Ford's Jim Farley confident company can sell small cars at a profit
Over the next two years, Ford will have a whole lineup of new smaller cars coming the US market including the Fiesta and global Focus. At a Ford media event today, marketing VP Jim Farley talked to reporters about the plans for those cars. Traditionally, carmakers have had a hard time making money on small cars in the US because customers have expected prices in proportion to size. That perception is now changing as customers are moving down from trucks and SUVs to cars, particularly smaller cars. As drivers have become accustomed to the feature-rich environments of those larger vehicles, they are reluctant to give up all those goodies. As a result, customers are downsizing while optioning up those cars to a point where they are profitable. According to Farley, the average transaction price (the amount customers end up actually paying to drive off the lot) on the Focus has jumped from $14,000 in 2007 to $16,000 in 2008. That comes as a result of customers opting for features like better sound systems and the new SYNC system. Farley is confident that will continue with the Fiesta and the new Focus. When combined with the fact that both cars will be "identical" rather than just similar like past "world car" efforts, Farley expects the economies of scale to make these and other smaller cars profitable.
[Source: Ford]
Reader Comments (Page 1 of 1)
Dustin 6:32AM (12/17/2008)
If the Fiesta is indeed identical to the Euro model, they've got a winner. But I expect some "minor" changes which will be just enough to make it worse, IMO.
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Jared 8:06AM (12/17/2008)
I'm with you. I sure hope that the US Fiesta is identical to the Euro model, but I have a hard time trusting Ford on this. They've screwed it up so many times in the past.
ghs 10:12AM (12/17/2008)
When you see Fiesta's in the US with plastic hubcaps and weenie tires, and w/o projector headlamps and other cool features, know that they also sell the geeky stripper models in Europe as well. Don't believe that every EU fiesta looks like the one above. Hopefully though, they will at least offer one like the above in the US.
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Landy 11:02AM (12/17/2008)
That's right! Alloy wheels and Xenon headlights are options for the Fiesta in Europe. But the car doesn't look much worse with plastic hubcaps and normal headlamps.
gsolman6 12:46PM (12/17/2008)
"Traditionally, carmakers have had a hard time making money on small cars in the US because customers have expected prices in proportion to size."
That is a MYTH. It should be reworded "U.S. carmakers have...."
Most of the foreign nameplates in the U.S. first got a foothold by selling small cars whether they were from Germany, Japan, or Korea. As far as I know the Corolla, MINI, Civic, Elantra, 3, etc. are all profitable for their makers..............
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John 11:28AM (12/18/2008)
Small cars from Germany? That is a new thing.
You seem to be unaware that the way the Japanese got a foothold was by "DUMPING" cars in the US. i.e. The Japanese govt. subsidizes exports, so that they can sell their cars here for way less then they sell for in Japan. They made money from their govt, not from sales!
Now that you have been convinced (fooled) that Toyota makes better cars, you will gladly pay more for a Camry, but you'll get a better handling, more comfortable, better stereo, better fuel economy, higher quality, more durable automobile if you buy a Fusion.
You can bet your last dollar that the Fiesta will be a far superior car to a Yaris or a Fit.
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