Any guy who's gone swimming in cold water can tell you shrinkage is not a good thing. Yet even as Ford comes to grips with losing second place to Toyota, The Blue Oval Boyz say the automaker could shrink even more before they return to profitability (and start to pay off the principal on those gi-normous loans). At a "roundtable dinner" last night with the Detroit Free Press' Tom Walsh, FoMOCo CEO Big Al Mulally said his employer's market share could continue to drop as they seek to stabilize output to match demand (translation: cut production, close down plants, eliminate jobs). Mark "What Me Worry?" Fields thinks Lincoln can help pull the company out of its doldrums, citing a 15 percent increase in sales last year. Apparently, that's "the largest gain of any luxury brand in the U.S. market." Chief marketing director Jim Farley added Lincoln has a good future with younger buyers and ever-oh-so-PC "diversity customers." But what about poor, pitiful Mercury? Will it suffer the fate TTAC's Steven Lang predicted yesterday? Mulally tap-danced around that one. "We're committed to Mercury" but "we're continuing to review our portfolio. That's an ongoing assessment we continue to have, and should have." And if it does survive? Fields says it'll be the "smaller volume brand" in the Lincoln-Mercury portfolio. So as Ford shrinks, Mercury will shrink even more. And when something shrinks too much it just fades away…..
Find Reviews by Make:
Read all comments
Ford will shrink, but when they find their feet (and trust me, they will), they’ll be much better. As a big, lumbering giant, they are still engineering good cars, with good quality & reliability and a good brand cache. So when Ford contract to a more efficient size, their profitability will increase, allowing more money to be channelled into R and D.
Selling Jaguar and Land Rover is a mistake, in my opinions. With the right management, Jaguar could have been the Germans’ worst nightmare. I mean, Ford could have sent a Mazda hit squad to Jaguar to help them with the reliability issues.
Ford are going to be the Japanese and South Koreans’ worst nightmare, because even in big lumbering mode, Ford is only just falling behind the transplants, what will they be like when they’re more streamlined….?
Katie—we disagree from time-to-time:) but I think you got it right….streamlined and great execution against the fundamentals (eg. quality) are a good start. As an aside——-I am particularly heartened about the renewed comitment to Lincoln.
Net, Of all the big 3—Ford seems to have the most cogent plan and I think Mulally is slowly changing their toxic culture. Cash flow is the single biggest issue—they have to work their plan faster in order for this to issue to be addressed.
A local “giant” Ford dealer near Pittsburgh, who assimilated several smaller dealers under the “Shults” banner has already closed two locations within the past two years. Now they’ve been running radio ads proudly proclaiming that one of their last locations is becoming a “Ford, Lincoln and Mercury” dealer.
The writing is on the wall.
umterp85
Trouble is, I trust Mr Mulally, but got absolutely no faith Mr Fields. Sack him fast!
I still think its easier (balance sheet wise) to keep the near-dead Mercury around than to battle L-M franchises when they realize Ford just took away their entry level models.
If Lincoln has potential, Mercury will too. Just depends on when Ford has the money to make it happen…and if they wise up, sell Volvo and plow back the proceeds for their homegrown products.
Mark “What Me Worry?” Fields thinks Lincoln can help pull the company out of its doldrums, citing a 15 percent increase in sales last year.
Percentages tell me nothing. What are the actual sales numbers between 2006 and 2007? And 2008?
I agree that Ford has the best game plan of the Detroit 3 — pare itself down to its core brands ASAP. Regarding Mercury, as the song says, “It’s much too late for goodbyes.”
Such a contrast to GM!
I agree with Sajeev, it is a better idea to keep Mercury in stasis. Don’t kill it, but don’t go crazy with a full product plan just yet, either.
When and if the overall Ford turnaround plan bears fruit, more resources can finally be diverted to Mercury again. Logically, this strategy should be part of the renewed commitment to Lincoln, since LM are a joined brand.
Longterm growth should be the plan, not further shrinkage.
Ford has it in them to make good cars – it’s just they also have the exact opposite to sell cars with very dangerous hazards (just off the top of my head – 16M cruise control devices, plastic intake manifolds, ignition coils, pinto rear fuel tanks and the design is still used on the panther platform, switch stalks in the steering column, and on and on and on.) Too many times they’ve been caught with deceptive and underhanded supplier & cost conscious deals (with engineering documentation discussing flaws and recommending resolving it) and fatalaties occurred directly as a result (but for that design flaw).
