dumped plans to build the Focus sedan in Australia but wants to develop a four-cylinder Falcon.
Ford Australia chief executive Marin Burela says the US-based car maker's plans to build the Focus in Australia had been abandoned because of "changing global economic conditions".
The car will now be built in Asia.
\Mr Burela said no job losses were expected because of the decision.
Last August Ford said building the smaller Focus model here would create 300 new jobs.
Ford will introduce new two-litre four cylinder EcoBoost engines to the Falcon range in 2011, which Mr Burela has touted as the most significant environmental steps in the Falcon's 50 year history.
The car manufacturer will also introduce a liquid injection LPG system for the Falcon and a clean diesel 2.7 litre turbo-charged V6 engine for the Territory.
The move, to begin in 2011, will protect jobs at Geelong and Broadmeadows and provide the potential to grow the employee base when exports start, the company says.
The Federal Government will invest $42 million from the Green Car Innovation Fund towards the development for the Falcon and Territory while the Victorian Government will provide an undisclosed amount.
Australian Manufacturing Workers Union federal secretary of the Vehicle Division, Ian Jones, said Ford's announcement was great news for workers.
"This today is a day for rejoicing because it's the way back for Ford Motor Company," he said in Melbourne.
"It's a day that workers at Ford Motor Company have been praying for for some time."
The first application of the ecoboost four-cylinder in a rear-wheel drive will be a 2.0-litre with direct-injection and turbocharging, which Ford says will “deliver the power and refinement of a six-cylinder” but with 15-20 per cent better fuel economy.
The first of these engines will be fitted to Falcons within two weeks for local testing.
Other developments include a PSA-sourced 2.7-litre turbodiesel for the 2011 Territory --which will reduce emissions by 25 per cent compared with the petrol six-cylinder version – three new engines and a range of other engine updates from 2010 aimed at better economy.
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The company had previously committed to building the Focus at its Broadmeadows plant from 2011.
The multi-million dollar next-generation Focus plan involved building 40,000 cars a year at Broadmeadows alongside the Falcon, with 15,000 Focuses to be sold in Asia.
Last November, Ford renewed its commitment to the existing in-line six cylinder Falcon engine in place of importing a new V6 engine.
Ford had originally announced that it would dump the Falcon and Territory's six cylinder in favour of a globally sourced and more efficient V6 that met Euro IV emissions standards that come in from next July.
However, its new engine technology push is now expected to involve some of Ford's latest global V6 and new 2.0-litre four-cylinder engines.
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