Ford Motor Co. Must Win Small Car Bet

Ford Motor Co. is all in now, placing all its chips on the bet that gasoline prices will remain high and so will consumer demand for smaller, fuel-efficient vehicles.

Chief Executive Alan Mulally, in announcing a staggering $8.7 billion second quarter loss, said the automaker will accelerate its transition to smaller vehicles, converting three truck plants to build cars and bringing six of its European economy models to the U.S. market.

Mulally made it clear that Ford can build the smaller cars the market is suddenly demanding. But the real question is whether the automaker can sell them.

Ford's challenge is to fill showrooms with cars that will be as popular as its pickup trucks and sport utility vehicles have been, and as profitable. The Ford F150 has for decades enjoyed the most loyal customer base of any vehicle. Can Ford generate the same loyalty with a Focus, Fusion or Flex?

Mulally likes to point out that Toyota and Honda have done it, and there's no reason Ford can't as well.

Say this for Mulally — he's not afraid to roll the dice.

That's a good thing in a collapsing domestic auto industry that has little choice but to take big risks.

Ford must make this conversion work, and the only way to do it is by offering high-quality, attractive and fuel-efficient vehicles that make consumers forget about their pickups and SUVs.

The company has heavily mortgaged its assets to finance this transition. Its future rests on its ability to succeed in the small car market.

It can reach back into its history to find the formula. Ford Motor Co. debuted with the Model T, a utilitarian vehicle that became the car for the masses. The Model T celebrates its 100th anniversary this summer.

The company could give itself no better birthday present than to come up with the Model T's 21st-century equivalent.

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