Ford Motor Co. soon may be faced with the biggest auto recall in U.S. history to correct a possible transmission defect in 16 million cars, Business Week reported yesterday.

The magazine said the National Highway Traffic Safety Administration still is trying to negotiate a settlement with Ford in the transmission case but said NHTSA Administrator Joan Claybrook is doubtful that an agreement can be reached.

The magazine said that the federal agency is trying to negotiate a settlement similar to the one on the Ford Pinto gas tank case in which the company admitted no fault but agreed to correct the problem.

The possibility of a massive recall comes at a time when Ford has posted a record loss for the third quarter and has a bleak profits outlook for at least the remainder of the year.

NHTSA, acting on complaints from the Center for Auto Safety, claims that several types of automatic transmissions used in Ford products shift into reverse when the driver pushes the shift lever into park. The Center for Auto Safety claims at least 128 persons have been killed as a result of the faulty transmissions.

Former Transportation secretary William Coleman, who represents Ford in the negotiations with his former agency, has denied there is anything wrong with the transmission.

According to the magazine, Claybrook said she was willing to discuss any solution, including installation of a warning light and buzzer to alert drivers that the car is not firmly in the park position.