Ford said it would slash $5 billion in costs and one-third of its work force as it warned its auto business would not make a profit in North America for another three years. It also suspended its dividend and pledged to revamp a vehicle line-up seen as weak by analysts.
However, the No 2 US automaker ruled out an immediate sale of its Jaguar brand, disappointing investors who wanted Ford to press ahead with asset sales to raise cash, sending shares to their biggest single-day percentage decline in almost four years.
Ford named Alan Mulally, a former Boeing executive, as chief executive, ending the troubled five-year stint of Bill Ford Jr as the companyâ€™s operational head.
GM is in the midst of its own restructuring as it tries to recover from a $10.6 billion loss in 2005.
Turnaround efforts at the worldâ€™s largest automaker have gained traction this year as 34,400 workers about a third of its work force have accepted early retirement and buyout offers. GM is also closing 12 plants.
Senior executives at General Motors and Ford Motors have discussed a merger or alliance, and these are at the planning stage to take con competition from Toyota and Honda of Japan.
The two companies are both struggling with shrinking market shares while restructuring operation, are not holding talks, and one source said there is a slim chance that anything will come of the situation. GM and Ford declined to confirm any talks.
GM spokesman said GM officials routinely discuss issues of mutual interest with other automakers. We do not confirm or comment publicly on those private discussions as a policy, which in many cases never lead anywhere. Ford spokesman said the automaker does not comment on speculation.
Still, CEO Rick Wagoner is under pressure to show further improvement as GM studies a possible tie-up with Nissan Motor and Renault SA in which Nissan and Renault could buy up to a 20% stake in GM.
That deal, urged by GMâ€™s largest individual shareholder, billionaire investor Kirk Kerkorian, has been widely viewed as a means of prodding Wagoner to speed up to the companyâ€™s turnaround efforts.
Last year, GM and Ford agreed to jointly develop a new 6-speed transmission, which is in production in plants at both companies.