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2b2 06-04-2010 12:39 AM

Ford (½ BILLION) Payout to Merc Dealers - UPDATED/AGAIN
Ford offers payouts to Mercury dealers based on percentage of business - Automotive News
Jamie LaReau
June 3, 2010 - 4:32 pm ET
DETROIT -- Ford Motor Co. is offering the 1,700 dealerships with a Mercury franchise a cash compensation for the loss of the brand.

The compensation figures, delivered to dealers in packets this morning, range from the very low thousands up to about $200,000, sources said.

Ford announced on Wednesday it would discontinue the Mercury brand. It will cease production on all Mercury vehicles in the fourth quarter. There will be no 2010 model year Mercury products.

The dealer compensation is based on a three-year sales average of Mercury as a percentage of a dealership’s total sales. It also factors in repayment for signage and parts and a blue-sky value, Ken Czubay, Ford’s U.S. sales chief, told Automotive News.

“We feel that the compensation we’re offering them is reasonable and fair,” said Mark Fields, Ford’s president of the Americas in an interview with Automotive News. “It is beyond what the franchise agreement states. It is beyond what state law states. It’s well beyond what other competitors have done in the marketplace.”

For example, most Mercury parts are commingled with Ford parts, Czubay said. Ford will let dealers keep all the Mercury parts and pay them 100 percent of the value of those parts.

“If 10 percent of a dealer’s business was Mercury business and he had $1 million in parts inventory, he’d have theoretically $100,000 in Mercury parts,” Czubay said. “We said you keep the parts and we’ll write you a check for $100,000. No one in the industry has ever done anything like that.”

But one dealer, who asked not to be identified, said Ford offered him nearly $200,000. He said that’s not enough, given he invested millions in a new Mercury-Lincoln showroom just three years ago.

Another dealer said his Lincoln-Mercury store’s annual revenues are about $2 million and that he sells about 350 Mercury units per year. “So even if they give me $500,000, it’s not enough,” the dealer said. “And now my property isn’t worth as much.”

According to sources, the formula gives dealers whose Mercury sales were 0 to 25 percent $1,500 per unit retailed annually. Dealers with 26 to 50 percent Mercury sales get $1,650 per unit, those with 51 to 75 percent get $2,000 per unit, and those with 76 to 100 percent get $2,500.

“We’ve gone above and beyond,” Czubay said. “At a time like this, you may think the franchise was worth more than what people are willing to pay for it. But I can assure you that from how we addressed it with our dealers, this was very fair and rounded up.”

ausrutherford 06-04-2010 01:24 AM

Re: Ford Payout to Merc Dealers - AutomotiveNews
So 200,000 times 1700=340 million at most.

Sal Collaziano 06-04-2010 12:00 PM

Ford offering dealers up to $200k to stop selling Mercury
Filed under: Ford, Mercury

Ford is getting out of the Mercury business in a big, fat hurry, and that means no 2011 models, no more Jill Wagoner commercials and cash compensation for the 1,700+ dealers who sell Ford's long-abused step-brand. Automotive News quotes unnamed sources who say dealers will receive up to $200,000 to stop selling Mercury cars and crossovers, along with money for any new service parts they have lying around.

Ford sales boss Ken Czubay tells AN that the company has worked out a formula for compensation that calculates the three-year average of Mercury vehicles sold at a dealership as a percentage of overall Ford, Lincoln and Mercury sales. The formula also calculates the cost for dealer signage and parts. An AN source claims that dealers who sell zero to 25 percent Mercury products receive $1,500 per unit retailed annually. The number shoots up to $1,650 per unit at 26 to 50 percent of sales and $2,000 for dealers at 51 to 75 percent. The dealer repayment program tops out at $2,500 for dealers who averaged a high 76 to 100 percent Mercury sales over the past three years. Dealers will also get 100 percent of their money back for Mercury parts purchased, and the dealers get to keep those parts free and clear.

Ford President Mark Fields called the dealer payoff "reasonable and fair," adding that it is "beyond what the franchise agreement states. It is beyond what state law states. It's well beyond what other competitors have done in the marketplace."

Some dealers, of course, say the payment is far too small to cover their investments in the Mercury brand. One dealer, who didn't want to be identified, reportedly told AN that he would be losing money even if Ford gave him $500,000.

