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Ford Motor Company

Company Profile

Reference Code: 4E3AD1B7-04B2-4E87-BB09-7DC916B9230F

Publication Date: Nov 2006

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Ford Motor Company 4E3AD1B7-04B2-4E87-BB09-7DC916B9230F

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Ford Motor CompanyTable of Contents

TABLE OF CONTENTS

Facts & Overview........................................................... 4

Business Description.................................................... 5

History ............................................................................ 7

Major Products & Services ........................................... 9

Revenue Analysis........................................................ 10

Key Employees ............................................................ 11

Key Employee Biographies ........................................ 13

Locations & Subsidiaries............................................ 18

Company View ............................................................. 19

SWOT Analysis ............................................................ 24

Top Competitors .......................................................... 29




Ford Motor CompanyCompany Overview

COMPANY OVERVIEW

Ford Motor Company (Ford) is one of the largest automotive manufacturers in theworld. It manufactures and distributes automobiles in 200 markets across sixcontinents. The company’s automotive vehicle brands include Aston Martin, Ford,Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. The company primarilyoperates in the US and Europe. It is headquartered in Dearborn, Michigan andemploys about 300,000 people.

The company recorded revenues of $177,089 million during the fiscal year endedDecember 2005, an increase of 3.2% over 2004. The operating profit of the companywas $7,493 million during fiscal year 2005, a decrease of 37% from 2004. The netprofit was $2,024 million in fiscal year 2005, a decrease of 42% from 2004.

KEY FACTS

Head Office 1 American RoadDearbornMI 48126 2798USA

Phone 1 313 322 3000Fax 1 313 845 6073Web Address http://www.ford.comTicker New York: F# Employees 300,000Turnover (US$ Mn) 177,089Financial Year End December




http://www.ford.com

Ford Motor CompanyBusiness Description

BUSINESS DESCRIPTION

Ford is one of the Big Three manufacturers in the US. The other companies in the BigThree include DaimlerChrysler and General Motors. The company manufactures anddistributes automobiles in 200 markets across six continents. With 108 plantsworldwide, the company’s core and affiliated automotive brands include Aston Martin,Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. It also owns a 33.4%controlling stake in Mazda.

The company operates in two businesses: automotive and financial services.

The automotive business consists of the design, development, manufacture, sale andservice of cars, trucks and service parts. Through this segment, Ford produces a widerange of vehicles including cars for the small, medium, large and premium segments,trucks, buses/vans (including minivans), full-size pickups, sport utility vehicles andvehicles for the medium/heavy segments. The company’s automotive business isorganized into two primary segments: Americas; Ford Europe Premier AutomotiveGroup; and Ford Asia Pacific and Africa/Mazda.

The Americas segment primarily includes the sale of Ford, Lincoln and Mercury brandvehicles and related service parts in North America (the US, Canada and Mexico) andFord-brand vehicles and related service parts in South America. The Ford Europeand Premier Automotive Group primarily includes the sale of Ford-brand vehicles andrelated service parts in Europe and Turkey and the sale of Premier Automotive Group(PAG) brand vehicles (Volvo, Jaguar, Land Rover and Aston Martin) and relatedservice parts throughout the world (including North and South America, Asia Pacificand Africa). Ford Asia Pacific and Africa/Mazda segment primarily includes thesale of Ford-brand vehicles and related service parts in the Asia Pacific region andSouth Africa, and Ford’s share of the results of Mazda Motor Corporation and certainof other Mazda-related investments.

In addition to producing and selling cars and trucks, Ford also provides retailcustomers with a range of after sales services and products through its dealernetwork. The company provides services such as maintenance and light repair, heavyrepair, collision, vehicle accessories and extended service warranty. In North America,the company markets these products and services under several brands, includingGenuine Ford and Lincoln-Mercury Parts and Service, Ford Extended Service Plan(ESP) and Motorcraft.

The financial services segment operates through the company subsidiary, Ford MotorCredit Company (Ford Credit). Ford Credit offers a wide variety of automotivefinancing products to, and through automotive dealers throughout the world. The




Ford Motor CompanyBusiness Description

predominant share of Ford Credit’s business consists of financing Ford vehicles andsupporting the company’s dealers. Ford Credit’s primary financial products fall into thethree categories retail financing, wholesale financing and other financing. In retailfinancing Ford engages in purchasing retail installment sales contracts and retaillease contracts from dealers. The company also offers financing to commercialcustomers comprising vehicle leasing companies and fleet purchasers. In wholesalefinancing, Ford offers loans to dealers to finance the purchase of vehicle inventory. Inother financing, Ford makes loans to dealers for working capital, improvements todealership facilities, and for acquiring and refinancing real estate. Ford Credit alsoservices the finance receivables and leases that it originates and purchases, makesloans to affiliates, purchases receivables from company subsidiaries, and providesselected insurance services.




