Ford is to cut its shareholder dividend in half, a further blow for investors who have watched the carmaker’s losses mount in recent months.It announced a 50% cut in its third quarter dividend to five cents just days before it is due to unveil its latest trading results.

Chairman Bill Ford said market conditions had become tougher.

Ford’s US sales have slumped, with high petrol prices sapping demand for once popular sports utility vehicles (SUVs).

‘Sacrifices required’

Critics say Ford has relied too heavily on sales of SUVs and trucks in recent years, limiting development of other models.

The firm’s market share has slipped amid fierce competition from more efficient Japanese producers such as Toyota and Nissan.

Ford made a worldwide loss of $1.9bn in the first quarter and is expected to make a significant loss over the past three months.

“The headwinds we faced at the beginning of 2006 have only become stronger, as consistently high gasoline prices in the US have caused consumer purchase preferences to shift away from SUVs and large trucks to smaller cars and crossover vehicles,” Mr Ford said.

“Our directors are well aware of the difficulties and sacrifices involved in turning around our company,” he added.

The dividend move - the first time Ford has reduced its payout to shareholders since 2002 - will save it about $92m per quarter.

Ford is embarking on a massive cost-cutting drive to make it more competitive, particularly in its home market.

It is looking to cut 30,000 jobs and close 14 plants by 2012.

Analysts said the move was sensible but highlighted the gravity of the financial problems facing the business.

“Given the family ownership, historically, the company has been very leery of cutting that dividend,” said Kevin Tynan, an analyst at automotive consultancy Argus Research.

“So this is a very serious thing.”

GM talks

Separately, the boss of GM - Ford’s main US rival - is set to hold talks with the head of Renault and Nissan about joining their existing alliance.

Rick Wagoner will hold a face-to-face meeting with Carlos Ghosn, the chief executive of both companies, at an undisclosed location.

Analysts have speculated that a tie-up between GM, Renault and Nissan could reshape the industry.

A decision on whether this would be in their mutual interests would likely be made before the end of the year, Mr Ghosn said.

“What is at stake is building an alliance with a third company and supporting this company in anything we can, in order first to be successful and, second, to develop synergies,” he said in an interview with the broadcaster CNBC.

Nissan could potentially utilise some of GM’s unwanted factories that are earmarked for closure, Mr Ghosn added.

GM had an “open mind” about the discussions, Mr Wagoner said, while stressing he was focused on its own plan to revitalise the business.

“We are very willing to sit down and talk about the full range of options with Mr Ghosn,” he commented.