Ford to end Mercury, expand Lincoln

DEARBORN, Mich. —Ford Motor Co. will cease production of its 72-year-old Mercury brand by the end of 2010 after years of declining sales.

Mercury's death is the latest in a string of casualties as Detroit carmakers try to cut costs and invest more heavily in fewer offerings. By shedding a midrange brand that was more and more irrelevant to buyers, the automaker can focus on accelerating sales of Ford and beefing up its luxury Lincoln brand.

Ford plans to expand its Lincoln lineup to make up for lost Mercury sales and support Lincoln-Mercury dealers who will suddenly be without a brand. Derrick Kuzak, Ford's product development chief, said Lincoln will have seven new or revamped vehicles in the next four years, including the brand's first compact car.

The automaker's board of directors approved ending the brand Wednesday morning. Ford Americas president Mark Fields said the decision was made this spring as part of an annual business review. He said Mercury's sales make up such a small percentage of North American market share — less than 1 percent, compared with Ford brand's 16 percent — and that the profile of Ford and Mercury shoppers is so similar, it makes more sense to focus on Ford and Lincoln.

The move should help the Ford brand. Mercury was the No. 1 brand that was also considered by Ford buyers, said Aaron Bragman, an analyst for the consulting firm IHS Global Insight. Ford said 53 percent of Mercury shoppers consider Ford and Lincoln. Ford said it will offer discounts through the summer on Mercury vehicles to shed inventory.

Ford shares rose nearly 4 percent to close at $11.85.

Ford has 1,712 dealerships currently selling Mercurys, although none are standalone Mercury dealers. All sell either Lincolns, Fords or all three brands. Ford expects some of its 276 Lincoln-Mercury dealers will continue as stand-alone Lincoln dealerships and it will try to consolidate others into existing Ford dealerships.

All dealers will be eligible for compensation, although Fields wouldn't say how much they will be offered.

Bob Tasca Jr., who owns two Mercury dealerships in Rhode Island and Massachusetts and is the head of Ford's Lincoln-Mercury Dealer Council, said many dealers will get through the Mercury closure and do well selling Lincolns.

But he said the closure is still emotional, because dealers will have to lay off staff and, in some cases, close showrooms.

"From a financial standpoint, it was the only decision Ford Motor Company could make," Tasca said.