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From the Chicago Tribune:

Mercury unit on its way up after years in the doldrums

Montego, upcoming models expected to give division a lift

February 3, 2005


Not long ago, you could set off a cannon in a Mercury dealership without striking a customer or a car.

Prophets were forecasting that Mercury, like Oldsmobile, would disappear and take Lincoln with it.

The cars offered were old, and so, too, were the folks who bought them. The division was kept afloat by new sport-utility vehicles, but there were no new cars for those who preferred sedans.

That was two years ago, and now Mercury, along with its Lincoln partner, is talking about selling a total of 500,000 vehicles if not more by the end of the decade. That's up from 300,000 in 2004.

And it plans to do so with new cars to attract younger customers.

It's off to a good start. The 2005 midsize Mercury Montego is in short supply without offering rebates, and more than 40 percent of its buyers traded in a non-Ford product, mostly Japanese imports. The sedan, available in front-wheel- and all-wheel-drive, the latter a feature the Japanese don't offer in their sedans, replaces the Mercury Sable. Even Lincoln-Mercury President Darryl Hazel is a bit overwhelmed with Montego's success.

"It's a car people want, not a car we have to work hard to sell," he said in an interview.

More are coming, important because, as Jim Padilla, chief operating officer of Ford and president as of Feb. 1, told us: "Mercury gives Lincoln reason to exist."

Translated: Mercury is the step-up car for Ford buyers and Lincoln is the top rung, once incomes rise high enough.

Equally important, the high-priced and high-profit luxury cars help pay the bills for the entry-level divisions.

Mercury's expanded lineup includes a new compact Mariner SUV on sale now, a high-volume midsize Milan sedan this fall along with a gas-electric Mariner and a redesigned Mountaineer SUV. A Mercury derivative of the Ford Freestyle crossover arrives for 2007. But Lincoln isn't sitting idly by. It offers a new Mark LT derivative of the Ford F-150 pickup, and an entry-level midsize Zephyr sedan comes out this fall as a 2006. They will be joined in 2007 by a crossover rendition of the Aviator sport-utility.

Lincoln reportedly is considering replacing its rear-wheel-drive Town Car and LS sedans with derivatives of Montego in 2008-09, but Hazel won't comment.

"A certain number of people are wedded to keeping it rear-drive, but AWD would create more buzz," he said.

Some observers feel Hazel could use a few novelty items. Lexus, for example, unveiled a $125,000 sports car concept at the Detroit auto show. Hazel dismissed a Lincoln rival to it. "We'd be more into volume products," he said.

But he doesn't dismiss low-volume, image-building vehicles such as a convertible or roadster.

"When our core products are done, I'll start spending some capital on other products," he said. "If I wanted a Lincoln convertible I might have gotten a convertible, but I felt the Mark LT would be more mainstream and do more for the franchise."

Hazel also cites two reasons that the Mark LT will succeed where the short-lived Lincoln Blackwood pickup failed: LT will offer four-wheel-drive, which Blackwood lacked, and LT has an open bed for hauling. Blackwood's had a power cover that typically didn't work. Zephyr gives Lincoln a model in the $30,000 segment that accounted for more than 800,000 of the 1.4 million luxury cars sold last year.

Lincoln has the LS, but it's rear-drive and starts at about $33,000 with a V6, about $40,000 with a V8, and Hazel said consumers don't spend $40,000 on their first luxury car.

"The LS will stick around a while, but it will only offer a V8 for '06, and we may reposition it as a performance sedan," Hazel said.
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