Ford May Say Goodbye to Mercury Brand

Ford may close Mercury
Ford may close Mercury

The Mercury brand was created by Ford (F) founder Henry Ford's son Edsel during the Depression. Its goal was to offer a mid-priced car between the Ford and expensive Lincoln brands. It now appears that Mercury will join Pontiac and Saturn on the extinct car brand list.

Citing a person familiar with the matter, the Wall Street Journal reports that CEO Alan Mulally has already won support from key members of the Ford family to seek the board's approval to shutter the brand. The proposal will reportedly be presented to the board in July.

Mercury sold over 500,000 vehicles in 1984 and 1985. Last year it sold only a little over 90,000 cars and trucks. A look at Ford's sales numbers for April and the first four months of the year shows that the Ford brand sold 146,589 vehicles in April. Mercury sold 9,128 and Lincoln, a luxury brand that should have high margins, sold 7,279. Ford's total domestic sales as a company were 167,542 up 25% from April last year.

In April Mercury sold only 2,482 Mountaineer SUVs and 3,101 Milans. By contrast, the hottest selling Ford, the Fusion, sold 18,971 cars. The Escape crossover sold 19,146. And the truck flagship, the F-150, sold 40,946.

Ford runs the same risk that GM did when it closed Pontiac. The brand was not doing well, but was several decades old. The product development costs and marketing spending were expensive based on units sold, but there was a level of customer loyalty to Pontiac. Once the brand was gone, some of those customers migrated to brands outside the GM family. The cost of those lost sales is impossible to determine, but GM's revenue was almost certainly hurt.

Ford may think it gains margin over the long-term by closing Mercury, and CEO Alan Mutually has made his mark by improving Ford's profits. But getting rid of Mercury may lose the No. 2 U.S. car company more than it bargained for.