* Vehicle prices up $800 mln worldwide in 3rd qtr
* North American earnings offset European weakness
* Projects loss of at least $1.5 bln in Europe this year
* Asia seen 'flirting with profitability' next year -CFO
DETROIT, Oct 30 (Reuters) - Ford Motor Co posted a third-quarter profit that trounced Wall Street forecasts on Tuesday, driven by higher vehicle prices and record profit margins of 12 percent in North America.
Worldwide, Ford earned $800 million more through price increases than it did last year. Half of that jump came from North America, where Ford has earned more than $2 billion and posted margins over 10 percent for three quarters in a row.
The No. 2 U.S. automaker's strength in North America offset the effects of the sharp industry downturn in Europe, where Ford expects to lose at least $3 billion over the next two years, and helped make up for its lagging position in China and other growth markets.
In the third quarter, Ford posted an overall pretax operating profit of $2.2 billion, or 40 cents per share, beating analysts' average estimate of 30 cents per share, according to Thomson Reuters I/B/E/S.
In North America, Ford earned $2.3 billion with a 12 percent operating margin. ``Twelve percent segment margins is just insane,'' said Jefferies analyst Peter Nesvold, who has a ``buy'' rating on Ford.
But operating margins in North America are unlikely to be as high in the fourth quarter because of higher spending in areas like engineering and advertising, Chief Financial Officer Bob Shanks warned during a call with analysts and reporters.
Higher pension costs and fewer cost deductions will pressure North American results next year, he added. Ford must also take steps to boost quality, especially after tumbling to the bottom of a key reliability survey this week.
Still, Ford expects North America will continue to ``carry the load'' as operations in Europe, Asia and South America find their footing and generate consistent profit, Shanks said.
In the third quarter, Ford lost $468 million in Europe. It earned $9 million in South America. It also earned $45 million in Asia Pacific and Africa, the first profit for those regions since the second quarter of 2011.
In an interview, Shanks said Ford would be ``flirting with profitability'' in Asia over the next five quarters, indicating results could be volatile as the company spends heavily to improve its competitiveness in the region.
Ford's strong showing in North America reflects the benefits of Chief Executive Alan Mulally's ``One Ford'' strategy to build more cars and trucks on five global platforms by the middle of the decade, down from the current nine platforms.
``We're at the relative start of that around the world, led by North America,'' Mulally said on a conference call.
EUROPE PLAN ECHOES U.S. TURNAROUND
Ford hired Mulally as CEO in 2006 to steer the automaker's turnaround in North America, which began in late 2005 with the ``Way Forward'' plan engineered by Mark Fields, who had led North and South American operations for seven years.
From 2006 to 2009, Ford cut capacity in North America by a little more than one-fifth, analyst Nesvold has estimated. Higher prices garnered an additional $10 billion in revenue from 2006 to 2010.
Its restructuring during the U.S. auto industry's peak helped Ford avoid the government financing needed by rivals General Motors Co and Chrysler Group LLC in 2009.
The North American turnaround plan will serve as a blueprint for Ford's restructuring of Europe, although there are limits on how much Ford can draw from its past experiences, Shanks said. Ford of Europe is ``much, much leaner'' than the U.S. operations were in 2006, he said.
``Europe isn't North America,'' Shanks said. ``It clearly has excess capacity - which we're addressing - but if you look in other areas, it's very lean. We actually want and need to invest in other areas in the business to grow the top line.''
Last week, Ford announced three plant closures in Europe to cut costs by as much as $500 million. Executives also left open the possibility of further actions if a recovery in Europe fails to materialize.
Ford is taking steps to keep its European inventory at around 40 days' supply, down from the typical 50 days, in line with tepid demand. Nevertheless, Ford is launching 15 new or refreshed models in Europe over the next five years.
In the first nine months of this year, Ford lost around $1 billion in Europe. It expects to lose at least $1.5 billion in the region this year, and another $1.5 billion in 2013.
FIXING 'MYFORD TOUCH'
In a U.S. reliability study released by Consumer Reports magazine this week, the Ford and Lincoln brands tumbled to near the bottom of 28 brands measured, in part because of complaints about its MyFord Touch navigation and entertainment system.
On Tuesday, Mulally said Ford is disappointed with the results of this week's study and plans take further steps to address problems in the system, which launched in 2010.
This year, Ford expects U.S. industry-wide auto sales to reach 14.7 million vehicles. It forecast European sales of about 14 million.
Ford's third-quarter revenue fell 3 percent to $32.1 billion, better than the $30.9 billion expected by analysts. Net income in the quarter was about $1.6 billion, or 41 cents a share, on par with results from last year.
Ford's margin on its global automotive business was 6.3 percent in the third quarter. It is aiming for overall margins of between 8 and 10 percent by the middle of the decade.
``We think Ford is entering a new phase where it can begin harvesting the heavy lifting of the One Ford plan,'' Morgan Stanley analyst Adam Jonas said in a research note.