When Alan Mulally came to the Ford Motor Company two years ago he finally forced the company to face reality. It wasn't going to go anywhere, he told his executive team, unless it put all its resources into resuscitating the Ford brand on a global basis.
So Jaguar and Land Rover were given the heave-ho, and Volvo was put "under review." The decision was made to let Mercury slowly die, and Lincoln's turn-around was put on the back burner until the Ford brand revived.
But as the company formulated its turn-around plan, it slowly dawned on everyone involved that there was a real opportunity to save Mercury. They figured out a way to give the brand a unique line-up of vehicles without breaking the bank. So in April of this year they took their ideas to Mulally, and after extensive studies they got the go-ahead in June to save it.
John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers. Follow the jump to continue reading this week's editorial.
Mercury was worth saving for a couple of reasons. Even though Mercury sales have been sinking for a decade, Lincoln-Mercury dealers still need the volume that the brand provides. Many, if not most, Lincoln-Mercury dealers couldn't survive without it. Second, Mercury brings in younger buyers than the Ford brand does, and a more diverse group of buyers at that, especially women.
Historically, Mercury's sales volume was never enough to justify the cost of tooling up unique models for the brand. Most Mercury models are nothing more than re-badged Fords. The fact that it's still alive shows there's a lot of power in that brand. But how to give it a terrific line-up of unique models?
Back to the plans to resuscitate the Ford brand. The company determined that it was going to build its product portfolio around C-segment vehicles. After all, it's the biggest segment in the world. And where there's volume, there's economy of scale. That's how mass marketers make money in this business.
Ford has a slew of C-segment vehicles in Europe. There's 3-door, 4-door, 5-door and station wagon versions of the Focus. Then there's the C-Max and Kuga that are built on the same architecture. Mazda and Volvo use that platform, and the B-class Fiesta shares a lot of it, too. With a little bit of modification they can bump it up to the C/D segment, where they have three different body styles of the Mondeo, plus the S-Max crossover and Galaxy people mover. Talk about manufacturing volume!
Up to now it didn't make much sense to build small cars in the U.S. Sky-high UAW labor rates were twice as much as Toyota or Honda had to pay their American workers. But last year's UAW contract changed all that. Now the Detroit Three have a fighting chance to build compact cars profitably in their home market, and Ford is going at it with a vengeance.
The plan is to retool a number of its U.S. plants with flexible manufacturing lines that can build just about any of these C-segment vehicles. The company is going to put six of these models (including the Transit Connect) in Ford showrooms in the next few years. But that leaves a lot of other models to choose from, and that's where the company realized it could sell some of them as Mercurys.
After all, if the cars are already designed and they've got the plants to build them in, the financials just became attractive enough to justify giving Mercury a unique line-up of models. For example, why not give Mercury dealers the 5-door version of the Mondeo, and the S-Max and the Kuga? OK, so they're still re-badged Ford's, but to most Americans they'll be completely different than anything they'll see on the lot at a local Ford dealership.
Ironically, the plan to save Mercury rose directly out of the plan to kill it off. And so a brand that was literally on its last legs will finally get a shot at proving what it can do.
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