Ford Motor Co has seen a sharp increase in sales over the past week since its dealers began accepting trade-ins under the U.S. government's cash for clunkers incentive program, the automaker's U.S. sales chief said on Thursday.

We were having a strong month before (cash for clunkers) started, said Ken Czubay, who heads Ford's U.S. marketing and sales operations. The pace of sales has picked up dramatically.

Czubay said that while Ford did not have a forecast for the industry-wide sales rate for July, it appeared likely that overall sales could top 10 million vehicles on the annualized basis tracked by analysts.

That would represent the highest sales rate of the year and would strengthen expectations that U.S. vehicle sales have stabilized after a four-year decline that drove them to their lowest levels since the early 1980s.

The U.S. government has allocated up to $1 billion for incentives to encourage Americans to trade in older and less fuel-efficient vehicles for new models.

Consumers are eligible for a rebate of up to $4,500. Auto industry executives expect the program to add about 250,000 vehicles to the 2009 sales tally.

Similar government incentives have boosted sales in Europe and the auto industry has already begun lobbying for additional funding for the U.S. program.

The National Automobile Dealers Association has projected that the current cash for clunkers funding will run out before the November 1 expiration of the incentive.

Czubay, who spoke to reporters at Ford's product development center, said that the Ford website set up to direct consumers to the automaker's vehicles that qualify for the cash for clunkers program had received 500,000 hits.

He also said Ford dealers had been so busy with the program that he has been forced to take daily calls with them as late as 9 or 10 p.m. because of the surge in showroom traffic and sales.

Ford, like other major automakers, will report U.S. sales for July on Monday.

Ford shares were up 3.7 percent, or 26 cents, at $7.38 on Thursday afternoon on the New York Stock Exchange.

The No. 2 U.S. automaker saw sales drop 32 percent in the first half, a smaller decline than the nearly 35 percent drop for the market as a whole.

Ford is the only U.S. automaker that has not restructured in bankruptcy with federal funding.

(Reporting by Michael Strong, writing by Kevin Krolicki, editing by Matthew Lewis)

Ford Motor Company