Ford is battling a tough market in Europe, with car prices still falling and no sign of life in Germany's economy, but nearly all its brands are making money there, company executives said on Tuesday, according to a Reuters report.

"It is still a very difficult market environment. We still see no sign of life in the German economy," Ford of Europe Chief Executive Lewis Booth told reporters at the Frankfurt auto show.

He said Ford saw continued downwards pressure on prices in Europe, while steel prices were expected to increase, Reuters said.

Booth reiterated that the European arm of the US carmaker still expected to deliver 2005 pretax profit of between $100 million and $200 million.

The group expected continued difficult market conditions next year, he said, but the outlook hinged on what happened with oil and the outcome of the German election this weekend.

"Until we see a strong recovery in the Germany economy, I think Europe is going to be a challenging place to do business," Booth said.

In an interview on Tuesday, the head of Ford's Premier Automotive Group (PAG), Mark Fields, said the luxury brands division was set to just reach its 2005 profit target of $300-600 million before tax and excluding special items.

"We are still sticking to our objective of hitting the lower end of the milestone," Mark Fields, executive vice president for Ford of Europe and head of PAG, told Reuters.

Fields said four of the five brands he oversees in Europe -- Ford, Volvo, Land Rover and Aston Martin -- were operating profitably and said Jaguar was making progress.

Fields, who will take over next month as head of Ford's North American business, declined to discuss his plans for handling that region, Reuters added.

He said Ford's luxury brands were responding to high fuel prices by making new models more fuel efficient than their predecessors.

It was also considering launching hybrid versions of some models. "In the next few years you may see something (in the way of hybrids) come out in Volvo," he reportedly said.