Business World

Ford Motor Co said on Thursday it will increase production over the rest of the year after a surge in sales triggered by the U.S. government’s “Cash for Clunkers” sales incentive program.

Ford has emerged as one of the clear winners from the $3 billion sales program, which offers rebates of up to $4,500 for consumers who trade in older and less fuel-efficient vehicles.

But like other automakers, Ford was caught off guard by the incentive-fueled jump in sales that began in late July and raised the prospect that the battered industry had hit bottom.

In response, Ford said on Thursday it will build another 6,000 Focus sedans in the current quarter by adding overtime and a Saturday shift at an assembly plant in Wayne, Michigan.

And a second plant in Kansas City, Missouri, will drop plans to shut down for two days later this month and increase output of the Escape small SUV by another 3,500 vehicles.

The moves take Ford’s third-quarter output in North America to 495,000 vehicles, up 18 percent over a year earlier.

The No. 2 U.S. automaker also set a fourth-quarter production target of 570,000 vehicles. That would represent a 33 percent annual gain.

“I think we were surprised by the speed and the urgency with which consumers went to dealers,” said Ford sales analyst George Pipas quick cash.

The output gains will translate into higher revenue for Ford, the only U.S. automaker to have avoided bankruptcy. Shares were up 2.2 percent to $7.87 in afternoon trading.

Ford posted a sales increase for July, its first since late 2007, and the automaker has been gaining U.S. market share.

In a sign of its momentum, Ford has also taken 16 percent of the deals made under the Cash for Clunkers program, compared with a retail market share of 13 percent this year to date.

“Ford and some Asian brands have been the biggest beneficiaries of the vehicle trade-in program,” Standard & Poor’s equity analyst Efraim Levy said in a note for clients.

FORCED TO MOVE EARLY

Ford had previously planned to detail production plans in early September but said it had been forced to act earlier because sales remained strong in early August.

Other major automakers have also raised production. General Motors Co GM.UL said it will spell out stepped-up production plans for the rest of 2009 by the end of August. 

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