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Codenamed "Erika", the third generation Escort was launched in September 1980. The code name alluded to the leader of the product planning team, Erick A. Reickert. The North American Escort introduced at this time was a derivative. The two vehicles were intended to share component designs, but separate engineering organizations and government regulations made this impractical.
The Escort Mark III was intended to be a hi-tech, high-efficiency design which would compete with the Volkswagen Golf, and indeed the car was launched with the advertising tagline "Simple is Efficient". The Mark III was a radical departure from the two previous models, the biggest changes being the adoption of front wheel drive, and the new hatchback body, which introduced trademark styling cues which would be later seen in the forthcoming Sierra and Scorpio, most notably the "Aeroback" rear end — the "sawn off" bootlid stump which was proved to reduce the car's drag coefficient. Also new were the overhead camshaft CVH engines in 1.3 L and 1.6 L formats, with the Valencia engine from the Fiesta powering the 1.1 L derivative. The suspension was fully independent all around, departing from the archaic leaf spring arrangement found on its predecessors. The Escort Mark III was voted European Car of the Year in 1981. From launch, the car was available in Base (Popular), L, GL, Ghia and XR3 trim.