Rising N American losses force Ford to review strategy

MICHIGAN: Ford Motor, buffeted by declining sales, shrinking margins on its most profitable vehicles and a dire need to conserve cash, may lose $3bn in North America this year, people familiar with the company's internal projections said.

The pretax loss would be almost twice the $1.6bn Ford lost in its North American auto business last year and higher than analysts' projections of a deficit as big as $2.5bn. Moody's Investors Service on Friday lowered its Ford debt rating further into junk status, citing “considerable additional stress” on the automaker in the region.

The unexpectedly poor performance threatens chief executive officer William Clay Ford Junior's corporate turnaround plan announced six months ago, which banks on the North American auto operations being in the black by ’08, largely through job cuts and new, better-quality vehicles.

A wider loss in North America would make it “imperative that Ford accelerate its cost-cutting activity and product launches,” said Pete Hastings, a fixed-income analyst at Morgan Keegan in Memphis, Tennessee.

Ford spokesman Tom Hoyt declined to comment. The companystopped providing earnings guidance to analysts in January. Analysts still expect Ford to post an overall profit for the year excluding one-time costs, as it did last year, thanks to its Ford Motor Credit unit, which earns more by lending money to buy cars and trucks than Ford does making them. Bill Ford, the great-grandson of the company's founder, in January pledged to restore profit in North America by cutting 30,000 jobs by ’12 and closing 14 manufacturing facilities.
.