The latest press release from Ford comes with good news and also bad news. Starting with the bad news, the Blue Oval will end Mercury production in the 4th quarter of 2010 stating that the company’s financial resources will be concentrated towards product development, production, marketing and sales for is core brand.
Also the reason which determined Ford to end the Mercury brand is the fact that Mercury’s customer profile, pricing and margins are almost
identical to Ford which resulted in declining sales.
As expected Ford will make sure that this transition will go smooth, working closely with Mercury dealers and also honoring warranties and providing access to parts and service for existing customers.  
The good news is that in next four years considerable attention will be given to the Lincoln brand which will receive 7 all-new or refreshed models.   
Ford press release :
DEARBORN, Mich., June 2, 2010 – Ford Motor Company will expand and
enhance its Lincoln brand lineup with seven all-new or significantly
refreshed vehicles in the next four years as part of an aggressive
growth plan focused on standout product design, class-leading
technology and new powertrains – all aimed at competing with Cadillac
and Lexus in North America.
Ford also will end production of Mercury vehicles in the fourth
quarter of this year to fully devote its financial, product
development, production and marketing, sales and service resources
toward further growing its core Ford brand while enhancing the Lincoln
brand.
We have made tremendous progress on profitably growing the Ford
brand during the past few years.  Now, it is time to do the same for
Lincoln,” said Mark Fields, Ford’s president of The Americas.  “The
new Lincoln vehicles will transform luxury for North American premium
customers through an unexpected blend of responsive driving enjoyment
and warm, inviting comfort. We will also offer our customers a
world-class retail experience through a vibrant retail network.”
Lincoln’s hallmarks will be refined, modern design, the most
fuel-efficient premium powertrains and industry-leading technology that
create a unique driver experience both in the cabin and on the road.
“Profitably growing Lincoln in North America is an important part of
our One Ford plan,” said Alan Mulally, Ford president and CEO. “Our
Ford brand is gaining momentum and winning customers around the
world.  Now, we are going to use the same laser focus to further
strengthen Lincoln and deliver even more products luxury customers
really want and value.”
Foundation Set
The future of Lincoln is building from a strong base that includes the
all-new flagship MKS large sedan, the all-new MKT seven-passenger
crossover and a significantly refreshed MKZ mid-size sedan – all now in
showrooms.  The hybrid version of the MKZ will reach showrooms later
this year and is expected to be the most fuel efficient premium sedan
on the market.
Lincoln’s product actions continue later this year with the debut of
the significantly refreshed 2011 MKX crossover, the first vehicle to
feature MyLincoln Touch driver connect technology. 
This will be followed by another six all-new or significantly
refreshed vehicles within four years developed with Lincoln’s DNA of
standout design, precise and confident driving experience,
class-leading technology and powertrains delivering top performance and
fuel efficiency. 
Lincoln will be led by expanded product development and marketing,
sales and service teams to support the brand’s growth plan and ensure
it has a strong cadence of distinct products that are well positioned
in the market.  Plans for Lincoln include:

  • Lincoln’s first-ever C-segment vehicle
  • New Lincoln-exclusive powertrains, including an all-new
    V-6 engine and advanced fuel-efficient transmissions
  • EcoBoost engines available in all Lincolns – from the
    Navigator full-size SUV to the new C-segment Lincoln
  • Fuel economy leadership with each new vehicle – leading to
    Lincoln emerging as the most fuel-efficient luxury lineup on the
    market
  • More useful technology and features than any other
    competitor – with a special focus on comfort and convenience.  New
    advanced features include: fully retractable glass roofs;
    adaptive computer-controlled suspensions; electronic, push-button
    gear-selectors; active noise control; and exclusive MyLincoln
    Touch driver connect technology 
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“Lincoln vehicles will reward drivers with smooth, effortless power
complemented by agile handling and responsive steering,” said Derrick
Kuzak, Ford’s group vice president, Global Product Development.  “The
cabin is a sanctuary with segment-leading quietness, genuine materials
and intuitive, useful technology.”
Lincoln has started gaining traction with customers, as evidenced by
market share gains during the past five years.  Lincoln’s share of the
retail U.S. luxury vehicle market has grown from 4.5 percent in
2005 to 6.3 percent through the first quarter of 2010.
In addition, Lincoln’s reputation with consumers has risen, with
favorable opinion and purchase consideration reaching its highest level
in the past five years.  Lincoln’s long-term durability was second
only to Porsche’s in the 2010 J.D. Power and Associates Vehicle
Dependability Survey.
Mercury
Mercury originally was created as a premium offering to Ford and was an
important source of incremental sales.  However, the continued strength
of the Ford brand – particularly during the past three years – has
accelerated the migration from Mercury to Ford for many customers. 
Today, Mercury’s customer profile, pricing and margins are almost
identical to Ford, but Mercury’s incremental sales have been declining.
The majority of current Mercury sales are to fleet buyers and
customers purchasing through employee, retiree and friends and family
discounts, which Ford anticipates largely can be satisfied by Ford brand
vehicles.
Of Ford Motor Company’s 16 percent market share in the U.S., Mercury
accounts for 0.8 percentage points, a level that has been flat or
declining for the past several years.  That contrasts with the Ford
brand, which has increased market share by 2.2 percentage points so far
this year on the strength of new products and improved quality, fuel
efficiency, safety, smart design and value.
Ford’s strengthening financial position – including the return to
profitability and positive cash flow – allows the company to absorb
short-term costs associated with the discontinuation of Mercury and to
consolidate future product investments into Lincoln.
Today, there are no stand-alone Mercury dealerships in North
America.  Ford is working closely with dealers to maintain properly
located stand-alone Lincoln or Ford-Lincoln dealers, which will offer
dealers and the company the greatest opportunity for long-term
profitable growth.
New operational standards developed with the company’s dealers will
facilitate a Lincoln customer experience that exceeds the expectations
of North American luxury customers.
Personal Attention
Ford will work closely with Mercury dealers and customers during the
transition, including providing existing Mercury owners with continued
access to parts and service support at Ford and Lincoln dealers and by
honoring current warranties, including Ford’s Extended Service Plans.
“We are 100 percent committed to supporting Mercury owners through
Ford and Lincoln dealerships and working hard to keep them as valued
customers in the future,” Fields said. “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.”
Mercury owners will receive additional details in the coming days
explaining the transition and assuring them that Ford and its dealers
will continue to provide all necessary parts and service support for
Mercury products.  
Ford has notified Mercury dealers of the decision and provided
details of a financial package that includes payment in exchange for
resigning the franchise. 
Ford today also informed dealers of special offers on new Mercury
vehicles that will be available through the summer to support the sell
down of current Mercury inventory and remaining Mercury vehicle
production.
“We are taking decisive action and moving into the future with the
right plan to deliver profitable growth for all stakeholders,” Fields
said. “These moves position us to continue building momentum through
strong brands, great products and an unwavering focus on the customer.”

Source: Ford