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Ford seeks larger presence in growth markets

Subcompact Ka key in automaker's goal to achieve annual sales of eight million

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Steven Armstrong, Ford Brazil president, and Bill Ford, Executive Chairman, Ford Motor Company, unveil the Ka Concept in Camacari, Brazil on Nov. 13.

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Steven Armstrong, Ford Brazil president, and Bill Ford, Executive Chairman, Ford Motor Company, unveil the Ka Concept in Camacari, Brazil on Nov. 13.

BILL Ford and Joe Hinrichs, Ford Motor Co.'s president of the Americas, were in Brazil last month for the debut of a concept described as one of the most important for the future of the automaker.

It's an early look at the next generation of the subcompact Ka, a five-passenger hatchback designed to be an affordable family car for millions of buyers in China, India, South America and other growth markets. The Ka is also sold in Europe, but there are no plans to offer it in the U.S.

"It is one of the most important product programs we're working on, and I know the things we're working on for North America," Hinrichs said in a veiled reference to the all-new Mustang and F-150 expected next year.

The Ka breaks cover on the same day Ford executives are in New York City to show the 2015 Lincoln MKC, a compact crossover that expands the Lincoln lineup.

"It's a big deal for us," Hinrichs said of the smallest car Ford makes. The Ka stems from a global platform developed in Europe, but most of the development since 2010 has been done in Brazil, where Ford has 1,200 engineers. "It's been an important product program from the beginning and gotten a lot of leadership attention."

This is Ford's first attempt at global vehicles smaller than the Fiesta. The effort fills a gap in the One Ford plan to engineer, build and sell the same vehicles around the world while allowing Ford to move into areas where it historically has not made money, Hinrichs said.

"We've been talking for a long time about leveraging global platforms, but there have been questions about the lower end of the spectrum," he said, and "whether Ford can move its global strategy down market."

Strong Ka sales would also help Ford achieve its goal of eight million sales annually by mid-decade. The automaker is about two million short.

The smaller the car, the bigger the challenge to make a profit, but Hinrichs said it is possible to offer a quality entry-level vehicle with savings from leveraging its global scale.

Hinrichs knows firsthand the importance of an affordable small car for emerging markets. A year ago, his job was to oversee Ford's Asia Pacific operations, and he was involved in discussions on whether the Ford brand needed a domestic brand in China that would be more affordable than the current Ford-branded vehicles offered there now.

Pricing has not been announced, but consumers in Brazil can get a Ka for $10,000 compared with the Fiesta, which starts at about $17,000. And with a complicated cost structure, Brazil is not as low-cost as other emerging markets, where the car is expected to cost less.

"It's a necessary segment to play in," said analyst Dave Sullivan of AutoPacific.

The tiny Ka fills a spot in the market referred to as "sub-B" at the value end of the small-car spectrum. The segment is projected to grow 35 per cent from 2012 to 2017 to about 6.2 million vehicles. The Ford Figo sold in India also falls in this category. Hinrichs said 44 per cent of these value vehicles will be sold in South America and south Asia.

"We need to be in this space," Hinrichs said. "There is so much potential around the world."

The 2015 Ka will launch in Brazil next year and then go on sale in other parts of the world. Competition includes the Chevrolet Celta, Volkswagen Gol G4, Fiat Uno Fire and Fiat Palio. In Brazil, Ford will build the Ka at its Camacari complex.

Vehicles in this segment often are tall, thin and look tippy.

Ehab Kaoud, chief designer for Ford in South America, worked to create a vehicle that looks more planted and premium. With the face and grille of a Fusion, it is clearly a Ford. Kaoud said he wanted a car that looked safe, large and more expensive than it is.

Costs are kept down with the choice of materials and features. There is more plastic in the interior and instead of a navigation system, the Ka has a docking station for a cellphone with map applications.

Ford started selling vehicles in Brazil in 1919. It is tied with the United Kingdom as automakers' third-largest market, after the U.S. and China. Ford has 9.5 per cent of the market in Brazil with sales of 294,000, but the economy is slowing.

There are currently two different cars marketed as the Ka. There is a higher-end model sold in Europe, which was originally a joint venture with Fiat, and the Ka engineered in South America for the local market.

Ford wanted the next-generation Ka to be a global vehicle, part of a larger goal to have every vehicle Ford sells in Brazil come from a global platform by 2015.

The Ka will be Ford's sixth global vehicle for Brazil. The other five include the Focus, Fiesta, Fusion, Ranger and EcoSport. Ford will have invested more than $2 billion in the country from 2011 to 2015, most of it in Camacari, to improve its portfolio.

On Nov. 12, Ford's chief financial officer Bob Shanks told a supplier conference 86 per cent of Ford volume now comes from core platforms, compared with 26 per cent six years ago. The goal is 99 per cent of Ford's vehicles will come from nine core platforms by 2016.

-- Detroit Free Press

Republished from the Winnipeg Free Press print edition December 27, 2013 A1

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