Ford Motor CompanyHistory

HISTORY

Ford was established in 1903 by Henry Ford and 11 other associates. The companymade its first shipment in the same year. The company launched its T model in 1908.

The company began producing trucks and tractors in 1917. During 1925, Fordacquired the Lincoln Motor Company, branching out into luxury cars.

In 1956, Ford went public. In the same decade, Ford produced one of its mostsuccessful cars: the Thunderbird.

The global expansion of Ford continued during the 1960s when the companyestablished Ford Europe in 1967. Throughout the 1970s and 1980s, Ford continued toexpand, with further moves into Europe and Asia. In 1987, Ford helped to form thePark Ridge Corporation in order to acquire the Hertz car rental business.

Ford experienced further growth in the 1990s. In 1990, Ford acquired Jaguar. Thecompany increased its stake in Hertz to 100% in 1994. The company acquired therepair chain Kwik-Fit in 1999 and later Volvo’s passenger vehicle business.

Ford spun off its Visteon automotive components business unit during 2000. Ford alsoacquired Land Rover from BMW in the same year. In late 2002, the companyconcluded the sale of Collision Team of America (CTA) and Kwik-Fit.

Ford expanded its presence in China during 2002 and 2003. The Changan Ford (ajoint venture operation with Changan Automobile) assembly plant located inChongqing became operational and production of the Fiesta in China started in mid2003. The company’s Ford Services Thailand became operational later in 2003.

Ford sold Cosworth, its motor sport technology engineering company, and JaguarRacing, its Formula One team, during 2004. Also in 2004, the company recalled about600,000 vehicles of its Escape and Mazda Tribute SUVs. In the same year, thecompany launched the 2005 F-Series Super Duty and has also introduced the FordExpedition King Ranch.

Ford recalled about 792,000 pickup trucks and sport utility vehicles, during January2005, because of a fire risk from overheating of the speed control switch. The recallinvolves some of Ford’s 2000 model-year F-150 pickup trucks, Expedition andNavigator SUVs, and 2001 model-year F-Series Supercrew pickup trucks equippedwith speed control.

The company made several acquisitions during 2005. This included the reacquisitionof Visteon’s twenty-three North American facilities in order to protect its supply of




Ford Motor CompanyHistory

components. The company also acquired a minority interest in the Beanstalk Group, amajority-owned subsidiary that licensed trademarks, and subsequently sold 100%interest in the Beanstalk Group .

Ford sold its subsidiary The Hertz Corporation, one of the largest general use carrental businesses in the world, during 2005. Ford also sold its interests in Mahindra &Mahindra and Vastera during the same year. The company also exchanged its 8.3million shares in Ballard Power Systems for an equity interest in NuCellSys, a 50:50joint venture with DaimlerChrysler.

In July 2006, Ford became the first automotive manufacturer to commence theproduction of dedicated hydrogen fueled V-10 engines.




Ford Motor CompanyMajor Products & Services

MAJOR PRODUCTS & SERVICES

Ford Motor Company is one of the largest automotive manufacturers in the world. Itmanufactures and distributes automobiles in 200 markets across six continents. Thecompany’s key products and services include the following:

Products:

Passenger cars TrucksBuses and vans Sport utility vehiclesVehicle accessoriesAftersales vehicle parts and productsExtended repair service products

Services:

Maintenance and vehicle repair servicesFinancial services:Retail financingWholesale financingThird-party claim management services

Brands:

Ford MercuryLincoln Volvo Jaguar Land RoverAston Martin




Ford Motor CompanyRevenue Analysis

REVENUE ANALYSIS

The company recorded revenues of $177,089 million during the fiscal year endedDecember 2005, an increase of 3.2% over 2004. For the fiscal year 2005, theAmericas, the company’s largest geographic market, accounted for 55.4% of the totalrevenues.

Ford generates revenues through two business divisions: automotive (86.7% of thetotal revenues during fiscal year 2005) and financial services (13.3%).

Revenues by Division

During the fiscal year 2005, the automotive division recorded revenues of $153,503million, an increase of 4.3% over 2004.

The financial services division recorded revenues of $23,586 million in fiscal year2005, a decrease of 3.8% from 2004.

Revenues by Geography

The Americas, Ford’s largest geographical market, accounted for 55.4% of the totalrevenues in the fiscal year 2005. Revenues from The Americas reached $85,000million in 2005, a decrease of 1.2% from 2004.

Ford Europe and PAG accounted for 39.3% of the total revenues in the fiscal year2005. Revenues from Ford Europe and PAG reached $60,258 million in 2005, anincrease of 11.3% over 2004.

Ford Asia, Africa and Ford Mazda accounted for 5.3% of the total revenues in thefiscal year 2005. Revenues from Ford Asia, Africa and Ford Mazda reached $8,245million in 2005, an increase of 18.5% over 2004.




