Mercury, Lexus to Launch New Premium Small Cars
Ford's resurgence has been a pretty big story lately, with everybody geeked about Blue Oval sales numbers, and market share, and profits, and new products, etc., etc. But a look at the numbers shows that it's the Ford division driving most of this success, with Lincoln and Mercury still struggling to find customers.
And while Ford's luxury division at least has some distinctive new models to offer '” like the Lincoln MKS and Lincoln MKT '” Mercury has been waiting years for something truly fresh: The division hasn't sold anything beyond badge-engineered Fords since the last iteration of the Mercury Cougar was discontinued in 2002.
The current lineup of the Mercury Milan, Mercury Mariner, Mercury Mountaineer and Mercury Grand Marquis represents not much beyond slightly up-level versions of the Ford Fusion, Ford Escape, Ford Explorer and Ford Crown Victoria.
Now, that's not necessarily a problem for customers: Last year, 92,299 of them preferred Mercury styling over Ford's (or Lincoln's), and mechanically speaking, the Mercury products are just as impressive as the Fords (or Lincolns). But the situation is a bit of a drag on ye olde bottom line. I don't know exactly how many sales it would take to make up for the resources Mercury uses, but I'm thinking the rough answer would be "a lot more."
Which brings us to a recent announcement from Mark Fields, Ford's president of the Americas. Confirming long-rumored plans, Fields told dealers that Mercury would get a new small car built off of the same platform that underpins the much-anticipated 2011 Ford Focus (pictured here). The car is expected to go on sale next year and possibly revive the Mercury Tracer name.
This will have a couple of big-time benefits for Ford. First, it's exactly in line with the company's plans to build multiple vehicles off of the Focus platform and thus spread costs around as much as possible. In fact, Ford had already announced that the U.S. could see up to 10 different products built on that platform.
The move also could be the first step in Mercury's new positioning as a brand for premium-level small cars, a segment that has been struggling for traction in the auto blogosphere for some time now.
Here's my take on this: U.S. customers are moving toward smaller, more fuel-efficient vehicles, and some of these buyers will certainly want a more premium experience than is currently available on something like a Nissan Versa '” but far fewer are going to be willing to actually pay premium prices to get it. Just take a look at the Audi A3.
Forget the Super Bowl ad, Audi sold just 3,874 of its five-door hatchbacks in 2009, a drop of 18.6 percent compared to 2008. Yes, January sales were up a substantial 106.2 percent, but we're still only talking about 468 cars, and the company has had to suspend production of the vehicle for a short time to allow demand to catch up with supply.
There could be a number of reasons why the A3 has been slow to gain traction here, but I'm sure its price tag is one of them: The base A3 starts at $27,270; the five-door VW Golf, which shares the same platform, opens with an MSRP of $19,335; and just for comparison's sake, the similarly sized Versa, even in its highest trim level, begins at $16,100.
Remember, too, that the A3 is just the thin end of the wedge. Audi expects to add three-door and sedan body styles in the U.S., and the company is prepping an even smaller vehicle, the A1, over in Europe. And quite a few other premium automakers, from Lexus to BMW, have been teasing compacts as well. Actually, Lexus has gone a step further, announcing it will manufacture a version of the LF-Ch concept that debuted in the fall of 2009.
The new vehicle, the Lexus CT 200h, will be unveiled at the upcoming Geneva Motor Show and is expected to look a lot like the LF-Ch. That means it will be a five-door hatchback that bears a passing resemblance to the Mazda MAZDA3 and, naturally, feature a Toyota hybrid powertrain '” along with a Lexus-sized price tag. The CT 200h will launch in Europe first, with a U.S. debut expected in 2012 or so.
With the Toyota Recallathon recently claiming another victim (the Toyota Tacoma, for a driveshaft issue), it's hard to say what kind of sales a Lexus hybrid hatchback will achieve here. The mid-size Lexus HS earned 1,980 sales in December, which isn't too shabby for what's essentially an up-level Toyota Prius that features a $34,650 starting price. But that number had dropped to 1,247 by January, and who knows how low it will go in February.
As for how this all relates to Mercury? U.S. small car buyers may not be ready to to pay nearly $30,000 for a lux compact, even if it comes from one of the truly elite brands like Audi or Lexus, or even Cadillac or Lincoln. But I'm thinking people might be ready for something that fits between one of those products and a basic compact such as the Versa.
You know, something like a 2012 Mercury Tracer.