And then there were two: Back in June, Ford (NYSE: F) announced that it planned to discontinue the venerable Mercury brand and would wind down sales of its existing models by the end of 2010. After that, the company's once-full brand portfolio will hold just two names.

The demise of Mercury was hardly a surprise, given Ford CEO Alan Mulally's relentless focus on "One Ford," a single global family of products to be sold under the company's eponymous blue oval brand. Since Mulally arrived in 2006, Ford has moved to sell or close Aston Martin, Jaguar, Land Rover, Volvo, Mazda, and now Mercury.

But there are two left, not one: Venerable luxury marque Lincoln is the only brand not named "Ford" to survive Mulally's purge. Why?

Ford throws down a gauntlet
Even as it announced Mercury's demise, Ford made it clear that it would lavish Lincoln with attention:

  • The brand will roll out seven "all-new or significantly refreshed" vehicles over the next four years, including Lincoln's first-ever compact.
  • Lincoln will see "more investment and attention" to design and technology efforts, with a focus on performance and fuel efficiency.
  • There will be more money for Lincoln sales, service, and marketing.

Ford's intention is to compete head-to-head with General Motors' Cadillac and Toyota's (NYSE: TM) Lexus.

That's a big challenge. Lexus, of course, has become a major force in the U.S. luxury-car market since Toyota introduced it in 1989. It has eclipsed similar offerings from Japanese rivals Honda (NYSE: HMC) and Nissan in cachet, if not always in sales. And the past decade has seen Lincoln's ancient rival Cadillac beginning its own renaissance, from its edgy "Art and Science" styling direction to its move to rear-wheel-drive performance with its CTS series cars -- built on a unique-to-Cadillac platform.

Cadillac's renaissance has stalled somewhat in the past couple of years, with several planned models falling victim to budget cuts that happened during GM's downward spiral. But recent reports have suggested that the marque will get back on track, with just-departed GM CEO Ed Whitacre himself directing Cadillac to develop a no-holds-barred full-sized "flagship" sedan, according to one report. Cadillac is also known to be developing a small rear-wheel-drive sedan aimed squarely at BMW's bestselling 3-series line. That model is likely to arrive by 2012.

It's reasonable to expect that GM's investments in Cadillac will increase significantly once the company has returned to public ownership. Although the brand -- like much of GM, at least in North America -- is still in many ways a shadow of its former self, its year-to-date sales have been 65% better than Lincoln's.

That represents a challenge -- and an opportunity -- for Ford.

The route to a Lincoln revival
So can Ford bring about a Lincoln revival? If the company can spare the time and money -- and apparently it thinks it can -- to bring the focused attention that has become its hallmark in the past couple of years, then I think it has a great opportunity to revive the old nameplate.

Careful design with a luxurious feel sells. Just look at the attention Apple (Nasdaq: AAPL) gave to its recent design of the iPhone 4, with its precision-fit metal buttons and switches inspired by the work of iconic industrial designer Dieter Rams. And then there's Ford's own bread-and-butter products, such as the Taurus sedan, with its jewel-like taillights and meticulous interior.

Ford marketing VP Jim Farley has promised that Lincoln's upcoming designs will have a distinct "point of view," although the company hasn't yet given details. But it's already clear that Lincoln's future is likely to involve a combination of understated luxury with fuel efficiency -- with a focus on Ford's acclaimed EcoBoost engines, which use Honeywell (NYSE: HON) turbochargers to increase power without a significant impact on fuel economy.

Ford has summoned its Lincoln dealers to a meeting in October to unveil its plans for the brand, which are expected to include investments to upgrade the "dealer experience" for customers. It's likely that we'll know more after that -- dealers like to talk to the press, after all -- and the models Lincoln chooses to highlight in the upcoming major auto shows will give us more of a clue as to the brand's future direction.

But it may be a few years before we know the answer to the big question: Will Lincoln add significant value to Ford -- or will it ultimately prove to be a distraction?

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.