Story from Detroit News today...
With no product in the pipeline, Ford dodges questions about the declining brand's fate.
Bryce G. Hoffman / The Detroit News
After enduring years of speculation about the future of the Mercury brand, dealers are asking Ford Motor Co. for a straight answer to a simple question: Does Mercury have a future?
In February, members of the Lincoln Mercury National Dealer Council asked Ford executives to outline their strategy for Mercury. If it has a future, they want to see the products. If it does not, they want to know now so they can manage their business accordingly.
According to dealers, Ford agreed. The Dearborn automaker told them it would discuss the fate of Mercury at a dealer meeting that was then planned for April in Las Vegas. Company sources say no such commitment was made.
Either way, Ford canceled that meeting. The company is now planning a September meeting in Detroit -- a meeting dealers hope will provide a definitive answer to their question.
"The company is in (the) process of developing a strategy and has committed to communicating this plan to the Lincoln Mercury dealer network in the fourth quarter," the council said in a letter to its members dated April 28. In private conversations with The Detroit News, several Mercury dealers said they have grown weary of carefully nuanced statements from Ford executives like: "We have no plans to kill Mercury at this time." But they acknowledge that Ford is in a difficult position.
If Ford says that Mercury will not be killed, dealers want to see the products to back that up. The problem is that other than a hybrid version of the Milan and a freshening of the conventional model due out late this year, there are none. On the other hand, if Ford admits that Mercury is dead, it would deal another blow to the brand's sales and invite lawsuits from dealers.
That is a risk Ford seems unwilling to take.
When asked to comment on the future of Mercury, Ford spokeswoman Jennifer Flake would say only: "We've been investing, and continue to invest, in new Mercury product."
As proof, she pointed to the new versions of the Milan but would not discuss any product plans beyond those.
Pipeline is empty
"It's clear that there is no new product for Mercury," said analyst Jim Hossack of AutoPacific in Los Angeles. "The plan is not to kill Mercury. The plan is to let it die."
The difference is significant, he said.
In 2000, General Motors Corp. unveiled a plan to phase out its Oldsmobile brand over four years and spent about $1 billion paying off dealers and suppliers as a result. But Chrysler LLC, which simply stopped producing Plymouths after it merged with Germany's Daimler AG, managed to avoid much of that cost, Hossack said.
People familiar with Ford's plans for the brand say Mercury is dead, but are quick to add that Ford has changed its mind about Mercury at least half a dozen times during the past three years.
When Mark Fields took over as head of Ford's North American operations in 2005, a review of Mercury's viability was at the top of his agenda. At the time, Ford concluded that the cost of eliminating Mercury exceeded the cost of keeping it, given that the rebadged Fords being sold as Mercurys required little in the way of re-engineering.
But the situation at Ford has gotten worse. The automaker has been unable to stop its U.S. market share decline, and overall sales have fallen with the rest of the U.S. auto market.
Ford had some success with its efforts to reinvent Mercury, bringing in customers who had never before considered a Ford product -- particularly professional women. Yet Mercury's sales have dropped more than 30 percent since April 2006 and show no sign of improving.
Last week's announcement that Ford will miss its goal of returning to profitability in 2009 underscores these challenges.
Ford CEO Alan Mulally has said publicly that Mercury's role will diminish as Lincoln becomes the dominant brand in the pairing. He has also said that he thinks Ford can compete with just Ford and Lincoln.
"Ford really needs to focus on Ford -- the Ford brand," said George Magliano, director of automotive research for Global Insight Inc. "The issue is not just the volume. It's the resources and the focus."
Dealers say Ford already is cutting back, particularly when it comes to advertising. And many dispute the idea they can survive as stand-alone Lincoln stores.
Several, like Dave Knittel, general manager of Charlotte County Lincoln Mercury in Florida, say Mercury sales still account for more than half their overall sales volume. He thinks Ford is trying to force Ford and Lincoln Mercury dealers to consolidate.
"It's planned obsolescence for us," he said.
Source: Dealers worry that Mercury is a goner
