Ford is undergoing a major restructuring drive
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Ford has reported a loss of $12.7bn (£6.5bn) for 2006 - the biggest annual loss in the embattled US carmaker's 103-year history.
A slump in sales, combined with major restructuring costs, saw the firm lose $5.8bn in the final three months of the year alone.
The iconic US carmaker has been struggling in the face of competition from Japanese rivals such as Toyota.
Ford has plans to close 16 factories in North America and cut 45,000 jobs.
The company, which is currently the second-biggest carmaker in the US, may be overtaken by Toyota in its domestic market later this year, reports have suggested.
'Aggressive actions'
Ford's full-year loss surpassed the company's previous record annual net loss of $7.39bn in 1992.
However, the company said it remained confident that it would return to profit by 2009.
"We fully recognize our business reality and are dealing with it," said Ford chief executive Alan Mulally.
"We have a plan and are on track to deliver. We began aggressive actions in 2006 to restructure our automotive business."
Ford had previously put much weight on sales of pick-up trucks and SUVs, or sport utility vehicles, to generate profits.
But a peak in the price of oil last year, which pushed US petrol prices up to $3 a gallon, saw customers abandon gas-guzzling vehicles in favour of smaller, more fuel-efficient cars.
Mr Mulally said Ford planned to "operate profitably at lower volumes and with a product mix that better reflects consumer demand for smaller, more fuel efficient vehicles".
Ford, the world's third-biggest motor company, made a net profit of $1.44bn in 2005.
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We fully recognize our business reality and are dealing with it - we have a plan and are on track to deliver.
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