Ford Bullish on Small Cars

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Ford kick-started the SUV revolution with the introduction of the Explorer SUV in the ’90s, but the next big opportunity it sees is in small cars. That’s according to Ford sales analyst George Pipas, who spoke to a gathering of Chicago-area media recently. Who are the buyers that will drive growth in this segment? Pipas says it’s Millennials, a demographic that wasn’t even driving when the Explorer debuted.

It’s easy to see why Ford is focused on Millennial buyers, which it counts as those born from 1980-95. Every day about 11,000 Millennials become old enough to drive in the U.S., according to Ford. With 50 percent of first-time buyers choosing small cars, there are sales to be had, Pipas said.

For Millennials, though, small doesn’t necessarily mean basic. “[Millennials] want more than an econobox in a small car,” he said. “They will give up something else to get what they want on the car.” Pipas acknowledges there’s been a lack of small cars in Ford showrooms in the past, but the automaker plans to change that. The Fiesta, which debuts in December at the L.A. Auto Show, and the redesigned Focus, which bows a month later at the Detroit auto show, are two cars Ford hopes will draw small-car shoppers. Ford expects to offer 10 Focus-related models worldwide.

Though Millennials will be a force in the market, Pipas says there are other factors working in small cars’ favor, including one that might not immediately come to mind.

“Gas prices are way overplayed in determining what people buy,” he said. “The volatility [of the price of gas] is important. Volatility makes people uncertain.”

The changing mindset of the American consumer also seems poised to figure into the buying equation. “People are a little more thoughtful about what they buy,” Pipas said. “People are moving from conspicuous consumption to careful consumption.”

Ford may be showing a renewed interest in small cars, but it won’t have free rein of the segment, as it’s filled with solid competitors from the likes of Toyota, Honda and others. But if Ford’s recent introductions like the Flex and Fusion Hybrid are anything to go by, the new Fiesta and Focus should be impressive entrants. If I were in the market for a small car and had the luxury of time, I’d wait to check them out before making a purchase. We’ll have plenty of auto show coverage on both in the coming months.