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NINETY EIGHT REGENCY

Mercury: Why kill a favorite brand?

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Mercury: Why kill a favorite brand?

FRED W. KORKISCH, Santa Barbara, Calif. The writer teaches macroeconomics. June 28, 2010 - 12:01 am ET

To the Editor:

Slowly, politicians and industry realize that globalization is killing U.S. industrial jobs. And rationalization will go on as long as there is some industry left. Maybe there won't be in 25 years or so. This is a warning to politicians, unions and manufacturers.

We face such developments not only because of foreign competition but also because of shareholder greed and managerial lack of vision -- besides closing down brands, plants, jobs, etc.

Why have U.S. car magazines for decades downgraded U.S. car quality, cars that cost half as much as European cars and are cheaper to maintain?

Now there is a tendency to simplify products, production and logistics, preferably linking a company with only one brand to enhance "brand value." It is assumed by marketing and production cost experts that different brands are mainly competing with the main selling line. But diversification will always raise market shares. When Chrysler dropped DeSoto, it lost the cash flow of 100,000 cars for good.

And how about tariffs on imports and spare parts, tax breaks for manufacturing?

The simplifying philosophy killed DeSoto, Plymouth, Pontiac and now Mercury; next could be Buick and GMC. But originally the idea of different brands was to have different sizes and different purchasing prices. The system was abandoned when each brand had so many different models and price categories that a fancy Chevy could be more expensive than a well-equipped Buick.

And why are new special cars emerging every year? There are certainly a desire and a market for something that is not called Chevrolet or Ford. Why kill a favorite brand simply to cut advertising costs? Is Mercury not competitive? Then ask yourself why and how that could be changed.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100628/RETAIL03/100629927/1422#ixzz0s9QDG6BX

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