Ford Motor Co., the world's third-biggest automaker, posted a record quarterly loss of $8.7 billion and accelerated a shift to fuel-efficient vehicles to wean itself from money-losing trucks.

    The second-quarter deficit of $3.88 share compared with a profit of $750 million, or 31 cents, a year earlier. The figure included $8 billion in pretax writedowns for plant closings and the declining value of truck leases at Ford Motor Credit Co. The shares fell as much as 8.6 percent.

    Ford said it will convert three North American truck factories to make small cars, sell more European autos in the U.S. and double production of hybrid vehicles. The revamping is a response to record gasoline prices that have ravaged sales of large pickups and sport-utility vehicles and derailed Chief Executive Officer Alan Mulally's turnaround plan.

    "They believe this is a permanent shift in buyer sentiment that they have to adjust to no matter how hard it will be," said Maryann Keller, an independent auto analyst and consultant based in Greenwich, Connecticut. `This is going to be expensive. The losses are going to be bigger during this transition."

    The loss marks the sixth in eight quarters under Mulally, 62, recruited from Boeing Co. to revive the Dearborn, Michigan- based automaker. Gasoline approaching $4 a gallon and plunging sales of F-Series pickups forced the CEO in May to abandon his target of returning to profit in 2009.

    Analysts' Estimates

    Excluding costs Ford considers one-time expenses, the loss was $1.38 billion, or 62 cents a share. On that basis, Ford was expected to report a deficit of 28 cents, the average estimate of 12 analysts surveyed by Bloomberg.

    Ford dropped 48 cents, or 8 percent, to $5.55 at 10:57 a.m. in New York Stock Exchange composite trading after falling to $5.51 earlier. Ford's 7.45 percent bond due July 31 rose 0.75 cent to 57.75 cents on the dollar. The yield fell to 13.4 percent.

    Ford said it had $26.6 billion in automotive cash at the end of the quarter, down $10.8 billion from a year earlier. The company is "confident" it has enough liquidity, Chief Financial Officer Don LeClair told reporters.

    Ford hasn't set a new goal for returning to profit, spokesman Mark Truby said. The company also hasn't made an estimate for how much cash it will burn as it restructures. Ford borrowed $23.4 billion in late 2006 to revamp operations.

    Writedowns

    Ford had pretax writedowns of $5.3 billion for its North American auto operations and $2.1 billion for vehicle leases at Ford Credit. The writedowns stemmed primarily from falling demand for large pickups and sport-utility vehicles, and LeClair said 85 percent of the Ford Credit writedown was tied to falling values for pickup trucks and SUVs.

    Ford Credit had a loss of $1.4 billion, compared with a year-earlier profit of $62 million.

    "Every number was close, but every number was on the wrong side, on the negative side," said Dan Poole, vice president of equity research at Cleveland-based National City Corp. "The $8 billion charge was quite a bit of a surprise."

    In January 2007, a Ford spokeswoman said the automaker's biggest loss was the $6.7 billion deficit in the first quarter of 1992.

    Product, Plant Changes

    Ford said its plant in Cuautitlan, Mexico, in 2010 will produce the new Fiesta small car to be sold worldwide. Ford disclosed that plan in May.

    SUV factories in Wayne, Michigan, and Louisville, Kentucky, will be converted to small cars. The Michigan plant will make the switch in 2010 and Louisville in 2011.

    Production of Expedition and Navigator large SUVs, now made at Wayne, will be shifted to another Louisville plant that now makes only Super Duty F-Series pickups.

    Also, a St. Paul, Minnesota, plant that builds the Ranger small pickup was given a two-year reprieve to 2011 to meet renewed consumer demand for the vehicle.

    The automaker said it would build a car-based Explorer to replace the current truck-based SUV in 2010 and a new seven- passenger Lincoln "crossover" vehicle in mid-2009. Ford showed prototypes of those models in January at the Detroit auto show.

    North American production capacity for 4-cylinder engines will double to more than 1 million units by 2011. A redesigned Mustang sports car and Taurus sedan will arrive in 2009.

    Output of gasoline-electric vehicles will double next year, including the introduction of hybrid versions of the Ford Fusion and Mercury Milan sedans.

    Pickup Slide

    The F-150 slide has contributed to a 24 percent industrywide decline in full-sized pickup sales this year. U.S. auto sales have dropped eight straight months and are down 10 percent through June. J.D. Power and Associates, citing a deteriorating U.S. economy, yesterday reduced its forecast for the year to 14.2 million sales, the lowest in 15 years.

    Ford is scaling back in 2008 after paring 46,300 jobs in North America the past two years. The automaker began dismissing salaried employees in June as part of a plan to trim those labor costs by 15 percent. About 4,200 U.S. factory workers accepted buyouts in the first quarter, and Ford is planning to make offers at most of its U.S. plants.

    Gasoline averaged $3.76 a gallon during the quarter, a 25 percent increase from the same period a year earlier, according to motorist group AAA. Consumers responded by abandoning trucks and shifting to cars and smaller SUVs.

    Trucks Down, Cars Up

    Sales of the F-Series fell 31 percent in the quarter to 126,575, overwhelming sales gains for models such as the Focus and Fusion sedans. The F-Series accounts for about a quarter of Ford's U.S. vehicle sales.

    The automaker lost $15.3 billion in the past two years, mostly because of deficits in North America. It hasn't boosted its U.S. market share since 1995.

    Ford shares slid to a 23-year low of $4.36 on July 2, after reaching a high for 2008 of $8.48 on May 1. The shares had risen on a $100 million first-quarter profit that surprised analysts and disclosures by billionaire Kirk Kerkorian that he had acquired Ford shares. He holds a 6.5 percent stake.

    So far, Mulally has the support of Kerkorian, whom he met with last month. Jerome York, an adviser to Kerkorian, said in an April 28 interview the automaker has "really started moving the needle" under its CEO.

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    To contact the reporter on this story: Bill Koenig in Dearborn, Michigan, at wkoenig@bloomberg.net