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.