L-M dealers fret: Can they have future minus Ford franchise?

Joseph Thurby Jr. calls himself a survivor.

He has been a stand-alone Lincoln-Mercury dealer since 1971. But Thurby fears for his survival if he can't add a Ford or other franchise in the next few years.

"The only other answer is to find another franchise, any other type of franchise -- Suzuki, Honda -- you name it," Thurby said. "We're a dwindling group of dealers."

Like Thurby, many stand-alone Lincoln-Mercury dealers think their best hope for long-term survival is to add a Ford franchise. Without one, they worry that their dealerships won't have the volume and products to compete. To survive in the meantime, many dealers are cutting staff and inventory.

For its part, Ford Motor Co. is sticking to its plan to consolidate Lincoln-Mercury with Ford franchises in major metro areas. At the end of last year, Ford had 292 stand-alone Lincoln-Mercury stores, down from 357 at the end of 2008.

"We'll focus on the metro markets," Ken Czubay, Ford's vice president of U.S. sales and marketing, said last month at the National Automobile Dealers Association convention. "We'll continue to have a dialogue on an individual basis in the big cities on the stand-alone points."

In an online survey conducted by Automotive News, 38 of the 53 Lincoln-Mercury stand-alone dealers who responded -- 72 percent -- said they are at a competitive disadvantage with Ford-Lincoln-Mercury dealerships. The top reason cited: a lack of products to appeal to a wide customer base.

Ford Motor leaders are aware of Lincoln-Mercury dealers' product concerns. They declined to comment on the future product strategy. But last month Ford announced that it would add a small car, the Mercury Tracer.

The Tracer -- a Mercury name revived from the late 1990s -- is a derivative of the Ford Focus. It will go on sale next year, and many dealers say it will help.

Thurby expects to sell about 200 Tracers annually, which would nearly double his current annual sales of 250 new Lincoln and Mercury vehicles.

Ramon Alvarez, owner of Alvarez Lincoln-Mercury-Jaguar in Riverside, Calif., hopes to sell at least 50 Tracers next year. Now he sells about 150 new vehicles a year. He said he sold about 100 Tracers a year in the late 1990s.

Alvarez is working aggressively to acquire a Ford franchise, but he knows it's a long shot because a Ford store is right across the street from his dealership.

Asked whether he'd consider a different franchise, Alvarez said, "You gotta do what you gotta do."

To stay abreast of the competition, Alvarez said, he works seven days a week. He greets every customer and goes out of his way to deliver vehicles to boost customer loyalty.

Alvarez has reduced his staff by 20 people -- about one-third -- in the past 18 months. He also has cut inventory to whittle away at costs.

"We're down to about a 45-day supply," Alvarez said. He used to carry a 90-day supply.

Alvarez said it has come down to using fewer paper clips and turning off the lights early: "I've even cut back on ground floor mats for the dealership."

Dealer Dan Pfeiffer once owned two stand-alone Lincoln-Mercury stores in the Grand Rapids, Mich., area, a market with about 1 million customers, he said.

Last fall, Pfeiffer closed Dan Pfeiffer Plainfield Lincoln-Mercury after owning it for 23 years. He was selling about 120 new vehicles a year compared with about 600 a year in the late 1980s and early 1990s -- when Mercury had the Villager minivan, Lynx small car and Cougar coupe, which have all been dropped.

Mercury now offers just four nameplates. Last year Mercury sold 92,299 vehicles, compared with 359,143 vehicles and six nameplates in 2000 -- its high-water mark for the decade. Lincoln, which offers six nameplates, sold 82,847 last year, down from 193,009 in 2000.

On the other side of town, Pfeiffer still owns Pfeiffer Lincoln-Mercury, which sold 400 new vehicles last year, down from 1,300 in the mid-1980s.

Survival has meant cutting all expenses, including his ad budget. Pfeiffer stocks only 50 vehicles at any given time, compared with 250 in previous years.

"We have a computer that turns the heat down when we close at night," Pfeiffer said. "It hurts, but if we didn't do all of that, we couldn't exist."

Pfeiffer does not want to surrender his Lincoln-Mercury franchises to one of the four nearby Ford dealers. Ford has not approached him -- yet.

Most Lincoln-Mercury dealers say Ford is not pushing them aggressively to sell their stores or helping some stand-alone Lincoln-Mercury dealers acquire others. Instead, Ford is emphasizing consolidation in its top 130 major metro markets.

"We have no plans to consolidate our rural dealers," said Steve Kincaid, a Ford spokesman.

Ford executive Jim Farley said five years from now, there still will be Lincoln-Mercury stand-alone stores.

"In the luxury market, almost 75 percent of the volume is in 10 metro markets," Farley, group vice president of global marketing, said in an interview at the Geneva auto show.

"Those customers expect an exclusive experience, but we'll have many fewer [stand-alones] than we do today."

Rick Kranz contributed to this report