Edmunds.com: If Mercury Left by Wayside, Ford Will Still Retain Those Customers
SANTA MONICA, Calif. — Though Ford's communications and management teams have remained largely mum about reports that the automaker will wind down Mercury, Edmunds.com said if this does come to pass, then it is good news.
Analysts with the site also suggested that most of the customers will stick with Ford when the Mercury brand closes up shop.
In fact, almost half (46 percent) of Mercury shoppers also look at Ford brand models, according to cross-shopping analysis from Edmunds.com.
"Shutting down Mercury eliminates a distraction," suggested Jeremy Anwyl, chief executive officer of Edmunds.com. "Mercury is a brand that has lost its meaning in the American automotive marketplace and it isn't worth trying to change that."
Currently, less than 6 percent of Ford's sales are Mercury vehicles. Moreover, the average incentive per Mercury vehicle sold in April was larger than the Ford brand counterparts.
More specifically, the automaker spent $3,326 per vehicle sold on incentives for Mercury units in April, while spending $3,172 for Ford brand units, according to Edmunds.com.
"For years Ford executives have been asked why they keep Mercury, but they had been adamant about keeping the brand for reasons that are unclear and now, apparently, dismissible," Edmunds.com senior analyst Michelle Krebs explained in a report for AutoObserver.com.
"Clearly, it is more cost-effective to focus precious marketing dollars on fewer brands. Seemingly in preparation for this announcement, Ford had significantly cut back on Mercury marketing money of late," she added.
Mercury has faced similar challenges as former Big 3 nameplates Plymouth and Oldsmobile and now apparently will likely meet the same fate.
"Like Plymouth and Oldsmobile, Mercury is a victim of both increased competition from outside its corporate parent and a lack of differentiation from within," suggested Karl Brauer, senior analyst for Edmunds.com. "Mercury products have been nothing more than modestly restyled Fords for decades, and that's not how you build or maintain a brand."
Offering a bit of history, Scott Oldham, editor of Edmunds' InsideLine.com, noted: "Mercury was launched in the 1930s, when Henry Ford's son Edsel saw an opportunity to create an additional brand within the Ford hierarchy between the everyman Ford Deluxes and premium Lincoln Zephyrs.
"In the '50s, Mercury vehicles were renowned for style, performance and cutting-edge technology. A dash of glamour was added to the automaker's image when James Dean appeared on screen in a Mercury car in the film Rebel Without A Cause," he added.
KBB: Fords Hold Value Better than Mercury Models
Moving on, Kelley Blue Book, which also chimed in on the impact of a possible Mercury discontinuation, said that when comparing two-year-old Mercury and Ford in the segments in which they both field vehicles, Ford models retain about 1 percent more of their values, and this discrepancy could grow if Ford confirms it is cutting Mercury.
"Among the segments in which they compete, two-year-old Mercury vehicles underperform their platform-sharing Ford counterpart by approximately 1 percent in terms of retained value (Kelley Blue Book Trade-In Value divided by Original MSRP)," explained Juan Flores, director of vehicle valuation for KBB.
"With the announcement that Ford may discontinue the Mercury brand in the near future, it is Kelley Blue Book's opinion that the current gap between Ford and Mercury vehicles could begin to widen," he added.
Consumers tend to be averse to buying vehicles made by discontinued brands, and this is likely to impact Mercury down the road, Flores noted.
"Historical precedence suggests that consumers typically shy away from purchasing vehicles from a brand that is no longer in existence," he said. "We anticipate that given the choice between a similarly equipped Ford or Mercury in the future, consumers will more often than not opt for a Ford vehicle that is still in production versus a similar out-of-production Mercury."