Can the new Ford Fiesta justify its price premium?

After a four-month wait, Ford today finally announced the prices and variants of the 2011 global Ford Fiesta sedan. Expectations were high and many thought Ford would price the Fiesta extremely competitively, against the Hyundai Verna, Volkswagen Vento and Honda City.

However, Ford seems to have disappointed many with its premium pricing, especially the CarToq community members. The Fiesta has been launched in eight variants (four petrol and four diesel), namely Style, Trend, Titanium and Titanium Plus, priced between Rs. 8.23 lakh and Rs. 10.42 lakh ex-showroom Delhi.

On the face of it, this pricing puts the Fiesta at a premium to comparable models from Hyundai and Volkswagen. For instance, the top-end Hyundai Verna diesel manual transmission version, the Verna 1.6 SX CRDi (O), is priced at Rs. 10.05 lakh ex-showroom Delhi, a good Rs. 37,000 cheaper.

Can the new Ford Fiesta justify its price premium?
Photo: 2011 Ford Fiesta

But it’s loaded with far more features such as six airbags compared to the Fiesta’s two airbags, all-round disc brakes (Fiesta has rear drums), parking camera and leather upholstery. The Fiesta only counts voice-activated commands and cruise control as among the premium features it offers.

So can Ford really justify this price premium? We asked Nigel E. Wark, executive director, marketing, Ford India if he thinks this premium pricing is justified. Says Wark, “We offer the best overall cost of maintenance, which is 40% lower than the competition. This has been calculated over 100,000 km of ownership.” He also adds that customers looking for a car that handles better and is better built will definitely consider the Ford Fiesta.

Adds Wark, “Customers in this segment are discerning and want features. We’ve loaded the Fiesta with features such as Bluetooth, cruise control and voice-activated controls. These are things we think customers will see value in.”

Not sure if this going to be enough considering that the competition offers some of these features too. Voice commands and cruise control may not necessarily be the most-wanted features in this segment.  So maybe the Verna still has an edge here. Ford might have been able to bring down the maintenance cost (including spare part costs) significantly in recent times, but the impact of this will be evident only in the future.

With the Figo, Ford has been able to provide great price value on initial purchase price and features – and maintenance costs are seemingly lower on this car. But these are still early days. So it will take a while to change the existing perception that Ford cars (Fiesta Classic and Ford Ikon) are high on maintenance cost.

Where the new Fiesta does seem a little better in value is in comparison to the Honda City, which was the petrol C-segment leader till March. The top-end Honda City VMT Exclusive is priced at Rs. 9.17 lakh. If you compare that with the Titanium version of the new Ford Fiesta, it is also priced at Rs. 9.17 lakh. In terms of initial cost, Ford Fiesta is the same as the City but the City has a more powerful engine and is a known good handler.

Overall though, we think the price premium for the Ford Fiesta is not really justified. Ford was non-committal on the sales target when we asked them.

Here’s our forecast. The Fiesta will not make any impact on the Verna sales. With a diesel offering also, Ford is actually targeting the Honda City buyer, with an overall lower cost proposition. Honda City sold more than 2,800 units in June. Given Honda is a more popular brand, and City has a more powerful engine, Fiesta will find it difficult to dislodge the City.

After the initial launch excitement settles down, Fiesta sales might settle down to about 2,000 units a month. What do you think?

Specifications at a glance

[table id=20 /]