RPO83

Grosskarlbach, Germany Oct. 31 (Bloomberg) -- Ford Motor Co.'s German unit may not reach its goal of breaking even this year as the carmaker offers incentives to boost demand, said Ford-Werke AG Chief Executive Bernhard Mattes.

``Due to the weak environment I don't want to give a prognosis,'' said Mattes in an interview. ``We want to wait until the end of the year to see whether we achieve our goal or not.''

Ford-Werke had predicted it would at least break even if not post a small profit this year after a loss of 80 million euros ($78 million) in 2001. The carmaker this year has won market share in Western Europe from General Motors Corp. and Volkswagen AG.

``Price incentives certainly play a role in eroding profit,'' said Juergen Pieper, an analyst at Bankhaus Metzler. ``The market is very competitive.''

Ford has offered loans of 0.75 percent to win customers. The world's No. 2 carmaker posted a 5.8 percent drop in sales in September in Western Europe to 165,254 vehicles as sales of Ford- brand cars slumped 11 percent.

In the first nine months of the year, sales in Western Europe for the Ford brand fell 3.8 percent.

The company is broadening its product range to attract new customers. It premiered a convertible version of its Ka model, called Street Ka at last month's Paris car show. Earlier this year, it brought out a hatchback version of the Fusion model.

Dearborn, Michigan-based Ford narrowed its loss in the third quarter to $326 million as the No. 2 carmaker cut costs. It plans to slash 35,000 jobs and shut five factories by 2005.

The company's marketing costs in the U.S., which include no- interest loans, accounted for 15.9 percent of revenue in the third- quarter, little changed from 16 percent a year earlier. European losses widened to $121 million from $24 million a year ago, mainly because of costs at the Jaguar and Volvo units.

Ford shares rose 6 cents, or 0.7 percent, to $8.48 at 11:49 a.m. in New York.

__________________
*Retired.