,

Isn't it PBJ (peanut butter and jelly)?

 

OOOOOHHHHHH Pontiac-Buick-GMC. I get it!!!

[Motownr]

You need to restructure your sandwich. The Jelly/Jam should be on the bottom.

 

 

 

To be technically correct, it's BPG now.

 

Anyway, my point is that Ford has to make higher sales/dealer a top priority and channeling FLM is a step in the right direction. It's also a pretty quick process and rather cost-effective move.

 

If they do it right, it'll also help cut the number of Ford dealers in the massively over-dealered metro markets. There's no law saying that Ford has to add additional LM stores to make every point full line (FLM).

[g48150]

Why can't we just sell on a site like Ebay? Why?

 

Can't we all just upgrade to the 21st century?

 

Can't we all just get along?

[RichardJensen]

Why can't we just sell on a site like Ebay? Why?

Call up Jac the knife, ask him how well that worked.

 

my point is that Ford has to make higher sales/dealer a top priority

I agree. It just took me a few seconds to figger out what PBG stood for.......

[630land]

While imports are getting more customers [who don't care a hoot about the 60's glory days of brand differention], wringing hands over the dying 'it has to have [outdated] mid price name' is a waste of time.

 

Let the brand fade away, don't do an Olds and have to buy out dealers. Just have it fade with the dealer consolidation.

 

No too many people. sich as those that refuse to let the past die will miss it. Just like the Taurus.

[ehaase]

Let the brand fade away, don't do an Olds and have to buy out dealers. Just have it fade with the dealer consolidation.

 

I am getting more and more convinced that it is time for Mercury to fade away. In October, Mercury only sold 10,277 cars and trucks. Among its 6 models, that's an average of about 1,700 per model. Hardly seems worth the effort.

 

The Grand Marquis is Mercury's reason for existence. Maybe the baroque sounding name needs to change (as Buick replaced the LeSabre and Park Avenue with the Lucerne), but Ford's failure to update its full size sedan is the main reason for Mercury's collapse.

[NLPRacing]

Well, there is at least one loyal Mercury customer, no wait, make that two. Myself and my Father in law.

Why? Two important reasons.

1. Mercury provides at least some distinction from the ubiquitous Fords.

2. The L/M franchises I have dealt with are far better in service and customer attention than any Ford dealer in my experience.

If Mecury vanished, so would I unless there was an affordable line of Lincoln products.

 

2002 Mountaineer, 2006 Milan.

 

I think you made my point. I'm not talking about "shutting down" Mercury like GM did with Oldsmobile, nor am I talking about a consolidation like GM is doing with Buick, Pontiac & GMC. IMHO, Ford should stop developing any new Mercury models and instead concentrate on a Ford & Lincoln only line up. I'm sure current loyal Mercury owners would happily get a Lincoln instead, if the Lincoln wasn't too expensive. Make a Lincoln version of most all Fords and maybe give Lincoln one or two unique products. Like I said, if Ford did this over a few years, nobody would even notice that Mercury went away.

[AlRozzi]

Having grown up with FML brands and a current owner of an '01 Sable and '00 Cougar, giving up Merc is difficult for me to do. However, I recognize Ford has too many brands to manage and Merc is a good candidate for elimination.

 

If I were Mullay, here is what I would do;

 

1) SELL ASTON as intended because at 5,000 units annually, it is not worth management's time at the moment.

 

2) PHASE OUT MERCURY, but a) give Lincoln the Grand Marquis as a base model because it has a loyal customer base and is still Mercury's best seller B) drop Montego and Mountaineer because neither sell well these days c) Forget Milan and put the production into Fusion and more especially into MKZ because it sells for more $ d) give Lincoln the Mariner too, as it sells well and will be updated with the '08

 

CONSOLIDATE BRANDS INTO TWO FRANCHISES

 

3) FORD/LAND ROVER- Forget the PAG business division and give Ford dealers the Land Rover lineup. Ford salesmen know how to sell 4WD vehicles and LR can be a step-up for Ford suv customers.

 

4) LINCOLN/VOLVO/JAGUAR- With Mercury out, put Volvo and Jag into the Lincoln franchise operation. LM salesmen are more able to sell luxury cars, and then Jag could exist as a lower volume brand selling more expensive cars and basically pick up Aston's void.

[RichardJensen]

Ford has too many brands to manage and Merc is a good candidate for elimination.

"Everybody" says this, but I have never seen anyone put forth a convincing argument that this is true. Most of the arguments are based on the "Toyota doesn't do this" line of reasoning that could just as easily be applied to heavy trucks, diesels, and performance coupes, in order to demonstrate why Ford should get out of THOSE markets as well.

Edited November 13, 2006 by RichardJensen

[AlRozzi]

I'm looking at it in the context of the cost to develop and market a brand and its individual line of vehicles and how best to spend that money, especially when limited. For example, if Ford could take the money spent advertising the Milan and add that cash to the Fusion budget, then a clearer, stronger message could be made for the Fusion and more Fusion volume would flow through the Ford dealer network rather than dividing the volume between two.

 

Furthermore, I just don't know anybody under the age of 40 who has heard of Mercury. Strange in relation to that is I don't know one person who is unfamiliar with the Jaguar name, yet Jag sales are 10% of Merc.

