More Products People Want

More Products People Want Ford Motor Company / 2008 Annual Report Contents Operating Highlights 1 About the 2008 2007 Company Sales and Revenues (a) 2 A Message from Worldwide wholesale unit volumes the Executive by automotive segment (in thousands) Chairman 3 A Message from the President Ford North America 2,329 2,890 and CEO Ford South America 435 438 Ford Europe 1,820 1,918 8 Board of Directors Volvo 359 482 and Executives Ford Asia Pacific and Africa 464 535 9 Financial Contents Jaguar Land Rover and Aston Martin 125 292 144 Shareholder Total 5,532 6,555 Information 145 Global Overview Sales and revenues (in billions)

Automotive $ 129.2 $ 154.4 Financial Services 17.1 18.1

Total $ 146.3 $ 172.5

Financial Results (a) Income/(Loss) before taxes (in billions)

Automotive $ (11.8) $ (5.0) Financial Services (2.6) 1.2

Total $ (14.4) $ (3.8)

Net income/(loss) (in billions) $ (14.7) $ (2.7)

Diluted net income/(loss) per share of Common and Class B Stock $ (6.46) $ (1.38)

Cash and Spending (a) Automotive capital expenditures

Amount (in billions) $ 6.6 $ 6.0 As a percentage of Automotive sales 5.1% 3.9%

Automotive cash at year end (in billions)

Automotive gross cash (b) $ 13.4 $ 34.6 – Cash net of Automotive debt (12.4) 7.7

Shareholder Value Dividends per share $– $- Total shareholder returns % (c) (66)% (10)%

(a) Data presented includes Jaguar Land Rover for 2007 and 2008 and Aston Martin for 2007. (b) Automotive gross cash includes cash and cash equivalents, net marketable securities, loaned securities and certain assets contained in a Voluntary Employee Beneficiary Association trust (“VEBA”), a trust which may be used to pre-fund certain types of company- paid benefits for U.S. employees and retirees. Before 2008, we included in Automotive gross cash those VEBA assets that were invested in shorter-duration fixed income investments and could have been used within 18 months to pay for benefits (“short-term VEBA assets”). As a result of our agreement with the UAW regarding retiree health care obligations, we did not in 2008 and do not expect in the future to have significant short-term VEBA assets. (c) Source: Bowne

Ford Motor Company | 2008 Annual Report About the Company

More Products People Want Ford Motor Company, a global Ford Motor Company / 2008 Annual Report automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles across six continents. With about 213,000 employees and about 90 plants worldwide, the company’s wholly owned brands include Ford, Lincoln, Mercury and Volvo. The company provides financial services through Ford Motor Credit Company. For more information regarding Ford’s On the Cover products, please visit www.ford.com. The new European Ford Fiesta is purposely bold and sophisticated, designed to clearly stand out from any other car in markets around the world. In fact, the new Fiesta is specifically designed to appeal to increasingly savvy customers who value “Offering consumers more fuel-efficient vehicle fuel efficiency, technology and aesthetics. The highly anticipated North American choices, including improving and increasing our Ford Fiesta arrives in early 2010. hybrid vehicle offerings, is part of Ford’s broad plan to deliver technology solutions for affordable fuel economy for millions.”

– Derrick Kuzak, Ford group vice president, Global Product Development

Ford’s next-generation hybrid propulsion system builds upon the proven success of the Ford Escape and Mercury Mariner Hybrids, delivering class-leading fuel economy for the all-new 2010 Ford Fusion and Mercury Milan Hybrids that debut later this year.

Ford Motor Company | 2008 Annual Report 1 A Message

Affordable Fuel Economy from the for Millions Executive Ford is committed to delivering the best or among the best fuel efﬁciency with every Chairman new vehicle we introduce. For example, the 2010 Ford Fusion is now America’s most fuel efﬁcient midsize sedan for both This year I am marking my 10th year as Chairman and 30th year as an employee of the hybrid and conventional gasoline Ford Motor Company. In spite of the many challenges we face, I have never been more models. Fusion Hybrid delivers 41 mpg excited about our prospects for the future. in city driving – better than the Toyota Camry – while the four-cylinder Fusion S In 2008 we accelerated our efforts to transform Ford Motor Company into a growing gets 34 mpg highway and 23 mpg city, and profitable global automotive leader. In addition to streamlining and globalizing our topping both Camry and the Honda operations, we introduced more products that customers really want and value, a key Accord. And we’re doubling our hybrid element of our plan. Unfortunately, the tremendous progress we have made has been production in North America in 2009. more than offset by an economic crisis of historic proportions.