Ford Motor CompanyKey Employees

KEY EMPLOYEES

Name Job Title Board Total Annual Comp.William C. Ford Chairman, President, Chief Executive

Officer, Chief Operating Officer(Since: 2001)

Executive Board -

Edsel B Ford Director(Since: 1993)

Non Executive Board -

John R Bond Director(Since: 2000)


Robert E Rubin Director(Since: 2000)


Richard A Manoogian Director(Since: 2001)


Stephen G Butler Director(Since: 2004)


Kimberly Casiano Director(Since: 2003)


Jorma Ollila Director(Since: 2000)


Irvine O Hockaday Director(Since: 1987)


Ellen R Marram Director(Since: 1988)


John L Thornton Director(Since: 1996)


Homer A Neal Director(Since: 1997)


Donat R. Leclair Executive Vice President Senior Management -Lewis Rover Booth Executive Vice President Ford Europe

and Premier Automotive Group and Chairman of Ford Europe, Jaguar and Land(Since: 2005)

Senior Management -

Anne Stevens Executive Vice President, and Chief Operating Officer, The Americas(Since: 2005)

Senior Management -

Mark A Schulz Executive Vice President; President, International Automotive Operations(Since: 2005)

Senior Management -

Mark Fields Executive Vice President; President, The Americas(Since: 2005)

Senior Management -

J C Mays Group Vice President, Design, and Chief Creative Officer(Since: 2003)

Senior Management -




Ford Motor CompanyKey Employees

Richard Parry Jones Group Vice President, Global Product Development and Chief Technical Officer(Since: 2001)

Senior Management -

David T Szczupak Group Vice President, Manufacturing, The Americas(Since: 2005)

Senior Management -

James C Gouin Vice President, Controller(Since: 2003)

Senior Management -

Ziad S Ojakli Group Vice President, Corporate Affairs(Since: 2004)

Senior Management -

Derrick M Kuzak Group Vice President, Product Devel-opment, The Americas(Since: 2005)

Senior Management -

John Fleming Group Vice President, President and Chief Executive Officer, Ford Europe(Since: 2005)

Senior Management -

Michael E Bannister Chairman and Chief Executive Officer, Ford Motor Credit Company(Since: 2004)

Senior Management -




Ford Motor CompanyKey Employee Biographies

KEY EMPLOYEE BIOGRAPHIES

William C. Ford

Board: Executive BoardJob Title: Chairman, President, Chief Executive Officer, Chief Operating OfficerSince: 2001

Mr. Ford is the Chairman, President, Chief Executive Officer, and Chief OperatingOfficer of Ford. Mr. Ford began his career with Ford in 1979 and was elected thecompany’s Director in 1988. He was elected Vice President, commercial truck vehiclecenter in 1994. Mr. Ford held that position until 1995 when he was appointedChairman of the Board’s finance committee. He was appointed Chairman of theBoard’s environmental and public policy committee in 1997 and became Chairman ofthe Board of Directors and Chairman of the nominating and governance committee in1999.

Edsel B Ford

Board: Non Executive BoardJob Title: DirectorSince: 1993

Mr. Ford is a Non Executive Director of Ford. He is a retired Vice President of FordMotor Company and Former President and Chief Operating Officer of Ford Credit. Hejoined Ford in 1974 and was elected to its Board of Directors in 1988. He heldnumerous positions in the company’s Ford and Lincoln Mercury divisions and servedin Ford Australia before being appointed to his Ford Credit post in 1991. Mr. Ford hasbeen a Director of the Detroit Branch of the Chicago Federal Reserve Bank, as well asthe Skillman Foundation.

John R Bond


Mr. Bond is a Non Executive Director of Ford. He has served as Chairman, HSBCHoldings, the UK. Mr. Bond joined the Hong Kong and Shanghai Banking Corporationin 1961 and served as its Executive Director from 1988-1992. From 1991-1993, hewas President and Chief Executive Officer of Marine Midland Bank. He served asGroup Chief Executive of HSBC Holdings from 1993-1998 before being appointed itsGroup Chairman in 1998.





Robert E Rubin


Mr. Rubin is a Non Executive Director of Ford. He served as US Secretary of theTreasury from 1995 to 1999, before joining Citigroup in 1999. Mr. Rubin previouslyserved from 1993 to 1995 in the White House as Assistant to the President forEconomic Policy. Prior to employment at the White House, Mr. Rubin spent 26 yearsat Goldman, Sachs & Co, where he served as Co-Senior Partner and Co-Chairmanfrom 1990 to 1992, and Vice Chairman and Co-Chief Operating Officer from 1987 to1990.

Richard A Manoogian


Mr. Manoogian is a Non Executive Director of Ford. He has been with Masco since1958. Mr. Manoogian was appointed Vice President and a Member of the Board in1964, President in 1968 and, in 1985, became Chairman of Masco.

Stephen G Butler


Mr. Butler is a Non Executive Director of Ford. He is a retired Chairman and ChiefExecutive Officer of KPMG. Mr. Butler served as Chairman and Chief ExecutiveOfficer of KPMG from 1996 until his retirement in 2002.

