Ford Motor, the second largest car maker in the US, has warned that it no longer expects to return to profitability in North America next year as the rising cost of raw materials and a jump in the price of petrol take their toll.

The group announced plans to cut an unspecified number of jobs at its Volvo Cars unit and to eliminate the night shift at its plant in Gothenburg, Sweden, in a bid to cut costs and post a profit.

Furthermore, Ford conceded today that it would manufacture 20,000 less vehicles this quarter in North America than the 690,000 the company had originally targetted. This is 15 per cent lower than the same period for last year. Third quarter production is expected to be as much as a fifth below 2007 levels, while the fourth quarter decline will be smaller, at between 2 and 8 per cent, the company said.

Ford’s struggling North American unit made a $3.5 billion loss last year and a $45 million loss in the first quarter of 2008.

Alan Mulally, Ford’s chief executive, said: "Unless there is a fairly rapid turnaround in US business conditions, which we are not anticipating, it now looks like it will take longer than expected to achieve our North American profitability goal."

"Rapidly rising commodity prices – particularly steel prices – and higher gasoline prices that are accelerating consumers’ shift away from large trucks and SUVs together are having a tremendous impact on our sales, our manufacturing operations and our profitability as we look to 2009," he added.

Ford also said that the group as a whole only expected to "about break even" next year.

The group’s shares fell by $0.47, or 5.91 per cent, to $7.34 in mid-morning New York trading.

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