Ford Motor Co
The Fiesta brings Ford back to a subcompact segment it abandoned and represents the automaker's next big bet that it can drive back to profitability with a new line of cars.
Ford expects the 2011 model year Fiesta, unveiled at the Los Angeles Auto Show, to reach North American customers by early summer as one of two key U.S. car launches next year. A redesigned Focus compact car is set for later in 2010.
The only large U.S. automaker not to reorganize under a government-funded bankruptcy in 2009, Ford gambled three years ago in mortgaging most of its remaining assets including the Blue Oval trademark to amass cash for its turnaround.
Ford, which posted a nearly $1 billion third-quarter profit, expects to be solidly profitable in 2011 after posting losses totaling about $30 billion from 2006 through 2008.
In the Fiesta, Ford hopes to prove wrong the widespread belief that Detroit-based automakers cannot make profits off small cars in their home market.
The importance of Fiesta to the company can't be overstated, Ford's global marketing chief Jim Farley said. It's really a monumental product for us symbolically and from a business standpoint.
Ford started laying the groundwork more than a year in advance of production and plans to release pricing on the Fiesta months before it will be available to consumers.
Ford also is running programs to teach its dealers how to sell small cars, skills that may have atrophied after years of relying on sales of larger SUVs and pickup trucks.
With the Fiesta, Ford is courting U.S. buyers that have gravitated toward smaller cars now dominated by import brands that have had many years of head starts, as well as potential new car buyers it hopes to convert.
Unveiling the Fiesta in L.A. introduces the car to the largest single market, and one dominated by import brands.
The L.A. show is the venue of choice for automakers aiming to show more fuel efficient cars. General Motors Co
It's crucial for them to do well with it, it is not going to be a huge volume product for them, IHS Global Insight analyst Aaron Bragman said of the Fiesta.
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The Fiesta is now produced in Europe and Asia and will be built in Mexico for the U.S. market as a four-door sedan and a five-door hatchback. One version could get 40 miles per gallon on the highway and 30 mpg in city driving, Ford said.
Ford's advance marketing has included loaning European built Fiesta's to people for six months aimed at increasing awareness about the car. It plans more of that as well.
The automaker also plans to launch a kind of on-line reservation system after the L.A. auto show with car pricing and incentives such as free Sync and premium sound systems to customers who make a no commitment reservation, Farley said.
Ford said Fiesta pricing would be very competitive with other cars in the segment and has used the Toyota Motor Corp <7203.T> Yaris and Honda Motor Co Ltd <7267.T> Fit for performance comparisons.
Suggested retail prices on the Yaris start at $12,355, while the Fit starts at $14,900.
Bragman expects the Fiesta to slot in below the Focus in terms of price, suggesting that the next generation of the Focus will get more expensive and have more content than the current Focus in North America.
Ford frankly has to make money on its passenger cars and that means all of them are going to be getting a little bit more expensive than they otherwise have been, Bragman said.
The development of the Fiesta and Focus cars aligns with Ford's expectations that the U.S. small vehicle market will grow steadily into one of the biggest segments and that profits will be generated by producing products globally.
The Fiesta, which was not planned for the North American market initially, has about 60 percent of parts in common with the European Fiesta. The fully global next generation Focus will have 80 percent common parts.
When you pull this all together, this is the way that you drive profitability in small cars, Ford product development chief Derrick Kuzak said.
(Reporting by David Bailey; Editing Bernard Orr)