Kimberly Casiano


Ms. Casiano is a Non Executive Director of Ford. She is the President and ChiefOperating Officer, Casiano Communications, Puerto Rico. Ms. Casiano wasappointed President and Chief Operating Officer of Casiano Communications in 1994.From 1987 to 1994, she held a number of management positions within Casiano





Communications in both the periodicals and magazines and the bilingual directmarketing and call center divisions.

Jorma Ollila


Mr. Ollila is a Non Executive Director of Ford. He has been Chairman of the Board andChief Executive Officer of Nokia since 1999. Mr. Ollila also has been Chairman of itsGroup Executive Board since 1992. He was President and Chief Executive Officer ofNokia from 1992 to 1999, a member of its Board of Directors since 1995 and amember of its Group Executive Board since 1986. From 1978 to 1985, Mr. Ollilaworked with Citibank Oy and Citibank.

Irvine O Hockaday


Mr. Hockaday is a Non Executive Director of Ford. He has been President and ChiefExecutive Officer of Hallmark Cards. Mr. Hockaday joined Hallmark in 1983 as itsExecutive Vice President and was appointed to his current post in 1986. He hasserved as Director of Crown Media Holdings.

Ellen R Marram


Ms. Marram is a Non Executive Director of Ford. She served as Managing Director ofNorth Castle Partners during 2000. Ms. Marram served as President and ChiefExecutive Officer of Efdex from 1999 to 2000. She previously served as President andChief Executive Officer of Tropicana Beverage Group from 1997 until 1998, and hadpreviously served as President of the group, as well as Executive Vice President ofThe Seagram Company and Joseph E. Seagram & Sons. Before joining Seagram in1993, she served as President and Chief Executive Officer of Nabisco BiscuitCompany and Senior Vice President of the Nabisco Foods Group from 1988 until1993. She has also been a Director of The New York Times Company and Eli Lilly.

John L Thornton






Mr. Thornton is a Non Executive Director of Ford. He retired as President and Co-Chief Operating Officer of The Goldman Sachs Group in 2003. Mr. Thornton hasserved as Chairman of Goldman Sachs, Asia from 1996 to 1998. He was previouslyCo-Chief Executive of Goldman Sachs International, the firm’s business in Europe,the Middle East and Africa. He joined Goldman Sachs in 1980 and was appointed aPartner in 1988.

Homer A Neal


Dr. Neal is a Non Executive Director of Ford. He is Director, University of MichiganAtlas Project, Samuel A. Goudsmit distinguished professor of Physics and interimpresident emeritus at the University of Michigan. Dr. Neal joined the University asChairman of its Physics Department in 1987 and in 1993 was appointed VicePresident of Research. Dr. Neal served as Interim President of the University ofMichigan from 1996 to 1997. He has served as a Member of the US National ScienceBoard and of the Advisory Board of the Oak Ridge National Laboratory.

Donat R. Leclair

Board: Senior ManagementJob Title: Executive Vice President

Mr. Leclair is a Non Executive Director of Ford. Mr. Leclair served as the company’sController during 2001. Previously, he served as Controller for North America. Hejoined Ford in 1976 as a Financial Analyst at the Lorain Assembly Plant and has heldvarious leadership positions in product development, manufacturing and finance.

James C Gouin

Board: Senior ManagementJob Title: Vice President, ControllerSince: 2003

Mr. Gouin joined the company in 1979 in accounting and has held several positionswithin Finance, North America Automotive Operations, Vehicle Operations and





Marketing and Sales. Prior to his current position, he served as Controller, NorthAmerica.




Ford Motor CompanyLocations & Subsidiaries

LOCATIONS & SUBSIDIARIES

Ford Motor Company of Canada, Limited The Canadian RoadOakvilleOntarioL6J 5E4CANT: 1 905 845 2511F: 1 905 845 8085

AutoAlliance International, Inc. 1 International DriveFlat RockMI 48134 9498USAT: 1 734 782 7800F: 1 734 783 8216

Volvo Cars of North America, LLC Ford Motor Credit Company One American RoadDearbornMI 48126USAT: 1 313 322 3000F: 1 313 323 2959

Mazda Motor Corporation 3-1, ShinchiFuchu-choAki-gunHiroshima 730-8670JPNT: 81 82 282 1111F: 81 82 287 5190

Ford Malaysia

Ford Lio Ho Motor Company Ford Vietnam Limited Aston Martin Lagonda Ltd. Banbury RoadGaydonWarwickCV35 0DBGBRT: 44 1908 610620F: 44 1908 644733

Premier Automotive Group 51 Berkeley SquareLondonW1X 5DBGBRT: 44 20 7493 0281

Ford Otosan




Ford Motor CompanyCompany View

COMPANY VIEW

A statement by William C. Ford, Chairman, President, Chief Executive Officer andChief Operating Officer of Ford is given below. The statement has been taken from thecompany’s 2005 annual report.

