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.