As a result, after a profitable first quarter, we ended the year with a substantial net loss. While we recognize the seriousness of our current situation, we remain confident in our plan.

In the last two years we have aggressively restructured our operations as we work to match production to demand. At the same time, we have shifted to a more balanced product lineup offering the highest quality, safety, value and fuel economy. Today our product quality is unsurpassed by Toyota or Honda. We have more vehicles chosen as top safety picks by the Insurance Institute for Highway Safety than any other brand. We also have made significant advances toward achieving fuel economy leadership. Ford’s Electriﬁcation Strategy We are introducing EcoBoost™ engines, six-speed transmissions and other fuel- Ford Motor Company is embarking on an saving technologies across a wide range of vehicles. This year we will double our hybrid aggressive plan to bring pure battery- models and volumes in the United States. In 2010 we will deliver a commercial battery- electric vehicles, next-generation hybrids powered vehicle for fleet customers and in 2011 a battery-powered passenger vehicle. and a plug-in hybrid to market quickly In 2012, we will deliver our third generation of hybrid vehicles, including a plug-in version. and more affordably over the next four years. It’s the next step in our The hard work of our global team has positioned us to survive the current recession commitment to deliver fuel economy and succeed when the recovery begins. We are undergoing the most rapid and far- solutions for millions. The plan leverages ranging transformation in our history so that we can lead the way into the future with our ONE Ford product vision by taking advantage of high-volume, global great new products. vehicle platforms. We’re also forging Thank you for your continued support of our efforts. partnerships with suppliers, electric utilities and other key stakeholders to meet the technical challenges of making vehicle electriﬁcation an affordable mass-market reality. William Clay Ford, Jr. Executive Chairman March 6, 2009

2 Ford Motor Company | 2008 Annual Report A Message from the Safety Leadership

President Ford Motor Company has more Top Safety Placeholder to be shot Picks from the Insurance Institute for and CEO Highway Safety – totaling 16 – than any other brand. The new Ford F-150 is the In 2008 the automotive industry faced a deep recession in the United States and latest to earn this rating, joining other 2009 models, including the Ford Flex, Europe, the worst worldwide financial crisis in decades and a dramatic slowdown in Ford Escape, Lincoln MKS and Mercury all major global markets. Like all automakers, Ford Motor Company was adversely Mariner. Robust body structures and impacted by these extraordinarily difficult economic conditions. innovative safety technologies – such as AdvanceTrac® with Roll Stability However, the plan Ford is operating under – what we call ONE Ford – is helping us Control™ that help drivers prevent endure these current conditions and position ourselves for future success. Our plan has skidding and rollovers – play key roles. been consistent for the past two years: Ford is broadening its safety leadership to include crash avoidance with new t"HHSFTTJWFMZSFTUSVDUVSFUPPQFSBUFQSPGJUBCMZBUUIFDVSSFOUMPXFSEFNBOEBOEUIF technologies such as MyKey™, which changing model mix. allows parents to limit the vehicle’s top t"DDFMFSBUFUIFEFWFMPQNFOUPGTBGF GVFMFGGJDJFOU IJHIRVBMJUZOFXQSPEVDUTUIBU speed and audio volume to encourage safer teen driving, and the Collision customers want and value. Warning with Brake Support radar t'JOBODFPVSQMBOBOEJNQSPWFPVSCBMBODFTIFFU warning system to help drivers avoid rear-end accidents. t8PSLUPHFUIFSBTPOFUFBN MFWFSBHJOHPVSHMPCBMBTTFUT

The Ford Taurus - the car that changed America’s view of full-size sedans - is all-new for 2010 and ready to take on the world’s best, with an upscale new design, impeccable driving dynamics and class-leading technologies. The famed performance model, Taurus SHO, returns for 2010 (above).

