Ford has denied all rumors that Mercury could either be up for sale or axed altogether but supplier sources reveal the Blue Oval subsidiary will be retired by 2012. As Ford’s market share and profits in the U.S. continues to dwindle, management are looking at ways of reducing costs and are even considering more drastic measures such as selling or axing remaining subsidiaries such as Volvo and Mercury.

The official statement is that both brands are safe but supplier sources have revealed to Edmunds that Mercury has no new models or updates in the pipeline beyond the 2012 model year. The last new product for Mercury will be the Milan midsize sedan (pictured), which is due for a midcycle refresh early next year along with the Ford Fusion on which it’s based. The remainder of the fleet will remain unchanged until the brand’s demise.

Speaking with Automotive News, Ford’s president of the Americas said Mercury is still an important brand on Ford’s portfolio and it will still receive investment.

At the same time, however, Fields said Lincoln will become the dominant portion of the Lincoln-Mercury franchise and Lincoln is where a majority of Ford’s focus and future investment is going to be. The new strategy is already showing promising results. The all-new MKS sedan managed to rack up more than 8,000 preorder sales and a bulk of these are top-spec luxury models.