At the time, Ford's North American product line included the subcompact Pinto and Mustang II, and the compact Maverick, but replacements for all of these models would soon be needed.

[7] A proponent of downsizing, Sperlich conceived of a "world car" that could be sold in both Europe and North America as a solution to the needs of the various divisions.

[10] In December 1973, Ford President Lee Iacocca formally approved development of the Fox platform.

[11]: 96 Although the Fairmont would be the first Fox-based car to reach the market, development was guided by an anticipated sport coupe to be based on the new platform.

[12]: 12  In 1975, North American Automobile Operations took over development of the Fox platform from Sperlich's Product Planning and Research group.

The first running Fox/Fairmont prototype was a modified Cortina with a MacPherson strut and torsion bar front suspension.

The Fairmont is based on the rear-wheel drive Ford Fox platform, using steel unibody construction.

The independent front suspension comprised lower lateral arms, MacPherson struts, and helical-wound coil springs.

The rear suspension used a solid axle suspended on coil springs and vertically mounted dampers.

For 1980 only,[16] a 120 hp turbocharged version of the 2.3 L engine (shared with the Mustang Cobra) was available in Fairmont sedans and coupes.

For 1978 to 1981 model years, the Fairmont was offered with two different Windsor V8 engines (shared with mid-size and full-size Ford vehicles).

[28] The Futura was a two-door coupe distinguished by a model-specific roofline that featured a wrapover B-pillar similar to the 1977–1979 Ford Thunderbird but without opera windows.

Following the 1981 introduction of the Ford Escort, the automaker sought to expand its use of front-wheel drive across the compact and mid-size segment; the rear-wheel drive Fox platform remained in production, used mainly for performance and luxury vehicles (the Mustang, Thunderbird, their Lincoln-Mercury counterparts, but also the Ford LTD/Mercury Marquis).

An extended-wheelbase sedan counterpart of the Escort/Lynx, the front-wheel drive Tempo and Topaz followed the Thunderbird in using aerodynamic-influenced exterior styling.

The exterior was styled with design elements that were adopted by multiple Mercury product lines during the early 1980s (the Lynx, Capri, Cougar, and Marquis), including a waterfall-style grille, horizontally-ribbed taillamps, and (non-functional) front fender vents.

[34] Based heavily on the Fairmont Futura coupe, the Durango was a two-door, two-seat car-based pickup truck that was intended as a possible replacement for the 1977–1979 Ford Ranchero as well as a competitor to the downsized Chevrolet El Camino/GMC Caballero.

The running gear was modified with stiffer springs, re-valved shocks, and a rear anti-roll bar.

[15]: 32 [35]: 33 In 1978 Ford also made available specially prepared Fairmonts suitable for use as police cars and taxicabs.

[36] Ford's product literature lists the following special features for both packages: In later years the naturally-aspirated 2.3 L inline four engine became available as well.

It used the four headlight grille from the Fairmont Futura along with the Mercury Zephyr's taillamps and rear quarter window louvers.

The Elite II used the entire front end and matching rear bumper from the 1982 North American Ford Granada.

[42] Contemporary reviews were generally favorable, with many commenting on the "European" feel of the car and comparing it to the Volvo 200 series.

[15]: 27 [35][43] The 1978 Fairmont has been called the "most efficient Ford family (sedan) ever built from a space-per-weight perspective.

The car won its debut race on 8 July 1978 at the Edgewater Winston Championship Series, where it also set a national record.