The dire situation facing America’s car makers has been emphasized by the revelation that Ford could run out of cash next year if it doesn’t slash spending.
The company’s latest financial update revealed that it posted a loss of $129m (£81.8m) for the last quarter of 2008, with the worst performance coming from the north American part of the business. That’s less than the $380m (£241m) loss it posted for the same period last year, but the company’s running costs were $7.7bn (£4.9bn) during the last quarter.
That leaves Ford with cash reserves of just $18.9bn (£12.1bn) – enough to last for just seven months if it continues to spend money at the same rate. The plight of the 'big three' was further emphasised by GM's announcement it was suspending merger talks with Chrysler in the face of its own third-quarter losses.
Ford is responding to the crisis with plans to conserve cash reserves with massive cuts. These will include reducing spending by up to $5.5bn (£3.5bn), doing away with all bonuses and slashing both engineering and advertising costs. Ford has already pulled all of its UK advertising across all mediums until the end of the year.
Despite the gloomy news in America, Ford of Europe made a profit (albeit down by $224m), and it’s south American operations posted an increased profit, up from $94m (£59.7m)to $480m (£304.9m).