Ford Motor (F) said Wednesday that it will cease making Mercury brand vehicles later this year, putting a coffin nail in yet another storied American car brand. Production will end in the fourth quarter.
A minor player in the U.S. market for years, Ford said Mercury accounts for less than one percentage point of the company's 16% market share. In reporting May sales earlier Wednesday, Ford noted that overall sales rose 23%, but those of Mercury vehicles, which consists of just four vehicles, fell nearly 11%.
In doing away with Mercury, Ford can better allocate resources to its core Ford and upscale Lincoln brands, the Dearborn, Mich.-based carmaker said in a written statement issued Wednesday. To that end, Ford said it plans to introduce seven new or refreshed Lincoln models over the next four years to better compete against General Motors' Cadillac and Toyota Motors' (TM) Lexus luxury nameplates.
A Sign of Strength?
Ford said its strengthening financial position after several years of losses allows the company to absorb short-term costs associated with Mercury's demise and to drive investments in Lincoln. There are no stand-alone Mercury dealerships in North America, Ford said, adding that it is working with dealers to maintain "properly located" Lincoln-only and Ford-Lincoln dealers.
"Profitably growing Lincoln in North America is an important part of our One Ford plan," said Alan Mulally, Ford president and CEO, referring to the company's ongoing restructuring plan. With the Ford brand gaining momentum around the world, Mulally said, "Now, we are going to use the same laser focus to further strengthen Lincoln and deliver even more products luxury customers really want and value."
Ford's decision to ax Mercury is a good one, said Art Wheaton, auto analyst at Cornell University. "Lincoln has not been very strong as a global luxury brand, so in effect Lincoln has been acting as the Mercury brand for a long time," he said. With little to distinguish Ford and Mercury models, the company could ill afford to essentially keep slapping a different nameplate on the same car. The decision opens up the possibility for Ford to enter into a merger or joint venture with another full-luxury brand, possibly Germany's BMW, he said.
Wheaton said the winnowing of U.S. brands has been hastened by the recent recession, which has substantially reduced annual sales of new automobiles. From a high of about 17 million vehicles sold just a few years ago, automakers this year expect to sell just 11 million. Further, Asian manufacturers' entry into the U.S. market has also reduced the need for multiple brands offered by one company.
Losing the Brand
Mercury, introduced in 1939, was conceived as a premium offering to Ford and was once an important source of incremental sales, Ford said. However, the better-known Ford brand often left Mercury in the shadows, despite marketing efforts to distinguish the brands.
Today, the profile of consumers who buy Mercurys is largely indistinguishable from those that purchase Fords, the automaker said. Further, the majority of Mercury sales are to fleet buyers and others purchasing through discount programs.
Sales of Mercury peaked in 1978 at more than 580,000 vehicles but have declined ever since, to about 92,000 last year. It was among the last of a stable of not-quite-luxury brands among U.S. automakers that included General Motors' Buick, Oldsmobile and Pontiac lines.
Buick is still around, of course, but GM shut down Oldsmobile in 2004 and Pontiac was shuttered earlier this year. Chrysler's DeSoto and Dodge nameplates also competed in the market. DeSoto went away in the early 1960s and the demise of the Plymouth nameplate in 2001 made Dodge by default the company's entry-level brand.
Then there's Edsel. The Ford brand, slotted just below Mercury, was introduced in 1957, just as the nation was entering a recession. Edsel lasted just two years, brought down not just by the economy but also by atrocious styling and a reputation for poor quality.
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