DETROIT - Ford Motor Co Chief Executive Alan Mulally said on Thursday that the U.S. economy was on the right track to begin improving in the second half of the year.

We think we are right on track to start this recovery in the second half, Mulally told reporters on the sidelines of an an event promoting the Taurus sedan.

Any uptick in the U.S. economy would help U.S. vehicle sales recover from their near two-decade lows that have sent two car companies into bankruptcy as well as some auto suppliers.

U.S. industry sales for first part of June were a little better than May, said Ford's president of Americas unit Mark Fields, who was also present at the event.

U.S. auto sales fell nearly 34 percent in May from a year earlier, but aggressive discounting helped steady results for the battered industry with sales for the month reaching nearly 10 million units on an annualized basis.

The top executives at Ford, the only U.S. automaker not in bankruptcy, said the automaker is looking to further strengthen its balance sheet and reduce debt.

We are very rapidly moving on our plan to improve the balance sheet, Mulally said. Going forward, we will really accelerate that as we return to profitability and start repairing the balance sheet even more.

Mulally said in a statement that Ford has no current plans to issue additional equity.

Earlier this year, Ford bought back nearly $10 billion of automotive debt and raised $1.6 billion of by through a common stock offering, the latter of which it used to fund part of its obligation to a union-aligned retiree healthcare trust.

The automaker is restructuring its manufacturing operations to operate profitably at lower demand and to meet changes in the types of vehicles that customers are buying. In May, Ford unveiled its investment plans to convert a Michigan SUV plant to produce a new generation of Focus small cars.

Ford has targeted 2011 for a return to profitability. The automaker has posted losses totaling $30 billion for the last three full years.

Shares of Ford fell 21 cents, or 3.39 percent, to $5.98 Thursday on the New York Stock Exchange. (Reporting by David bailey, writing by Poornima Gupta, editing by Leslie Gevirtz)