Originally released in 1983, the Fiesta Mk II, with its fresh wraparound headlights, was given an XR2 version in 1984. With five gears, rather than the four fitted to the Mk I XR2, it also had an improved 96 bhp version of the 1.6-litre Compound Valve Hemispherical (CVH) cam-in head engine. It provided better performance than the similarly sized overhead valve Kent engine fitted in its predecessor.

Rather than giving the engine fuel injection, like the 1981 Escort XR3i, the Fiesta XR2 retained a Weber twin-choke downdraught carburettor, possibly to ensure it would not beat the XR3i on performance. With its sporty additions, including a rear anti-roll bar, wheel arch extensions, extra driving lamps and an all-round rear windscreen “spoiler”, the car was also fitted with a special steering rack with lock limiters that prevented the low-profile tyres from rubbing on the wheel arches. Despite lacking the crisp styling of the Mk I, the Mk II Fiesta and its variants was a popular model, selling over 1.9 million units in its six-year production run.