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Thursday, June 03, 2010

Mercury production to end in Q4

Ford Motor Co. will discontinue its 71-year-old Mercury brand and end vehicle production in the fourth quarter, Mark Fields, Ford's president of the Americas, said today.

Fields also announced plans to expand the Lincoln lineup with seven new or refreshed vehicles in the next four years.

Ford product development chief Derrick Kuzak said a new compact car will be developed for Lincoln. The car will be based on the same platform that the 2011 Ford Focus sits on, but it will be designed and engineered specifically for Lincoln, he said.

The final decision to kill Mercury was made this week and approved by Ford's board today, Fields said.

A total of 1,712 dealerships sell the Mercury brand in the United States, but there are no stand-alone Mercury stores. Among the Mercury stores, 511 also have Ford franchises, 276 are combined with Lincoln franchises, and 925 are dualed with both Ford and Lincoln franchises.

Some of the 276 Lincoln-Mercury dealerships are in markets that cannot support a stand-alone Lincoln store, Fields said. He said Ford Motor will work with those stores, helping them to either get a Ford franchise or consolidate their Lincoln franchise with a Ford store.

“We do foresee in some markets there could be some stand-alone Lincoln dealerships,” Fields said.

More information to come

Mercury dealers will all receive packets tomorrow morning outlining Ford's transition plan for the brand and outlining monetary compensation for their stores based on a formula Ford has developed, Fields said.

Fields said Ford decided to close Mercury during its annual spring business and product review. Ford division's improved market share -- up 2.2 percentage points through April compared with last year -- combined with the fact that most Mercury customers cross-shop the Ford brand, made it sensible to cut Mercury, Fields said.

“And it allows us to put 100 percent of our resources into Ford and Lincoln,” he said.

Dealer Bob Tasca Jr., who heads the Lincoln Mercury brands of the dealer council, calls this an emotional decision because it will affect dealers' lives.

“Some of the dealers have their homes mortgaged to their business,” said Tasca, who has two Ford-Lincoln/Mercury stores, one in Rhode Island and one in Massachusetts. “Some are going to make it, and some won't. But I really expect Ford will be fair.”

Ed Tonkin, chairman of the National Automobile Dealers Association, called it “a sad day.”

“NADA's concern is that Ford treats each of its Mercury dealers fairly and equitably,” he said, “especially the 276 of whom sell Lincoln and Mercury exclusively.

“Ford also needs to move quickly to take into account the millions of dollars that dealers have invested in facilities, equipment, personnel and training. They deserve fair compensation.”

Fields said Ford will offer special incentives to move Mercury vehicles this summer. He said he expects most of the Mercury inventory to be sold off by the end of this year.

There will be no job cuts that result from the demise of Mercury. Ford will redeploy any Mercury personnel to the Lincoln brand.

Besides an expanded lineup, Lincoln also gets an expanded marketing team, Fields said.

Ford declined to reveal how much it will cost the company to discontinue Mercury but said Ford's recent profitability has made it possible to make the move now. Ford reported a second quarter net profit of $2.1 billion.

Good thing in the long run

Peter Gervais, general manager of Gervais Lincoln-Mercury in Lowell, Mass., said in the long run the move “will probably be a good thing.”

"Lincoln has a little more brand status than Mercury," he added. “I think it was overdue and it should have happened beforehand.”

Ed Witt of Witt Lincoln-Mercury in San Diego, Calif., said he was optimistic about the switch.

“We love our Mercury brand. On the other hand, we are excited to take on a brand like Lincoln and making it a luxury brand. They're going to take the Lincoln brand to where it's never been before.”

He said he though Ford's leadership would take care of the Mercury dealers.

“Look at what they've been doing,” he said. “They've done it through leadership and focus and that's what we're going to do with Lincoln. This Mercury question has been around forever, a thorn in my saddle.

“We have definition, we have structure, and we have focus and direction. What else could I want? I think it's a big opportunity.”

Dealers reached by Automotive News said they weren't surprised.

“All I can say is this: I hate it,” said Robert Hammett, general manager of Hammett Motor Co. in Durant, Miss. “But they really don't need to make two of the same vehicles and put two different names on them. Mercury should have been a totally different outfit. Everybody has been expecting it.”

Glenn Mahoney, sales manager at Dana Ford Lincoln Mercury in Staten Island, N.Y., said some customers have been concerned.

“The dealers will still be here to warrant the cars, we're a dual point,” he said. “I think it is going be great, if we actually expand the Lincoln brand. It's kind of an overkill (with Lincoln and Mercury). The product lines are practically on top of each other.

“So, from that standpoint it was an interchangeable part. From being a dual store, it was nice to have both sides for us. It was kind of nice to have that area to move. I think Mercury sales will do pretty well throughout the end of the year.”

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