Until Merc and BMW decided to go down market, "entry luxury" an oxymoron, they were outselling them in the US. If you believe JD Powers the Lexus is better quality and Lexus has better resale value. Price isn't an issue the Lexus buyers would have no problem buying Mercs or BMWs. I spent a brief period selling Lexus and we traded more than a few Mercs and BMWs because the owners wanted a luxury experience that required selling the car before the warranty ran out. Does the term "money pit" ring a bell? It was a common reason for trading their Merc or BMW for a Lexus. Lexus made a commitment to be the best when they entered the market and that included reliability, something the Germans have never been known for.
If Ford can be as successful with Lincoln as Lexus has been for Toyota, Ford can "cry all the way to the bank". I believe Ford can do this. Like Cadillac, and a few others, it won't happen overnight. The key, IMO, is continuing progress with their product portfollio.
I don't dissagree with Lexus and its sucess (somewhat), but there will always be those people that the Japanese brands wish would dissapear off the face of the Earth: those who buy German and American cars because they are German and American cars. I am one of those people. If I want a luxury car, it must show off status and be able to compete with the best of Europe, which is regarded for luxo-sports car greatness. Lexus just doesn't have it. To some people, they just look like everything else that Toyota makes. Vanilla. I respect Toyota and Lexus, but I am not the only one who will never buy one. Its all opinion, but there are those poeple out there.
Mercury was always lower-tier luxury plus sport. Mecerdes and Bimmer no creating small, FWD vehicles. No well established doctor or lawyer will buy one of these. It is a way to get a foot in the door. The wealthy want vehicles like S-Calsses and 7-Series. Youthful people who want a dose of sport will be the ones buying the CLAs and 1-Series cars. Ford can have an advantage with Mercury. If Mercury competes with the CLA and smaller, more affordable luxo cars with a dose of sport, Lincoln can devote to building the more expensive S-Class fighters.
I'm not arguing with you, I just see a different story. From what I have noticed in auto-industry discussions, there are two types of market beleivers: The Toyota two-brand-strategy belivers and the Volkswagen multi-brand beleivers. You bet your aces on Toyota, I bet mine on VW.