Ford Motor Company | 2008 Annual Report 3 ONE Ford has transformed us into a different auto company: different than others today and from ourselves a few years ago. However, the worldwide economic slowdown – driven by tight credit markets and weak consumer confidence – has shaken the foundation of even the strongest ONE FORD companies, in the automotive sector ONE Ford expands on the company’s four-point business plan for achieving success globally. and in every other industry. It encourages focus, teamwork and a single Certainly, the severe economic global approach, aligning employee efforts challenges of 2008 had a significant toward a common deﬁnition of success and

CO optimizing their collective strengths worldwide. 2 impact on our results for the year, both in terms UP TO IMPROVED 20 PERCENT FUEL ENGINE The elements of ONE Ford are: IMPROVEMENT LOWER PERFORMANCE EMISSIONS of our operating losses and cash flow. After

TORQUE UP TO 15 PERCENT REDUCTION IN earning a profit in the first quarter of 2008, ONE TEAM: ONE Ford emphasizes the CO2 EMISSIONS FUEL ENGINE EFFICIENCY PERFORMANCE we had an overall net loss of $14.7 billion for importance of working together as one team the year, with $6 billion of that coming in the to achieve automotive leadership, which is measured by the satisfaction of our customers, Ford EcoBoost™ Engine fourth quarter. That compares with an overall employees and other essential business Technology Debuts net loss of $2.7 billion in 2007. Our worldwide partners, such as our dealers, investors, Automotive revenue was $129.2 billion in 2008, suppliers, unions/councils and communities. One of Ford Motor Company’s key compared with $154.4 billion in 2007. At year- initiatives to deliver fuel economy ONE PLAN: The company’s four-point plan end 2008, our total Automotive liquidity was leadership makes its debut this year. consists of: balancing our cost structure with $24 billion, including gross cash of $13.4 billion. It’s Ford’s clever EcoBoost engine our revenue and market share; accelerating technology, which delivers significant Fortunately, we began aggressive development of new vehicles that customers gains in fuel economy along with a great restructuring efforts under ONE Ford before want and value; financing our plan and performance drive feel. EcoBoost gives rebuilding our balance sheet; and working the current crisis began. We eliminated excess the Lincoln MKS the power and torque of together to leverage our resources around a V-8 engine with the fuel economy of a manufacturing capacity, closing plants and the world. V-6 engine, thanks to the combination of reducing our work force. We negotiated a turbocharging and direct fuel injection. new contract with the UAW to improve our ONE GOAL: The goal of ONE Ford is to create The new 3.5-liter V-6 is the first in a wave an exciting and viable company with profitable competitiveness. We shifted to a balanced of EcoBoost engines coming from Ford. growth for all. By 2013, more than 90 percent of Ford’s product lineup offering high quality, proven North American lineup will be available safety, excellent fuel economy and good value. with EcoBoost technology.

Ford’s senior management team is focused on continuing to implement the company’s global ONE Ford plan, left to right: Sue Cischke, Ray Day, Nick Smither, Jim Farley, Lewis Booth, Bennie Fowler, Mike Bannister, Alan Mulally, Mark Fields, John Fleming, John Parker, Derrick Kuzak, Felicia Fields, Joe Hinrichs, Ziad Ojakli, Tony Brown and David Leitch.

4 Ford Motor Company | 2008 Annual Report As part of our ONE Ford plan we also secured credit in advance of the financial market meltdown. As a result of all of these actions and based on our current planning assumptions, we have sufficient liquidity to make it through this global downturn while maintaining our product plans, without the need for government bridge loans. However, as we told Congress in our business plan submission in December 2008, in this environment a number of scenarios could put severe pressure on our Automotive liquidity, causing us to require such a loan – including most importantly a significantly deeper economic downturn, or a significant industry event such as the uncontrolled bankruptcy of a major competitor or major suppliers that caused a major disruption to our supply Unsurpassed Quality Built In base or dealers. Ford, Lincoln and Mercury vehicles continue We continue to take the decisive actions necessary to lower production to match their impressive quality gains, collectively lower worldwide demand and reduce costs. We expect this will contribute to significantly improving for the fourth straight year and reduced negative Automotive operating-related cash flow in 2009 as compared with moving into a virtual tie with Honda and Toyota for the 2008 model year, according 2008, and position Ford for growth when the economy rebounds. Based on our current to the latest U.S. Global Quality Research planning assumptions, we believe we are on track for total Company and North American System (GQRS) study. Automotive pre-tax results and Automotive operating-related cash flow to be at or above breakeven in 2011, excluding special items. Our ultimate goal remains unchanged: Ford’s commitment to world-class quality to create a viable Ford Motor Company and a lean global enterprise delivering profitable extends beyond Things Gone Wrong (TGWs). Ford also designs into its vehicles growth for all. a number of customer-driven product Looking ahead, we anticipate very weak global industry sales volumes during features, such as fuel economy, superior 2009, with a full-year decline in the range of about 15% from 2008 levels. Significant craftsmanship, and quiet interiors. These features represent the “things gone right” government policy stimulus is being implemented in most markets and is expected that are also critical to an overall satisfying to improve the environment for sales later this year. Financial markets remain under ownership experience. significant stress, however, and further government and central bank actions are needed to provide liquidity and stabilize banks.

