Ford CEO Mulally shares Toyota's vision

Toyota, too, is expecting to report a big loss for its 2008 fiscal year which ended Tuesday — an estimated $3.8 billion.

•Quality. Ford's quality is improving, independent surveys show, even if the word hasn't exactly broken out on the bicoastal cocktail party circuit.

Ford's domestic brands — Ford, Mercury and Lincoln — all were above average in J.D. Power and Associates' 2009 Vehicle Dependability Study. Mercury, in fact, was fifth, right behind Lexus and Toyota.

"Their best performance in five years," says Power's Dave Sargent, vice president of automotive research. And he says this took real work. "Quality is not something you can spray on the vehicle."

Closely watched Consumer Reports also lauded Ford in its latest check of reliability. Of the 12 Ford-brand cars and trucks listed, nine, or 75%, got its "recommended" rating. That tied the percentage for Toyota-brand models. By contrast, GM's Chevrolet had only 21% of its models recommended, and Chrysler's Dodge had none.

•Labor. There's no avoiding the fundamental difference between Toyota's and Ford's factories in the U.S: Ford is a union shop, and Toyota, by and large, is not. But Ford just negotiated concessions with the United Auto Workers that Ford says will save $500 million a year and make its labor costs fully competitive with Toyota's in the U.S. over the next of couple years.

•Profitable cars. Toyota has thrived on a consistent lineup of dependable high-volume cars with names that consumers recognize — and pay a premium for: Camry and Corolla. Ford once had a top seller in the Taurus, but largely abandoned its commitment to cars to chase higher profit margins in pickups and SUVs.

Now Ford is serious about the car business again. Ford is bringing in its best small cars from Europe, starting with the car-like Transit Connect utility vehicle, a Fiesta subcompact and a new Focus subcompact co-designed for both continents. Mulally revived the Taurus name first by sticking it on an unremarkable existing sedan, but he is about to start selling an all-new version that has gotten critical buzz for its sharp-edged looks.

•Hybrids. Ford is the largest domestic maker of hybrids, while Toyota is the larger seller of them overall. Ford boasts that its midsize Ford Fusion hybrid sedan, just out, gets better gas mileage than Toyota's Camry hybrid sedan, although it falls shy of Toyota's gold-standard hybrid Prius. Ford was the first domestic automaker with a full hybrid, the small Ford Escape SUV.

Ford chief has long been a fan of Toyota

Mulally traces his admiration of Toyota to the 1990s, when he worked at Boeing. By the time he was hired away by Ford, he had become CEO of Boeing's commercial aircraft division. He loyally jettisoned the Lexus he was driving when he was hired, but not his respect for its maker.

"I clearly have been a student of Toyota for many, many years," says Mulally in an interview. "I absolutely believe Toyota's fundamental premise is they are in for the long term, that they make products people want, and they are going to use minimum resources and minimum time to do that."

Like the Toyota brand, the Ford brand name lacks glam. Mulally has summarily booted Ford's couture collection — Aston Martin, Jaguar, Land Rover and likely soon, Volvo — to focus cash reserves and energy on reviving the core Ford name and its values.

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