Not so say that other MFGRs don’t have this dilemma but it seems Ford overrules their talented engineers recommendations in order to make just a few extra dollars per vehicle. You can forgive crappy plastics, average engines, or breakdowns b/c that won’t kill you but when your suv flips over b/c of a flat and your Ford dealer had a part in with deflating your tires to 26psi to reduce rollover effects of a pickup truck quickly converted to an suv – I don’t know what that is.
I’d like to see FMC severed from the poisonous Ford family influence and become a true publicly owned company.
Katie: Miracles do happen—we agree twice in one day.
I like what I have seen from Farley so far—he’s kind of quirky—but in a good way–and compliments Mulally’s more austere style.
Mr Fields is quirky as well—but in a very shallow and disturbing way. Get rid of the empty suit.
Jolo—I think Lincoln ended up with about 132K sales in ’07—-+9% for the year. I think they show a more modest increase in ’08 as the new MKS (whose sales will be highly incremental to Lincoln)does not come out until summer….’07 had the benefit of a full year of the new MKX.
# jolo :
January 9th, 2008 at 10:12 am Edit This
Mark “What Me Worry?” Fields thinks Lincoln can help pull the company out of its doldrums, citing a 15 percent increase in sales last year.
Percentages tell me nothing. What are the actual sales numbers between 2006 and 2007? And 2008?
2006 – 120,476
2007 – 131,487
Incidentally, the 15% quoted by Fields is retail sales only. Total sales were only up 9.1%.
nice use of the font color HTML tag
I believe there is room in the FoMoCo line for a well-dressed Ford. Let’s call it a Mercury.
There are lots of successful examples. The Lexus ES and RX series are simply posh Toyota Camrys and Highlanders. They utilize the same engines and drive trains and the dealers often have common ownership and property. Re-badged JDM Hondas are North American Acuras. Nissan’s Infiniti line shares engines, platforms and dealers with the mother ship. Audi’s are up-scale Volkswagens.
I think the problem is not that there’s no room for a well-dressed Ford, but that it already exists and it’s called Lincoln. Where does that leave Mercury? Imagine another brand trying to exist between VW and Audi, or between Toyota and Lexus, or between any of those other mainstream and luxury brands. If it was really a good idea, wouldn’t those companies be all over it?
Sometimes I think the management a Ford and GM for that matter seem to forget that they are in the business of selling “durable” goods NOT disposable novelty items. They are dealing in high-end purchases that the customer will make, what every 5 to 10 years. So if you drop the ball today it will be a bout 5 years before you can regain the necessary momenteum.
You cant bitch-slap your own brands and products and than expect the customers to so show interest let alone respect your products and brands. FoMoCo itself did all the damage to Lincoln and Mercury. Today these brands are all but irrelevant to the minds of the majority of US consumers. Only Ford and GM behave as if there is time and room in this business to waste time and stand still. So now Ford wants to “push” lincoln again, too bad Hyundai of all brands is beating Ford to the punch with its new luxury sedan.
Think about it, Ford has damaged an iconic American brand to the point were Lincoln (Ford once top of the food chain brand) now has to compete with the upstart Hyundai brand! The Joke is Hyundai appears to actually have the better product, a REAL RWD car with a v8!
No matter how you slice it up Ford is run by a bunch of jackasses! It is hard to believe that it was Lincoln in the 1980s and early 1990s that was actually carrying the torch of American luxury with its than successful Mark VII and Continential. Oh, I forgot Ford purchased Jaguar and cut its own throat in an attempt to prove to America that the British Jaguar was better and more desirable than an American car could ever be.
So Lincoln and Merucry are the damaged, worthless brands that they are today because FoMoCo made them that way.
WhatdoIknow1: Nobody can disagree that Ford beat Lincoln and Mercury to near death.
Jonathon hits the nail on the head though—There is a space for Lincoln to reinvent itself via a Toyota / Lexus, Honda / Acura, or Audi / VW model.
I think Ford has realized this…thus their stated intent to drive more resources to Lincoln. Pipeline is following the words—MKS refeshed MKZ and hopefully MKR to come. Time will tell how much they can build on their 130K 2008 sales. I think if Lincoln can find a way to get to an annual 170K-200K retail franchise—they are back to being relevant.
Why keep it? Ford is sinking into the sunset (their market cap is what, down to around $10 billion dollars?). Mercury is not going to save them, perhaps without the mountain of debt keep it, but get rid of it. Their stock this morning hit $5.80, at the rate they are going they may be delisted.
Throw the deck chairs over and hopefully you can float on them.
I think many folks here like to deny the obvious! You CAN NOT compare Ford/ Lincoln to Toyota/ Lexus, Honda/ Acura, or even Nissan/ Infiniti. The VW/ Audi connection is a bit different so Im not sure it fits in here.