For Ford, the year ahead will be marked by an unprecedented number of new product introductions. Consistent with our ONE Ford plan, we are introducing more products that customers want and value.

Ford Motor Company | 2008 Annual Report 5 Smart Technologies Keep You In North America, 2009 will be the first full sales year for the new Ford F-150 pickup. Connected and Informed We also will introduce upgraded gas and new hybrid versions of the Ford Fusion midsize sedan; a new Ford Mustang, available as a coupe with optional factory-installed glass roof or convertible model, and Shelby GT500; a new Ford Taurus; a high-performance Taurus SHO with an EcoBoost™ engine; a new type of small commercial van for the North American market called the Ford Transit Connect; an upgraded Mercury Milan and new Milan Hybrid; an upgraded Lincoln MKZ; a Ford Flex and Lincoln MKS with a fuel-efficient EcoBoost engine, and an all-new Lincoln MKT premium crossover also available with EcoBoost. Ford SYNC® Ford is an automotive company that’s In Europe, 2009 is the first full sales year for the Ford Fiesta. We also will launch our thinking like a consumer electronics fastest volume production model ever, the new Focus RS; and introduce the new Ford company. Our affordable, industry-leading Ka progressively across the region. The Ford Kuga crossover will be available for the first SYNC technologies and services are time with a 2.5-liter turbocharged gas engine and five-speed automatic transmission. going global and expanding in-vehicle connectivity for our customers. SYNC In Asia, we will introduce the all-new Ford Fiesta five-door and four-door sedan in not only delivers emergency, diagnostic China, and build it in Nanjing. The Fiesta also will be introduced in Australia and New and information services, but in the Zealand. Other new product introductions in 2009 include the Ford Ranger compact summer of 2009 it adds real-time trafﬁc pickup and Ford Everest SUV, both with advanced, efficient turbo-diesel engines. reports and turn-by-turn directions on the road. SYNC’s success is creating In South America, 2009 will provide still more evidence of the growing strength of our demand outside North America. We’ll ONE Ford plan. We are bringing to market the new European-based Ford Focus in Brazil, be making it available in Europe in 2010 Argentina and Venezuela. In Brazil, the North American-based Ford Edge also goes on followed by the Asia Paciﬁc region. sale, along with the European-based Ford Transit.

Ford also is on track with its plan to invest in new, smaller, fuel-efficient vehicles and achieve a more balanced global product portfolio. Within the next five years, all Ford vehicles competing in global segments will be common in North America, Europe and Asia, fulfilling a key element of our ONE Ford plan. This includes Ford Fiesta- and Focus-sized small cars, Fusion- and Mondeo-sized midsize cars and utilities, as well as commercial vans. Importantly, every new product will be the best or among the best in its segment ™ Ford SmartGauge for fuel economy, while providing top quality, safety, smart technologies and value. Ford’s SmartGauge™ with EcoGuide gives hybrid owners a more connected, fuel- We also are launching the most aggressive vehicle electrification program in the efﬁcient driving experience. An innovative industry. By 2012, we plan to produce at least four high-mileage vehicles that will use new instrument cluster that provides real- the most advanced forms of battery technology in a family of hybrids, plug-in hybrids time information to help drivers maximize and battery-powered vehicles. fuel efﬁciency debuts on the 2010 Ford Fusion and Mercury Milan Hybrids.

No Park 2

Active Park Assist The innovative new feature available on the Lincoln MKS ﬂagship sedan and all-new Lincoln MKT seven-passenger luxury crossover uses an ultrasonic- based sensing system and Electric Power Assisted Steering (EPAS) to position the vehicle for parallel parking, calculate the optimal steering angle and quickly steer Lincoln is offering full-size luxury crossover customers a fresh new choice with the 2010 Lincoln MKT, a three-row tourer that delivers the optimal blend of fuel economy, performance, technology and spaciousness. the vehicle into a parking spot.

