DETROIT (Reuters) - Ford Motor Co (F.N) will launch a small car aimed at emerging markets next year, the toughest test yet of Chief Executive Alan Mulally’s strategy of building “global” models that can be sold in countries around the world.
Top Ford executives, including Chairman Bill Ford, were at the company’s Camacari plant in Brazil on Wednesday to showcase a concept version of the global Ka four-door, five-passenger hatchback, which will be introduced in Brazil next year.
Eventually, Ford will bring the global Ka to other emerging markets, including China, where more families are amassing the wealth needed to buy their first vehicle.
The Ka compact is the smallest and cheapest Ford vehicle to get a global overhaul, competing in what Ford calls the “sub-B” segment. The No. 2 U.S. automaker has long struggled to make money in this market, which is in the midst of significant growth and intensifying competition.
“These vehicles really are important to us globally to move into areas of the business where we have historically not had good share, not made money,” said Joe Hinrichs, who leads Ford’s operations in North and South America.
“If you’re going to grow, especially in the growing emerging markets around the world, you need to have this entry-level family car,” he said.
Ford expects global sales of small, low-cost cars to grow 35 percent between 2012 and 2017, outpacing the expected 12 percent rise for the industry as a whole. Ford said 44 percent of the market for “sub-B” cars will be in South Asia and South America.
The automaker now feeds this market with its current-generation Ka and Figo, which are built on older, locally tailored vehicle platforms that Ford is increasingly avoiding.
The global Ka, which shares components and an underbody with the Fiesta and EcoSport compact crossover, represents the latest test of Mulally’s “One Ford” plan.
This strategy aims to cut Ford’s costs by developing global models that can be sold around the world, with a few tweaks for local markets. The strategy harkens back to Henry Ford’s Model T, which was exported around the world in 1913.
Ford’s first global vehicle under Mulally was the Fiesta in 2008, but developing a global car as small and cheap as the Ka has been a challenge.
Ford studied Maruti Suzuki India Ltd (MRTI.NS), Hyundai Motor Co (005380.KS) and Kia Motors Corp (000270.KS) and their approach to the global market for small cars, Ford Chief Financial Officer Bob Shanks said.
Ford did not discuss the price of the global Ka but said the current Ka costs between $10,000 and $12,000 in Brazil, compared with $17,000 to $26,000 for the Fiesta. The current Ka is sold in Europe and South America.
The global Ka will rival the VW Polo, Fiat Uno and Chevrolet Onix, Ford said. The redesigned Ka does not have a touch screen but has a docking station to accommodate a smart phone, allowing the driver to view navigation and other features.
“In these markets, you don’t spend $1,000 for a navigation system,” Hinrichs said. “But most everyone in these markets does have a smart phone. So it will dock in the center stack.”
Brazil is the world’s fourth-biggest auto market. Italy’s Fiat SpA FIA.MI, Germany’s Volkswagen AG (VOWG_p.DE), and U.S.-based General Motors Co (GM.N) and Ford sell more than 70 percent of all new cars sold in that market.
Reporting by Deepa Seetharaman; Editing by John Wallace