Ford Says New Fiesta Off to a Good Start in Europe

(MoneyWatch)  Ford says it's encouraged by early acceptance for its all-new Fiesta model in Europe.

Popularity in Europe doesn't always translate into popularity in the United States, but Ford is placing big bets that will begin to change, starting with the Fiesta in 2010.

The all-new Fiesta will be the first of a half-dozen cars Ford plans to bring to the United States that were designed primarily for European markets. That is, they're small, with good performance and handling, expressive styling. Above all, they're fuel-efficient.

In its first two months on sale, Ford has sold more than 42,200 new Fiestas in European markets, the company said. The Fiesta is also on sale in South Africa. In the United Kingdom, Fiesta sales represent the model's highest market share since 1998, the company said.

The Fiesta goes on sale in China, Australia and New Zealand in early 2009; plus Japan and the United States in early 2010. Models for North American markets will be built in Mexico.

Ford says about half of the new Fiesta's buyers in Europe are splurging for upscale trim and equipment packages, more than expected. In the U.S. market, it will be especially important for Ford's profitability to get customers to buy highly equipped small cars that won't necessarily be cheap.

However, U.S. customers are used to equating "small" with cheap and entry-level. When U.S. gas prices spiked last summer at $4 a gallon, it looked as if the day had finally arrived for fuel-efficient "world cars" in the United States. High gas prices are a big reason why European and Japanese buyers accept smaller cars than typical American cars. GM is also pursuing a "world car" strategy. Like Ford, GM wants to reduce complexity; share costs across markets and across brands; spread costs across the greatest possible volume; and achieve the biggest possible quantity discounts from suppliers.

High U.S. gas prices support that strategy, by bringing U.S. customer demands more in line with the rest of the world. U.S. gas prices have subsided again lately, but Ford and GM are quietly banking on them going up again.