Streams

May Auto Sales: Ford to End Mercury

Wednesday, June 02, 2010

Auto sales in May rose sharply compared to year ago, thanks in large measure to an easy comparison. Recall that a year ago, the economy was in a severe recession and General Motors and Chrysler were days away from filing for bankruptcy, factories were shutting down and the last thing on the minds of many Americans was buying a new car.

But a year later, consumers are feeling better as employers have started to hire--albeit slowly--and U.S. auto makers are offering vehicles that consumers actually want.

Overall, sales increased 19 percent from a year ago. At the current sales pace, 11.6 million will be sold in 2010. At this point a year ago, the annual sales rate was under 10 million cars and trucks.

General Motors, which filed for bankruptcy just a year and a day ago, sold 223,410 cars and trucks in May, up more than 17 percent from a year ago. Even Chrysler, which continues to struggle, saw sales increase nearly 33 percent. All of the Detroit automakers also had strong sales to rental companies which pushed up total sales volumes.

Ford, which saw sales increase 22 percent, announced that it would end the Mercury brand later this year and fold it into Lincoln.

“At the same time, we will work closely with our dealers to phase out Mercury franchises and continue to build a healthy, growing Lincoln with strong new products and a profitable dealer network that delivers a world-class customer experience,” said Mark Fields, president of The Americas for Ford.

There are currently no stand-alone Mercury dealerships in the U.S. and the company said it would ensure that current Mercury car dealers and customers would receive support including necessary parts and supplies, as well as honoring existing warranties.

“Like Plymouth and Oldsmobile, Mercury is a victim of both increased competition from outside its corporate parent and a lack of differentiation from within,” said Karl Brauer senior analyst with Edmunds.com. “Mercury products have been nothing more than modestly restyled Fords for decades, and that’s not how you build or maintain a brand.”

Ed Tonkin, chairman of the National Automobile Dealers Association, said Ford needs to treat dealers fairly. “It’s a sad day for this 70-year-old marque, and its loss is disappointing for the more than 1,700 dedicated dealers who sell the Mercury brand.”

Toyota, which has been plagued with recalls and lawsuits, saw sales rise only 7 percent, despite offering a slew of incentives to get buyers to the dealers.

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