Detroit : Ford Motors plans to stop producing its famous Mercury brand which was first created in the 1930s.

The classic brand which has seen sales and investment plunge in recent years, was first developed in the 1930s by Edsel Ford. It will now cease production in the fourth quarter.

Ford declined to reveal the cost of eliminating the brand, but said it expected to shift the resources to expand its Lincoln luxury brand and did not plan any job cuts.

Mercury, established to serve as a bridge between the mass-market Ford brand and Lincoln, has seen sales dwindle from a peak in the late 1970s. Its US market share has been falling for several years and is now less than 1 per cent.

Pull the plug

Auto industry analysts have suggested for years that Ford pull the plug on it, but executives had affirmed plans to continue with the brand as recently as this year.

"From a financial standpoint it was the only decision that Ford Motor Company could make and it's a difficult one," said Bob Tasca, Chairman of the Lincoln Mercury dealer council.

The wind-down of Mercury, coupled with Ford's planned sale of its Volvo car unit to China's Geely, reduces Ford to just two brands like Toyota. It further distances the auto maker from its past multi-brand strategy.

Ford said the Mercury decision would not change its forecast to be solidly profitable in 2010. The Ford board of directors approved the Mercury decision on Wednesday.

"Given our improving financial situation, it really allows the company to absorb the short-term cost of discontinuing Mercury," said Mark Fields, Ford's US President. "We don't take this decision lightly."

The company has been eliminating brands and overhauling its car line-up under Chief Executive Alan Mulally, who joined in 2006. Mulally has been a close follower of the Toyota manufacturing company and brand strategy.

In the last three years, Ford has eliminated members of its former premier auto group, selling off the Aston Martin, Jaguar and Land Rover brands and preparing the sale of Volvo. Ford shares rose nearly four per cent on Wednesday after the automaker reported a 22 per cent rise in May US sales overall, with continued market share gains.

Time and resources

"Mercury products have been nothing more than modestly restyled Fords for decades, and that's not how you build or maintain a brand," Edmunds.com senior analyst Karl Brauer said in a statement yesterday. Eliminating Mercury will allow Ford to focus its efforts on the Ford brand and to accelerate efforts at Lincoln.

TrueCar.com analyst Jesse Toprak said it would take time and resources to make Lincoln a competitive luxury brand in the United States, perhaps three to five years for the first fruits and a decade to reinvent its image.