Ford will build the Fiesta subcompact in Russia starting next year as it scrambles to replace sales lost by collapsing demand for its Focus compact in the crisis-hit market.
The Fiesta five-door hatchback will be produced alongside the EcoSport small SUV, which Ford and local partner Sollers started assembling this week at their factory in Naberezhnye Chelny, the automaker said in a statement.
Russian car sales have fallen as Western sanctions over the crisis in Ukraine have hurt the economy, which has been affected further by declining oil prices. Russia's 10-month sales were down 13 percent to about 2 million vehicles, according to figures from the Association of European Businesses (AEB).
Ford's decline has been more severe as its 10-month volume fell 41 percent to 50,226 vehicles. A big reason for the decline was a near 60 percent drop in Focus sales to 22,526 units.
While the Focus remains Ford's best-seller in Russia, the car ranked 23rd overall through October after years of consistently placing within the country's top 10. One reason for the decline is a shift by customers to models that are a size down from the Focus.
"The subcompact segment has overtaken the compact segment in Russia," a Ford Sollers spokeswoman said. Ford expects the EcoSport and Fiesta subcompacts to help it recover the lost sales. “These new cars are our answer to the market,” she said, adding that the Focus also has suffered because it is older than some of its compact competitors.
Russian sales are dominated by locally made models, with all 10 of the year's best-sellers made in the country. The Ford Sollers spokeswoman said 99 percent of cars the automaker sold in the country were made at its three local plants.
Russia-made cars also qualify for a government-backed scrapping subsidy. Under the terms of the scheme, buyers of locally produced new passenger cars are eligible for a discount of at least 40,000 rubles (752 euros) when scrapping or trading in their old vehicles.
The AEB credited the incentive, which has been extended until 2015, with helping to slow Russia's sales decline to 10 percent in October compared with a 20 percent drop in monthly sales in September.
Ford and Sollers, which established their joint venture in 2011, also have factories in St. Petersburg, where the Focus and midsize Mondeo are made, and Yelabuga, where models such as the Ford Explorer, Kuga and Edge SUVs are built. Altogether, Ford makes 11 different cars, SUVs and light commercial vehicles in Russia.
Fiesta output will start in the second half of next year. Like the EcoSport, which went into production Dec. 2, the Fiesta will be built from kits, with stamped parts coming from a supplier also based near the factory, which is in Russia's Tartarstan region.
Ford will open an engine plant in the region next December to produce 1.6-liter gasoline units for the Focus, Fiesta and EcoSport.
“We are committed to increasing our local content level in Russia. From the very start of production of the Ford EcoSport we are sourcing about 30 components from local suppliers,” Adil Shirinov, chief operating officer for Ford Sollers, said in the statement.
The Ford Sollers spokeswoman said other variants of the Fiesta will be considered for Russia, where many subcompacts are offered as sedans because of local customers' preference for that body style.
The country's No. 1 seller is the Lada Granta followed by the Hyundai Solaris. Both are subcompacts that are primarily sold as sedans. Ford makes a sedan version of the Fiesta for some global markets but not Europe.