Ford's axing of Fiesta, Focus cars epitomizes industry disruption

Rationalizing your business in an already high-cost, low-return industry that is undergoing major change is not easy. Look no further than Ford and its Fiesta.

The almost 50-year-old small hatchback has been one of Europe’s most popular models. Less than a decade ago, Ford was celebrating it becoming the UK’s best-selling car of all time.

By late last year, Ford was bidding Fiesta a sentimental farewell. And by 2025, the compact Focus will follow suit.

A lot has been written about how disruptive the switch to batteries and rise of software will be for automakers used to traditional combustion engines.

The Fiesta and Focus are good examples of this long-predicted turmoil.

This all started in 2018, when Ford made the radical decision to move away from being a full-line automaker, shrinking its passenger-car lineup down only to higher-margin performance models such as the Mustang.

To finance the costly move to develop EVs that work like rolling connected devices, Ford needed to concentrate resources on the SUVs and trucks that actually make money.

This transformation has taken longer to play out in Europe, where pickups are not nearly the phenomenon they are in the U.S. and small cars are still big-sellers.

But while Europe’s compact- and small-car segments have remained relevant, they are also extremely fragmented.

Eight of the 11 best-selling models in the region last year were small cars, according to market researcher JATO Dynamics.

The top-volume Peugeot 208 and runner-up Dacia Sandero were the only two to top 200,000 registrations, and not by much. A dozen other models exceeded 100,000 units.

This amounts to a counter-productive brawl. Europe has seven mass-market car brands with roughly between 4.5 percent and 6 percent share of the overall passenger vehicle market, according to the European Automobile Manufacturers’ Association.

The concern for European countries is that more automakers will follow in Ford’s footsteps and decide that competing for these low- to no-return sales is not worthwhile.

The automaker is backfilling assembly plants that used to make Fiestas with other models, but its factory in Saarlouis, Germany, will run out of road once the Focus is phased out.

The IG Metall union has said that Ford plans to cut about 3,200 jobs in Europe and shift some product-development work to the U.S.

There is understandably fear of further losses in Saarlouis, where morale among roughly 4,500 workers is low.

The automaker opted in June of last year to build EVs in Valencia, Spain, instead of Saarlouis, in part because labor leaders near the Mediterranean Sea offered more competitive wages, according to people familiar with the matter.

The company is in talks with around 15 potential investors for the Saarlouis plant, including China’s BYD, said the people, who declined to be named because the talks are private.

Ford has declined to comment on development job cuts or talks with potential suitors for Saarlouis, with a spokesman saying only that no decisions have been made.

Further pullback by Ford will be painful to watch. Its lineup of affordable yet reliable small cars and sedans were mainstays among European students, young professionals and families for decades.

Ford has not shied away from the emotions inside and outside the company about cars like the Fiesta going away. In a two-minute-long video released in October, a man rolls up to a house to read a bedtime story to his grandson about “a car for the people.”

“Sometimes it went fast, sometimes it went slow, but it always, always went,” the grandfather reads. “Until, one day, it did not anymore. Not because it could not, not because it would not, but because its job was done.”

The video then cuts to an old Fiesta in the driveway and pans over to the garage, which opens and reveals both a battery-powered Ford and an electric plug on the wall.