Vehicle manufacturer Ford has been forced to set aside $500m (£350m) against bad debts and warned yesterday that year-end losses would be much worse than expected.

The news compounded the sense of crisis at the world's second largest carmaker, where chief executive Jacques Nasser was ousted in October and replaced by chairman and founding family member Bill Ford.

Mr Ford had warned of the need to cut jobs and restructure the business, details of which are expected in January when Ford may shed 30,000 jobs and close six north American plants.

The company admitted that in trying to compete with rivals such as General Motors and DaimlerChrysler it has been extending credit to doubtful customers.

Yesterday's statement is effectively the fourth profits warning from Ford since September 11.

Higher unemployment and a sharp rise in personal bankruptcies have forced the company to make immediate provisions and its fourth-quarter loss is now expected to exceed analysts' expectations four-fold. Year-end operating losses are now expected to top $800m.

"We have a very serious situation," chief financial officer Martin Inglis told analysts. "We are seeing an increase in repossessions."

He would only say that Ford had set aside "several hundred million", but industry followers promptly noted that the company would have to provide some $500m to bring it into line with other large American carmakers.

The company's marketing and consumer financing costs have rocketed since September, when Ford was forced to follow a move by GM in offering interest-free loans to customers.

Total sales jumped by a third during October, but yesterday Ford had to admit that the gain during November amounted to a mere 4.4% above the figure for a year earlier.

Mr Inglis said Ford would continue with its cheap financing deals. Dropping the incentives "would not be the right thing to do", he said. "We are in a business that is highly competitive."