GM and Ford bet on small cars for bigger profits

Article by Christian A., on August 27, 2010

Only time will tell if the strategy of General Motors Co. and Ford Motor Co. for small cars is effective. The plan of these companies is evident at the Detroit auto show where their displayed cars had features not commonly seen in domestic econoboxes, such as roomy interiors, computer gadgets, turbocharged engines and sporty sheet metal.

For instance, the redesigned 2011 Ford Focus attracted plenty of attention with its touch-screen controls for navigation, phone, climate control and entertainment. This car can also download applications used on Apple's iPhone.

Expect the car to arrive in early 2011. The small-car segment has long been dominated by Asian automakers but as gasoline prices rise and federal mileage standards get tougher, it will be highly contested.

In the US, a small size is equated with low prices and so potential customers may complain when they see high prices.

To remedy this, Ford and General Motors Co. are offering a range of high- and low-end versions of the new cars. Jim Farley, Ford's Motor Co.'s group vice president of global marketing, revealed that at the high end, Ford will be offering "aspirational" small cars that appeal to rich buyers.

Topics: gm, ford, small car, profit

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