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Mercury Fighting for Customers

Can Ford find a meaning for its “other” brand?
by Paul A. Eisenstein 2/3/2003

With the recent introduction of the Messenger concept vehicle, Ford Motor Co. officials intend to send the unambiguous message that their long-troubled Mercury division is here to stay.

That’s been far from certain in recent years, as Ford has allowed the once vibrant brand to wither. Pulling one product after another from the lineup, Mercury is, for the moment at least, little more than a shell of its former self. But the automaker insists it has an assortment of new cars, trucks and crossovers in the pipeline with which Mercury can again take wing.

“Lincoln Mercury wasn’t handled the way it should have been for a long time,” concedes Ford Chief Financial Officer Allan Gilmour, also referring to the upscale brand with which Mercury is paired.

History not repeating

It wasn’t always that way.

The Mercury nameplate was originally conceived as a means of attracting buyers who wanted something a bit more stylish and exclusive than the mainstream Ford division could deliver – but without the ultra-premium price tag of a Lincoln.

At its peak, through the automotive boom years of the late 1970s, Mercury delivered, sales peaking in 1978 at 583,577. But volume has steadily withered as Mercury lost direction – and product. An assortment of vehicles have been pulled from the lineup, most recently the sporty, compact Cougar. Last year, sales slipped another 15.6 percent, to just 263,000.

It didn’t help that former Ford CEO Jac Nasser had at one point intended to pull the plug on the division. He intended to shift the resources being invested in the brand to other, newer nameplates, including European acquisitions like Volvo, Jaguar and Land Rover.

But that posed “a classic dilemma,” according to industry analyst David Cole, director of the Center for Automotive Research, in Ann Arbor, Mich. “The question is if Mercury isn’t there, will Ford maintain the (overall) volume, or will (the division’s customers) go somewhere else?”

Domestic automakers have written off a number of well-known divisions over the years, most recently with the demise of Chrysler’s Plymouth, and General Motors’ Oldsmobile – the latter, many felt, serving as Nasser’s prototype.

Olds and older?

But unlike Olds, whose customers have largely shifted to other GM brands, Ford came to suspect that Mercury’s owners wouldn’t stay in the “family.” And their loss would be doubly troubling. Mercury’s products are largely rebadged versions of the vehicles the Ford division sells, something that drives economies of scale, helping lower the cost of building each and every car and truck.

Ford officials also came to realize that without Mercury, it would be difficult to support the Lincoln nameplate, which is also struggling for identity in the increasingly competitive luxury segment.

“Lincoln needs Mercury and Mercury needs Lincoln,” suggests Darryl Hazel, the division’s president, adding that the automaker has come to “the intersection of our capabilities and our understanding,”

In an effort to get both brands on track, Ford decided to pare Lincoln Mercury off from the upscale, import-oriented Premier Automotive Group. In the process, Lincoln Mercury moved from the headquarters Nasser had set up in the Los Angeles suburbs, “back to Detroit where God intended it to be all along,” joked Group Vice President Jim O’Connor.

Now the automaker must come up with a solid line-up that can give Mercury not just product to sell, but a clear image that consumers can recognize and identify with. That won’t be easy. For one thing, acknowledges Hazel, it’s not completely clear within the company what Mercury is.

“Identity is important. If you don’t know who you are, you’re going to get into trouble,” he says, conceding that message hasn’t gotten through to “all your constituents.” It could be “two to three years,” according to Hazel, before Mercury sorts out that fundamental question.

What makes a Merc?

Even then, knowing exactly what Mercury is may not be enough. That won’t ensure the brand can get unique products of its own. At least not until sales levels pick up significantly, company officials caution.

The brand’s most popular model, the Grand Marquis, is little more than a rebadged version of the Ford division’s Crown Victoria. But that doesn’t mean product has to be identical. The tony Mercury Mountaineer is a much more refined looking alternative to the Ford’s mainstay SUV, the Explorer.

Analyst Cole insists that even more striking differentiation would be needed in the future. He notes how General Motors’ increasingly efficient product development and manufacturing systems allow it to develop vehicles that are identical underneath, yet visually quite distinct. Within the Cadillac brand, for example, the new SRX crossover shares the basic platform and many of its basic components with the CTS sedan.

The Messenger is an example of what Mercury could do. Under the skin, it has a lot in common with the sporty, next-generation Ford Mustang.

Initial reaction to the show car has been strong, and some senior officials, including Ford’s Chief Operating Officer, Nick Scheele, are lending their weight to the vehicle, though there’s been no firm decision on whether to produce the Messenger yet.

Hazel is actually cool to the idea, feeling the sporty coupe doesn’t fit the blue collar image he sees for the division. His priority, he says, is focusing on more fundamental, higher volume vehicles.

There’s an update for the Grand Marquis, two new and as-yet-unidentified sedans, the Monterey minivan and a Mercury version of the Ford crossover, the Escape. It adds up to at least one new product every year for the next four years from Mercury, with more on tap for Lincoln. Is it enough? There’s no guarantee, analysts caution.

While Mercury may have a core audience, it has been steadily shrinking. The imports have shown it’s possible to create conquests, but it isn’t easy. It starts with a clear mission and requires a solid foundation of product. Right now, Mercury has neither. It needs to prove it can deliver.

My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.

My next Ford.....
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