Ford's Fiesta Subcompact Fetching More Than Focus Car

Ford Motor Co.’s new Fiesta, the first subcompact it has made in North America since the Pinto in 1980, is selling at higher prices than its Focus compact and competing offerings from Japanese automakers.

The Fiesta is fetching an average of $3,000 to $4,000 above its $13,995 base price as buyers load it with extra features such as heated leather seats, said George Pipas, Ford’s sales analyst. At almost $18,000, the Fiesta is commanding a higher average price than the Honda Motor Co.’s Civic compact and Toyota Motor Corp.’s Corolla small car, according to Pipas.

The Fiesta, which went on sale in the U.S. in June, is an attempt to turn around Ford’s history of making little or no money selling small cars to U.S. consumers. With rising oil prices boosting interest in those cars, Ford and General Motors Co. are introducing models to meet drivers’ changing tastes while delivering a profit.

“The Fiesta is the first test to see whether our strategy is working,” Pipas said in an interview. “The car is attracting younger buyers with higher incomes and education and those are the kind of consumers who buy highly contented vehicles.”

The Fiesta is a pillar of Chief Executive Officer Alan Mulally’s bet that U.S. buyers will embrace small cars equipped with the amenities more typically found in larger models such as sport-utility vehicles. The top model, which Pipas said accounts for 39 percent of U.S. sales, has options such as push-button starting, heated leather seats and a lighted gearshift knob.

40 Miles Per Gallon

The Fiesta is rated by the U.S. Environmental Protection Agency to get 40 miles per gallon on the highway and 29 mpg in the city, Ford said. That matches the highway mileage GM has said its new Chevrolet Cruze compact achieves.

Fiesta buyers worldwide are younger, more affluent and better educated than consumers who purchased the previous version of the subcompact, Pipas said. The latest Fiesta model debuted in Europe two years ago and in Asia last year. Ford sold 940,000 of the new Fiestas globally through August, with Europe accounting for 85 percent, Pipas said.

The car is the first on Ford’s global B-size platform, which Ford says will be one of 12 core vehicle underpinnings by 2013, down from 25 last year.

The Fiesta available in North America is built in Mexico and is the first subcompact Ford has sold in the U.S. in more than a decade. Only 7 percent of U.S. buyers are choosing the cheapest trim level on the Fiesta, Pipas said.

“The Fiesta has the highest transaction price in its segment in the U.S.,” Pipas said. “And the Fiesta’s average transaction price is higher than vehicles in the segment above, like the Corolla and the Civic.”

Higher Trim Levels

In Europe, 4 percent of buyers select the lowest-price Fiesta, while 42 percent opt for the top trim level, Pipas said. In China, the cheapest car attracts 5 percent of buyers, while 67 percent go for the mid-priced version and 28 percent take the high-end Fiesta, Pipas said.

“Buyers choosing high-series content levels are not just a U.S. thing,” Pipas said. “People want to buy the product. They think it’s cool, like a Mini Cooper.”

In the U.S., where Ford sells the Fiesta for $13,995 to $20,375, the Dearborn, Michigan-based automaker will introduce a new version of its Focus compact car early next year. Ford hasn’t revealed prices for the new Focus. The current version starts at $16,985 and can top $20,000.

Ford is hoping the new Focus will attract buyers with demographics similar to those of the Fiesta, Pipas said. The current Focus is sold primarily on price and now carries a discount of more than $2,000, according to automotive researcher Edmunds.com.

‘Night and Day’

“The difference between the current Focus and the new Focus is like night and day,” Pipas said. “If our Fiesta experience is transferrable and an indication, then it casts a positive light on Ford’s global growth strategy.”

Six out of 10 Fiesta buyers in the U.S. haven’t previously purchased a Ford, Jim Farley, Ford’s global marketing chief, said today at a press briefing at the Paris Motor Show.

“We’ve been pretty surprised by the conquest power of the Fiesta, because it’s not a cheap and cheerful small car. It’s a premium small car,” Farley said. “We thought the Fiesta would take away sales from the Focus, but as we get new customers in the showroom, they’re discovering Focus. We’re selling more Focuses as a result of the Fiesta.”

To contact the reporter on this story: Keith Naughton in Paris at Knaughton3@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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