The Obvious is that Toyota, Honda, and to a large degree Nissan had built up steller reputations producing all types of automotive products from lowly Corollas all the way up to rather expensive 300zxs and Supras before they decided to create dedicated luxury brands. On the other hand Ford during the same period in history was destroying its reputation building crappy, poorly built unreliable products that they refused to stand behind.
Acura, Infiniti, and Lexus each were built upon over 20 years of great success by their parent companies in the automotive world. These companies EARNED the right to compete in the higher-end of the marketplace by making BETTER cars.
Ford is truly kidding itself if it believes the Lincoln brands carrys any weight today. Ford is in the opposite position of the competitors. FoMoCo has over 20years of bad products and bad will to overcome before loyal Ford fans will be begging them for “new” Lincolns.
What really makes matter worse for Ford is the fact that they have manage to spread the Ford bad will to many other brands. Many costumers of Jaguar, Range Rover, and Volvo are now quite familiar with the Ford corp culture of; “we built it, you bought it, now f&*k-off sucker”!
If Ford wants Lincoln to succeed Ford needs to understand what made Toyota (not Lexus) so successful.
WhatdoIknow1: If you would re-read my post instead of reacting to it with anti domestic hyperbole—-you would have seen that I said Ford-Lincoln had the OPPORTUNITY to re-invent itself in the mode of Toyota-Lexus.
Further, I think Ford Ford HAS realized that this must be their success model if it ever aspires for their brands to once again be relevant. Mulally has been pretty transparent on this….especially as it relates to operational efficiency and quality / reliability.
KatiePuckrik: Selling Jaguar and Land Rover is a mistake, in my opinions. With the right management, Jaguar could have been the Germans’ worst nightmare.
I agree that Jag could be the German’s worst nightmare. But to that end, who’s to say that Tata isn’t the right management? Clearly Ford wasn’t it. Last year I reported that Aston Martin quit Ford, not the other way around, because Ford wasn’t prepared to effectively market and grow the brand. Maybe Tata can give Jag and LR the attention and support that they need to flourish.
Also, I find it interesting that we are having this conversation about Mercury now, on the heels of Ford jettisoning AM, Jag and LR. I think the case could be made that there’s actually more elbow room for Mercury in Ford’s product mix today. Without the PAG (save Volvo) creating an artificial ceiling over the traditional FoMoCo lineup, the company is free to go upscale with Lincoln and Mercury could be pushed into the near-luxury space that Lincoln currently occupies (please, nobody try to convince me that today’s Lincoln is a premium luxury brand).
What then do we do with Volvo if it can’t be the new Mercury? Send them back to the land of their inheritance (i.e. making tank-like super safe, comfortable, and practical cars for upper middle class buyers that eschew pretentious German nameplates).
umterp85, FoMoCo would be best served by understanding that Ford/Lincoln is closer in market perception to Kia/Hyundai than to Toyo/Lex and starting from there.
Praxis: I think ford is correctly looking beyond today’s perception and looking towards tomorrow. Aspirationally—the Toyota / Lexus model is the gold standard—Honda / Acura a close second—this is what Ford should be benchmarking—and this is exactly what Mulally is doing.
If Ford benchmarks mediocrity—they have absolutely no shot. Other than a warranty scheme—tell me what Hyundai has brought to the party that Ford should emulate ?
Said another way—-imagine the following headline…
” Mulally reverses position—Ford bags Toyota as its benchmark–now looks to Hyundai as its inspiration”
Mr Praxis—do you kind of see the ridiculousness of the headline ?
In order for Mercury to survive Ford has to stop treating it like a stepchild and give it roots of it’s own, look how long these “parts bin cars” has been going on, the Mavricks, the Comets, Tuarus’s , Sables. At least GM kickstarted Caddilac, got it going in the right Direction, except for the Escalade model, which is a Hyped up Denali…which doesn’t even come close to the Germans…I recently went to the auto show was very disapointed by the interior design of the Ford Mo Co, it looked like all of the instrument pannels came from the same cars,with the exception of Lincoln, it looked like it was stripped from an 63-73 Lincoln,( talk about butt ugly0. Even the Edge has the same cheesey looking dials…Hey Ford , why don’t you hire some of the Mazda designers, Thats probably why their CX-9 got top honor…However I will say this, that is a pretty nice looking retro 4 door station wagon you have as a concept car…Now if only you stuck to making concepts to reality, then only then the Asian and Germans would have something to worry about!