Driving Innovation: The Way Forward

Ford Motor Company was solidly profitable and growing around the world in 2005.The major exception was our automotive operations in North America, where shortand long-term challenges continued to slow our progress. The next chapter in ourhistory will be defined by our renewed commitment to innovation and our bold plan toaddress those challenges.

We have recommitted ourselves to sustainable and profitable growth, to a renewedfocus on our customers, and to boundless innovation in everything we do: fromdesign, to safety, to fuel-efficiency, to efficiency on our factory floors. We are going touse our size to accelerate change, and build a culture that encourages fresh newthinking and breakthrough ideas.

When I took over as CEO at the end of 2001, Ford Motor Company was unprofitable,losing more than $5 billion that year. In 2002, we launched a major effort to revitalizeour company.

We concentrated on improving our core automotive business. We divested severalnon-core companies, lowered our costs, refocused our financial operations onsupporting our automotive business and launched the biggest wave of new productsin our history. As a result, we have been profitable every year since 2003, including anet income of $2 billion in 2005. Today our automotive operations in Europe, Asia andSouth America are all profitable, and our global brands are thriving. Mazda is enjoyingits best performance ever. Aston Martin is expanding. Land Rover’s largest-everintroduction of new products is winning in the marketplace. Jaguar is addressing itsunique cost structure issues and bringing out groundbreaking new cars. And Volvo isentering its most aggressive product period ever, with five new models in 18 months.

In parts of the world where the car market is growing sharply, so are we. We are doingespecially well in Russia, Turkey and Hungary. Last October I traveled to India to helpintroduce Ford Fiesta, our most important new product there in years. Ford sales inChina, the fastest growing market in the world, were up 46 percent in 2005.

We are proud of our success around the world. But in our North American automotiveoperations, we lost money in 2005. Commodity prices, including oil and steel, rose





sharply; competition from around the world intensified; and rising fuel prices causeddemand for SUVs to drop sooner and faster than we had anticipated.

We took a number of important steps in 2005 to address these issues. To strengthenour balance sheet and cut costs, we sold The Hertz Corporation and restructured ouragreement with Visteon, our parts supplier spin-off. We reached an agreement withthe UAW that will help us reduce health care costs in a reasonable way. We began amajor rationalization of our supply base, identifying key suppliers to form partnershipsthat will provide for more stable relationships.

But the conditions we confronted represented a turning point in our industry unlikeanything we’ve experienced in the last 50 years. The automotive business hadshifted, completely and permanently, to full-scale global competition. The days ofunlimited, inexpensive gasoline are gone forever. It is time for a bold new approachthat goes beyond anything we have done in the past. So, in January 2006, welaunched the most fundamental restructuring in our history, which we call the "WayForward" plan. Developed by senior executives Mark Fields and Anne Stevens andtheir team, Way Forward is a comprehensive plan for restructuring and reinvigoratingour automotive business in North America. It touches every piece of our NorthAmerican business to make it more customer-focused, product-driven and efficient,including:

A renewed commitment to bold design, improved safety and technological innovationto differentiate Ford Motor Company and its products in the marketplace.

New product investments using Ford’s global architectures and scale to deliver morenew products faster, including more crossovers, hybrid vehicles and new small cars,as well as increased spending to strengthen Ford’s truck leadership and launchproducts in new segments to reach more customers.

More clarity for the Ford, Lincoln and Mercury brands, with a sharper focus on thecustomer and a clear point of view that will appeal to more buyers.

Pricing that is clear, credible and simple, which will further improve residual values.

North American capacity will be realigned to match demand - with 14 manufacturingfacilities to be idled - resulting in significant cost savings and reduced employment of25,000-30,000. Capacity will be reduced by 1.2 million units, or 26 percent, by 2008,which represents the majority of actions within the plan’s 2006-2012 period.

Salary-related costs cut 10 percent in North America, with the reduction of theequivalent of 4,000 salaried positions by the end of the first quarter 2006. In addition,the company’s officer ranks are being reduced 12 percent by the end of the firstquarter.





Material cost reductions, excluding special items, of at least $6 billion by 2010*

A new low-cost manufacturing site is planned for the future. This plan will restore ourNorth American automotive operations to profitability by 2008. It reflects lessons fromour successes around the world - including Mazda, where Mark led a remarkableturnaround by telling his team: "Change or die." The Way Forward has similar strongmedicine for our North American business. But it also contains the vision and strategicfocus to rebuild the business, because we know we can’t just cut our way to success.Along with our substantial cost restructuring, we are changing the business modelthat’s existed for many decades at Ford.

How will we do this?

First, we are taking a more far-sighted approach to creating shareholder value.Because of the tremendous volatility of market conditions, we will no longer issuequarterly or annual earnings guidance. We still have extremely rigorous targets forcosts, capacity utilization and other traditional metrics. But we want to underscore animportant point inside the company and out: We cannot succeed in the long run ifwe’re focused only on the short term.

