As we have been reporting for the past couple of years, the future of Mercury is in limbo. An aging fleet, poor sales and lack of image is causing the brand to slowly wither away. However, Ford CEO Alan Mulally seems defiant the brand will survive, but fails to mention how it will manage to do so in any detail.

Ford's juggling of its premium brands, Mercury and Lincoln, has seen the Blue Oval attempting to figure out where to place them in the market. One possibility that has been hinted on several times in the past is to position Lincoln more upmarket, while Mercury focuses on smaller mid-sized cars and crossovers.

This strategy was reiterated by Mulally during his most recent interview with Inside Line.

"The plan right now is (to develop) Ford, Lincoln and Mercury," Mulally said, adding that Mercury will focus on smaller vehicles that occupy the void between Ford and Lincoln brands.

One of the first new Mercury vehicles is expected to be a compact crossover based on the next-generation European Ford Kuga, which will be manufactured in Ford’s Louisville plant in Kentucky. Beyond that, there’s a chance Mercury will get its own version of the new 2011 Ford Focus.

[Inside Line]