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From AutoWeek

By AMY WILSON | Automotive News

To most people, Mercury is little more than a Ford with a waterfall grille and $500 extra on the window sticker.

Ford Motor Co. executives are trying to change that perception - even though they acknowledge that future Mercury models still will be Ford derivatives. Mercury will have more models, and the differentiation will be better done, they contend.

By the end of 2005, the Mercury brand will have seven nameplates in its lineup, up from just three last year. New models include:

  • The Montego sedan, which debuted last week at the Chicago Auto Show. It is a derivative of the Ford Five Hundred sedan. Both the Montego and the Five Hundred will go on sale in September.
  • The Mariner sport wagon, which is derived from the Ford Escape. It also goes on sale in September.
  • The Monterey minivan, which is a sibling of the Ford Freestar. It went on sale last fall.
  • A mid-sized sedan based on the 2006 Ford Futura. It will debut in 2005.
  • A sport wagon based on the 2005 Ford Freestyle. Mercury's version probably will debut in 2005 or 2006. [/list:u]

    Because the new Mercury models remain derivatives of Ford models, Mercury planners must work hard to differentiate the brand. To set Mercury apart, Ford Motor design chief

    J Mays is aiming squarely at younger, image-conscious consumers - the type willing to spend an extra $2 for a cup of coffee at Starbucks.

    "There's nothing wrong with having derivatives of Ford if they're distinctive," Mays said. "Over the long run we should be able to make the Mercury brand a brand that will ask and get a higher dollar."

    It's a balancing act because Mercury's prices can't rise too high. One tactic: Mercury will feature high-tech design touches that will distinguish them from Fords without ballooning the price.

    Mercury cues

    For example, the Mercury Montego will feature high-intensity discharge headlamps and light-emitting diode taillamps. And some Mercury models will come with seats that can be heated or cooled, while only heated seats will be offered in the matching Ford models. Product planners also could use more robust or refined powertrains to set the Mercury models apart.

    Design cues will include the familiar waterfall grille plus satin-finish aluminum trim, which is more modern-looking than chrome, Mays said. And some Mercury nameplates will get new sheet metal on the front quarter of the vehicle.

    The Mercurys that debut in a year or two will have more styling differences than those arriving now, executives said. The Monterey minivan, for instance, looks much like the Ford Freestar.

    Executives say the new cars should attract people in their 40s, not unlike the buyers of the current Mercury Mountaineer. In contrast, the average Grand Marquis buyer is 68 years old and often is a repeat buyer.

    Many target buyers will be new to the Mercury showroom and may own a Toyota or Honda.

    "I don't want them to look at a Mercury and think, gee, that's for an older audience," Mays said. "In order to bring the brand up, you need to bring the age group that's buying the vehicles down."

    The Mercury price range is $20,000 to $40,000. Company executives won't say what kind of a premium they expect to get for Mercury. But the just-released Monterey may suggest where that spread is heading.

    Monterey's volume models are priced at $34,000 to $36,000, while the volume models in the Freestar line range from about $27,000 to more than $30,000.

    Company executives admit that Mercury has become a hodgepodge.

    "What Mercury was was a collection of vehicles that we stuffed together and called Mercury," said Elena Ford, Ford Motor's director of North America product marketing.

    That cobbled-together lineup eroded the brand image. Mercury sales plunged to 202,257 units last year, down from 438,000 in 1999.

    The Villager minivan and Cougar coupe were dropped in 2002, and the brand had only three vehicles - the Grand Marquis, Sable and Mountaineer - to sell until the Monterey joined the lineup last fall. Mercury counts its Marauder as part of the Grand Marquis family.

    Some industry pundits predicted Mercury would go the way of defunct brands such as Plymouth and Oldsmobile. But that would have left Lincoln Mercury dealers in the lurch, executives said. The dealers rely on Mercury volume to stay in business.

    So work on the new lineup began. With the new vehicles, Mercury wants to increase annual sales by at least 50 percent during the next few years, said Darryl Hazel, vice president of Lincoln Mercury.

    A family matter

    Elena Ford has been one architect of Mercury's turnaround plan. She is the granddaughter of Henry Ford II, and worked for a time as Mercury brand manager. Two years ago, after CEO Bill Ford ordered a Mercury revival, she helped plan the new Mercury lineup. In her current job she will help develop new models.

    Mercury's derivative strategy has one obvious advantage:

    Ford Motor, still recovering from financial problems, won't have to spend as much money on product development.

    But that low-risk strategy suggests Mercury will never free itself entirely from the Ford brand's shadow.

    "Having Mercury around as almost-clones obviously will create profitable product," said industry analyst Jeff Schuster of J.D. Power and Associates. "But for long-term image and long-term brand identity, they need to have something unique."
    • [/list:u]
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