Instead, we are guided by our long-term goals of building brand, satisfying customers,developing strong products and accelerating innovation. We also will be managing toallow our employees more freedom, to take smart risks and to demonstrate theircreativity. Over time, we believe this approach will lead to sustainable profitability.You’ll be able to judge our results as we report our progress. Second, we’re going tosharpen our focus on the people who determine our success - our customers. We’regoing to go way beyond what we’ve ever done before at Ford to find out what’s ontheir minds. Our business decisions will originate from our knowledge of what ourcustomers want, both today and tomorrow. We’re going to figure out what they wantbefore they even know it, and we’re going to give it to them. In the past, our productdecisions were sometimes driven by plant capacity concerns. From now on, ourproducts will be designed and built to satisfy customers, not just fill factories.

This is going to require change number three: We are unleashing our spirit ofAmerican innovation. To me, innovation is seeing what others can’t see, and usingthat vision to build what others have never built. Innovation resolves contradictionsand flattens old barriers. It’s the heart of all progress. We have a proud history ofinnovation at Ford. It is what built our company and made it great. Innovation helpedus create the first affordable car and put the world on wheels. We are going to reclaimthis legacy to build a distinct competitive advantage.





We will use innovation to drive the bold American designs of our cars and trucks,giving them the uniquely American look and feel that reflect our country’s spirit,ingenuity and sense of adventure.

We also will use innovation to drive breakthrough advances in safety. Ford and Volvoengineers are exemplifying that by working together on safety features such as a newcollision-avoidance system, night-enhanced vision and the next generation air bag.The 2006 Ford Five Hundred and Mercury Montego with optional side air bags, werethe world’s only large sedans to earn the Insurance Institute for Highway Safety’shighest "Top Safety Pick-Gold" rating. The chassis of these vehicles was co-designedby Ford and Volvo engineers.

Finally, American innovation will drive our new advances in fuel-efficiency, to offsethigh gas prices and reduce our impact on the environment and dependence onforeign oil. Currently, we are offering four new flexible-fuel vehicles for 2006 that runon a mixture of gasoline and ethanol, a renewable resource, including the Ford F-150pickup truck. By 2010, more than half our Ford, Lincoln and Mercury products willhave hybrid capability. We will have the capacity to produce up to a quarter of a millionhybrids a year, and scale up as the market demands.

A good example of innovation in action is Ford Escape Hybrid. Escape was the firsthybrid ever designed, engineered and built by an American automaker. It generatedmore than a hundred patents as well as new design techniques that we are using nowto develop other products. The Ford Rouge Center in Michigan is another example ofwhere innovation will take us. Despite cynicism and institutional barriers, we built themost progressive assembly plant in the world at the Rouge. It marries lean, flexibleand environmentally responsible manufacturing to produce America’s best-sellingvehicle, the F-Series truck. Over time, the Rouge will save us many millions of dollars,not just because of its plant-covered roof, but in energy costs for heating, cooling andlighting.

Projects like these are going to be the rule at Ford, not the exception. We are movingfrom a culture that discourages innovation back to a company that celebrates it.

As part of that effort, we recently sent out a mailing to 120,000 U.S. dealers,employees and retirees asking for ideas. We also launched an innovation Web site inNovember to solicit ideas from employees. In its first month, we received more than1,000 ideas, and we are following up on some very promising ones.

We also are going to design compensation plans that reward new thinking. Thiscompany was founded by an innovator; we want to make sure that today the companyis overflowing with innovators. We will find them, encourage them and reward them.





This is what it is going to be like at Ford: far-sighted, customer-focused andinnovative. The Way Forward has already begun, and the proof is in our products. In2005, for the first time since 1993, we gained car market share in the U.S. That gainwas due to strong sales of a number of great new products such as Ford Mustang,Five Hundred and Fusion; Mercury Montego and Milan; and Lincoln Zephyr. We alsohad the best-selling crossover utility vehicle (CUV) in the U.S., Ford Escape, andincreased our total CUV sales by 28 percent. Ford F-Series was the best-selling truckin the U.S. for the 29th year in a row, selling more than 900,000 units for the secondstraight year.

We have more great products on the way. We have a comprehensive and realisticplan to move us forward. And we have the dedicated and talented people of FordMotor Company determined to deliver outstanding results. All of which gives me greatconfidence in our future.

Addressing the challenges we face, particularly in North America, is going to bedifficult and at times painful. Winning will require sacrifices by the people of Ford, andthere will be fewer of us in the future than there are today. We take these toughactions with a sense of compassion and gratitude for those who have served us withall their hearts. But we are pressing ahead rapidly for the good of all of ourstakeholders.

We are embarked on a journey that will be seen as a turning point in our history. Weare determined to seize our heritage of innovation and emerge stronger than we’veever been.