[Source: Automotive News, sub. req.]Ford offering dealers up to $200k to stop selling Mercury originally appeared on Autoblog on Fri, 04 Jun 2010 10:58:00 EST. Please see our terms for use of feeds.

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2b2 06-09-2010 07:09 PM

Re: Ford offering dealers up to $200k to stop selling Mercury
Ford aims to complete Mercury dealer talks by year end - Reuters/AutoNews
June 8, 2010 - 12:31 pm ET
UPDATED: 6/8/10 3:49 p.m. ET
CHICAGO (Reuters) -- Ford Motor Co. hopes to wrap talks by year end with the dealers for the Mercury brand it is shutting to focus on its mass-market Ford and luxury Lincoln brands, CEO Alan Mulally said today.

Mulally declined to discuss the expected cost for phasing out the Mercury brand, part of a restructuring that includes an expanded investment in the Lincoln brand lineup. Mercury production is expected to halt in the fourth quarter.

"We don't have a time frame per se, but we are hoping to help everybody through the rest of this year, that is the general time frame," Mulally said after an appearance at the Chicagoland Chamber of Commerce annual meeting...

..."We are pretty much on track with our consolidation," Mulally said. "We have a few too many dealers in some of the larger metropolitan areas, but we are continuing to work with all of our dealers including the Mercury dealers in a collaborative way."

Read more:

2b2 07-24-2010 03:20 AM

Killing Mercury Costs ½ BILLION $$$,$$$,$$$.00
Closing Mercury will cost Ford nearly $500 million, CFO says - AutoNews[/size]
Jamie LaReau
Automotive News -- July 23, 2010 - 3:52 pm ET
DETROIT -- Ford Motor Co. could spend nearly $500 million to shutter its Mercury brand, CFO Lewis Booth said.

In an interview today with Automotive News, Booth said Ford took special charges of $247 million in the first half of 2010 to cover the cost of ongoing dealer reductions and shuttering the Mercury brand. He estimates the total cost to close the brand will be twice that amount.

About 700 of the 1,700 franchised Mercury dealers in the United States have signed agreements to close their stores in return for cash compensation, Booth said.

“The plan is in place and we're having very fruitful discussions with our dealers,”

Booth said. No dealer lawsuits have been filed against Ford related to the shutdown of Mercury.

Ford announced in June that it would discontinue the 71-year-old brand by Dec. 31 and focus solely on the Ford and Lincoln brands. It expects to sell off all Mercury inventory before year end. Ford plans to end production of the Mercury lineup in early October.

Read more:

ausrutherford 07-25-2010 01:19 AM

Re: Ford (½ BILLION) Payout to Merc Dealers - UPDATED
Still rather cheap...and theyve already paid almost half (including my local dealer, which is already out).

2b2 08-09-2010 04:33 PM

Re: Ford (½ BILLION) Payout to Merc Dealers - UPDATED
Many Mercury dealers hold off on settlements - AutoNews
Jamie LaReau
Automotive News -- August 9, 2010 - 12:01 am ET
Many Mercury dealers are reluctant to sign their settlement deal with Ford Motor Co. because they want larger payments.

Some dealers and their lawyers say the reluctance to sign points to a rocky wind-down of Mercury. Lawsuits are possible, and negotiations between many dealers and Ford are certain. Many dealers aren't sure of their options but know they don't like the offers.

Of the 1,712 Mercury dealerships, about 700 have signed Ford's compensation agreement, the automaker says. Ford announced in June that it would terminate the 71-year-old Mercury brand by Dec. 31.

"I haven't talked to anyone who has signed it yet," says Chris Lemley, owner of Sentry Auto Group Ford-Lincoln-Mercury-Mazda in Medford, Mass.

Dealer lawyers have seen offers ranging from $100,000 to nearly $800,000. Ford declined to comment on the amounts. The company says it will pay 100 percent of what dealers paid for parts. Dealers also may keep and sell them, Ford says.

"There's no question that dealers feel Ford's offers are not a true value for the franchise," says Mike Charapp, a McLean, Va., lawyer who represents dealers. "Ford's contention, as I understand it, is they'll broaden the Lincoln lineup, and the dealers will pick up the sales that way. I don't think Ford even has a pretense this is a true value for the franchise."

