Ford is scaling back European operations

Ford, the world's second largest car maker, has announced a $1bn expansion into China the day after reporting narrower losses over the past three months.

"Every automobile company in the world realises the potential for Asian growth, and we know that China will lead that growth," the company said.

Ford began its car production in China in 1997 and has since been trying to catch up with its key rivals General Motors and Volkswagen.

The investment will boost Ford's production from China to 150,000 vehicles a year from 20,000 at present.

The news comes as Ford provided more evidence of a turnaround by reporting a sharply narrower loss.

New products

Ford said it made a third-quarter net loss of $25m (�14.9m) compared with a loss of $326m (�194m) in the same quarter a year ago.

The automotive future of China is very bright and we are participating fully in its growth Bill Ford Ford chairman

The blow was cushioned by a strong performance from its finance arm, Ford Credit.

Ford's automotive unit lost $609m (�363m) before taxes, a slight improvement on a year ago. Both its North American and European operations were in the red.

Bill Ford, chairman and chief executive, said: "We continue to make significant progress on cutting costs, building relationships and launching great products.

"During the next year alone, we will launch 40 new products across all of our vehicle brands to consumers worldwide."

"It's going to be a product led recovery," Ford's chief financial officer Don Leclair told BBC World Business Report.

Job losses

Ford is in the middle of a programme of cost cutting and product improvement.

The European shake-up will result in 6,700 job cuts, many of which were announced in early October.

The company warned it would cost up to $600m (�357m) to make further restructuring changes in its European business.

Production in China will take-off as Ford scales down or closes some of its European factories.