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Mercury stores get quick way out: Dealers sell new cars as used

Mon, 15 Nov 2010

Expect strong Mercury sales numbers for November.

Last week, some Mercury dealers pushed to move out their inventory--or at least take final incentive payment from the company and report the vehicles as sold--by Friday, Nov. 12. If they did so, Ford had promised to get them their cash settlement checks before year end.

Moving to wind down Mercury, Ford offered dealers the chance to report their Mercury vehicles as sold by Friday and then sell those remaining vehicles as used.

Hines Park Lincoln-Mercury in suburban Detroit scrambled to sell all remaining Mercury vehicles by the deadline, said Ryan Colb, the store's operations manager. Colb said the dealership started the week with eight Mercurys and sold six. He took final pay Friday on the last two--both Mountaineer SUVs.

"We're putting them on the used-car lot," Colb said. "The used-car market is pretty strong now, so they're booking out good, and we shouldn't lose any money on them."

Colb said it was important to get his Mercury compensation check this year for tax reasons, but having only Lincoln now is "bittersweet."

"My grandpa started this place, and this year is our 40th anniversary," Colb said. "We started off as a Mercury dealership with no Lincoln. Now we start the next 40 years with just Lincoln."

In June, Ford said it would discontinue Mercury by Dec. 31. A total of 1,294 Mercury dealerships remain in business, a Ford spokesman said. The stores have "well under" 10,000 new Mercury vehicles left, George Pipas, Ford's lead sales analyst, said during a recent conference call.

Late last month, Ford gave dealers the option to report any new Mercury vehicles they own as sold using a "final pay" system, Ford spokesman Steve Kinkade wrote in an e-mail.

Final pay is the amount the automaker pays dealers when they sell a vehicle, including dealer cash and other vehicle incentives, Kinkade said. "If a dealer has 10 vehicles left on the lot, they can report all 10 sold and get paid out for those vehicles and then go ahead and sell them as used," he said.

Dealers have the other option: Sell the vehicles as new until Dec. 31. Ford will offer final pay or retail incentives on remaining 2010- and 2011-model-year vehicles, Kinkade said.

Analysts say Ford is making the latest offer to expedite the shutdown of Mercury and avoid lawsuits.

"You want to create an incentive to get things taken care of quickly," said Dave Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Mich. "Ford can afford it right now. They want to clean things up as soon as possible."

Ford expects to be sold out of remaining Mercury vehicles by mid-December, Kinkade said.

Through October, Mercury sales are up 4 percent, to 78,656.

By Jamie LaReau- Automotive News