Ford Motor Company announced Wednesday that it will end production of Mercury vehicles in the fourth quarter of this year and devote attention to the Lincoln brand.
Of Ford Motor Company's 16 percent market share in the U.S., Mercury accounts for 0.8 percentage points, a level that has been flat or declining for the past several years. That contrasts with the Ford brand, which has increased market share by 2.2 percentage points.
Ford said its strengthening financial position - including the return to profitability and positive cash flow - allows the company to absorb short-term costs associated with the discontinuation of Mercury and to consolidate future product investments into Lincoln.
Ford said the Mercury's customer profile, pricing and margins are almost identical to Ford, but Mercury's incremental sales have been declining.
The majority of current Mercury sales are to fleet buyers and customers purchasing through employee, retiree and friends and family discounts, which Ford anticipates largely can be satisfied by Ford brand vehicles.
There are currently no stand-alone Mercury dealerships in North America. Ford is working closely with dealers to maintain properly located stand-alone Lincoln or Ford-Lincoln dealers, which will offer dealers and the company the greatest opportunity for long-term profitable growth.
Ford will work closely with Mercury dealers and customers during the transition, including providing existing Mercury owners with continued access to parts and service support at Ford and Lincoln dealers and by honoring current warranties, including Ford's Extended Service Plans.
Mercury owners will receive additional details in the coming days explaining the transition and assuring them that Ford and its dealers will continue to provide all necessary parts and service support for Mercury products.
Ford said it has notified Mercury dealers of the decision and provided details of a financial package that includes payment in exchange for resigning the franchise.
Ford today also informed dealers of special offers on new Mercury vehicles that will be available through the summer to support the sell down of current Mercury inventory and remaining Mercury vehicle production.
"We are 100 percent committed to supporting Mercury owners through Ford and Lincoln dealerships and working hard to keep them as valued customers in the future," said Mark Fields, Ford's president of The Americas. "At the same time, we will work closely with our dealers to phase out Mercury franchises and continue to build a healthy, growing Lincoln with strong new products and a profitable dealer network that delivers a world-class customer experience."
The automaker said it will expand and enhance its Lincoln brand lineup with seven all-new or significantly refreshed vehicles in the next four years as part of a plan to compete with Cadillac and Lexus in North America.
"Profitably growing Lincoln in North America is an important part of our One Ford plan," said Alan Mulally, Ford president and CEO. "Our Ford brand is gaining momentum and winning customers around the world. Now, we are going to use the same laser focus to further strengthen Lincoln and deliver even more products luxury customers really want and value."