Craze for cars

Ford Motor Co. hopes to wrap talks by year end with the dealers for the Mercury brand it is shutting to focus on its mass-market Ford and luxury Lincoln brands, CEO Alan Mulally said today.

Mulally declined to discuss the expected cost for phasing out the Mercury brand, part of a restructuring that includes an expanded investment in the Lincoln brand lineup. Mercury production is expected to halt in the fourth quarter.

“We don’t have a time frame per se, but we are hoping to help everybody through the rest of this year, that is the general time frame,” Mulally said after an appearance at the Chicagoland Chamber of Commerce annual meeting.

Company data showed that the broadly improved Ford brand vehicle lineup would meet the needs of Mercury customers, Mulally said of the decision announced last week to phase out the Mercury brand which was created by Edsel Ford in the 1930s.

Mercury has no stand-alone dealerships in the United States and some 1,436 of its 1,712 dealerships are paired in some way with the Ford blue oval brand that has been expanding. That leaves 276 Mercury-Lincoln dealerships that could become solely Lincoln dealers when the phase-out is completed.

“We have the vehicles that people really do want to cover the needs of the customers who were looking at Mercury before,” he said. “The entire Ford product line has moved up.”

Ford has reintroduced a small car to the United States this year in the Fiesta and will add a redesigned Focus compact car and a redesigned Explorer SUV to its brand lineup among other additions and investments. That leaves the Ford brand with a full lineup globally and within the United States, he said.

When it announced the Mercury closing, Ford affirmed its outlook for “solidly profitable” in 2010 and for its 2011 earnings to improve on 2010. It has not detailed the cost to wind-down Mercury or a specific earnings target.

“We have everything associated with what we are doing included in our guidance,” Mulally said.

Ford, which last year posted its first full-year profit since 2005, reported a first-quarter profit of $2.1 billion and raised its full-2010 outlook to solidly profitable. The automaker’s losses totaled $30 billion from 2006 through 2008.

Ford has been working for several years to reduce its dealership network, primarily in some metropolitan areas where consolidations would leave the surviving dealers with higher annual volumes.

“We are pretty much on track with our consolidation,” Mulally said. “We have a few too many dealers in some of the larger metropolitan areas, but we are continuing to work with all of our dealers including the Mercury dealers in a collaborative way.”