Here's an article from CNN financial news that says Mercury may be next
to go.
http://cnnfn.cnn.com/2000/12/18/home_auto/mercury/
Will Mercury follow Olds?
Analysts expecting Ford to follow
competitors in thinning out brand
lineup
By Staff Writer Chris Isidore
December 18, 2000: 12:15 p.m. ET
NEW YORK (CNNfn) - The Mercury brand could be on a fast
ride down a
dead-end road.
The brand is in a difficult "middle ground" between the
lower-priced volume
brands, such as Ford, and the premium brands in the
Ford Motor Co. family --
home grown Lincoln, and overseas acquisitions such as
Volvo, Jaguar, and
most recently Land Rover.
After last week's move by General Motors Corp. (GM:
Research, Estimates) to
phase out the Oldsmobile brand and the announcement by
DaimlerChrysler
(DCX: Research, Estimates) a year ago that it would
drop the Plymouth brand,
many believe Mercury will be the next model to be
dropped.
"The underperformance of the
Mercury brand relative to the rest of
Ford's brands is glaring," said
Jonathan Lawrence, analyst with
Dain Rauscher Wessels, who
predicts an announcement by Ford
as soon as the North American
International Auto Show in early
January in Detroit. "If you look at the
Ford brands, every one has a distinctive identity. All
of the Mercury models are
basically twins of other Ford vehicles. The only model
in there unique to
Mercury is Cougar and that's being phased out."
Ford (F: Research, Estimates) officials deny there's
any plans to drop Mercury,
however.
"These rumors have been circulating for 30 years and
they're still not true," said
Jim Trainor, spokesman for Mercury. "Mercury makes a
lot of money for Ford
Motor Co. The economics are pretty simple. We don't
have to be the biggest to
make a contribution."
But even the company admits it is concentrating far
more new vehicle
development effort and dollars into the Lincoln brand,
and relatively little to
Mercury. The overwhelming majority of Mercury dealers
are also Lincoln
dealers.
"That's not to say Mercury will not get new product,"
said George Pipas,
market analysis spokesman for Ford. "But in terms of
the number of new
products that the Lincoln-Mercury franchises are going
to see coming to
showroom, more investment and more product news will be
on the Lincoln side
of franchise."
Mercury has seen sales fall, although not quite as
steeply as Oldsmobile. Still,
sales of 339,069 vehicles by Mercury through the first
11 months of 2000 are off
17 percent from year earlier level, as its market share
has slipped to 2.1
percent from 2.6 percent in 1999. As recently as 1993
the brand sold 483,845
vehicles and captured 3.5 percent of the overall
market.
But Trainor says that some of the Mercury models are
doing well in the face of
the slowdown. He said the Grand Marquis, with sales of
114,946 year-to-date,
should have its best sales in 14 years, although only
slightly ahead of year
earlier sales. The Sable, a twin of the Ford Taurus,
also is ahead of year-ago
sales through November.
Stepping stone brands become slippery
The middle brands were once seen as stepping stones for
automakers to move
their loyal customers from lower-price, entry level
brands to the higher price
luxury brands such as Lincoln or GM's Cadillac. But
those lines have been
blurring for years, and some competitors, such as
Toyota Motor Corp. (TM:
Research, Estimates) and Honda Motor Co. (HMC:
Research, Estimates) have
found success introducing luxury brands such as Lexus
and Acura to the U.S.
market without offering a middle brand.
Even some of those who see
a need
for a Mercury brand say it
no longer
serves as a much of a
transition to
higher-priced brands as it
once did.
Casey Johnson, owner of
Fort Dodge
Ford Lincoln Mercury in
Fort Dodge,
Iowa, a member of the Ford
Dealers'
Council, said that most of
his Mercury
customers are loyal repeat
Mercury
buyers, not people moving
up the
chain of brands. But he
said the brand
is still important,
especially to the
Lincoln Mercury dealers who don't also offer Ford.
"All the high-end cars are nice, but for dealer
stability volume is key and
Mercury is still a higher volume brand," Johnson said.
"I think Mercury will be
here for many, many years to come."
GM had eight domestic vehicle brands when it announced
plans last week to
drop the Oldsmobile line at the end of the product
cycle of current models.
More complex marketing needs for Ford
While the Ford line-up was once a much simpler, with
recent overseas
acquisitions it has become far more complex in terms of
its marketing needs.
Ford must manage the three home-grown brands along with
Mazda, Volvo,
Jaguar, Aston Martin and the recently acquired Land
Rover.
"Ford says it is committed to the Mercury brand but
it's not investing in new
products," said Mike Flynn, director of office for
study of automotive
transportation at the University of Michigan. "It has a
much more complicated
set of brands than it had five or six years ago.
Mercury has a been a less
visible brand than Oldsmobile in the last five years."
Mercury is also weighted far more to cars than the
light truck models that have
grown to capture about half of all U.S. vehicle sales.
About 78 percent of its
total sales are in car models, an even higher
percentage than at car-dominated
Oldsmobile.
The changes in the U.S. auto market makes ground very
shaky for the middle
brands, said Paul Ballew, general director, global
market and industry analysis
for GM.
"It's hard to be a niche, unless you're a niche with a
specific point of
differentiation. The middle market is a very difficult
place to be a niche. That's
lesson of what we've seen in recent years in Plymouth,
Oldsmobile and
Mercury."
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