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If Ford closes Mercury, what does it mean to you?

Consumer Reports News: May 28, 2010 02:53 PM

The industry is abuzz with word that Ford is considering closure of the Mercury brand. If it does, what will the impact be to consumers? In reality, probably very little. (Read: " Ford may close Mercury.")

Closing Mercury would be far less dramatic than what General Motors went through last year as it scuttled Pontiac, and eventually cast aside Saturn and Hummer. In those cases, there were many vehicles unique to the brand either in their entirely or significant elements. With today's four-vehicle Mercury line-up, each is just a slightly better trimmed version of a Ford vehicle. Let's admit it, the waterfall grille and extra chrome doesn't fool anyone.

Ford would continue to honor warranties. Both service and repair work could be performed at Ford and even Lincoln dealerships in most cases. Many dealerships already carry all three brands.

General Motors made the same pledge as it closed down brands, but from a practical standpoint, not all its dealers were trained and equipped to handle models from brands they didn't sell. (Read: " GM car warranty confusion leaves consumers and dealers in the dark.") This should not be an issue for Mercury. In recent years, product differentiation was limited largely to minor cosmetics, and Ford would continue to provide parts for years to come.

What about buying?
Historically, when a car brand ends, the resale value on its models drops. Customers considering a Mercury vehicle now would do well to wait until Ford Motor Company's intentions become more clear. To do otherwise, risks the vehicle dropping precipitously in value after purchase.

By waiting, timing might work out well for some buyers. If a decision is reached this summer, model-year end deals may be especially attractive for the Mercury models.

As with all year-end deals, the savings can be offset by a drop in value due to newer models arriving in showrooms. The appeal is greatest, in general, for those customers who hold on to a vehicle for at least several years or are high-mileage drivers, thereby enabling the miles to be spread over another model year.

Resale value on all Mercury vehicles will take a hit should be the brand go away, but they may not suffer as much as with more solitary brands, such as Oldsmobile or Saturn.

How the showroom would change
The showroom and parking lot space opened up by Mercury's market departure would be well timed for the planned expansion of the Ford product line. The Fiesta subcompact sedan and hatchback arrives this summer, and next calendar year, even more new models are expected.

Ford has announced that it will introduce several models based on the next-generation Focus platform, including a small three-row people mover akin to the Kia Rondo. These new, small vehicles would provide fresh metal for dealers to move and space will be needed to store and promote them.

Another piece of interesting timing is that Ford has just introduced a new Titanium version of the Flex and announced that there will be a Focus Titanium, as well. This new trim designation denotes a full-featured model, augmented with even more uplevel finery. Sounds a lot like a Mercury... If there is need for better-equipped Fords before customers make the significant financial leap to a Lincoln, Titanium may be the solution.

Nothing is set in stone just yet, but should Mercury fade away, it should have limited impact on consumers—especially those mindful of the potential resale implications.

Jeff Bartlett

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