Ford CEO says company assessing tiny car for US

DETROIT: Rising demand for small cars has pushed Ford Motor Co. to revisit its decision not to bring the tiny European Ka model to the United States, Ford's chief executive said Monday.

"We're assessing that right now," CEO Alan Mulally told a Detroit radio station, adding that a lot of people share the opinion that Ford should sell the Ka in the U.S.

A new version of the Ka was unveiled last week at the Paris Motor Show. It will be launched in major European markets by late this year or early 2009.

The Ka is far smaller than the Focus, which currently is Dearborn-based Ford's only U.S. compact car. Focus sales are up 24 percent through September, even though the U.S. auto market is down nearly 13 percent for the year.

Mulally said on WJR-AM's "Paul W. Smith Show" that Ford decided to give the Ka another look due to high fuel prices pushing up demand for small cars and the response to introduction of the Fiesta subcompact. Ford had said previously it wouldn't bring the Ka, sold mostly in Europe, to the U.S. because the markets are different, with European cities having more congestion and narrower roads than U.S. cities.

Ford plans to start selling the Fiesta global subcompact and the European version of the Focus in the U.S. in 2010, boosting its array of small cars as the U.S. market continues to shift away from trucks and sport utility vehicles.

U.S. small car sales overall are up 6 percent for the first nine months of the year, while truck sales are off 21 percent, according to Autodata Corp.

Ford spokesman Said Deep said the company is exploring whether or not Americans will accept a car that's even smaller than the new Fiesta, which the industry calls a "B" segment car. B cars are the size of a Toyota Yaris or Honda Fit, which now are selling well in the U.S. Fit sales are up 54 percent through September, while Yaris sales have risen 29 percent.

"Are people willing to go smaller than that?" Deep asked. "That's a big unknown, and I think that's what's got to be determined."

A diesel version of the Ka gets 42 miles per gallon (18 kilometers per liter) of fuel in combined city-highway driving under U.S. testing standards, Deep said, not much more than a gasoline-powered Fiesta will get in the U.S.

"There's not a dramatic difference in them to kind of give up the comfort package," he said.

The only vehicle the size of a Ka in the U.S. is Daimler AG's Smart Fortwo, a super-small car that has proved popular in the face of gasoline rising to around $4 per gallon. Smart has sold 18,156 of the models through September.

The new Ka has not yet been given a safety rating in Europe. A model tested in 2000 received a three-star crash test rating out of five stars from the Brussels-based Euro NCAP, an agency that assesses cars sold in Europe. Three stars is considered low under the group's standards.

Ford spokesman Finn Thomasen said safety results for the new model will come out next month, and he anticipates it will be better than the previous model.

Ford is looking to sell well-equipped, high-quality small cars in an effort to make up revenue lost when high-profit truck and sport utility vehicle sales tanked. Mulally said Ford will continue to adjust its factory capacity to match market demand. Overall, its sales are off 17 percent through September.

"None of us have seen a slowdown like we're going through right now," he said.

But he told Detroit station WWJ-AM that the $700 billion bailout of the financial industry is the right move to help stabilize home prices and deal with bad mortgages. The recent freeze in the credit markets has prevented some buyers from being able to get car financing as well.

Despite the deteriorating economy worldwide, Mulally said he's still confident Ford will survive the downturn.

"We knew this was going to get worse before it got better," he said. "And we went to the markets to borrow the appropriate amount of cash to fund our transformation."

Ford has burned through nearly $11 billion of its cash stockpile in the past year and reported a second-quarter loss of $8.7 billion. The loss included $8 billion worth of write-offs because tumbling truck and SUV sales decreased the value of Ford's North American truck plants and Ford Motor Credit Co.'s lease portfolio. The company has $25 billion in long-term debt.