6 Ford Motor Company | 2008 Annual Report Manufacturing Flexibility

It pays to be flexible, and Ford Motor Company is investing in our manufacturing facilities – like the transformation of the Michigan Truck Plant for small-car production – to increase their flexibility to produce multiple models in the same plant. By 2013, every North American Ford Ford is leveraging its global portfolio of products to meet the unique needs of American small-business owners with the assembly plant will have a flexible 2010 Transit Connect, a spacious new fuel-efficient alternative to larger commercial vehicles that’s ideal for navigating body shop. U.S. cities. Transit Connect goes on sale in the U.S. this summer.

In addition to producing these vehicles, we are employing a comprehensive approach to electrification that will tackle commercial issues such as batteries, standards and infrastructure. We are working with Southern California Edison, the Electric Power Research Institute and six additional electric utility companies from New York, Atlanta, Detroit and Raleigh to develop plug-in hybrid vehicles and infrastructure.

Despite an extremely difficult year we continue to see many positive developments. These ongoing improvements make us more confident than ever that we have the right plan and are taking the right actions to survive the downturn and emerge as a lean, globally integrated company poised for long-term profitable growth. As always, we thank you for your support of our efforts. Community

Ford Motor Company Fund and Community Services (www.community. ford.com) promotes corporate citizenship, philanthropy, volunteerism and cultural diversity in communities where we do Alan R. Mulally business. The Fund supports initiatives President and and institutions that foster innovative Chief Executive Officer education, auto-related safety and March 6, 2009 American heritage and legacy. Ford’s presence in the community also provides opportunities for salaried employees and retirees to volunteer through the Ford Volunteer Corps.

The strengths of the European Ford Kuga extend beyond its high safety levels. Kuga boasts an exciting design and a convincing driving quality – two recognized and acclaimed Ford brand characteristics. Kuga also has high levels of comfort and load carrying capability, as well as an impressive sustainability performance.

Ford Motor Company | 2008 Annual Report 7 Board of Directors and Executives*

Board of Directors Mark Fields Other Vice Presidents Stephen G. Butler Executive Vice President and President, The Americas Darryl B. Hazel (1,5) John Fleming Senior Vice President and President, Customer Service Kimberly A. Casiano Executive Vice President, Chairman, Ford Europe Division (1,3,5) and Volvo Joseph Bakaj Edsel B. Ford II John G. Parker Product Development, Ford Europe (3,4) Executive Vice President, Asia Pacific and Africa Stephen E. Biegun William Clay Ford, Jr. Thomas K. Brown International Governmental Affairs (3,4) Group Vice President, Purchasing Ken Czubay Irvine O. Hockaday, Jr. Mei-Wei Cheng U.S. Sales and Marketing (1,5) Group Vice President, Executive Chairman, Raymond F. Day Ford Motor China Richard A. Manoogian Communications (2,5) Susan M. Cischke Robert J. Graziano Group Vice President, Sustainability, Environment Ellen R. Marram President and CEO, Ford Motor China and Safety Engineering (2,3,5) Ken Macfarlane James Farley, Jr. Alan Mulally Manufacturing, Ford Europe Group Vice President, Marketing and Communications (4) Paul A. Mascarenas Felicia J. Fields Dr. Homer A. Neal North America Engineering Group Vice President, Human Resources and (3,4,5) Martin J. Mulloy Corporate Services Gerald L. Shaheen Labor Affairs Bennie W. Fowler (1,5) Stephen T. Odell Group Vice President, Quality John L. Thornton President and Chief Executive Officer, Volvo Cars Joseph R. Hinrichs (2,4,5) Barb J. Samardzich Group Vice President, Manufacturing and Labor Affairs William Clay Ford Powertrain Engineering Derrick M. Kuzak (Director Emeritus) Neil M. Schloss Group Vice President, Product Development Treasurer David G. Leitch Committee Memberships Gerhard Schmidt Group Vice President and General Counsel (1) Audit Research and Advanced Engineering and Chief Technical (2) Compensation J Mays Officer (3) Sustainability Group Vice President, Design and Chief Creative Officer (4) Finance Robert L. Shanks Ziad S. Ojakli Controller, The Americas (5) Nominating and Governance Group Vice President, Government and Community Philip G. Spender Relations Executive Vice President, Mazda Motor Corporation Executive Officer Group Nicholas J. Smither Ingvar Sviggum William Clay Ford, Jr. Group Vice President and Chief Information Officer Marketing, Sales and Service, Ford of Europe Executive Chairman and Chairman Peter J. Daniel James P. Tetreault of the Board Senior Vice President and Controller North America Manufacturing Alan Mulally President and Chief Executive Officer *As of March 6, 2009 Michael E. Bannister Executive Vice President, Chairman and Chief Executive Officer, Ford Motor Credit Company Lewis W. K. Booth Executive Vice President and Chief Financial Officer

