Men examines Lexus cars in a new dealership in Jakarta, Indonesia, on November 7. Japan's Lexus open its world's first 'Lexus Gallery' in the country with Southeast Asia's largest economy, where it expects to sell as many as 200 cars next year, up from around 50 this year.- Reuters

DETROIT (Reuters):

Ford Motor Co. posted a narrower-than-expected quarterly loss last Thursday and said it was nearing a deal to sell its British luxury brands, Jaguar and Land Rover.

Ford, which has struggled with declining sales and falling U.S. market share, also said it was moving ahead of its own targets for its turnaround.

The number-two U.S. auto-maker said it was on track to reduce its expected cash burn by $5 billion and to post a narrower loss in the current quarter as it targets a return to profitability by 2009.

Ford also said it was taking Volvo off the auction block and would integrate the Swedish luxury brand more closely into purchasing and development efforts executives stopped short of ruling out an eventual sale.

"Our plan now is to not sell it and to focus on improving especially the cost structure and the position of the brand," Chief Executive Alan Mulally said. "It's what we've decided for now is our focus."

selling jaguar, land rover

By contrast, Ford said it expected to wrap up a deal to sell Jaguar and Land Rover by early next year, disbanding its stable of European premium brands that have been inconsistent performers for the automaker.

Ford posted a third-quarter net loss of $380 million, or 19 cents per share, compared with a loss of $5.2 billion, or $2.79 a share a year earlier, when it took large restructuring charges.

Ford's loss from continuing operations, excluding one-time items, was one cent per share. That was sharply narrower than the average Wall Street forecast for a loss of 48 cents per share.

The narrower-than-expected loss was in sharp contrast to third-quarter results at General Motors Corp., (GM) which shocked Wall Street on Wednesday by reporting a record loss of $39 billion.

Bear Stearns analyst Peter Nesvold said the numbers showed Ford had more momentum behind its turnaround effort heading into 2008 than GM.

"Ford's losses are at the bottom of its product cycle, which starts to improve by year-end 2008," Nesvold said in a note for clients.

GM's former finance subsidiary, GMAC, in which GM retains a 49 per cent stake, was hurt by its exposure to the slumping market for housing finance. Ford's finance arm, Ford Motor Credit, has no exposure to that market. The Ford finance unit contributed $556 million in pre-tax third-quarter earnings.

Ford said it expected a cash outflow of $12 billion to $14 billion between this year and 2009, down from an earlier forecast for a $17 billion cash burn during that period as it closes plants and cuts workers.

Ford shares were up three cents to $8.27 in mid-day trade on the New York Stock Exchange.

The improved Ford results come as its 58,000 factory workers represented by the United Auto Workers union begin a ratification vote on a proposed four-year contract.

slashing labour cost

Analysts have hailed the deal for its potential to slash Ford's labour costs by allowing the automaker to hire up to a fifth of its workers at half the wage rate of current employees and shift retiree health-care obligations to a new trust fund.

Ford said it had cut 6,500 factory jobs in North America during the third quarter, taking its total work force reduction to about 33,600 since late 2005.

In the crucial North American market, Ford posted a narrower loss of $1 billion in the third quarter before taxes and excluding special items, compared with a loss of $2.1 billion a year earlier.

That improvement reflected higher pricing as the automaker pulled away from cut-rate sales to car rental companies and held back from offering consumer incentives such as zero-per-cent financing.

Ford Chief Financial Officer Don Leclair said the decision to throttle back on sales incentives on the showroom floor had saved $500 million during the quarter.

A Ford ornament shines off the grille of an unsold 2008 Escape with a 2008 Focus sedan in the background at a Ford dealership in the southeast Denver suburb of Centennial, Colorado, November 4. Ford Motor Company posted a third-quarter loss of US$380 million on Thursday, a vast improvement over its US$5.2 billion loss a year earlier. - AP