Ford Motor Co. Chief Executive Officer Alan Mulally said investments in the company's car lineup and efforts to pay back debt are helping the automaker make "tremendous progress" in its turnaround effort.
"During this worst recession, we chose to increase our investment in new vehicles that people want and value," he said in an interview from the Consumer Electronics Show in Las Vegas. "Now we are delivering on that product promise, and we're actually paying the loans back and improving our balance sheet."
Ford, which reported a 33 percent sales rise in December, gained U.S. market share last year for the first time since 1995. New models like the Ford Fusion are fueling orders at the Dearborn, Michigan-based automaker. Its shares rose more than fourfold in the past year to the highest level since 2005.
"The consumer loves a company that not only has a strong product line but is creating a strong business, and they know they are going to be around," said Mulally, 64. "The goodwill that everyone has for Ford far outweighs the disadvantages."
Ford is reaping the benefits of Mulally's plan to invest in new models with much of the $23 billion the automaker borrowed in late 2006. Ford put up as collateral all major assets, including its name, to secure that lending, which allowed the company to stave off the bankruptcies that befell General Motors Co. and Chrysler Group LLC last year.
"This isn't just lucky happenstance, it's a combination of benefits from not taking a bailout, unassailably high quality and an interesting, exciting product lineup," said John Wolkonowicz, an analyst at IHS Global Insight in Lexington, Massachusetts. "Ford is in the driver's seat now."
Ford rose 3 cents to $11.40 at 9:34 a.m. in New York Stock Exchange composite trading. Yesterday's closing price of $11.37 was the stock's highest since June 16, 2005.
Sales of the redesigned Taurus have climbed 90 percent since it debuted four months ago. Ford said its models commanded $2,700 more revenue per vehicle in the third quarter, as it slashed incentives and boosted prices.
Ford also is banking on bringing more technology into its cars. It's using the Las Vegas show to demonstrate its plans to put social networking, Web browsing and iPod-style thumb controls in 80 percent of models by 2015.
Mulally, who came to Ford from Boeing Co. in September 2006, posted his first back-to-back quarterly profits at the Automaker on Nov. 2, with third-quarter net income of $997 million. He has said Ford will be "solidly profitable" on an annual basis in 2011.
"The advantages of us doing this ourselves clearly outweigh any of the advantages of going through bankruptcy," Mulally said. "The only disadvantage that we have right now is that we have a little more debt, but we're paying that back."
Consumer Reports magazine said that Ford had "world-class reliability" and that the Fusion topped Toyota Motor Corp.'s Camry in quality.
Ford's surge comes as Toyota stumbles. The Toyota City, Japan-based automaker has projected a $2.2 billion loss in the year ending March 31. Toyota is fixing 4.26 million vehicles in the U.S., its biggest recall, for accelerator pedals that may get stuck on floor mats.
"If Ford becomes the quality brand and is able to unseat Toyota and Honda at the top of the industry, there will be no stopping them," Wolkonowicz said.
Ford gained 1.1 percentage points of U.S. market share to 16.1 percent in 2009, according to Woodcliff Lake, New Jersey- based Autodata Corp. That will grow to 16.6 percent by 2012, Global Insight projects. GM will have fallen from 19.9 percent last year to 17.1 percent, while Toyota will grow to 16.8 percent in 2012, according to Global Insight.
"There's going to be a three-way battle for the No. 1 spot over the next decade," Wolkonowicz said.
The advantage to Ford of not taking a bailout will fade when GM and Chrysler pay back U.S. taxpayers, said Michael Robinet, a CSM Worldwide analyst in Northville, Michigan.
For now, Ford's go-it-alone posture has improved its positive perception among car buyers to 51 percent in December from 41 percent a year earlier, said Beau Boeckmann, vice president of Galpin Motors in North Hills, California.
Boeckmann, whose store more than doubled sales last month, said that "several people have said I'm buying a Ford because they did the right thing and didn't take a bailout."
Ford could face challenges this year from a resurgent GM, which slashed costs and reduced debt in bankruptcy.
"GM is not going to go down without a fight," Wolkonowicz said. "GM has some products now that are as good as they had in the 1960s when they were the top of the heap."
Ford's new cars have benefited from Mulally's focus on developing fewer models that can be sold globally. He sold off the Jaguar, Land Rover and Aston Martin luxury lines and is trying to sell Volvo to China's Zhejiang Geely Holding Group Co.
"Ford has been able to focus more of their energies on fewer vehicles with higher sales volumes," said Robinet. "That's going to have tremendous benefits."