Ford Motor Co. (F) boosted its third-quarter U.S. production target Monday for a second time, a sign that the auto maker's strategy to gain market share from its government-backed domestic rivals may be paying off.

The company now intends to build 485,000 new cars and light trucks during the quarter, a 16% increase over the 418,000 produced in the year-ago quarter.

The move marks the first time in two years that Ford's quarterly production will be increased year-over-year, and comes amid fresh signs that the downturn in U.S. auto sales may be abating.

"We decided last year to break the mold and stop over-producing," said Mark Fields, Ford's president of the Americas. "Our inventory is now down and with demand up, driven by our new products, we are in the position to increase production again. There is definitely a cessation in the deterioration of the economy."

Ford's production change comes as General Motors Corp. (GMGMQ) and Chrysler Group LLC are still scrambling to adjust output while dealing with bankruptcy-induced reorganizations.

GM is still in the bankruptcy process while Chrysler is working to find a new direction after merging its assets with Italian auto maker Fiat SpA (FIATY) earlier this month. Chrysler kept all of its U.S. plants idle during the past two months as it restructured itself. The company resumed production at seven North American plants Monday.

Ford's executives have also used media and public appearances to highlight the auto maker's decision not to take federal aid, which appears to be connecting with some customers. GM and Chrysler both accessed low-interest federal loans to keep their operations running.

"We see customers coming into showrooms who appreciate that Ford is doing its turnaround on its own," Fields said.

Fields said he expects to see yet another gain in retail market share in June when official data is released on Wednesday. This would be the eighth time out of the past nine months that Ford has boosted U.S. retail market share.

Ford announced earlier this month that it was bumping up production by 10% to produce 150,000 cars and 310,000 trucks in the third quarter. Monday's revised target adds another 15,000 cars and 10,000 trucks.

Separately, Ford's sales analyst, George Pipas, said June could be the U.S. auto industry's best month since sales began their freefall last fall.

The annualized sales rate in the U.S. could hit 10 million this month for the first time in 2009, Pipas told reporters Monday.

-By Jeff Bennett, Dow Jones Newswires; 248-204-5542; jeff.bennett@dowjones.com

(Sharon Terlep of Dow Jones Newswires and Matthew Dolan of the Wall Street Journal contributed to this story.)