In the next four years, Ford will expand the Lincoln lineup with at least one new product and will update several vehicles, say Ford and industry sources.

Ford says its cash compensation to Mercury dealers is fair. The compensation is based on a formula that considers many factors including dealers' recent sales, says Ford spokesman Steve Kinkade.

"We're not trying to pull the carpet out from under these guys at all," Kinkade says. "This goes along with our collaborative process of working with dealers on a case-by-case basis."

One Mercury dealer who requested anonymity because he hopes to negotiate with Ford says he spent millions on his franchise, real estate and construction. Yet Ford is offering him less than $150,000 in compensation for his Mercury franchise.

Another dealer who spoke on the condition of anonymity says he plans to sue Ford. His compensation offer was about $500,000, which he thinks is a far cry from the millions he has invested to build and operate the store.

Some Mercury dealers fear that if they are left with only Lincoln, they will go out of business.

"For some dealers, the loss of Mercury will lead to the destruction of their Lincoln franchise," says Charapp, the dealer lawyer. "They have legal cause now to argue that by terminating Mercury, it's a constructive termination of Lincoln also."

Many Lincoln-Mercury dealers say Mercury accounts for 40 to 60 percent of their new-vehicle sales and service revenue. Last year Lincoln sold 82,847 vehicles in the United States, while Mercury sold 92,299.

Ford acknowledges that some of the 276 Lincoln-Mercury dealerships are in markets that cannot support a stand-alone Lincoln store. Mark Fields, Ford's president of the Americas, has said Ford will work with those stores, helping them either get a Ford franchise or sell their Lincoln operations to a Ford store.

Charapp declined to speculate how many Mercury dealers might pursue legal action against Ford, because there are steps dealers must follow before considering a suit...

...Mercury dealers had about 8,200 vehicles in stock at the end of July, says Ken Czubay, Ford's vice president of U.S. marketing, sales and service. That's a 42-day supply, says the Automotive News Data Center. Mercury's July sales fell 31 percent compared with July 2009, to 6,903.

Czubay says Mercury production will end by early October...

Read more:

barndaley 10-19-2010 01:07 AM

Re: Ford (½ BILLION) Payout to Merc Dealers - UPDATED

For example, most Mercury parts are commingled with ford parts, Czubay said. Ford will let dealers keep all the Mercury parts and pay them 100 percent of the value of those parts.
yes i agree with this one.. i also read this off somewhere.. wither a blog or a forum as well.. i don't know if this is a trend for dealing with their parts or just a strategy but it caught my attention as well..

2b2 01-17-2011 07:11 PM

Re: Ford (½ BILLION) Payout to Merc Dealers - UPDATED again
Mercury dealer sues Ford - MDdailyrecord
Posted: 7:00 pm Thu, January 13, 2011
By Ben Mook
Daily Record Business Writer
"...According to court documents, the dealership (Francis Scott Key Lincoln Mercury in Frederick, MD) claims it started 2010 with Ford management touting its support of the Mercury brand, including the news of a Mercury Tracer model for 2011. Then, in June, Ford broke the news it was going to discontinue the Mercury line at the end of the year. FSK Automotive claims it was offered only $181,026 in compensation for the loss of the Mercury line..."


2b2 07-25-2011 05:52 PM

Re: Ford (½ BILLION) Payout to Merc Dealers - UPDATED/AGAIN
via TTAC...

Dealers battle Ford over Mercury termination settlements - Automotive News
- (LINK 2 google-cache)
Amy Wilson
Automotive News | July 11, 2011 - 12:01 am EST

Six months after Ford Motor Co. built its last Mercury, the automaker is still battling with dealers who object to what they call low-ball settlement offers.

Ford says 98 percent of the 1,712 Mercury dealerships in business as of June 2010, when Ford said it would kill Mercury by year end, have signed termination agreements. That leaves 31 that are still arguing that Ford's settlement offers don't reflect the financial damages they've sustained because of the loss of Mercury. For many stand-alone Lincoln-Mercury dealerships, Mercury contributed the bulk of sales and profits.

At least four dealer lawsuits have been filed in federal courts against Ford. Other dealers have filed cases with the motor vehicles departments in their states. Others have simply refused to settle...

(I copied the whole article. If it disappears from the linked sites, PM me)

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