CHICAGO – Continued speculation about the future of Mercury isn’t hurting sales, but it is making some dealers nervous, the brand’s marketing chief acknowledges.

Mercury’s viability was called into question again in recent weeks, as Tracinda Corp. advisor Jerry York was quoted as saying he was convinced Ford Motor Co. eventually would dump the brand, remarks he later apologized for to Ford.

Tracinda is billionaire Kirk Kerkorian’s investment arm, which recently signaled plans to acquire at least 5.6% of Ford stock.

“Actually, we had a good April,” says Brett Wheatley, general marketing manager for Lincoln Mercury. “It is a concern among our dealers, but it is fairly clear that we have not made a decision yet on Mercury.

“But we’re working on a fast solution.”

Combined, Lincoln Mercury sales were down 26.8% in April in a light-vehicle market off 13.7%, Ward’s data shows. The Milan was the lone Mercury model posting a gain, up 4.5%.

Wheatley points out the number of new models coming for the brand.

“We have a redesigned Milan and Milan hybrid coming and new Mariner powertrains, (including a new 4-cyl. and an upgraded V-6 along with a 6-speed automatic transmission),” he says, adding the Milan is due in January as a ’10 model.

“We’d like to get the Milan hybrid sooner because of gas prices, but can’t,” he says.

In the meantime, Ford will focus on EcoBoost, its new more fuel-efficient engine technology that combines gasoline direct injection and turbocharging. Ecoboost will be featured on the ’10 versions of the upcoming ’09 model Lincoln MKS sedan and Ford Flex, Wheatley notes.

The MKS is due to hit the market in a few weeks and the Flex cross/utility vehicle reaches showrooms this summer.

But Wheatley admits the rumors have been a distraction.

“There isn’t a lot of general public awareness about the speculation over Mercury outside the company and our dealers,” he says. “The speculation has come from the media. But no plans have been decided and no one has canceled an order, and there has been no negative impact on sales.

“At the end of the day, it’s speculation from outside that we keep deflecting and keep going. As soon as we have an answer about Mercury we’re going to tell our employees, our workers and the media.

“Everybody has an opinion about Mercury, mostly the media, but also Jerry York.”

Why not scrap Mercury and move its products under the more upscale, higher-margin Lincoln umbrella?

“We’re bullish on Lincoln,” Wheatley says. “It’s doing a good job. (The) MKZ and MKX are doing well and we feel MKS will, too. We already have 7,000 orders for (the) MKS and the sedan isn’t out yet. We hope to sell at least 3,000 a month.

“What we are doing now is discussing our future product cycles, what changes need to be made and what products would be right for what markets and who gets what product – and those decisions still haven’t been made.”

Dealers “are the most concerned,” he says of whether Mercury will survive. “As for product, they have a wish list and it includes small cars and more crossovers.”

An earlier Ward’s analysis indicates 2012 could be the tipping point for the brand, if no new product is allocated between now and then.

Meanwhile, Wheatley says Lincoln will stick with the MK designation on its vehicles, despite some criticism consumers may not know MKZ and MKS denote sedans and the MKX is a CUV.

“It was so expensive to launch the MK nameplates and we have so much equity invested in the MK terminology that it would be hard to undo the MK designation now, and we’ll stick with it,” he says. “ We found it tended to have customers emphasize the Lincoln brand and say, ‘I have a Lincoln X or Z,’ and that has helped the Lincoln brand.”