Troubled Ford ends sponsorship

Ford provided engines to Champ Car since 1992, then selling its Cosworth engine subsidiary to series co-owned Kevin Kalkhoven some two years ago. Since then, the Detroit-based car maker remained the title sponsor for the North American series.

But on Wednesday the company said it has terminated its sponsorship agreement, ending its last remaining affiliation with open wheel racing, having also withdrawn from Formula One two years ago.  Ford remains heavily involved in all three NASCAR series - Nextel Cup, Busch and Craftsman.

"We evaluate all of our racing programmes on an annual basis and have decided that this sponsorship does not align with our current business objectives," director of Ford Racing Technology Dan Davis said.

Champ Car president Steve Johnson thanked Ford for its involvement in the series and emphasized the announcement will not impact the series' future stability.

Johnson said: "We thank Ford for what it has done for the series, but we are continuing building a bright future for the series and are exploring a number of other options for a manufacturer partner."

Ford's announcement comes a day before the second largest US car maker is expected to report a record loss for 2006, estimated by analysts to be around $15 billion (USD) on a combined basis.

Ford was the hardest hit US car maker by rising interest rates, higher fuel prices and a shift away from high-margin trucks.

Ford lost $7 billion through the first nine months of 2006 and is expected to lose another $4.86 billion in the fourth quarter as it booked costs to close plants and cut jobs, according to estimates.

"The basic story of Ford's stunning collapse in its home-market profitability remains the same," David Healy, Burnham Securities analyst, said in a note.

"Ford's finances were wrecked by the collapse in volume and pricing of its most profitable truck models."

Ford cut North American production 22 percent in the fourth quarter and completed a buyout offer with unionised factory workers that cut 38,000 jobs, about half its US factory work force. Its US sales dropped 8 percent for the year.

Ford last month took the unprecedented step of mortgaging assets, including its US plants, to borrow over $23 billion to fund a cash burn it expects to tally $17 billion in the next three years.

Includes reporting by Poornima Gupta, Reuters