Poor Mercury. Ford Motor’s middle-market division is going down, and its existence is on the line again. It was not that long ago that Mercury sold 400,000 vehicles a year, but now everyone from Honda and Acura to Toyota and Hyundai are grabbing chunks of Mercury’s market.A Sad Story Some of the Mercury names in the table below might be unfamiliar. In 1999, the Cougar was a Mercury version of the Ford Thunderbird. The Sable was Mercury’s slightly dressier edition of the Ford Taurus sedan and wagon. The Tracer was a small car, but Ford (nyse: F – news – people ) stopped making it in 1999, and in 2000 stopped building the Mercury Mystique, a good-handling European-designed small sedan similar to the Ford Contour. News source: Forbes The Villager, a joint venture between Nissan Motor (nasdaq: NSANY – news – people ) and Ford, was a U.S.-built minivan. Ford discontinued that model after 2002 and replaced it with the 2004 Monterey, a Mercury-grilled clone of the unimpressive Ford Windstar–now called the Freestar. The company put the Mercury minivan out of its misery this year, and the Freestar may be next.What about Mercury’s new models? The Milan, a version of the Ford Fusion, and the Montego, an adaptation of the slow-selling Ford 500, more or less cover the ground of the discontinued Mercury Sable sedan, but customers are not lining up to buy either of these cars. Milan sales might reach 37,000 this year; Montego, 25,000. At the peak in 1993, Sable sales hit 121,000.Throughout its history, Mercury has had its best years when its vehicles were dolled-up Fords. I do not mean this as an insult. Some Lexus and Acura models are dolled-up Toyotas and Hondas. Done well, it works. Some Americans will not buy a car with a Ford nameplate on it, but will buy a similar car under the Mercury banner.One shortcoming: Ford stopped offering key models as Mercurys. For starters, Mercury dealers do not have a version of the Focus, the small Ford. Nor do they have a model based on the Ford division’s popular Mustang. Ford also made Mercury dealers wait for years before giving them a version of the popular Ford Escape small sport utility vehicle. In fall of 2004, dealers finally got the Mariner (as a 2005 model), but that was years after Ford supplied a knockoff of the Escape to Mazda dealers. I cannot comprehend that last move.Mercury still lacks editions of two Ford-branded crossover sport utility vehicles, the Ford Freestyle and the new Ford Edge. Meanwhile, Ford has allowed its Grand Marquis, a rear-drive sedan, to languish. Here we have a company with a line of rear-drive cars–Ford Crown Victoria, Mercury Grand Marquis and Lincoln Town Car–that made up the Ford’s most profitable car platform only ten years ago, and rear drive cars are coming back in demand. Yet I am not aware of any immediate plans to build a modern series of rear drive cars. Ford apparently plans to keep building these cars until they die instead of creating competitive models.1999 Mercury Lineup 1999 Sales 2005 Sales Cougar* 56,831 Grand Marquis 122,776 64,716 Mountaineer 49,281 32,491 Mystique * 39,351 Sable * 101,120 24,149 Tracer * 23,146 Villager * 45,315 Recent Additions To Mercury Lineup Mariner 34,099 Milan** 5,321 Montego 27,007 Monterey * 3,781 Total 437,820 195,564 *Discontinued **Introduced late 2005 Source: Automotive News All this makes me wonder whether Ford executives have been deliberately shortchanging Mercury all these years because they secretly want to kill it. I believe that there was a plan to eradicate Mercury during the regime of Jac Nasser but when William Clay Ford, Jr. removed him, Ford vetoed that idea. Now I am starting to wonder again. Trade publication Automotive News has quoted the Mercury Brand Manager as saying that the “Way Forward” team considered dropping Mercury, then decided to keep it, but made it clear that sales had to improve.Should Mercury go away, what would become of Lincoln? Lincoln-Mercury dealers sell both lines. Without Mercury, it is hard to see how they could survive on Lincoln alone. Ford would be throwing out 80 years of hard work.Lincoln is also in bad shape. Lincoln models, such as the Continental, the Town Car and the LS used to be distinct cars. Now they are making Lincolns out of fluffed-up Fords. Examples: the MKZ (ex-Zephyr) is a dolled-up Ford Fusion; the coming MKX is a fancier Ford Edge crossover SUV. They seem nicely done, yes, but they are still Fords with some nicer features.If Lincoln gets the best fancied-up Fords, what does that leave for Mercury? Of course, killing Mercury would just reduce the factory volume, raising the overhead costs per vehicle. Have General Motors (nyse: GM – news – people ) profits improved since it killed Oldsmobile?While I am at it, Mercury uses a dull logo–the upside down bent L-shaped waterfall. Mercury’s old emblem, the head of the old Roman god, was far better.These are just some of the challenges facing Ford’s new chief executive, Alan Mulally. With the parent company just reporting a near-record quarterly loss of $5.8 billion, Mulally does not have much room to maneuver or endless financial resources to give all of Ford Motor’s suffering divisions distinctive new models. Even so, he should remember that Mercury does best when it is the division with sexier Ford models. And Lincoln needs truly distinctive luxury models to stay competitive in this market.