CHICAGO – All-wheel drive, an increasingly popular feature in many segments of the U.S. light-vehicle market, may prove to be an important selling point for Ford Motor Co.’s Mercury brand, says Lincoln-Mercury President Darryl B. Hazel.

Mercury unveiled its ’05 Montego fullsize sedan this week at the Chicago Auto Show here, and Hazel says the availability of AWD may play well with potential Mercury customers. Equally important, a higher take rate on AWD could emerge as a key differentiator between Montego and the Ford Five Hundred on which it is based. AWD also is offered in the Five Hundred.

Montego’s all-wheel-drive option may connect with Mercury buyers.

Montego is the first fullsize Mercury to offer AWD (and first Mercury car with the option since the midsize Topaz in the late 1980s).

Hazel says AWD will become “an expected luxury feature.” Recently, luxury marques such as Lexus, Infiniti and BMW have added AWD variants of their passenger cars, apart from the AWD cross/utility vehicles and SUVs already in their lineups.

Hazel says AWD and Mercury may develop as a good match – with the all-new Montego leading the way. Mercury buyers are expected to go for the feature in a big way, and the division is forecasting penetration rates for Montego to be high.

“I wouldn’t be surprised if we eventually get up to 50% (of Montego sales)” Hazel predicts, although he says initial take rates won’t be that high.

The Montego may be the perfect product for a revitalized Mercury, Hazel says. Along with AWD, the sedan will feature a high-tech continuously variable transmission to enhance performance and fuel economy. Equally important, Hazel is confident Montego’s styling is a winner. Ford Flouts New Car Flagship http://subscribers.wardsauto.com/ar/auto_ford_flouts_new

“Some of us think it’s the better-looking of the two vehicles,” he says of Montego’s styling versus the Ford Five Hundred. He says Montego underscores Mercury’s new design direction billed as “understated but smart.” He says interior styling and materials also should help to separate Montego.

But performance, a brand “differentiator” once employed by Mercury, probably won’t be a key to the new-age Mercury, Hazel tells Ward’s. In the past, Mercury-badged variants of Ford products sometimes offered a higher-powered engine or other performance accouterments not available with the Ford nameplate.

“I don’t think performance is where we’re going,” he says.

Hazel stresses the company’s strategy is to make Mercury models appear to be more than badge-engineered Fords.

“I think we know where we need to go (with product differentiation),” he says. Unique, fresh styling, well-designed interiors with upscale materials and performance and safety features like AWD and the CVT will help to set Mercury apart.

“I think you’ll see a nice level of differentiation” in future Mercury products, Hazel predicts.

Hazel is backed by Peter Horbury, recently named executive director of design-North America. Horbury, now responsible for future Mercury design direction, professes an affinity for Mercury borne by a strong brand identity in past decades in his native U.K.

“This Englishman knows Mercury,” Horbury says, noting the British highly regard past Mercurys for trend-setting styling.

“There will be more (Mercury) icons in the future, I promise you,” he says.

bvisnic@primediabusiness.com