General Motors

(GM) - Get Report

moved Wednesday to dispel the widespread perception that its products lack the longevity of those offered by its foreign-based competitors.

The world's largest automaker increased the powertrain warranty on all of its 2007 passenger vehicles to five years and 100,000 miles. Previously, it offered a warranty for three years and 36,000 miles. The new warranty will apply retroactively to 2007 GM cars and trucks already sold.

"This latest step in our North America turnaround plan reflects the confidence we have in the quality of our cars and trucks," GM said in a press release, adding, "The bottom line is GM now has the best coverage in the industry."

The offer reflects an effort by GM to compete with lower-cost auto manufacturers, like

Toyota

(TM) - Get Report

, without increasing cash incentive offerings that weigh down its profitability. It's unclear how much the extended warranty will ultimately cost GM.

Shares of GM were recently up $1.20, or 3.9%, to $31.62.

Meanwhile,

Ford

shares were also on the rise after the company

announced late Tuesday that it would replace its founder's great-grandson with an industry outsider as CEO.

Alan Mulally, a top executive from aerospace giant

Boeing

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, will take the reins from Bill Ford at the No. 2 U.S. automaker as it attempts to stabilize its business. Ford will stay on as chairman and the public face of the company.

While outsiders rarely find a place in the auto industry, Mulally comes well credentialed to head up Ford's "Way Forward" turnaround plan, having dealt with similar issues as chief executive of Boeing's commercial airplanes group.

The 61-year-old Mulally has spent 37 years at the aerospace giant. He was named president of commercial airplanes in September 1998, and he added the title of CEO of the unit in March 2001. Now, he faces the challenge of restructuring Ford under the watchful eyes of the descendents of the company's founder Henry Ford. The Ford family owns about 5% of the automaker's outstanding shares and controls 40% of the voting rights through a separate class of stock.

Bill Ford, who took over as CEO of the automaker in 2001, has acknowledged previously in public that he would cede the helm of his great-grandfather's auto empire if he found the right person. Mulally said in an interview with

CNBC

on Wednesday that he received assurances from Ford that he would remain actively involved with the company.

"Sometimes, bringing an outsider onboard can bring a new sense of urgency and objectivity to a situation," says David Cole, chairman of the Center For Automotive Research. "With this hiring, Bill Ford showed investors that he's willing to take that bold step in order to make real change at the company."

Shares of Ford were recently up 26 cents, or 3.1, to $8.65.