Ford Motor Co. said Wednesday it will cease production of its 72-year-old Mercury brand by the end of 2010 after years of declining sales.
Ford plans to expand its luxury 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.
Ford'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 a regular annual business review. He said Mercury's sales make up such a small percentage of North American market share, and that the profile of Ford and Mercury shoppers is so similar, that it makes more sense to focus on accelerating the Ford brand and growing Lincoln.
"We don't take this decision lightly," he said.
Mercurys sales peaked in 1978 at more than 580,000 vehicles but just over 92,000 Mercurys were sold last year.
Ford has 1,712 dealerships currently selling Mercurys, although none are stand-alone 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.
Ford didn't say how much it expects to pay to shutter the brand, but Fields said the closure doesn't affect the company's forecast that it will be solidly profitable this year. The company also doesn't plan to lay off any workers at its Dearborn headquarters.
Mercury was conceived as a mid-range brand between no-frills Ford and the luxury Lincoln brand. But it struggled to differentiate itself in recent years as Ford moved upmarket and the company failed to give Mercury new products or advertising support.
Tom Krisher reported from Detroit.