The Detroit carmaker reported a loss of $2.7bn (£1.3bn) – down from $12.6bn 12 months previously.

The sharp drop in deficit prompted Ford to claim its turnaround plan was on track.

Its global revenue increased $14bn year-on-year to almost $174bn. Ford continued its cost cutting measures last year – particularly in its domestic market of North America where it is set to close 10 plants and cut 40,000 jobs.

Ford posted a pre-tax loss of $1.1bn from its automotive operations for the full-year, down from $5.1bn in 2006.

Chief executive Alan Mulally said the result showed the company was heading in the right direction and “validates our strategy and plan”.

However, having moved into the black in the third quarter Ford slipped back into the red in the last three months off the year as trading conditions remained tough.