Continent's car industry woe hits Ford and Citroën

Ford, the American car maker, warned it faces $1bn (£646m) in losses in its European division this year, as the Continent's car industry slipped deeper into crisis.

The company said it was already laying off temporary workers and slowing production lines to reflect falling demand for new vehicles, and there would likely be more cuts to come.

At the same time, Peugeot Citroën was dealing with a protest by thousands of workers threatened with job losses and plant closures, and French ministers raised the spectre of a trade war to protect the country's domestic car industry.Vehicle sales across Europe have fallen almost to a 20-year low.

As well as shortening work days and laying off temporary staff, Citroën has cut back on advertising and marketing, especially in countries where sales are falling fastest.

Where before the company had predicting $500m-$600m in losses across the Continent this year, yesterday it doubled that estimate to $1bn.

Ford lost $404m in Europe in the second quarter of 2012, according to its latest results, offsetting strength in North America. Overall, group profit was $1bn, down from $2.4bn in the same period last year.

Also yesterday, PSA Peugeot Citroen insisted it will press ahead with restructuring plans and 8,000 job cuts, as it reported a €662m (£518.3m) loss at its auto division for the first half of the year. Close to 2,000 workers marched to Peugeot's Paris headquarters in protest.

Arnaud Montebourg, France's recovery minister, outlined support measures for the industry and said that the government would formally ask Brussels to monitor South Korean car imports with a view to taking trade action.