Just where are Ford's niche cars in response to competitors? Well, the response is coming. The blue oval is planning a raft of clever cars from a new B-platform. These will include a new Ka (due in mid-2005), a three-seat ultra-compact Ka (due late 2005), a funkily-styled baby Land Rover – (due in 2006) – and a baby Volvo (codename Y305) due in 2007.

Following a policy of capitalising on the strong performance of European sub-B market, the company is also pondering a cute Smart-style short-wheelbase three-seater.

Ford may also look at further Ka spin-offs – a low-roof three-door 'lifestyle' hatch, a soft-top to replace what will be the relatively short-lived StreetKa and even a full-on 'SportKa' with a 150bhp engine and seriously uprated chassis.

One interesting B-car project is L358, the Land Rover version of the next Fusion.

Volvo is also said to be interested in a derivative of L358, following the pattern set by the MK2 Freelander and the upcoming XC50. If this plan materialises, the XC10 and L358 will be built together in a Ford factory. However, Volvo's plans are still loose enough for the XC10 to become a V10 baby hatch or a C10 baby coupe.

Ford boss Nick Scheele says there is no reason why Volvo shouldn't expand into entry-level territory, and also switch its attention to smaller cars, rather than build big models such as the proposed V90 super-estate. “We do see great potential for growth in the B- and C-segments,” he says. “And with the more stringent emission rules from 2008, small and light cars are also politically very correct.”