June 21 (Bloomberg) -- Ford Motor Co. may fail to meet its goal of returning to profit in North America by 2008 because of declining sales of sport-utility vehicles, according to officials at the world's third-largest automaker.

The officials, who declined to be identified because they aren't authorized to speak for Ford, said a jump in gasoline prices is hurting demand for SUVs. Competition from General Motors Corp. and Toyota Motor Corp. also may erode sales of Ford's pickup trucks, the officials said.

Executive Vice President Mark Fields, who heads Ford's Americas unit, told reporters today that ``our commitment for 2008 is very, very serious.'' He also said the company is slowing its rate of U.S. market-share decline.

William Clay Ford Jr., chief executive officer and great- grandson of the company's founder, pledged in January to revive earnings, partly by cutting 30,000 jobs over six years. Fields said then that improved car and truck designs would help halt a 10-year drop in U.S. market share.

Ford's U.S. sales tumbled 27 percent for the mid-size Explorer SUV and 30 percent for the larger Expedition in this year's first five months, as gasoline prices rose 34 percent. The Dearborn, Michigan-based automaker lost $1.19 billion in the first quarter, mainly because of North American automotive losses and costs to cut jobs in the region.

``A lot of that is in the stock at this point,'' said Dan Poole, who helps manage about $34 billion at Cleveland-based National City Corp. ``A bigger surprise would be if they achieve'' the profit goal. National City owns Ford shares, which fell yesterday to their lowest close since October 1992.

Shares, Bonds

Ford shares rose 3 cents to $6.43 at 4 p.m. in New York Stock Exchange composite trading. They are down 17 percent this year. Shares of GM, Ford's bigger U.S. rival, have gained 35 percent this year on optimism that GM can end its losses.

Ford's 7.45 percent bond maturing in 2031 fell 0.12 cent to 70.63 cents on the dollar as of 4 p.m. in New York, according to Trace, the price-reporting system of the NASD. The bond's yield rose to 10.89 percent from 10.87 percent.

Ford generated about $8,000 in pretax profit on each mid- size SUV and $11,000 on large models as recently as 2004, Burnham Securities analyst David Healy said. Ford has sold 136,545 of the SUVs this year, 11 percent of its total U.S. sales, as the average price of a gallon of gas rose to $2.87.

Healy, who is based in Sierra Vista, Arizona, said that because of discounts Ford is offering on the vehicles, the automaker may not be making money on them.

North America

North American auto operations had a pretax loss of $1.6 billion last year and have been unprofitable in six of the past seven quarters. Ford's total net income in 2005 was $2 billion because of earnings from car and truck loans.

``We don't see the news in these unattributed comments'' about the profit goal, Ford spokesman Oscar Suris said. ``Since the day we unveiled our Way Forward plan, we have talked about the challenges we face and the expectation that our progress toward our goals would not be smooth or linear.''

``Sometimes when your back is up against the wall, as it is for Ford right now, you do things which are not easy and which you might not otherwise do -- like breaking up the company or adopting more aggressive cost-cutting plans,'' said David Giroux, an analyst at Baltimore-based T. Rowe Price Group Inc., which owned 9.6 million Ford shares in March.

``To keep holding the stock, Ford investors have to conclude that that's what's going to happen,'' he said.

Debt Ratings

Standard & Poor's and Moody's Investors Service have said they may lower Ford's debt ratings further below investment grade, in part because of SUV sales. Ford brought out a redesigned Explorer last year and is introducing a revamped Expedition this year.

Industrywide sales of SUVs, pickups and minivan have fallen 2.9 percent this year through May, while car sales have risen 2.7 percent as consumers shift to more fuel-efficient vehicles.

The annual cost of insuring $10 million of Ford Motor Co. debt for five years using credit-default swaps rose 16 basis points, or about $16,000, to 909 basis points, according to data compiled by Bloomberg.

In a credit-default swap, the buyer pays a premium and gets paid the full amount insured if the borrower defaults. Swap prices typically decline when creditworthiness improves, and rise when it worsens.

GM's debt rating was cut one level yesterday to Caa1 by Moody's Investors Service and to B- by Standard & Poor's, ending up deeper in junk territory because the Detroit-based carmaker had put up collateral to extend a $5.6 billion credit line.

Pickup Competition

Ford also is concerned that increasing pickup-truck competition may hurt the company's earnings, the people said. Toyota and GM are bringing out redesigned large pickups in 2007 to compete with Ford's F-150, last revamped in 2003.

F-Series pickups are about a fourth of Ford's U.S. sales, with more than 900,000 sold in each of the past two years. The F-150 accounts for about 60 percent of F-Series sales.

In a 2002 restructuring plan, Ford set a target of $7 billion in pretax profit by this year. The company said in April 2005 that it wouldn't make that goal. Later in the year, Bill Ford reshuffled leadership in the North American unit.

Ford's U.S. car and light-truck sales dropped 3.5 percent this year through May, as the industry total fell 0.4 percent. Its market share slid to 18.5 percent from 19.1 percent a year earlier. Ford's annual share has been falling since 1995, when it held 25.7 percent, as Asian rivals such as Toyota and Honda Motor Co. gained sales.

``I'm happy with where we are right now,'' Fields said today about U.S. market share. Most of this year's drop is because of the consumer shift to cars, he told reporters at a presentation about Ford's 2007 models in Dearborn. In addition to the revamped Expedition SUV, those include the new Edge and MKX wagons and a GT 500 version of the Mustang sports car.

He said Ford plans ``more aggressive'' marketing.

The company is making faster-than-expected progress in cutting hourly worker costs and has finished a 10 percent reduction among salaried employees, Fields said last week.

To contact the reporter of this story: Bill Koenig in Southfield, Michigan, at wkoenig@bloomberg.net; John Lippert in Southfield, Michigan, at jlippert@bloomberg.net.

Last Updated: June 21, 2006 16:13 EDT