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Near-luxury brand can compete, he says

BY SARAH A. WEBSTER
FREE PRESS BUSINESS WRITER

CHICAGO -- While some analysts suggest Mercury should join Oldsmobile on its exit from showroom floors, Ford Motor Co. Chairman Bill Ford insisted the brand could make a revival with vehicles like the new Montego sedan he unveiled Wednesday at the Chicago Auto Show.

It's clear that midpoint brands like Mercury and Buick, whose sales were each down more than 20 percent last year, are struggling as mainstream and luxury nameplates move their brands up and down market to skim sales.

But Ford, who also spoke about the importance of the domestic auto industry to a luncheon gathering of the Chicago Economic Club, said Mercury can be robust in this environment. He generally blamed a lack of strong products and direction for the decline of such premium near-luxury brands.

"There is still, we believe, a very strong market for Mercury," Ford said. He said it is important that the company offer vehicles between the mainstream Ford and luxury Lincoln nameplates.

"We think it's very important for Ford to cover the entire waterfront . . . so people looking for any kind of vehicle can find it," he said.

Mercury plans to release at least six new models, albeit several based on Ford vehicles, through 2007. That will boost the Mercury lineup from four to seven vehicles by 2005.

Buick, which unveiled a new LaCrosse sedan during the first media day of the Chicago show, is vying for a similar makeover.

Like Ford, Robert Lutz, General Motors Corp.'s product czar and chairman of GM North America, also says these premium brands can be revived. He pointed to Cadillac's renaissance as proof, although that vehicle sells in the very robust luxury market. He also said several of the more affordable luxury vehicles are really not that appealing.

"If you get a Mercedes or BMW low-end car, it's really low end. It's really bare bones," he said. "You think, Holy smokes! This is a Mercedes?"

Because of that, Lutz says strong designs, refined interiors and the right price can win back consumers in this part of the market.

Some experts have their doubts.

Brands like Buick and Mercury used to work in the marketplace because there were plenty of conservative people who could afford a luxury vehicle such as a Mercedes but didn't want to advertise their wealth, said Art Spinella, president of CNW Marketing Research in Bandon, Ore.

Today, the bling-bling, reality-show, tell-all culture is all about expression, as in, "Show me the money." And, he said, the number of people interested in modesty when it comes to their wealth and style is "diminishing dramatically."

"There's a social change here," Spinella said.

David Thursfield, president of Ford's international operations and global purchasing, also acknowledged the trend recently.

"In the retail business, the high-end merchants like Saks and Neiman Marcus are doing well, but so are the discounters," he told automotive industry executives at a conference in Las Vegas. "It's the middle of the market that once dominated that's shrinking."
 
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