'High-end' Ford Focus shows new strategy

LOS ANGELES  At more than $28,000, a fully loaded 2012 Ford Focus may still be a compact, but it can't exactly be described as an economy car. The price approaches an entry-level Lexus or Audi.

And that's the point.

The new Focus, due on sale this spring and the second-smallest car that Ford (F) sells in the U.S. after the subcompact Fiesta, is among the first of a new generation of small cars that represent an interesting experiment for the auto industry: Are American buyers actually willing to pay the price for feature-packed, upmarket versions of small, gas-stingy cars?

A lot is at stake for the U.S. auto industry. Automakers see the prospect of making significant money for the first time on small cars made in North America — and lessening their dependence on pickups and SUVs. Those vehicles have brought in the profits because buyers would load those vehicles up with high-margin trim, while they saw small cars as basic transportation appliances and expected a bare-bones price.

They can also save millions, if not billions, on development costs if they can sell here the same small cars they sell around the world, rather than creating U.S.-only vehicles. Though Ford has sold a Focus in both the U.S. and Europe for years, each market had different versions sharing little more than the name. Now, there will be one that — with some nods to local tastes and a few extra engine choices — Ford will sell worldwide.

But while Europeans demand more features in small cars, they also accept paying more. How will Americans react to a similar proposition?

Ford still will offer an entry-level Focus, the S, for $16,995. But that version is expected to attract less than 10% of buyers, says spokeswoman Angie Kozleski.

PHOTO GALLERY: Ford turns Focus toward stylish future

Ford expects the bulk of buyers to gravitate, with Ford's encouragement, to higher trim levels. The real test of how many U.S. buyers will embrace a luxury-packed mainstream small car will be a new top level, the Focus Titanium.

A buyer who takes that new trim level and loads it up with the expanded option list could spend roughly $5,000 more for a 2012 Focus than is possible for the most expensive 2011 Focus. Options include some big-ticket technology items not usually offered on small cars, such as voice-activated music and navigation systems, a rear-view camera and an 8-inch touch-screen to use to blast the stereo, crank up the heater or place phone calls. You can even order a Titanium that can parallel park itself.

The $28,090 price tag (with shipping) of a Titanium sedan with all the options ($28,585 for the five-door hatchback) approaches the sticker price of entry-level models from luxury brands. The coming Lexus CT 200h hybrid compact car will start at $29,120 with shipping. An Audi A3 five-door starts at $28,145.

Titanium won't be the most you can spend for a Focus for long. An ST model — a turbocharged performance model that's been offered in Europe — will go on sale worldwide in 2012 at a price expected to be even higher.

Taking a gamble

Many experts have said they think Americans are finally ready to pay top dollar for the same high-luxe small cars that are found in Europe. But it's been tried here before with limited success.

The difference this time may be that the change now is being driven by the times — not fickle tastes. Fear of gas prices rising even higher has some buyers already moving down from bigger vehicles into smaller, more fuel-efficient ones — provided they offer the amenities they're used to.

"Expectations have increased" for small cars, says Derrick Kuzak, a Ford group vice president, in an interview after a Focus test drive in Los Angeles.

Encouraging downsizing is the rising price of gas — the federal Energy Information Administration reported the average price of regular hit $3.13 per gallon this week.

Some buyers want smaller cars out of concern for the environment, regardless of gas prices. For many of them, the sticker price of the car isn't as big a factor in their purchase decision.

As a result, other automakers, too, are adding luxury touches to everyday sedans. Hyundai, for instance, offers heated rear seats in its new Elantra compact.

Consumers are now "willing to pay for the innovation and content," says Mike Jackson, CEO of AutoNation, the largest U.S. new-car dealer chain. Gone are the days of supercheap, no-frills — and unprofitable — sedans.

"The econobox is dead — and it should stay dead," he says.

Earlier success

BMW's Mini showed that an emotionally styled small car could lure buyers who would want to dress it up and personalize it with lots of profit-padding accessories and extras.

Though the Mini Cooper has a base price as low as $20,100, buyers typically pay $4,000 to $5,000 more, raising the selling price with customization extras such as racing stripes or fancy wheels.

Mini bucked the industry adage that small cars mean small profits. That long-standing belief is why so many small models from Detroit's Big 3, as well as other automakers, have been made in Mexico or elsewhere abroad where labor is cheaper.

Now, Ford thinks that the new Focus — to be made in Wayne, Mich. — has enough emotion and style to prove, like Mini, that the conventional wisdom is not the rule.

Adding plush versions "is only possible when you have a great-looking car and technology to support it," Kuzak said. "If you have emotional styling, inside and out, it makes a 'high series' more possible."

Not everyone agrees. General Motors is proud of the styling of its compact Chevrolet Cruze, but it's not adding a more tricked-out luxury version to match Focus.

The danger GM sees? The cost would nose up to the larger Chevrolet Malibu and simply cannibalize, not add, sales, says GM's North American marketing chief, Mark Reuss.

Outside pressure

In the end, automakers don't have much choice about making more small cars — whether they can persuade customers to buy pricier versions or not. They have to improve their average gas mileage to 35.5 miles per gallon by 2016 under Obama administration rules.

As a result, they're trying to turn out more cars the size of the Focus and Elantra — cars that will get 40 mpg on the highway. A model of the Cruze, the Eco, will get 42 mpg on the highway.

Even luxury-carmakers are getting into the act.

There's the compact Lexus CT. And both Ford's Lincoln brand and GM's Cadillac are planning new compacts for the first time in a decade. Audi, Mercedes and BMW all are considering it.

With no room in the market to expand into bigger vehicles beyond its S-Class flagship, Mercedes will introduce a U.S.-bound C-Class coupe at the Geneva Motor Show next month and is looking at more smaller models.

"We want to branch out there," said Ernst Lieb, CEO of Mercedes-Benz USA. "For us, that's where we have a chance."

It won't be easy. Mercedes has a small crossover that would seem perfect for the U.S. market, but it doesn't have the luxury feel and fittings feel that prosperous Americans demand from a Benz. For the moment, only 70 will be imported as test vehicles for hydrogen fuel-cell technology.

The B-Class F-Cell, as the vehicle is being called, "has not scored well in customer clinics" even though it sells well in Europe, Lieb says. The next generation of the B-Class, however, will likely be created with the U.S. more in mind.

Luxury makers are finding "buyers want premium amenities without the big size of the vehicle," says Jeff Schuster, analyst for J.D. Power and Associates.

Different wants

Meanwhile, mainstream cars are trying to fill the same gap — and facing similar challenges satisfying buyers with different tastes and buying habits.

For instance, Focus has power door lock switches on the dash, a concession to Europeans. The wide, deep cup holders are a nod to American preferences.

But engineers involved in the Focus development say that, in the end, there wasn't much trouble in bridging the Atlantic.

Working with counterparts at Ford of Europe, "it felt like we had a core vision and focus on what to do," said Don Ufford, Ford's vehicle engineering chief.

Brent Jones. For publication consideration in the newspaper, send comments to For more information about reprints & permissions , visit our FAQ's. To report corrections and clarifications, contact Standards Editor. For publication consideration in the newspaper, send comments to letters@usatoday.com . Include name, phone number, city and state for verification. To view our corrections, go to corrections.usatoday.com