Ford Motor Co said on Thursday it is increasing production over the rest of the year to meet increased demand spurred by the U.S. government's Cash for Clunkers sales incentive program.

Ford said it now plans to build 495,000 vehicles in the third quarter, up 10,000 from its previous forecast. That would mark an increase over year-earlier levels of 18 percent.

The No. 2 U.S. automaker also set a fourth-quarter production target of 570,000 vehicles, up 33 percent from year-earlier levels.

The output gains will translate into immediately higher revenues for Ford, the only U.S. automaker to have avoided a federally sponsored bankruptcy. Major automakers book revenue when vehicles are manufactured and shipped to dealers.

(Reporting by Kevin Krolicki, editing by Gerald E. McCormick)

Ford Motor Company