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US:The gods must love Mercury,Ford brand survives another near-death

The gods must love Mercury

Ford brand survives another near-death

Bryce G. Hoffman / The Detroit News

DEARBORN-- Whether a winged messenger as its name suggests or an albatross, Ford Motor Co.'s Mercury brand has survived another brush with death.

As part of a comprehensive re-examination of Ford Motor Co.'s domestic operations being led by Mark Fields, the new president of the automaker's Americas division, Ford recently took another hard look at the brand's future.

The conclusion? Mercury still brings in more money than the company would save by sending it the way of Chrysler's Plymouth brand and General Motors Corp.'s Oldsmobile marque.

"Sometimes, when you have new people in positions, they like to review things for themselves," said Darryl Hazel, Ford's vice president of marketing and the man who headed the Lincoln Mercury division until the position was eliminated in September. "In times like these, you look a little harder at everything."

While Mercury is staying, company executives say it has to evolve.

As it determines how to differentiate Mercury, Ford is considering phasing out the seven-passenger crossover Ford Freestyle and using the same platform for a new crossover called the Magellan. This would give Mercury its first unique vehicle since the 2002 Cougar coupe.

"We have plans for future Mercurys," Hazel said. "We are moving full-speed-ahead with all of those plans."

Ford's brands are under tremendous pressure. The automaker's overall share of the U.S. market has dropped from 19.7 percent last year to 18.7 percent today, and the company faces mounting financial woes.

Fields believes Ford's future lies in re-energizing and focusing its brands. In a recent memo to employees, Fields said "clarifying our brands for stronger emotional appeal" will be central to that effort.

Hints of the new direction can be seen in the new effort to restore Lincoln's lost luster under the guidance of chief designer Peter Horbury. The recent review of Mercury's future demonstrates just how serious and far-reaching the changes could be.

This is hardly the first time Ford has contemplated killing Mercury.

"People have been speculating on the role of Mercury -- the future of Mercury -- since I joined the company in 1972," Hazel said.

In the late 1990s, then-CEO Jacques Nasser had already raised the ax when none other than Elena Ford -- then a Mercury executive -- intervened to save the brand her grandfather, Edsel, launched in 1938.

Edsel Ford conceived of Mercury as a midrange offering that would bridge the gap between the company's budget-priced Fords and luxury Lincolns. Mercury filled that niche, at least initially. As the domestic market became crowded with foreign nameplates, however, it became harder for Mercury to stand out, particularly since most of its cars were based on Ford models.

Mercury's sales peaked in 1993 at 483,845 vehicles. Since then, Mercury sales have dropped 60 percent.

Today, the brand seems to have bottomed out at around 200,000 vehicles a year. While Ford's other domestic brands continue to lose market share, Mercury is actually up this year. Its year-to-date sales were up 3.9 percent at the end of October.

Still, some analysts would think its time to put Mercury to sleep.

"For the company as a whole, it's definitely the right thing to do," said Joe Langley, an analyst with CSM Worldwide in Farmington Hills. "As much as they have tried over the years, it still comes across as a rebadge."

It is one of the most persistent criticisms of Mercury. The brand has rarely had a vehicle it could call its own. Mercury's current lineup is no exception: the Mariner is based on the Ford Escape small SUV, the Montego sedan on the Ford Five Hundred, the Monterey minivan on the Freestar and the Mountaineer on the Explorer SUV. The venerable Grand Marquis is based on the full-size Crown Victoria sedan, while the new Milan shares the same platform as the midsize Ford Fusion.

But Hazel says there are important differences. The Mariner sells to a different customer than Escape. Mountaineer leases at twice the rate of the Explorer. And the Grand Marquis does a lot better in the retail market than the Crown Victoria. The Grand Marquis alone accounts for more than half of Mercury sales, and since it has not had an expensive redesign in years, its margins are huge.

"The brand is very complementary to Ford and, in many respects, always has been," Hazel said. "Sometimes we do a better job at executing than others."

Mercury dealers like Chris Lemley see nothing wrong with Ford's cross-branding strategy.

"The people who buy Mercury are people who are looking for something a little bit different than a Ford," he said.

Lemley owns several Ford and Lincoln Mercury dealerships in the Boston area. He said most of his car sales are Mercury models.

"Is it a totally different car? No. But there are customers who buy Mercury who would not buy a Ford," Lemley said. "I think sometimes Ford is a little too honest about how it shares platforms."

Today, Ford is working to more clearly define the borders between its brands.

"We've finally gotten that message," said Tom Brewer, general manager in charge of marketing for Ford's Lincoln-Mercury division.

Mercury's turnaround officially began last year when it launched its "New Doors Opened" campaign, an effort to shake off the brand's stodgy, oldster image and attract a new generation of customers.

Leading the charge is the Mercury Mariner.

"The Mariner represents exactly where Mercury is going," Brewer said, noting that the average Mariner buyer has never owned a Ford product and is much younger than the typical Mercury customer. "One in five is a convert from an Asian import."

Almost half are women -- a fact not lost on Mercury's marketing department.

Ford took the next step in the reinvention of Mercury earlier this month when full-scale production of the Mariner hybrid began at its factory outside Kansas City, Mo.

There is little doubt the new hybrid will be a success. The new Mercury is a hit with critics and environmental groups. Ford pre-sold 500 Mariner hybrids before the vehicle even went into production. But the company only plans to produce 4,000 Mariner hybrids each year.

"It doesn't tell me that they are making any big commitment to Mercury in terms of product development," said Erich Merkle, an analyst with IRN Inc. in Grand Rapids.

As with all the brand challenges facing Ford today, the fundamental question is one of resource allocation.

"Ford could make Mercury a fabulous success," said Jim Hossack, an analyst with California-based AutoPacific. "The problem is: Can (Ford) also make Jaguar a success, Mazda a success, Lincoln a success, expand into China and make Ford of Europe a success?

"Dropping a brand is a pretty tough thing," Hossack added, noting that the last lawsuit from Chrysler's decision to drop DeSoto in 1961 was not settled until 1986, when the last dealer still contesting the move died. "It's more financially responsible to let (Mercury) idle along."

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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