Is Mercury doomed?
That’s what Mercury dealers think, at least according to an Automotive News survey. According to the publication, 23 percent of Mercury dealers were NOT worried the brand would be dropped by Ford. The rest were: 45% said they were “very concerned” that Ford would discontinue Mercury. 32% said they were “somewhat concerned” that the brand would be terminated.
Some are more worried than others about how the demise of Mercury would affect them. 28% belived that other Ford brands would carry their dealerships “easily.” 38% said that they could survive without Mercury, but not easily. 17% said they probably couldn’t survive and 8% said they could not make it without the Mercury franchise.
Even if the brand isn’t dropped, dealers are pessimistic about its future. 27% of dealers believe that Mercury will not be competitive in the next four years. Mercury dealers, who are paired with Lincoln, have much more optimism about the Lincoln brand, as fully 50% are “very optimistic” about Lincoln’s future. Only 10% feel optimistic about the future of Mercury.
Despite the pessimism and persistent reports in the past that Mercury would be euthanized, there has been no indication that the regime of Alan Mulally, president of Ford for just over a year, has that plan in mind. Candidly, while it is easy to understand the pessimism about the future of Mercury, it is hard to understand the optimism about the Lincoln brand, which has been almost as badly neglected as Mercury.
Historically, however, Lincoln has at least had a market which was clearly enough defined, even if the Ford management frequently ignored it. Mercury, however, seemed to exist primarily to give Lincoln dealers a gussied-up Ford to sell. In the past five years, Mercury has lost products as Ford has introduced new models without parallel Mercury products, or has delayed the Mercury version so long that its market was miniscule. As a brand, Mercury is essentially without any image in the public mind, at least none that is positive.
On the other hand, terminating dealership franchises is an expensive proposition for an auto company, even if the dealers have other brands from that company. It’s estimated that terminating Oldsmobile cost General Motors about $1 billion in cash, plus whatever intangible “good will” existed for the brand. In fact, it is doubtful that GM would have dropped the Olds brand, were it not for a miscalculation made by top management. GM figured to have a huge capital gain from the sale of its satellite television operation, Direct TV, which GM had ended up owning as part of its investment in Hughes Electronics Corp, to EchoStar Communications Corp. Killing off Oldsmobile was expected to generate an offsetting loss, killing two birds with one stone: GM would shut down Olds and simultaneously shelter much of the gain expected from the Direct TV sale.
Unfortunately for GM, the sale of Direct TV to EchoStar ran into antitrust problems with the federal government and didn’t go through. Eventually, GM sold it to Rupert Murdock, but that didn’t happen until several years later. In the meantime, GM had committed to disbanding Oldsmobile and took a bath buying out its Olds dealers.
So, Ford Motor Company may well have decided that killing of Mercury simply isn’t worth the cost, and that it is better off keeping it alive, even if the division seems to barely be breathing.