 

Also, I was thinking that if Ford did take Merc out of the equation, perhaps a new, young and hip brand could be created (i.e. Scion)?

[RichardJensen]

For example, if Ford could take the money spent advertising the Milan and add that cash to the Fusion budget, then a clearer, stronger message could be made for the Fusion and more Fusion volume would flow through the Ford dealer network rather than dividing the volume between two.

Why do you conclude that more money in the Fusion advertising kitty equates to a 'clearer stronger message'? It equates only to more money for media buys, IMO.

 

Then, you should realize that not all Mercury volume would be replaced by Ford volume. In fact, I would argue that almost no Mercury volume would be replaced by Ford volume. Why? Because Mercury customers (for whatever reason) make a conscious decision NOT to buy a comparable Ford product. This is an almost axiomatic aspect of Mercury customers: They KNOW that a similar Ford product exists, and they DON'T want it as much as they want the Mercury variant. Cancelling those Mercury variants alienates those customers (and, since equipment is about at parity between the two brands, they're making a decision based on the styling of the Mercury, or some value assigned to the Mercury name--neither of which can be translated to Ford products)

 

Look at Buick volume. It did not go up after Oldsmobile was cancelled, despite insistence that Buick and Oldsmobile customers were basically the same.

 

You would essentially be increasing the incentive to sell Fusions into fleets, if you cancel the Milan and Mercury. The Milan's volume, small as it is, is essential to keeping Hermosillo running efficiently. You need to replace that volume, and if potential Mercury customers don't step into a new Fusion instead, you have to sell that Fusion you're building to someone, and if that someone isn't a retail buyer, it's going to be a fleet buyer.

 

There are all sorts of reasons, on paper, for closing Mercury, but those reasons on paper don't stand up to customer-focused scrutiny. Customer-focused analysis tells us that Mercury customers are fundamentally different from Ford customers, and they are (on average) wealthier. This is not a customer segment to drive into the bushes for the sake of sparing the CEO 15-30 minutes out of a weekly meeting (so much for distractions), or to save a few dozen bucks per vehicle (my thumbnail estimate of the cost, per year, of maintaining Mercury as a separate entity with its own advertising budget and product range).

[waymondospiff]

Why do you conclude that more money in the Fusion advertising kitty equates to a 'clearer stronger message'? It equates only to more money for media buys, IMO.

So if more money doesn't mean better results, then spending less wouldn't equal worse results, right?

 

Com'on. The Fusion ad launch budget was a fraction of the Camry's budget. More ads, more convincing, more telling the buying public at large "Hey! We're Ford. We build a worthwhile midsize sedan! Com'on down!"

Then, you should realize that not all Mercury volume would be replaced by Ford volume. In fact, I would argue that almost no Mercury volume would be replaced by Ford volume. Why? Because Mercury customers (for whatever reason) make a conscious decision NOT to buy a comparable Ford product. This is an almost axiomatic aspect of Mercury customers: They KNOW that a similar Ford product exists, and they DON'T want it as much as they want the Mercury variant. Cancelling those Mercury variants alienates those customers (and, since equipment is about at parity between the two brands, they're making a decision based on the styling of the Mercury, or some value assigned to the Mercury name--neither of which can be translated to Ford products)

I don't care if I don't convince Mercury customers to come back to Ford. Let them go. *IF* *IF* *IF* they can be replaced with other, new buyers to Ford. The Focus found a whole new batch of non-Ford customers when it launched. The Fusion is attracting new people to the Ford brand. If we can continue this trend with more focus on the CORE product (Fusion) then why not? Spreading money between two models because you're trying to support a dealer body can actually hurt the vehicles in the long-term. Less recognition can hurt resale values, driving up leasing costs - and causing further harm for any fleet sales.

 

You would essentially be increasing the incentive to sell Fusions into fleets, if you cancel the Milan and Mercury. The Milan's volume, small as it is, is essential to keeping Hermosillo running efficiently.

Not according to Ford. If I remember, Fusion sales were down the past two months due to supply issues - they simply couldn't make enough (if that reasoning, which you were highly supportive of, is correct.)

 

...[O]r to save a few dozen bucks per vehicle (my thumbnail estimate of the cost, per year, of maintaining Mercury as a separate entity with its own advertising budget and product range).

I remember reading, years ago, when I was knee-high to a grasshopper, that the American car companies would leave two threads off of a screw if they determined it would save three cents per car. A couple dozen bucks, invested back into the Fusion, could pay for, umm, improved plastics? Four-channel ABS to add stability control? An improved sound system? Unique center stack controls?

 

My point is: I believe Mercury's costs for advertising and development of "vehicle differentiation" parts adds complexity and drags the Ford organization down. Eliminating Mercury could improve the related Ford vehicles and might not have any impact on the bottom line.

 

These are possibilities. Could I be wrong, yes. Very possible. However, I'm willing to admit that I could be wrong while presenting some pretty solid (if I do say so myself) reasoning behind my opinion. You, RJ, don't do that. You say we're naive, wrong-headed, or ignorant if we even mention closing Mercury, largely ignoring our reasoning. That's frustrating.

 

Scott