Ford Ka Reflects Budget-Minded Buyers’ Desire for Chrome

Ford Motor Co., pushing for 8 million annual sales by the middle of this decade, rolls out its cheapest global small car next year, aiming to provide the first set of wheels to buyers in emerging markets.

The Ka Concept foreshadows a model that Dearborn, Michigan-based Ford will sell next year for less than its Fiesta subcompact. Ford is betting chrome accents and a more sturdy stance than models from General Motors Co. and Volkswagen AG will win over first-time buyers in markets such as Brazil, where Executive Chairman Bill Ford introduces the car today.

“I kept telling the designers: ‘Guys, no tin can,’” Ehab Kaoud, Ford South America’s design chief, told reporters last week in Dearborn. “This is the smallest car we do. But when you look at it, it really exudes premiumness.”

Chief Executive Officer Alan Mulally has revamped Ford by focusing the second-largest U.S. automaker’s development efforts toward global vehicles rather than unique models for disparate markets. The revamped Ka, which will replace the version Ford sells now in Brazil starting at 24,200 reais ($10,400), may be the stiffest test yet of that strategy. Ford has to balance offering features that draw buyers without adding too much cost.

“We’re not in the business of growing unprofitably,” Joe Hinrichs, Ford’s president of the Americas, told reporters last week. “The smaller the vehicle, the more challenging the margin equation is. We go into these programs with the expectation to make money.”

Ka’s Competition

Ford plans to invest almost $2.1 billion in Brazil during the first half of this decade to add production capacity in a market where government measures have discouraged imports, Hinrichs said. The Ka is the second global vehicle that Ford South America, based in Brazil, took the lead on developing, after the EcoSport small utility vehicle introduced last year.

The Ka competes in a segment that’s projected to expand to 6.2 million worldwide sales by 2017, one of the fastest-growing for the industry, Hinrichs said. By then, about 44 percent of deliveries in the segment will be to buyers in South Asia and South America.

Ford is rushing to capitalize on the enthusiasm of buyers in these markets who often have saved up to make their first vehicle purchase. The EcoSport drew lines 100 meters (328 feet) long when it debuted at the New Delhi Auto Expo last year, Hinrichs said.

“We had to shut the stand down every 30 minutes, turn the lights off, cover the EcoSport and get everybody out so we could bring the next group in,” he said. “That’s how big a deal it was in India.”

Ford’s Target

Ford set its 8 million vehicle goal more than two years ago. Crucial to reaching that target will be small-vehicle deliveries in South Asia and South America. Ford has projected such models will grow to 55 percent of its sales by the end of the decade, from 29 percent in 2000. The company sold 5.67 million vehicles worldwide at wholesale last year.

While the Ka has been around since the late 1990s, the version currently in production in Brazil differs from the model built in Poland through a joint venture with Fiat SpA. Ford also markets a low-priced Figo small car in India.

“We’ve never had a One Ford, global DNA, modern technology, modern platform vehicle” sold as the Ka, Hinrichs said. “It’s a very important part of that growth equation.”

Before it's here, it's on the Bloomberg Terminal.