Rumors of Mercury's Death Exaggerated

Does Mercury have a Future?

Auto industry analysts have predicted the demise of the Mercury brand since the 1990's. With a global surfeit of automotive brands, many are expected to disappear within a decade. Buick, Pontiac, Isuzu, Saab, Volvo, Jaguar, and Mitsubishi have also been nominated to join Oldsmobile in the car marque graveyard.

When Mercurys were first sold in 1939, they were basically extended hood Fords. Ford had belatedly recognized the threat from General Motors upscaling marketing ladder, and the Mercs were the Ford answer to the GM stepping stone sales model.

While many US brands were acquisitions of existing companies, Mercury never had a separate identity: Mercs were always just Fords with lipstick.

Lost in the Fifties

Mercury fit perfectly in the fat-car 1950s, when bigger was widely perceived as better and longer, lower Mercs built on existing Ford platforms sold well.

The step-up brands of the period were conservative cars. Mercury-Buick-Pontiac rarely did anything to disturb the upwardly mobile customer's transition to full boat luxury barges.

The Chrysler 300 hot rod experiment began a period of identity building in the 1960's, but by the 80's it was back to conservative. For Mercury, the rebadged Ford bit became pretty obvious and the brand image began its decline. The absence of a distinct personality is the death knell of a brand, and that lack characterizes today's Mercury.

Social and demographic change has shifted the low-end of the luxury market from big-but-conservative to big-and-glitzy.

As more affluent consumers choose top-of-the-line luxury models, the step-up brands have been challenged to justify their existence. This means broadening the marketing base to include style-minded youth and female buyers.

Mercury began targeting women and young sophisticates with overtly feminine ads and high fashion venues. But the lack of truly distinct products hampered this effort.

Sales Fall

With middle-status-market sales off everywhere, few remember 1978 when Mercury sold 580,000 cars. Mercury sales have dropped steadily from that peak.

By 1999 Mercurys had disappeared from Canada, most products were rebadged as Lincolns. The aging Grand Marquis is the last car sold in Canada still sporting a Mercury badge.

2005 saw 195,949 Mercurys ship, up from 193,534 in 2004. For 2006, Mercury moved 180,848 vehicles, fewer than both Plymouth and Oldsmobile did near their ends.

Historically, Lincoln needed Mercury, but Ford's Premiere Auto Group (PAG) investment in Euro luxury makes pushed downscaled Lincoln into Mercury's space. With the PAG debacle unwinding, Ford had to focus on saving neglected Lincoln.

Now Lincoln needs Merc again, but not as a marketing ladder. Mercury helps keep the dealership network from collapsing. As the Oldsmobile closing experiment has demonstrated, that would be very expensive for Ford.

So company brass can't line up fast enough to deny rumors that Mercurys are going the way of the Yugo.

Queen of De Nile

Ford management repeatedly insists they have no intention of dropping Merc.

On Oct 15, 2007, Ford Motor Co. CEO Alan Mulally again rebutted the claim that Mercury will be axed.

Management tends to group Mercury's sales results with revitalized Lincoln, obscuring future objectives.

But Ford brass don't have much to say about product development plans for the brand.

Lack of investment over the years is what dug the hole Mercury is now inhabiting.

Do executives really believe they can dig their way out with an ad campaign and no distinct product?

I think not.

Crazy like a fox, they are carefully avoiding the Oldsmobile Syndrome.

Where's the Beef?

If Ford is truly committed to the brand, where are Mercury's new models?

Other than a couple hybrids, no new products have been announced.

Mercury Milan, selling only about 35K units, is a thinly disguised Ford Fusion.

Renaming Montego, a rebadged Ford 500 selling 25K cars, as "Sable" hardly qualifies as new product commitment, even from a purely marketing standpoint.

Mariner sure does resemble Mazda Tribute and Ford Escape.

Mountaineer shares everything but trim with Ford Explorer.

Grand Marquis? Think Ford Crown Victoria, virtually unchanged since 1983, and the staple of police fleet sales.

Mercury dealers lack a small car. What, no rebadged Focus?

Mercury has no sporty or halo car like Ford's Mustang.

While burning the furniture to pay the light bill, Ford CEO Mulally cannot afford to resurrect Mercury.

My German Tort Law Professor used to solemnly intone: "Bevare de vidows und orfans, for dey are de potential plaintiffs!"

Mercury Dealers: Potential Plaintiffs

Mercury has around 1,900 dealers, the majority are are combined with Ford or Lincoln stores. Mercury 2006 sales averaged about 8 cars monthly per dealership. While this volume alone would not support dealers, combined Lincoln-Mercury shops can survive.

State franchise laws empower dealerships, the company can't just close shop and run. Big money paid out after the Olds fiasco did not go unnoticed by class action lawyers.

Merc can't be closed without first folding Lincoln into the Ford dealer network. So the future plan looks to me like Ford-Lincoln-Mercury dealerships followed by Ford-Lincoln dealerships through a slow process of attrition.

Some analysts say Mercury could be gone in 4 years, I think 10 is more likely, unless bankruptcy intervenes.

But this is not like an independent brand disappearing, Mercs can always be supported by Ford service departments.