Ford Europe plans to raise production in the fourth quarter by 40,000 vehicles due to anticipated stronger demand, the Wall Street Journal reported on Wednesday, according to Reuters.

The report said Ford's European arm, which posted a shock $US525 million pre-tax loss in the second quarter, has said it expects a stronger second half and is cutting costs to boost earnings later in the year.

A Ford Europe spokesman declined to comment to Reuters on the 40,000 unit output boost, as reported by the newspaper which cited people familiar with the matter.

"We do expect a better market in the second half - incoming orders are better and June and July were better than expected so we think there is a trend," the spokesman told the news agency.

"We are more optimistic than we were two months ago," he added, according to Reuters, noting that production plans are flexible and can be quickly changed to adapt to market conditions.

Reuters noted that Ford Europe, whose president and chief operating officer Martin Leach quit last week, is cutting third quarter production by about 22,000 vehicles, out of an annual production of 1.6 million units, amid weak conditions.

The news agency said most car makers in Europe are pinning their hopes on at least a modest recovery in demand in the second half after sales fell 2.6% in the first six months of the year.