Ford is set to turn out the lights on the Mercury brand for good, but not before giving consumers a last shot at some deals and a piece of history -- just as the now-defunct Pontiac nameplate did last year.
Mercury was an “in-between” brand, positioned above Ford but below Lincoln in the product hierarchy, though it never had Pontiac's sex appeal – not even in the good old days of the 1960s. Prior to Ford’s June announcement that Mercury was finished, its minuscule market share stood at about one percent. Ford wants to focus its resources on its eponymous core brand, and Lincoln, its long-languishing luxury marque.
Ironically enough, now that its days are numbered, Mercury is promoting its Milan, Mountaineer, Mariner and Grand Marquis with abandon. The best news for consumers is that dealerships are motivated to clear these cars off their lots. "It's not going to be that hard to get a deal," said Mike Whitty, owner of the Michigan-based Michael Learning Group and a consultant to dealerships.
Ford has promised that Ford and Lincoln dealerships would honor Mercury warranties and extended service plans. Since each of Mercury's vehicles has near-twin Ford counterpart, dealerships should have no problem servicing them for a long time.
Big Rebates And Low Rates
Like the products of any discontinued brand, Mercury cars and SUVs may suffer from low resale value. Still, a nice rebate could offset the loss. This month, Ford is putting $1,000 to $2,000 on Milans, $1,500 to $2,500 on Mariners, $2,000 to $3000 on Mountaineers and $3,000 to $4,000 on Grand Marquis models.
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In lieu of a rebate, the Grand Marquis and the Mountaineer are also featuring low interest rates starting at zero percent for 36 months, and the Milan and Mariner have zero percent financing for 60 months as an option.
But in a market packed with incentives, the smart consumer will ask for more – especially since Mercury's cross-town rivals and its counterparts in the Ford stable are offering similar deals.
Some Mercury dealers are already improving on the factory offers, taking as much as $5,000 off suggested retail prices. In some regions of the country, Ford is also combining low-rate financing with thousands in rebates into a single deal.
In mid-August, Pomoco Auto Group in Hampton Roads, Va., said it was offering a 2010 Mercury Milan for $19,119, more than $4,500 below the suggested retail price a for high-end trim level. Its deal on a well-equipped 2010 Mariner, originally priced at $25,180, involved more than $4,000 in savings: It was selling for $20,751 at mid-month.
Five Star Lincoln Mercury in Warner Robins, Ga., said it was offering a Grand Marquis for more than $5,000 below invoice plus low-rate financing, and a well-equipped Milan for $21,663, about $3,500 below its normal retail price, plus low-rate financing.
When a brand isn't on its deathbed, automakers and dealers rarely combine low-rate financing with big rebates.
While deals are common at some Lincoln-Mercury dealerships, finding them may take some effort. Inventory levels are low and shrinking, both at the national and dealership levels.
In mid-August, Don Wood Automotive in Athens, Ohio, listed just four Mercury models in its inventory, out of 171 vehicles. Robberson Ford Lincoln Mercury Mazda in Bend, Ore., had just five Mercurys out of 106 vehicles listed in inventory. Some Lincoln-Mercury dealerships list none at all.
Nationally, the Mercury inventory level has declined from about 14,000 to less than 11,000 since August 2009. In 2005, admittedly a strong year, the number was 50,000.
Christian Bokich, a Lincoln-Mercury spokesman, said Ford is scheduled to wrap up Mercury production sometime in the fourth quarter, but the exact timing hasn't been announced, he said. Mercurys will continue to be sold through fall in at least some areas. Availability will vary across regions.
"But 2010 is definitely the last model year, and the model-year change typically takes place in early fall of any year at a dealership," Bokich said.
Loyalty To Price
Whitty believes the deals will certainly draw customers, even owners of non-Ford vehicles, since people are less brand-loyal than they once were.
"If there is going to be a Mercury fire sale, then there are going to be a lot of people who are going to be interested in getting one. It's no different from back when Pontiac went out of business," he said.
But the projected resale value of a 2010 Mercury down the road could be an obstacle to some buyers, he said. Some will ask themselves, "What's the value of my vehicle going to be? The people who are thinking like that will probably think twice before buying a Mercury."
If the recent past is any indication, at least some losses are likely. Kelley Blue Book reported sharp declines in Oldsmobile resale values after the brand was shut down in 2004.
Pontiac's resale prices seem to have declined after its demise, too. If you had bought a 2009 G6 in late 2008 and put 60,000 miles on it over the last two years, its value would be about 47 percent of its original price today. On the other hand, a Chevy Malibu would retain 54 percent of its value, all other things being equal. In dollar terms, that works out to a loss of about $600 more on the G6, even accounting for the different sticker prices at the outset.
But the situation may be changing. With many recession-weary consumers still reluctant to buy new cars, the used car market has been relatively strong. If new car sales remain moribund and if people keep buying used rather than new, even a defunct brand may benefit from rising used car prices.
Not Much To Choose From
The biggest hurdle for buyers this fall is likely to be Mercury's a much-diminished product line. Bargain hunters in the market for a compact, large crossover, or a fresh version of a near-luxury sedan will come away from Mercury dealerships disappointed -- if they even visit in the first place.
Mercury has been in the doldrums for several years as sales fell and Ford scaled back production. In 2009, sales dipped to about 90,000 units. That figure was nearly 360,000 units in 2000. Despite dealers' calls for fresh models, Ford failed to replenish the Mercury pipeline. The company stopped producing the Sable, the brand's counterpart to the Ford Taurus, in 2009, and proposals to build the Tracer, a compact resembling the Focus, fell through early this year.
In the end, Mercury never quite built "the excitement" that Pontiac did, to borrow a phrase from one of the sporty GM make's ad campaigns. As a result, people aren't likely to buy and preserve one of the last Mercurys as a memento of their hell-raising youth.
But Mercury's rebates are as big as those that GM put on its Pontiacs as its brand slipped away. And cash will always be collectible.
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