Ford Motor CompanySWOT Analysis

SWOT ANALYSIS

Ford Motor Company (Ford) is one of the largest automotive manufacturers in theworld. The company’s automotive vehicle brands include Aston Martin, Ford, Jaguar,Land Rover, Lincoln, Mazda, Mercury and Volvo. The company manufactures anddistributes automobiles in 200 markets across six continents. The Ford Asia, Africaand Ford Mazda operations recorded strong performance in fiscal 2005. Strong FordAsia, Africa and Ford Mazda could prove to be a significant revenue and profit driverin the coming years. Intense competition from Japanese companies, however, couldlead to further deterioration in the North American operations of Ford.

Strengths

Strong Ford Asia, Africa and Ford Mazda operations

The Ford Asia, Africa and Ford Mazda operations recorded strong performance infiscal 2005. Revenues from Ford Asia, Africa and Ford Mazda reached $8,245 millionin 2005, up 18.5% over 2004. More importantly, this segment recorded an incomebefore taxes of $297 million in fiscal 2005, up from $82 million in fiscal 2004. StrongFord Asia, Africa and Ford Mazda could prove to be a significant revenue and profitdriver in the coming years.

Growing Ford Europe and PAG

The Ford Europe and Premier Automotive Group (PAG) recorded strong revenuegrowth in fiscal 2005. The Ford Europe and PAG primarily include the sale of Ford-brand vehicles in Europe and Turkey as well as sale of PAG brand vehicles (Volvo,Jaguar, Land Rover and Aston Martin). Revenues from Ford Europe and PAGreached $60,258 million in 2005, up 11.3% over 2004. Ford Europe and PAGaccounted for 34% of total revenues. Growing Ford Europe and PAG has enabled thecompany to offset revenue decline in the Americas division.

Strengths WeaknessesStrong Ford Asia, Africa and Ford Mazda operations

Growing Ford Europe and PAG operations

Profitable financial services division

Weakening North American automotive operations

Tarnished brand image

Large unfunded pension and other obligationsOpportunities ThreatsThe way forward plan

Hybrid vehicles

Opportunities in India and China

Rising raw material prices

Increasing competition

Low capital spending





Profitable financial services division The financial services division, Ford MotorCredit, is largely responsible for keeping the company afloat. In fiscal 2005, thefinancial services division has recorded income before taxes of $5,891 million, upfrom $5,008 million in fiscal 2004. In contrast, the automotive division recorded lossbefore taxes of $3,895 million in fiscal 2005, up from $155 million in fiscal 2004. As aresult, the company was able to record a net profit of $2,024 million in fiscal 2005. Inrecent years, the problems of automotive division have adversely affected the creditrating of the financial services division. This has forced the financial services divisionto resort to securitizing of retail auto loans, auto leases and lines of credit to cardealers on its books for raising money. As a result, revenues of this division havefallen in recent years. Yet financial services division continues to remain profitable.Ford Motor Credit continues to offset losses of the automotive operations and enablesthe company to remain in black.

Weaknesses

Weakening North American automotive operations

Ford’s automotive operations in North America recorded a weak performance in fiscal2005. Revenues from automotive operations in North America fell by 2.4% toapproximately $80,600 million in fiscal 2005. Furthermore, automotive operations inNorth America recorded a loss before taxes of $2,500 million in fiscal 2005, ascompared to an income before taxes of $684 million in fiscal 2004.

The weakening of automotive operations in North America is due to competition fromJapanese companies and a market shift away from fuel-guzzling light trucks such assports utility vehicles toward more fuel efficient vehicles. Ford relies more on trucksales than other vehicle manufacturers. Truck sales accounted for 67.2% of its USvehicle sales, whereas in case of most other vehicle manufacturers, truck salesaccount for only 56% of total vehicle sales. Stagnating truck sales in the US, onaccount of high fuel prices, has hurt Ford more than the others. Japanese competitorssuch as Toyota have also taken market share away from Ford. The company’s shareof the US light vehicle market, the largest in North America, has fallen from 19.3% infiscal 2004 to 18.2% in fiscal 2005. Ford’s automotive operations in North Americaaccounted for about 45.5% of total revenues in fiscal 2005. Any continued weakeningof automotive operations in North America would adversely affect the financial andmarket position of the company.

Tarnished brand image

The brand image of Ford has been tarnished owing to persistent product recalls. In2000, the US Department of Transportation investigated 271 tire tread separationslargely involving Ford’s sports utility vehicle, Explorer. Ford spent $2.1 billion in 2001





replacing 13 million tires made by Bridgestone/Firestone. In 2001, Ford recalled newEscape sports utility vehicle five times in four months owing to quality issues DuringJanuary 2005, Ford recalled about 792,000 pickup trucks and sport utility vehiclesbecause of a fire risk from overheating of the speed control switch. According to aleading consumer magazine, an eight year old Toyota is as reliable as a three year oldFord with 54 problems per 100 vehicles. Tarnished brand image has negativelyimpacted Ford’s sales in the US.

