CNBC has learned that Ford executives are working on a plan to phase out the Mercury brand.
There is no time line for how quickly the brand will be eliminated, but the Ford board of directors could make a decision by July. A Ford spokesperson says Ford has made no plans to change the Mercury line but the company is always evaluating its brands.
The Mercury brand has been shrinking for the last 30 years. Sales this year are up 21.1 percent, but the brand represents just 5 percent of Ford's total sales so far in 2010.
The brand has long been considered too similar to the Ford brand. Many of its models are slightly tweaked versions of Ford models—the Mercury Milan is similar to the Ford Fusion. The Mercury Mariner is not much different from the Ford Escape.
Ford CEO Alan Mulally has long said Ford's future will orbit around fewer brands. Since taking over Ford, Mulally has sold the Volvo, Jaguar, Land Rover, and Aston Martin brands. Meanwhile, he's focused on beefing up the Ford brand and has been giving Mercury less marketing and resources.
There are 292 stand-alone Lincoln/Mercury dealers in the U.S. For these dealers, losing Mercury would mean losing more than half their sales. How Ford deals with those retailers will be an important part of phasing out Mercury. Some of the dealers could potentially take on the Ford brand. According to Edmunds.com, 46 percent of Mercury shoppers consider purchasing Ford vehicles.
Without Mercury, Ford would be down to just 2 brands, reinforcing Mulally's strategy of "one Ford" focused on a stronger Ford brand with a complete lineup of cars, trucks and SUV's.