TRAVERSE CITY, Mich. (Reuters) -- Ford Motor starts producing its new global small car, the Fiesta, on Thursday, a key launch as the automaker aims to cut manufacturing and development costs worldwide.

Ford, which posted an $8.7 billion second-quarter loss, sees the Fiesta as a blueprint for its product development efforts that include a global platform for its Focus lower-medium car that has been built on differing platforms.

Global platforms can reduce overall development costs and purchasing costs, while allowing for differing interiors, exterior colors and other options depending on regional customer preferences.

Using the Fiesta platform, Ford aims to build about 1 million vehicles per year globally within five years.

The Fiesta, launched in 1976, has been a top seller in Europe over the last three decades and is being built for Europe at Ford stamping and assembly facilities in Cologne, Germany.

The company invested 455 million euros ($718.4 million) to retool the Cologne operation, and expects to build 148,000 Fiestas there in 2008. When it hits full production, the plant will produce more than 1,900 Fiestas and Fusions per day on three shifts, Ford said.

Ford plans to start making the European-designed Fiesta at a plant in Valencia, Spain in January. Production for the Asian market begins later in 2008 in Nanjing, China and Rayong, Thailand.

Ford plans to begin converting its Cuautitlan, Mexico truck plant in December to start production of Fiesta hatchbacks or two-door sedans for the North American market in early 2010.

The launch in North America is crucial as the automaker lacks a subcompact to compete with Toyota Motor Corp.'s Yaris, Honda's Fit and Nissan's Versa in a market where rising gas prices have helped accelerate a shift in consumer demand toward small cars.

Ford plans to expand its car lineup and increase output in North America to meet demand, while trimming production of once very profitable pickup trucks and SUVs.