Ford Motor Co. will cease production of the Ford Taurus at its Chicago Assembly Plant

The Detroit Free press reported that Ford Motor Co. will cease production of the Ford Taurus at its Chicago Assembly Plant and replace it with a car-like sport-utility vehicle similar to a Toyota Highlander, Ford and industry sources said Wednesday.

Ford hopes to launch the model by late summer 2003. The as-yet unnamed vehicle will be the first product on the all-new Ford platform -- code-named D219 -- that will eventually support several Ford and Mercury products, including a more upscale midsize sedan and wagon.

The move is an early glimpse of what Chief Operating Officer Nicholas Scheele promises will be a "product-driven turnaround" for the automaker.

After having its first money-losing year in nearly a decade last year, Ford is expected to announce a massive cost-cutting plan Friday that will allow it to turn a profit again in a year or two.

But Scheele and Chairman William Clay Ford Jr. have insisted that Ford will not be able to cut its way to prosperity.

"As we've done many times in the past, our turnaround will be driven by great products," Ford said in a speech to employees Sunday evening.

Analysts said the Dearborn automaker knows it must quickly get a vehicle into the red-hot category of car-like sport-utilities. The segment is rapidly filling with new models from Toyota, Honda and General Motors.

"It's a smart move," said Nick Twork, an analyst with AutoPacific in Southfield. "Ford needs to be in this segment, and they can't get" the new vehicle "out soon enough."

Although the new models could cannibalize some Taurus sales, it's a risk Ford must take, he said.

"If you don't marginalize your own vehicle, a competitor will come along and do it for you," Twork said.

Ford is saddled with too much factory capacity for the Taurus and Mercury Sable, for which about half of sales go to rental fleets. The oversupply hurts the Taurus' desirability and resale value. Buyers are also migrating from midsize sedans to car-like sport-utilities, further reducing demand.

The Taurus and its Mercury Sable sibling are scheduled for a major design upgrade around 2003. The Taurus, perhaps with fewer features and at a lower price, would be repositioned as a bargain midsize vehicle that would still drive profits.

Ford would be following the example of automakers such as Toyota, whose all-new Camry platform is the basis for several popular car and truck models, including the Highlander and Lexus ES 300.

With Ford expected to get its own version of the Mazda 6 sedan, built in Flat Rock, the moves essentially will supplant the current Taurus with up to four new models. The trick for Ford will be to execute them with the styling and quality customers demand.

"Suddenly, Ford's car catalog could look really strong," Twork said.

Workers in Chicago might face temporary layoffs during retooling, but should are expected to enjoy solid job security when production begins.

The Taurus and Sable will continue to be produced in Atlanta.

Company sources did not say whether the timing for the new product has been accelerated due to competitive pressures or the restructuring.