CHICAGO — On his first day at work as chief executive of Ford Motor Co., Alan Mulally had a question that no one could answer: Why get rid of the Taurus?

Long before he was hired last September, the struggling company had decided to stop making what once was the most popular car in the U.S., a decision that had him perplexed.

"How can it go away?" he remembered asking. "It's the best-selling car in America."

On Wednesday, at Mulally's insistence, the company announced that it was reviving the Taurus name.

The Dearborn, Mich.-based automaker made the official announcement at the Chicago Auto Show that it would place the storied moniker on the 2008 version of the Five Hundred.

In addition, an upgraded version of the Freestyle crossover vehicle will be re-badged as the Taurus X, and the Mercury Montego, the Five Hundred's cousin, will be renamed the Sable in the coming model year. The Sable was the Taurus' nearly identical cousin, with 2 million sold under the Mercury name.

Mulally said the Taurus' demise was one of the biggest disappointments he discovered as he started work. He still hasn't found out why Ford gave up on a car purchased by 7 million buyers during its 21-year history. All he knows is the decision was wrong and needed to be fixed.

"The Taurus, of course, has been an icon for Ford and its customers," Mulally told The Associated Press. "The customers want it back. They didn't want it to go away. They wanted us to keep improving it."

The Five Hundred should have been named the Taurus all along rather than starting with a new name, he said.

"Think of how much time and attention and money it takes to establish a brand," Mulally said. "It's going to take unlimited effort and time to try to build up the brand that we have with the Taurus."

The Five Hundred, built on a Volvo frame and considered a capable but dull car by industry analysts, never took hold in the marketplace. It sold moderately well in 2005, its first full year on the market, but sales nose-dived last year from almost 108,000 to about 84,000.

It will get a new, more powerful engine, standard electronic stability control and some cosmetic updates for the 2008 model year, when the name change will take place. The new version will be in showrooms this summer, company officials have said.

The Taurus name is one of the top three most recognized Ford nameplates, behind only the F-Series pickup trucks and the Mustang, said Cisco Codina, Ford's vice president of North American marketing.

The Taurus was among the company's most recognizable brands in the 1980s and 1990s, but by the end of its lifetime, it was almost exclusively sold to rental companies and other fleet buyers.

Last year, Ford lost $12.7 billion, and it was forced to mortgage its factories to set up a credit line of more than $20 billion as it undergoes a radical restructuring plan.

The Taurus, redesigned in 1996, became a symbol of the company's current ills. It was left almost unchanged for 10 years with little advertising support as the company focused on high-profit trucks and sport utility vehicles.

Ford, left with few desirable cars, was caught flat-footed this year when consumer tastes shifted away from trucks. Its sales dropped 8 percent last year as buyers went to more fuel-efficient models made mainly by Asian brands.

Mulally, hired from his post at Boeing Co. to rescue troubled Ford, studied the team-based approach to building the original Taurus and used some of its tenets in producing the highly successful 777 passenger jet.

While at Boeing, Mulally drove a Lexus luxury sedan, which he said was among the finest automobiles in the world. Now he says the Five Hundred is "very competitive" with the Lexus, made by Toyota Motor Corp.