Ford Motor Co. (NYSE: F) announced that it would soon be winding down its Mercury brand, but the brand contributes relatively little to the company’s earnings and its stock price.
Analysts at Trefis estimated that the Mercury brand contributes just 1.5% to the current stock price of Ford and that “phasing out the Mercury brand will have limited impact on Ford’s stock.”
The analysts noted that Mercury’s numbers have declined by 10% between 2005 and 2009, by dropping from 1.0% in 2005 to 0.9% in 2009. The analyst said that Mercury would have likely continued to lose market share during the next several years if Ford had kept the brand, and that by 2016, Mercury would likely only make up 0.6% of the U.S. automotive market.
“Mercury faces an identity crisis with most of its models simply modified versions of Ford models. Originally, Mercury was supposed to fill the gap between inexpensive Ford cars and its luxury marquee Lincoln. However, the Mercury brand seems to have lost its distinction according to Edmunds.com CEO Jeremy Anwyl.”
The analyst said that they believe Mercury is only worth $1 billion for Ford, which they believe to be worth about $38 billion in total.
