Ford shares plunge on Investor Day bad news

Ford shares plummeted on Monday after executives warned that losses in Russia will delay a return to profitability in Europe and that this year's big losses in South America will continue.

In addition, management told analysts and reporters on Tuesday that last Friday's recall of 850,000 vehicles for a short-circuiting problem with an air bag control module will cost about $500 million to fix.

On the New York Stock Exchange, Ford shares closed at $15.11, down 7.47% after trading as low as $14.83. Volume was 80.1 million shares, more than triple the daily average.

The problem in Russia is that economic sanctions in response to that country's invasion of Ukraine are having a major impact. Stephen Odell, Ford Europe president, said sanctions reduced Russia's economic growth to 0.3% so far this year and it will likely fall to zero for this year. Car sales there are down 15% and will come in at about 2.3 million for the year, or about 1 million lower than forecast, Odell said.

The automaker said it expects to report a pre-tax loss of about $1 billion in South America this year and a smaller but still substantial loss next year.

Back in North America the outlook is brighter, but even there profit margins margins in 2014 will be at the low end of its previous guidance of between 8% to 9%. Beyond this year, it said prospects should improve. Ford expects to sell 3.5 million vehicles in North American by 2020, up from 2.9 million in 2013,

In product news from the day of presentations:

• Raj Nair, Ford's head of global product development, said its next-generation of heavy-duty F-series pickups will feature extensive use of lighter aluminum like its standard-duty sibling.

"Lightweighting offers a once-in-a-lifetime chance to conquest" new buyers who might own rival trucks, said Jim Farley, head of global sales and marketing.

General Motors has said it will make its next-generation light-duty pickups of aluminum.

• Lincoln will add two new vehicles, Kumar Galhotra, head of Lincoln, said.

Galhotra did not say what they will be called, but they will not be new versions of existing vehicles. He also said the next-generation of the MKX mid-size crossover will launch next year.