Greater competition from Asian firms has hit US carmakers

It blamed poor sales in North America - news likely to hit carmakers' share prices in Japan and Europe.

Ford's chief financial officer, Don Leclair, said challenges were "continuing to mount".

The firm said it was "evaluating options" for cuts to staff costs elsewhere in the world.

The world's second biggest carmaker cut its 2005 earnings forecast to between $1 to $1.25 per share, a reduction of 25 cents a share on its previous earnings range.

Before its 8 April profits warning, Ford shareholders were looking forward to reaping between $1.75 to $1.95 per share.

Ford has been battling against tough competition from foreign rivals.

Net profits at Ford fell almost 40% to $1.2bn in the first three months of 2005.

The slide in Ford's fortunes prompted US credit rating agency Standard and Poor's to downgrade Ford's bonds to junk earlier this year, a rating given to companies thought to be at risk of defaulting on their debt.