Ford posts $8.7 billion second-quarter loss on truck slump

By David Bailey and Kevin Krolicki

DETROIT (Reuters) - Ford Motor Co (F.N: Quote, Profile, Research) posted a record $8.7 billion quarterly loss on Thursday as it wrote down the value of slumping truck and SUV operations and revamped plans in a bid to break its reliance on the gas-guzzlers that have been its franchise vehicles for a decade.

The second-quarter loss was deeper than analysts had forecast and Ford shares fell by 15 percent. Its bonds also traded lower.

Ford cautioned that it did not expect a U.S. economic turnaround until 2010 with oil prices remaining "high and volatile" and no relief for the high prices for steel and other commodities that have hit automakers hard.

In response to the sudden premium on fuel efficiency, the No. 2 U.S. automaker said it would retool truck plants in Michigan and Kentucky to make small cars in addition to an already announced conversion for a Mexican truck plant.

In addition, Ford will bring four previously unannounced small cars to North America, including a Mercury-branded derivative of its popular Focus. It also said it would double its hybrid output in 2009 and double its capacity to make fuel-saving four-cylinder engines by 2011.

Analysts have increasingly focused on whether Ford and rival General Motors Corp (GM.N: Quote, Profile, Research) have the cash needed to ride out the economic downturn in a market moving away from the light truck segment the U.S. automakers have dominated.

Ford ended the second quarter with a cash position of $26.6 billion down $2.1 billion from the first quarter.

"We're confident that we have enough liquidity to get through," Chief Financial Don Leclair told reporters.