It doesn’t look good for Ford’s Mercury brand. In the April 23, 2008 Wall Street Journal, CEO Alan Mulally said just as much.
In the 2007 Ford Motor Company Annual Report, the division sold 143,886 units, down from 180,000 in 2006. That’s a big drop. Of late, the division has been doing steady advertising for the Mariner and Milan. In the annual report, Ford made mention of the luxury Lincoln division, showing a photo of the 1941 Lincoln Continental next to a photo of a red 2008 MKS. Also on the page (which had Mulally’s letter to stockholders), the company featured the Lincoln MKX Crossover, saying that it helped make Lincoln the “fastest growing luxury brand in American in 2007.”
There was no mention of Mercury. Here’s why Mercury should stay.
- Most dealers that sell Lincoln sell Mercury. So even if Mercury sales are crap, it helps to have modestly priced cars in the Lincoln showrooms to bring folks in. In addition, the extra volume helps Lincoln-Mercury repair shops.
- It is NOT true that Mercury buyers are necessarily Ford buyers. The brand is a bit more deluxe than Ford, and those 143,886 units will not necessarily be picked up by Ford or Lincoln. They would likely be picked up by Buick or Chrysler. Ford Motor Company needs EVERY bit of volume they can muster up. It’s all about scale, Alan!
- Eliminating the marque will save some money in advertising, factory overhead and general corporate busy-ness, but there will certainly be dealer realignments and costs with killing it off. It even costs THOUSANDS for dealers to redo their signage. Please save the dealers another expense!
- Dealers that sell Mercury might look to ANOTHER car brand to fill out their product lines.
- Sometimes you’ve got to stick with it. Ford has invested millions in the brand. Yes, we are in a crummy recession but the cars are GOOD and there is no reason why they won’t get that volume back when the economy turns.
- Killing off Plymouth hurt Chrysler. Same analogy. Read the BrandlandUSA article on Chrysler’s current woes here.
So what’s a Ford CEO to consider?
- Scale and ratchet down advertising. It is not a given that Mercury needs to run big TV advertising campaigns, even though some are really good. Instead, Mercury should do niche advertising (sponsorships, giveaways, regional buys) to its target groups–moms, retired folks and longtime Mercury owners, just as a liquor manufacturer might do. Throw in some licensing and retro marketing, chat up the collectors and you’ve got a fan base. Details of that campaign could be determined, but a big national campaign is hard to amortize over just 150,000 vehicles. One can do that with higher margin luxury brands only.
- Make each Mercury into a car that is only nominally different than a Ford. This means that Ford could be switched in minutes into a Mercury, in a sense a customization, not a full car division. In as much as there is a King Ranch or Eddie Bauer edition of a Ford truck, one could customize a Ford car into a Mercury with a simple grille change and different owners manual, hood ornament and grille. This will enable Lincoln dealers to keep selling these cars. This strategy helped save Chrysler in the 1980s. It’s not pretty or glamorous, but it works.
- Reduce the number of Mercury models. This year, Lincoln-Mercury dealers sell the Milan, Mariner, Mountaineer, Sable and Grand Marquis. Perhaps they only sell the Sable, Milan and Grand Marquis, the three most middle of the road vehicles?
- Mercury becomes a type of car model. In worst case, Mercury survives by selling the Grand Marquis only. Mercury signs stay up, but the only model sold is the Grand Marquis. As Mercury is to Lincoln, Scion is to Toyota. The rear wheel drive car is a totally amusing relic of the 1970s, and it has fans galore. Because the Crown Victoria is turning into a fleet vehicle, this makes a great option for folks who like the feel and drive of the car. Corporate fuel standards might get in the way of such cars continuing into the future, but we bet that somehow Ford could figure out a way to get around it. Mercury Grand Marquis might even be a sort of retro-hip mobile, the Ford Motor Company alternative to Scion. Or perhaps Mercury Grand Marquis is to Lincoln as Mini Cooper is to BMW. A one-model car brand.
- Bring back the “Sign of the Cat.” I mean c’mon. That was good.