Even as Mercury prepares to drive off the cliff, its sales are climbing.
DespiteMotor Co.’s recent announcement of the brand’s impending death, Mercury deliveries jumped 26.2% in June, compared with year-ago, to 9,250. The top-selling model was the Mariner cross/utility vehicle, which posted a 37.5% gain to 3,101 units.
’s combined fleet and retail light-vehicle sales for the month rose 13.6% to 173,706 units on a daily basis, compared with year-ago, with 25 selling days this year and last.
Ford says it’s pulling the plug on the 71-year-old Mercury brand to focus more resources on the Lincoln luxury marque. If June sales are any indication, Ford has its worked cut out for it, as Lincoln deliveries dropped 11% to 6,318.
Ken Czubay, Ford vice president-sales and marketing, says Mercury’s strong sales in June largely were due to a concerted effort by dealers to begin selling down.
“Mercury sales went real well last month, and the sell-down is going slightly ahead of schedule,” he says in a conference call with analysts and journalists.
Ford says it is supporting the sell-down process, but declines to say if it’s doing so with incentives.
Czubay says the auto maker is well into the process of linking its 1,712 Mercury dealerships with existing Blue Oval franchises.
“We’re ahead of schedule on that,” he says, noting the consolidation strategy was in place before Mercury’s demise was announced. “The pace has accelerated, but continues in a very orderly and constructive and collaborative way.”
Some Mercury dealers hail Ford’s decision to discontinue the brand.
“In my opinion, Mercury should have gone away a long time ago,” Ron Boyer, president of Courtesy Ford, Lincoln and Mercury in Portland, OR, tells Ward’s. “Its volume does not support stand-alone facilities, and it only cannibalizes sales of the Ford brand.”
But others warn of dire consequences.
“Mercury sales are very good right now and will most likely stay good until supply is gone,” says OC Welch III, president of OC Welch Ford Lincoln Mercury in Hardeeville, SC. He says his Lincoln and Mercury combined sales are up 141%, compared with year-ago.
“I think Ford will regret the decision,” Welch says in an email to Ward’s. “I don’t see anyone moving from Mercury to Lincoln, and very (few) moving from Mercury to Ford.”
Although Mercury is on the chopping block, with production to be wound down by year’s end, residual values are not expected to take a significant hit.
According to ALG, a firm that forecasts residual values for the leasing industry, Mercury should outperform most discontinued brands.
“Historically, the impact of brand termination on residual values averages about 5 percentage points,” Matt Traylen, ALG’s Chief Economist, says in a statement.
“But due to Mercury’s low volume and stronger demand indications prior to the announcement, we expect its residual values to be impacted by only 2.5 to 3 percentage points over the next 36 months, with the majority of the decline in the first 12 months.”
Ford officials, meanwhile, are predicting a gradual recovery in industry sales over the year’s second half.
Czubay says the auto maker will “have a tough time beating its first-half performance,” which saw sales grow 28% on a year-over-year basis. But upcoming product should help drive demand, particularly the upcoming Fiesta B-car.
“A new Fiesta is entering the market, and we don’t understand the full impact of this (segment) because it’s new to our dealers,” Cuzby tells analysts and journalists. “It’s a totally new customer that will be introduced to the Ford line of cars, and that will give us a basis for sustained growth.”
Also arriving later this summer are redesigned versions of the Ford Edge and Lincoln MKX CUVs.
Ford ended June with a 406,000-unit inventory, consisting of 136,000 cars and 270,000 trucks.