Can Ford's "World Car" Bet Pay Off?

As CEO Alan Mulally sets about remaking Ford Motor (F), he has put at the center of his efforts the "world car." It's a simple concept: building one product for multiple markets rather than a bunch of different ones tailored to national or regional tastes. Like many auto executives, Mulally is convinced that the only way to make money on cars, especially the small ones Ford has struggled to sell, is by spreading development and other costs over one huge, global market. The first test of this high-stakes undertaking is the subcompact Ford Fiesta, already selling well in Europe and Asia and set to appear in the U.S. early next year.

The world car makes sense on paper, but it's risky. Ford has tried this before and failed, largely because its regional divisions couldn't agree on what kind of cars to build. But Mulally has reorganized the company around the world car and, after the Fiesta, plans global versions of several other models. "Ford is betting it has figured out what has bedeviled mass-market automakers for decades, which is hitting a home run in every market with the same car," says Jim Hall of 2953 Analytics, which helps automakers with design. "It's awfully difficult, but if Ford pulls it off, it stands to make huge profits."