Ford’s new F-150 SFE “superior fuel economy” edition delivers up to 21 miles per gallon on the highway while still providing 7,500 pounds of towing capability – fuel economy that is unsurpassed in the full-size pickup segment. For the 32nd year in a row, Ford’s award-winning F-Series is America’s best-selling truck and for 27 years in a row is America’s best-selling vehicle. The 2009 Ford F-150 has won many awards including the North American Truck of the Year, Motor Trend Truck of the Year, and Truck of Texas.

8 Ford Motor Company | 2008 Annual Report Financial Contents*

10 Management’s Discussion and Analysis of Financial Condition and Results of Operations 58 Quantitative and Qualitative Disclosures About Market Risk 64 Consolidated Statement of Income 65 Sector Statement of Income 66 Consolidated Balance Sheet 67 Sector Balance Sheet 68 Consolidated Statement of Cash Flows 69 Sector Statement of Cash Flows 70 Consolidated Statement of Stockholders’ Equity 71 Notes to the Financial Statements 139 Report of Independent Registered Public Accounting Firm 141 Selected Financial Data 142 Employment Data 142 Management’s Report on Internal Control Over Financial Reporting 142 New York Stock Exchange Required Disclosures 143 Stock Performance Graph

* Financial information contained herein (pages 10-143) is excerpted from the Annual Report on Form 10-K for the year ended December 31, 2008 of Ford Motor Company (referred to herein as “Ford”, the “Company”, “we”, “our” or “us”), which is available on our website at www.ford.com.

Ford Motor Company | 2008 Annual Report 9 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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10 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 11 Management’s Discussion and Analysis of Financial Condition and Results of Operations

Trends and Strategies

As indicated, we are in the midst of a global economic crisis that has included a sudden and substantial decline in global automotive industry sales volume. The dramatic decline in industry sales volume, combined with tight credit markets, other economic factors and trends described above, and the costs associated with transforming our business, have put significant pressure on our liquidity (as evidenced during 2008 by negative Automotive gross cash flow of $21.2 billion and total Company net loss of $14.7 billion).

While the economic environment worsens, we believe that our continued focus on executing these four pillars of our plan is the right strategy to achieve our objectives: x Aggressively restructure to operate profitably at the current demand and changing model mix; x Accelerate development of new products our customers want and value; x Finance our plan and improve our balance sheet; and x Work together effectively as one team, leveraging our global assets.

Despite the worsening external economic environment, we have made significant progress in transforming our business. As we continue to execute the four pillars of our plan, we have achieved key milestones for our Automotive sector as of year-end 2008 compared with 2005: x Reduced hourly and salaried personnel levels in North America (including Automotive Components Holdings, LLC ("ACH")) by more than 60,000 employees, with additional salaried personnel reductions of about 1,200 in January 2009; x Negotiated transformational labor agreement with the United Auto Workers ("UAW") in 2007, including lower wage structure for new employees, flexible work rules, and transfer of long-term responsibility for retiree health care as described in more detail in our Annual Report on Form 10-K for the year ended December 31, 2007 ("2007 Form 10-K Report"); x Closed 12 manufacturing facilities in North America (including ACH facilities); x Divested substantial non-core assets, including Aston Martin and Jaguar Land Rover operations, allowing us to further focus our resources on our "One Ford" vision; x Sold a significant portion of our ownership in Mazda; x Improved vehicle quality around the world, and undertaken plans to introduce our smaller, more fuel-efficient European vehicles to the North American market; and x Exceeded our goal of reducing cumulative annual North America Automotive operating costs by more than $5 billion (at constant volume, mix and exchange, excluding special items).

As we execute our plan, we have stated that we are committed to taking necessary steps to continue to match our manufacturing capacity to demand. In keeping with that commitment, we are taking additional steps discussed below and in "Outlook," particularly in North America, to continue our aggressive restructuring and to finance our plan and improve our balance sheet. In addition, we have announced that we are re-evaluating strategic options for Volvo, including possible sale.

