Ford Proves That America Can Still Make Good Cars - Ford Motor (NYSE:F), General Motors (NYSE:GM)

Today, Ford

announced that it sold more than 2 million vehicles in 2011, the first time the company accomplished the feat since 2007. The company returned to the position of No. 2 domestic automaker behind GM

primarily through its freshened product line and weakness among its Japanese competitors Toyota

and Honda

HMC

. Consumers are well aware of the product timelines that many manufacturers follow. Cars are typically redesigned every 5-7 years and Ford has introduced many new models over the past few years. Their volume seller, the Ford Focus is all new for 2012 and won many comparison tests from automotive publications. Consumers now emphasize reliability and high tech features from economy cars, and Ford is clearly meeting consumers' expectations after years of struggle. Ford has also revamped is line of SUVs and crossovers, with the redesigned Explorer leading the way. Previous Explorers had received lackluster reviews, with critics focused on the truck's reliability issues and rollover possibility. While the new Explorer lacks a car unibody platform and driving dynamics of some of its competitors, it still features the technology and fuel efficiency that is expected of modern cars. The company also plans on remodeling its popular Escape crossover with new engines and a design that's inspired from the company's European models. Ford has also generated some goodwill from consumers as being the only American auto manufacturer not to accept a government bailout. CEO Alan Mulally took several private loans just before the 2008 crisis hit, allowing the company to survive without government intervention. The 2012 prospects for Ford are very positive. Many consumers have clung to aging vehicles as a result of recent economic uncertainty, and the continued supply issues with some of Ford's competitors will only help the company. The company's willingness to use high technology provided by Microsoft

MSFT

and create fuel efficient vehicles will only boost the company's reputation going forward.

ACTION ITEMS:

Bullish:
Traders who believe in Ford's revenue prospects going forward should consider the following trades:

Buy shares of Ford. Shares have fallen significantly since reaching highs of $18+ earlier this year and could reach those levels again if Ford continues its sales growth.

Go long an automotive ETF. As consumers begin to feel more comfortable with the economy, they will look to replace the cars they neglected during the recession.

Bearish:
Traders who believe that consumers will continue to be cautious in the face of high unemployment will want to consider these trades:

Go short Ford shares. If the company is unable to sustain its success of 2011, shares will fall in the new year.

Go short an automotive ETF. Ford has a strong lineup of cars, so any failure to build revenue next year will likely affect all auto manufacturers.

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