Significant losses at Jaguar, Ford's luxury vehicle company, are dragging back efforts to restore the world's second-largest carmaker to profitability.
Ford yesterday reported a third-quarter net loss of $326m (£210m), substantially lower than the $692m of a year earlier, after taking a hit of $525m on the loss-making sale of its British repair arm Kwik-Fit and other non-core units.
Jaguar and Volvo, the Swedish car company, helped produce sharply increased losses at Ford's European operations which went $121m into the red, compared with a loss of $24m a year earlier.
Ford executives refused to quantify the deficit at Jaguar but said the increased overall losses in Europe were due to higher marketing costs at Jaguar and Volvo, and higher product costs at the former.
The problems at Jaguar, where 400 jobs are being cut and a four-day week imposed at its Halewood plant near Liverpool, have arisen despite sales being up more than 50% so far this year.
Nick Scheele, Ford president and former Jaguar chairman, said Jaguar stocks had been too high at the start of the year and there had been a substantial number of model launches at it and other companies within Ford's premier automotive group. This includes Land Rover and Aston Martin.
Ford has also been forced to delay the launch of its Jaguar XJ saloon which has an all-aluminium body and was due to go on sale this summer. "Instead of shipping 8,000-10,000 units a quarter we are not shipping any," Mr Scheele said, pointing to a January launch.
Both Mr Scheele and Allan Gilmour, chief financial officer, insisted that Jaguar's problems were temporary but admitted that Ford was being forced to scale back the rapid growth of its premium brands.
Ford, which lost $5.45bn last year, is in the throes of a "revitalisation" plan inaugurated by chairman and chief executive Bill Ford in January. This involves 35,000 job losses, mainly in North America, and plant closures.
Mr Ford told analysts that the plan was working. "We are gaining momentum and will meet or exceed all the targets we have set ourselves ... We are now going to increase our sense of urgency and accelerate our cost-cutting efforts."
Ford failed to convince investors, despite reporting a higher than expected operating profit of $220m and promising a "slight" profit for the full year.
Investors and credit rating agencies remain worried about the pace of the restructuring, a 15% decline in returns on its US pension fund assets which doubled the fund's shortfall to $6.5bn in a single quarter and aggressive price-cutting in the US and Europe.
· Union leaders yesterday voiced concerns about jobs at a Vauxhall engine plant after failing to win assurances about its long-term future.
Work on the V6 engine at Ellesmere Port in Cheshire will run out at the end of 2004 and there are no guarantees about the future, according to union officials, who met company managers yesterday.
Roger Lyons, joint general secretary of Amicus, said: "The Vauxhall workers at Ellesmere Port deserve to know their future." A Vauxhall spokesman said production at the plant would remain unchanged for the "foreseeable future".
