By MATT DOLAN
Wall Street Journal

Ford Motor Co. is preparing to phase out its 71-year old Mercury brand, adding to the list of storied Detroit nameplates that reached the end of the road in recent years as the industry has become more competitive.

Ford Chief Executive Alan Mulally and his top lieutenants have won the backing of key members of the Ford family and are expected to seek approval from the car maker's board to kill Mercury after years of dwindling sales, a person familiar with the matter said Thursday.

Mercury was created in 1939 by Edsel Ford, the son of legendary founder Henry Ford. It was prompted by General Motors Co.'s strategy of building a "ladder of brands" that included Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac. That allowed GM to appeal to a wide range of customers and move them up the brand and price ladder as their incomes rose, enabling GM to pass Ford as the world's largest auto maker.

Mercury would be the latest Detroit brand to die since 2000. As part of its bankruptcy restructuring last year, GM shut down its Pontiac and Saturn divisions, and Hummer appears to be headed for the same fate. Earlier this decade GM phased out Oldsmobile and Chrysler Group LLC killed off Plymouth.

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Mercury's future has been in question ever since Mr. Mulally arrived as CEO in 2006 and mapped out a turnaround plan that called for phasing out niche brands and putting most of the company's resources into its Ford division. Since then, Ford has sold Jaguar, Land Rover and most recently Volvo.

A person familiar with the company's plans said Mr. Mulally and other senior executives recently persuaded the company's chairman, William C. Ford Jr., and a cousin of his who works at the company, Elena Ford, to phase out Mercury. Elena Ford had strongly opposed previous efforts to shut down the brand.

News of the plan was first reported by Bloomberg News.

Mercury was supposed to give Ford a midpriced car that fit between the inexpensive Ford models and its more luxurious Lincolns.

For several decades that strategy seemed to work, with Mercurys such as the Cougar and Marquis selling well. But by the 1980s Mercury had little identity of its own—a problem that would become endemic for most of Detroit. Most Mercury models were simply Fords fitted with different grilles and tail lights. GM did the same, fielding nearly identical cars as Buicks, Chevrolets, Pontiacs and Oldsmobiles.

In the 1990s, Ford imported sporty cars made by its European arm and sold them under the Mercury nameplate, but the effort did little to raise the brand's profile.

In recent years, Ford tried to market Mercury to women drivers, but sales continued to dwindle. In 2009, Ford sold 92,299 Mercury vehicles, down from 359,143 in 2000.

"Mercury is a brand that has lost its meaning in the American automotive marketplace and it isn't worth trying to change that," Edmunds.com CEO Jeremy Anwyl said in a statement.

Under Mr. Mulally, Mercury received few new models. The Sable sedan—a knockoff of the Ford Taurus—was phased out in 2009 and production of the Mountaineer sport-utility vehicle and Grand Marquis large sedan will end this year.

That leaves Mercury with only two models: the Milan, a midsized car, and the Mariner, a small SUV. Ford planned to launch a Mercury version of its Ford Focus compact, but Mr. Mulally was faced with deciding whether it would be worth investing more in the marque.

Ford spokesman Mark Truby declined to confirm any discussions about the end of Mercury.

Stephen Munroe, general manager of Statewide Ford Lincoln Mercury in Van Wert, Ohio, said he was untroubled by the news. He said it would simplify his inventory since many of the Mercury cars have "sister" vehicles in the Ford brand.

The challenge, Mr. Munroe said, would be to eliminate Mercury without hurting the current good consumer buzz about Ford.

But the hundreds of dealers that sell only Lincolns and Mercurys may find it difficult to continue without the volume from Mercury. A person familiar with the matter at Ford said the company hopes to merge many of those dealers with existing Ford dealerships or shut them.

Mercury had 1,780 U.S. dealers at the end of 2009, according to a Ford filing with the Securities and Exchange Commission.

Ford officials also are engaged in an intense review of the future of Lincoln, which has struggled as well despite its fairly new line-up. A separate person familiar with the company's thinking said all options are under consideration for Lincoln, which hasn't measured up to becoming a luxury brand able to compete with Mercedes, BMW, Lexus or the revitalized Cadillac.

—Neal E. Boudette and Jeff Bennett contributed to this article