Ford boosts production 16% as June car sales show strength

DEARBORN, Mich. -- Ford is boosting its third-quarter production schedule after seeing more demand for its cars and trucks in June, the company said Monday.

Ford f plans to increase production by 16% compared with the third quarter of 2008. The automaker had said it would increase production 10%, but is adding another 25,000 vehicles because it's seen some stabilization in June auto sales, to be reported Wednesday.

The news comes amid several preliminary reports that June sales have been stronger than recent months. Last week, Edmunds.com and J.D. Power reported that June sales had increased significantly compared with May sales.

George Pipas, Ford's sales analysis manager, said Monday that he believes June will still be down compared with last year, but it will be the narrowest decline the industry has seen since the credit market collapsed in October.

"The worst is behind us," Pipas told journalists at a briefing at the company's headquarters. "We may see economic growth in the second half and a higher level of auto sales."

Ford was the only domestic automaker to stave off bankruptcy this year. Chrysler and General Motors both filed for court protection and got billions in aid from the federal government this spring when steeply declining car sales wreaked havoc on their finances. Even stronger automakers such as Toyota have been hit: It posted a $4.4 billion loss in May for the last fiscal year. It was the first time Toyota posted an annual loss since 1963.

Monthly sales are tracked on an annualized rate, projecting what the year's sales total would be if every month were the same. So far this year, the sales rate has hovered in the 9 million range each month. Pipas and Edmunds project June sales could top a 10 million rate. The sales rate last June was 13.64 million.

"Gee, who thought I could get excited about a sales rate of 10 million?" Pipas said. "But you always have to judge things from where you are. I am totally confident this will be the lowest decline of the year."

Pipas said June's strength could be a sign the car market has hit a bottom and may start increasing the remainder of the year.

But he also said some of June's strength could be attributed to the steep rebates Chrysler dealers offered to clear out their lots before losing their dealership contracts with the automaker. Rebates at GM's Pontiac brand, which the automaker is shutting down, also fueled sales.

Rebounding consumer confidence is also helping, J.D. Power said.

"Consumer confidence is improving, and market uncertainty is starting to decline, which has made consumers more willing to take advantage of deals on new vehicles," said Gary Dilts, senior vice president of global automotive operations at J.D. Power.