Ford Motor Company ran up a loss of $123m in the second quarter of this year but promised yesterday to step up a turnaround plan aimed at cutting costs and boosting market share.
Yesterday's results saw cost cutting beginning to take effect in the US but the company has been hit by rising fuel prices which have led to customers switching from gas-guzzling trucks and sport utility vehicles to saloon cars.
In the second quarter of 2005 Ford made a $946m (£511m) profit, and Wall Street analysts had been expecting the company to be in the black in the same period this year.
Ford has already said it plans to close 14 plants and cut 30,000 jobs in the US. Yesterday its chairman and chief executive officer, Bill Ford, suggested more to come. "We've seen an improvement in North America results in the second quarter, but the external factors we face aren't going to get any easier. Within the next 60 days we'll be in a position to discuss the additional action we will be taking."
Ford saw its US losses fall to $797m, from $907m in the same quarter last year, but noted that cost savings across most areas of the business had been partially offset by the switch from trucks to cars.
Overall, Ford said its automotive business lost $808m compared with a loss of $245m in the second quarter of 2005. Profits from the group's financial services business totalled $646m, half the total earned in the same period last year.
In Europe, pre-tax profits at Ford Europe climbed from $66m to $105m as cost reductions outweighed higher material costs, an unfavourable mix of vehicle sales, and lower prices.
Premier Automotive Group, which includes the Jaguar, Land Rover, Aston Martin and Volvo brands, reported a loss of $162m compared with its $17m profit.
Ford attributed the decline to a series of factors, including a fall in market share at Volvo. It said the unfavourable factors had been partly offset by "favourable product and market mix, driven largely by the success of new products at Land Rover, Jaguar and Aston Martin". Ford pointed to the launch of two Jaguar models, and strong global sales of Land Rover and Aston Martin.
This week the company announced a £1bn investment in Britain aimed at developing "greener" models across both its Ford of Europe and PAG range. These will be lighter cars that use more efficient engines using a range of fuels.
Goldman Sachs analyst Robert Barry said of Ford's position that the US remained "the primary culprit contributing to the weakness". He added: "Pressures from volume, pricing and [product] mix remain severe and we do not see much improvement any time soon."