Large unfunded pension and other obligations

Ford has significant unfunded pension, health care and life insurance obligations. Bythe end of 2005, Ford’s total pension obligations, including the US and non-US plans,totaled $74,595 million, while pension assets (US and non-US) totaled $63,784million, which resulted in unfunded pension obligations of $10,811 million. Total healthcare and life insurance obligations of Ford stood at $39,274 million at the end of 2005,while the plan assets stood at $6,497 million, resulting in unfunded health care and lifeinsurance obligations of $32,777 million. Unfunded pension, health care and lifeinsurance obligations would negatively impact the cash flow position of the company.

Opportunities

The way forward plan

In the beginning of 2006, Ford launched a restructuring plan to improve theperformance of its automotive business in North America. This plan aims to make theNorth American business more customer-focused, product-driven and efficient. TheNorth American capacity is likely to be realigned to match demand, with 14manufacturing facilities to be idled, resulting in significant cost savings and reducedemployment of 25,000-30,000 employees. Capacity will be reduced by 1.2 millionunits, or 26% by 2008, which represents a majority of actions within the restructuringplan’s 2006-2012 period. ’The way forward plan’ focuses on restoring Ford’s NorthAmerican automotive operations to profitability by 2008.

Hybrid vehicles

By 2010, more than half of Ford, Lincoln and Mercury products are expected to switchover to hybrid electric engines. Ford is planning to expand its capacity to produce upto a quarter of a million hybrid vehicles a year. Demand for hybrid vehicles isincreasing worldwide owing to stringent emission standards, higher fuel prices andgrowing environment-consciousness. Hybrid engines are more fuel efficient and lesspolluting than conventional gasoline and diesel engines. Ford’s focus on hybridelectric vehicles could help in turning around its North American operations.

Opportunities in India and China





Ford reinforced its commitment to the Indian market during 2005 by launching theFord Fiesta. While in China, Ford sales were up 46% in 2005. China and India areexpected to drive global demand for light vehicles through much of this decade. Lightvehicle production in China is expected to increase from 4.3 million units in 2005 to7.7 million units in 2010 while light vehicle production in India is forecast to increasefrom 1.4 million units to 2.5 million units during the same period. Growing vehiclemarkets in India and China would provide an opportunity for the company to diversifyits revenues.

Threats

Rising raw material prices

Steel prices, after declining by about 30% in 2005, have stabilized, but could rise tohigher levels if industry consolidation continues. The price of hot rolled steel coil rosefrom $386 per ton in January 2004 to a high of $653 per ton in November 2004 andthereafter fell to a low of $493 per ton in July 2005 owing to de-stocking in inventoriesand changeover of China from a net importer to a net exporter. Since then steel priceshave stabilized and recovered some of the lost ground. Hot rolled coil prices averaged$579 a ton during the first four months of 2006. Demand outlook for steel hasstrengthened in recent months owing to pick up in global industrial production andrestocking due to low inventory levels. Hot rolled coil prices are expected to average$572 a ton in 2006. Ongoing industry consolidation in the steel industry, however,could push prices to higher levels. In June 2006, for instance, Arcelor merged withMittal Steel to form the largest steel company in the world. High crude oil prices havealso led to an increase in polymer prices. Plastic materials are used extensively in theautomotive industry. Oil prices reached as high as $78.4 a barrel during July 2006.Recovering steel prices and rising polymer prices could adversely affect thecompany’s profit margins.

Increasing competition

Ford’s market share in the US light vehicle market has declined from 22.8% in 2001 to18.2% in 2005 thanks to competition from Japanese companies among otherreasons. Ford is facing intense competition from Japanese vehicle manufacturerssuch as Toyota and Honda. Toyota’s share of US light vehicle market has risen from10% in 2001 to 13% in 2005, while Honda’s share has improved from 6.9% in 2001 to8.4% in 2005. Nissan, another Japanese competitor, improved its market share from4.1% to 6.2% during the same period. After establishing a strong market position inthe passenger cars segment, Japanese companies are now eyeing the lucrative lighttrucks segment. Toyota, for instance, is aggressively pursuing market share in thelight trucks segment through its Tundra range of trucks. Intense competition from





Japanese companies could lead to further deterioration in the North Americanoperations of Ford.

Low capital spending

Ford’s capital spending, including research and development expenditure, is lowerthan its competitors, which could affect its competitiveness going forward. In 2005,Ford’s capital spending was $1,766 per vehicle, as compared to Honda’s $3,193 pervehicle and Toyota’s $2,937 per vehicle. Consequently, Ford would be able to replaceonly 59% of its existing vehicle range with new models during 2006-2009, whileHonda would replace 93% of its existing vehicle range with new models during thesame period. Toyota, meanwhile, is poised to replace 90% of its existing productrange during 2006-2009. An aging vehicle range would adversely affect growthprospects of Ford.




Ford Motor CompanyTop Competitors

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