The Capri Mk III was referred to internally as "Project Carla", and although little more than an update of the Capri II, it was often referred to as the Mk III. The first cars were available in March 1978, and sold very well initially. The concept of a heavily facelifted Capri II was shown at the 1976 Geneva show: a Capri II with a front very similar to the Escort RS2000 (with four headlamps and black slatted grille), and with a rear spoiler, essentially previewed the model some time before launch. The new styling cues, most notably the black "Aeroflow" grille (first used on the Mk I Fiesta) and the "sawtooth" rear lamp lenses echoed the new design language being introduced at that time by Ford of Europe's chief stylist Uwe Bahnsen across the entire range. Similar styling elements were subsequently introduced in the 1979 Cortina 80, 1980 Escort Mk III and the 1981 Granada Mk IIb. In addition, the Mk III featured improved aerodynamics, leading to improved performance and economy over the Mk II, and the trademark quad headlamps were introduced. The bonnet's leading edge was pulled down over the top of the headlamps, making the appearance more aggressive.
At launch the existing engine and transmission combinations of the Capri II were carried over, with the 3.0 S model regarded as the most desirable model although the softer, more luxurious Ghia derivative with automatic, rather than manual transmission, was the bigger seller of the two V6-engined models.
Ford began to focus their attention on the UK Capri market as sales declined, realising the car had something of a cult following there. Unlike sales of the contemporary four-door Cortina, Capri sales in Britain were mostly to private buyers who would demand less discounts than fleet buyers, allowing for higher margins on the coupé. Ford tried to maintain interest in 1977 with Ford Rallye Sport, Series X, "X Pack" options from the performance oriented RS parts range. Although expensive and slow selling these proved that the press would enthusiastically cover more developed Capris with higher performance.
However, the rise in popularity of "hot hatchbacks" and sports saloons during the early 1980s saw demand for affordable sports car fall throughout Europe. Between 1980 and 1983, Ford launched the Fiesta XR2, Escort XR3/XR3i and Sierra XR4i, all of which sold well but their introduction onto the market saw a decline in Capri sales even in the UK. Several of its competitors had already been discontinued without a direct replacement, most notably British Leyland's MG B which was not directly replaced when the Abingdon factory which produced it was closed in 1980. Vauxhall had launched coupe versions of its MK1 Cavalier in the late 1970s but when the MK2 Cavalier was launched in 1981 there were no coupe versions. Renault did not replace its Fuego coupe which was discontinued in the mid 1980s.
Despite being the most popular sporting model in Britain for most of its production life, the third generation Capri was also one of the most stolen cars in Britain during the 1980s and early 1990s, being classified as "high risk" of theft in a Home Office report.
The 3.0 S was used extensively in the TV series The Professionals in the early 1980s, with characters Bodie driving a silver 3.0 S and Doyle a gold 3.0 S, which was credited with maintaining interest in the car in the UK.
On 30 November 1984 production of Capris for the European market ceased, from then on it would only be produced in right-hand drive form for the British market. Ford had decided not to launch a direct successor to the Capri, as it did not feel that demand for affordable coupes in Europe was sufficient enough for a new Capri to be developed. Ford was, however, enjoying success with high performance versions of the Fiesta, Escort and Sierra, which appealed mostly to buyers who might have been expected to buy a Capri before 1980.
Ford made a return to the coupe market in Europe when the American built Probe was made available to European buyers from 1994. This car was less successful, and was withdrawn after just three years. Its successor, the Cougar, was also built in the States but was only imported to Europe for two years after its 1998 launch. The smaller Puma, produced from 1997 to 2002, was more successful, but Ford did not replace it directly, instead launching faster versions of the Fiesta and Focus hatchbacks soon after the Puma's demise. The Puma was the last coupe that Ford has produced for the European market until the American built Mustang was introduced in both right and left hand drive and sold in both Europe and the UK.