For Ford, Small Cars Are Big Business

ford fiesta

In order to reach out to a greater number of consumers, Ford (NYSE:F) is placing bets on smaller, more inexpensive cars in order to get the Blue Oval into more hands around the globe. During a roundtable discussion at this week’s North American International Auto Show, CEO Alan Mulally noted that smaller cars like the Fiesta and Ka will account for an increasing share of the global auto market, including the United States.

The pattern of growth for smaller vehicles stems from the increasing costs of cars overall, as more and more technology finds its way in and causes the price to inflate. Despite padding automaker’s profit margins — Ford has seen double-digit growth thanks to increasing prices — it is also spurring people to turn to more affordable options, The Detroit News reports.

In turn, this makes the small car market a more crucial one, and Ford hopes to be waiting with arms wide open, Mulally implied. “We have to find a way,” he said. “All of our data say the economics are very, very important.”

source: http://www.flickr.com/photos/fordeu/

Mulally also spoke of the growth potential in the post-recession U.S. as uncertain incomes and rising vehicle prices converge. As that happens, smaller models that are already popular abroad — like Ford’s EcoSport utility vehicle — may find new opportunities in the States.

“I think over time, you’ll see even smaller cars in the United States,” he said, per The Detroit News. “I think, in time, [the EcoSport] will be here.”

Personal mobility has been a priority for Mulally, who said that Ford will continue to partner with big cities and their planning departments. He cited Chongqing, a city of 35 million in China, as such an example. The Detroit News notes that Ford says mega cities — cities with more than 10 million people — will grow in number from 23 to 27 around the world by 2025, which could pose some environmental and social dilemmas as they relate to personal mobility.

To respond to such issues, Ford has drawn up a sustainability blueprint that asserts by 2050, the company will have a network made up of “very different cars” that will communicate between one another, and the infrastructure around them, The Detroit News reports.

Mulally, who recently committed to remaining on board at Ford through the end of the year amid speculations that he was contemplating a move to Microsoft (NASDAQ:MSFT), told Reuters that he still remains deeply committed to the day-to-day operations as well as setting Ford’s long-term strategy.

“I’m still doing everything I did,” he told reporters at the Detroit auto show. “I’m just spending more time on the longer term issues and I’m right there on the day-to-day issues. I’m the CEO.” His comments were reflecting the handing of the weekly Business Plan Review to Chief Operating Officer Mark Fields. It’s in these weekly meetings that Ford addresses the day-t0-day running of things.

“It’s not like I’m doing one or the other,” Mulally said, per Reuters. “Mark runs the BPR (business plan review) in the leader’s chair and I’m right there with him every step of the way.”

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