'Cash for clunkers' boosts Ford

The 'cash for clunkers' scheme in the US has boosted Ford's profits

Car giant Ford has reported its first earnings growth in more than a year thanks to the US "cash for clunkers" scheme and cost-cutting efforts.

America's second largest carmaker posted underlying pre-tax operating profits of 1.1 billion US dollars (£672 million) for the three months to the end of September, 3.9 billion dollars (£2.4 billion) higher than a year earlier.

The group's key North American division also returned to the black for the first time since the first quarter of 2005.

And Ford said it now expects to be "solidly profitable" on an underlying basis in 2011, having previously guided to deliver a break-even or better result. The firm - which employs around 35,000 people in the UK across its operations and dealerships - is benefiting from the US government's scrappage scheme to encourage sales of new cars. But Ford also said better results were being driven by increases in market share and cost savings.

It cut costs by 1 billion dollars (£611 million) during the quarter, having slashed jobs across the US and Europe, which offset an 800 million dollar (£489 million) drop in sales.

Alan Mulally, Ford president and chief executive, said: "Ford is making tremendous progress despite the prolonged slump in the global economy. Our solid product lineup is leading the way in all markets. While we still face a challenging road ahead, our One Ford transformation plan is working and our underlying business continues to grow stronger."

The group had been hit hard by plunging sales amid the recession, seeing full year losses widen to 14.6 billion dollars (£8.9 billion) after sales plunged by 36% in the final three months of the year. It launched a major restructuring to halt the decline, while the group has also driven out a line-up of new models.

Ford also confirmed that its Focus and Escape cars had been among the top new vehicles bought under the so-called cash for clunkers scheme. Across Europe, Ford reported a pre-tax operating profit of 193 million dollars (£118 million), up 180% on a year earlier despite sales falling by 22%.

Ford has four manufacturing bases in the UK at Dagenham in Essex, Bridgend, Southampton and Halewood. It also has around 550 dealerships across the country.