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Dealers optimistic because Lincoln dominates sales

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Dealers optimistic because Lincoln dominates sales

Some may fail, but most report Lincolns dominate their sales

Alisa Priddle / The Detroit News

Losing Mercury may prove to be more of a boon than a death knell to dealers.

Ford Motor Co. on Wednesday confirmed the brand will be wound down and production of the last four Mercury products will end in the fourth quarter. There are no stand-alone Mercury dealers, but 276 of the automaker's 1,712 U.S. dealers sell only Lincoln-Mercury.

Varsity Lincoln Mercury in Novi expects to be fine without Mercury. Partner Michael Stanford said Lincoln accounts for almost 70 percent of business, and with overall volumes higher than a year ago, "Lincoln is large enough to sustain us."

The addition of Lincoln products -- there are six vehicles now with seven new or refreshed models coming over four years -- should make up for lost Mercury sales, he said.

"If there are more rebadged vehicles for Lincoln, we should be OK," said Stanford, who notes his is the largest Lincoln-Mercury dealership in the country.

Most of the 11 Metro Detroit Lincoln-Mercury dealers are top-sellers in the country, he said.

Stanford likes the idea of a stand-alone Lincoln franchise to offer luxury customers the service they deserve. It's been complicated combining Lincoln, which offers more standard equipment and service, better warranties and residual values, with Mercury, which doesn't offer the same amenities.

Tammy Darvish of DARCARS Automotive Group in Silver Spring, Md., said Lincoln accounts for 70 percent of business at her Lincoln-Mercury dealership. "I'd rather it all be Lincoln," she said. "It is easier to focus on one brand."

Paul Taylor, chief economist for the National Automobile Dealers Association, said there will be some efficiencies for dealers such as simpler parts inventories.

In New Carrollton, Md., Vincent Trasatti Jr. said business has been migrating more to Lincoln in recent years. The owner of East West Lincoln Mercury is fine dropping Mercury if the trade-off is more Lincoln models.

"I'm not looking at this as a negative if it's the direction the company wants to go," Trasatti said. "It's been no secret that Lincoln was going to be the dominant brand. If all the focus and energy is on it so it becomes more desirable, that's good.

"Lincoln has a foothold in a lucrative market and I'll be happy if they capitalize on it."

The dealers likely to be least affected cater to more affluent areas where buyers can afford luxury cars, according to NADA's Taylor. Those most at risk are in modest retirement areas.

"Nobody wants to see this happen," said Dave Knittel, general manager of Charlotte County Lincoln Mercury in Punta Gorda, Fla. "For stand-alones in general, it's not great news."

Ford said it will help Lincoln dealers pair with a Ford dealership where necessary or buy out franchises unable to stay in business. Mercury dealers will be compensated fairly, Ford told dealers in a webcast Wednesday.

"It's hard to stay competitive if you're not competing in every segment," said Knittel, who would like to buy a nearby Ford dealership but has not been successful.

Stanford said he knows the move will prompt some dealers to retire, sell or close, depending on their location and customer demographics. "Some people will exit willingly."

But he also thinks Ford, having learned from painful dealer terminations by General Motors Co. and Chrysler Group LLC during their bankruptcies, will treat dealers with more dignity.

Ford, which did not file for bankruptcy or need federal loans to survive, may instead use the loss of Mercury to accelerate ongoing efforts to reduce its dealer count, Taylor said.

Patrick Olsen, editor of Cars.com, said Ford "clearly benefited from GM's slashing of half of its brands, which makes the move seem less drastic, and more of a necessary step toward financial success."

But any change in a lineup comes with risk, Taylor said. The question is whether Mercury buyers will pay extra for Lincoln.

Stanford said the price jump can be as little as $75 a month to buy Lincoln instead of Mercury.

"It is likely Mercury buyers will stay with Ford," he said. "But nothing is guaranteed."

From The Detroit News: http://detnews.com/article/20100603/AUTO01/6030387/1148/Dealers-optimistic-because-Lincoln-dominates-sales#ixzz0pnQ36YQf

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