Ford Cagey About Whether Buyers Will Pay Big To Go Small
By Michelle Krebs May 19, 2008By Bill Visnic
DEARBORN, MI -- Ford Motor Co. planners are certain the global market for compact B-segment cars is going to grow. And in the U.S., skyrocketing fuel prices make the migration from pickups and SUVs to small cars no longer a forecast, but a certainty.
It seems like perfect timing: Ford's preparing an all-new Fiesta B-car for the U.S. -- based on the swoopy Verve concept car -- and nobody's disputing there will be a deluge of demand from a fuel-price-weary consumer, even though the U.S. won't see the car until 2010 (it launches in Europe later this year). Enthusiasts for Ford's larger Focus already have registered the Internet domain name fiestafanatics.com in anticipation of the new B-class Fiesta, Sam De La Graza, Focus marketing manager, told AutoObserver.
But try as it might to explain how so-called "millenial" (age 14-29) buyers and "downsizers" alike will be convinced to go with Ford's latest Better Idea, the specifics get a little hazy. Because if Ford engineers and designers follow through on the marketers' contention that even B-class cars must be chock full of aspirational content, it looks like trouble's brewing - U.S. buyers may have a newfound desire for fuel-efficiency, but, with a few exceptions, they have shown scant penchant in the past to pay big for small cars.
First, the numbers. Ford says B- and "sub-B" sales were about 200,000 units in the U.S. in 2002. The number doubled to 400,000 last year, and the company believes U.S. sales will hit 700,000 by 2012 - after all, there are 11,000 millenials reaching driving age every day, and first-time buyers account for 32 percent of the B-car market.
Moreover, the B- and sub-B share of the total global industry was about 1 percent in 2002, and is expected to quadruple that figure by 2012. So it seems there will be plenty of potential customers.
The situation may get knotty, however, when it comes to the marketers - and designers' - vision and B-car showroom reality.
Ford's marketing and trend-watching managers insist spoiled U.S. prospects won't tolerate a
revival of the classic econobox - square sheetmetal and bare-bones equipment levels. Accordingly, the Verve concept car on display for the media here has almost an excess of exterior styling, plus rich-looking fabrics, a chunky steering wheel slathered with expensive-feeling rubberized grip points and is promised to offer plenty of creature comforts, including, of course, Ford's successful new Sync onboard connectivity system.
In Europe, where smaller vehicles have been the accepted standard since the end of World War II, a B-segment vehicle can be, and is, sold as a premium car - and buyers will pay the premium prices that support high standards of costly equipment and trim.
In the U.S., it is difficult to envision buyers - even those hungry for a fuel-efficiency alternative - immediately warming to a premium pricetag for a car that is smaller than the Focus. Ford says buyers moving down from pricier trucks and SUVs will pay big bucks for a fuel-efficient car - and case studies such as BMW's Mini brand add some credence to the idea.
But in the high-volume market - and for those coveted millenials buying their first new car on first-real-job wages - a pricy subcompact that seemingly must sit below the Focus in a Ford showroom (and in its retail hierarchy) seems to be a palpable disconnect. Volkswagen, for one, ran afoul of the market with its strategy to introduce expensive, European-type "premium-ness" to affordable-car segments.
Murray Callum, Ford's U.S. design director for cars, offers partial explanation: a nicely-equipped and -trimmed Fiesta may not be as expensive as skeptical journalists think.
"There are a lot of new technologies we're using" for richer interior materials, says Callum, who says the new techniques enable better-looking, better-feeling stuff at a lower cost.
Callum, who has plenty of European-market experience, also believes high equipment and trim levels also will help the Fiesta appeal to those moving down from more expensive vehicles.
But will that be enough to convince U.S. customers to spend premium money for a very small car?
"We hope," says Callum with a smile.
One other aspect Ford's millennial-watchers insinuate, but don't touch on too hard: younger generations don't seem to mind paying for what they want - even if it means going into debt. Younger people simply are more comfortable with higher levels of debt than are their Baby Boomer parents and grandparents, so if they find the new Fiesta appealing enough, they'll sign on the dotted line for an expensive small car that's not their parents' econobox.
Photos from Ford
1 - 2008 Fiesta, launching in Europe this year, although U.S. won't see it (as a 4-door sedan at first) until 2010.
2 - 2008 Fiesta interior.
LEAVE A COMMENT
Europeans have narrow streets, tight parking, $10 per gallon gas, luxury taxes on all cars, and displacement/horsepower taxes as incentive to buy small that we don’t. Travel by car is their last alternative, not the first as it is with U.S. citizens. They also have multiple engine choices per small car that include smaller sizes, diesel, etc. that we almost never have. Nearly all our cars have gotten bigger/heavier and the majority gets about the same fuel economy.
In the 70s and 80s the U.S. jumped into small cars, only to go back as they acclimated to expensive gas, got tired of small car compromises, and realized that the cost savings were minimal. I’m a fan of small cars for a number of reasons, but I see this as another fad that will fade as soon as the economy improves.
I hope they make at least one hi-content model. maybe add a "Pony" model for the frugal. But, historically, Ford North America seems make a wide range of models at introduction and then let the dealers and customers sort it out. the Escort had four trim levels, Taurus four, Focus five.
I think the industry overall has gotten a lot better with interior dimensions and materials. Small doesn't mean the sacrifice in power, room and comfort it once did. The price people are willing to pay will be determined by its perceived value vs its competition. If the Fiesta looks cheap when it arrives, it'll never move. Give it a variety of interior colors, standard LED lighting,make HID headlights and a 6-speed available. I hope Ford can turn the corner and stop trying to cost-cut their way to profitability. Put the money into it, Ford. Please.
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