Aggressively Restructure to Operate Profitably

Manufacturing. Our U.S. manufacturing presence includes 10 vehicle assembly plants and 24 powertrain, stamping, and components plants. We are converting three of these assembly plants from production of large SUVs and trucks to small car production to support what we believe is a permanent shift in consumer preferences to smaller, more fuel-efficient vehicles. To this end, approximately 50% of future U.S. manufacturing capacity will be allocated to small- and medium-size vehicles. In addition, nearly all of our U.S. assembly plants will have flexible body shops by 2012 to enable quick response to changing consumer demands, and nearly half of our transmission and engine plants will be flexible, capable of manufacturing various combinations of transmission and engine families. In addition, we have announced plans to close two Ford and two ACH plants in the 2009–2011 period. We are exploring our options for the remaining ACH plants, and intend to transition these businesses to the supply base as soon as practicable.

Product Development. In combination with the business improvements being achieved, we expect our "One Ford" product development vision and process to deliver a broad range of highly acclaimed global vehicles, and, as announced, we plan to accelerate the development of new products designed to meet shifting consumer preferences for smaller, more fuel-efficient vehicles. With our “One Ford” product development vision, we are working to make all small- and medium- sized Ford vehicles competing in global segments common in North America, Europe and Asia by 2013. This will include Fiesta- and Focus-sized small cars, Fusion- and Mondeo-sized mid-size cars and utilities, and commercial vans. As an example of how commonality can work for us, the new Fiesta compact car that we introduced in Europe in 2008 also will be offered for sale in all major markets, including the United States, over the next few years.

12 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

Suppliers. We continue to work to strengthen our supply base in the United States, which represent 80% of our North American purchases. As part of this process, we have been reducing the total number of production suppliers eligible for major U.S. sourcing from 3,300 in 2004 to approximately 1,600 suppliers today, with a further reduction to 750 suppliers planned. We believe that our efforts at consolidation will result in more business for our major suppliers, which is increasingly important as industry sales volume declines. In addition, our move to global vehicle platforms should increase our ability to source to common suppliers for the total global volume of vehicle components, so that a smaller number of suppliers will receive a greater volume of the purchases we make to support our global vehicle platforms.

Dealers. Our dealers are a source of strength in North America and around the world, especially in rural areas and small towns where they represent the face of Ford. At our current and expected future market share, however, we have too many dealers, particularly in U.S. metropolitan areas, which makes it increasingly difficult to sustain a healthy and profitable dealer base. To address this overcapacity, we are working with our dealers in efforts to downsize, consolidate and restructure our Ford, Lincoln, and Mercury network in our largest 130 metropolitan market areas in the United States to provide targeted average-year sales for Ford dealers of more than 1,500 units and for Lincoln Mercury dealers of more than 600 units. This should result in sustainable dealer profits. As part of these efforts, the number of dealers in our Ford, Lincoln and Mercury network in the United States has been reduced from about 4,400 at the end of 2005 to about 3,800 at the end of 2008. These efforts, which include funding dealer consolidations to enhance our representation in the marketplace, will continue in the future to reduce further our dealer network to match our sales and dealer sales objectives.

Ford Credit. Ford Credit also is further restructuring its operations and improving its cost structure to reflect lower financing volumes resulting from lower automotive industry sales volumes, lower financing volumes resulting from the sale of Jaguar Land Rover operations, and its agreement with Mazda to discontinue providing financial services. These actions include forming new strategic alliances and partnerships, and reducing capital needs in international markets while continuing to streamline its operations globally. In the United States, Ford Credit continues to restructure its operations and reduce personnel, including current plans described in its Current Report on Form 8-K filed January 29, 2009.

Accelerate Development of New Products

We are committed to introducing new products that consumers want and value, and we are receiving very positive reactions from consumers, media, and independent evaluators in response to the products we introduced in 2008, which we plan to build on in 2009.

Ford North America. Ford, Lincoln and Mercury collectively increased U.S. overall and retail market share in October, November, and December 2008 – the first time the brands have posted three consecutive months of market share improvements in 12 years. Our new 2009 Ford F-150 introduced in the fourth quarter was named Motor Trend magazine’s Truck of the Year and awarded the title of North American Truck of the Year at the North American International Auto Show in January 2009; the F-Series pickup has been the best-selling truck in the United States for 32 straight years. The F-150 also was named “Top Safety Pick” by the U.S. Insurance Institute for Highway Safety ("IIHS"), and we now have the highest number of vehicles with the IIHS “Top Safety Picks” in the industry. Ford also has more U.S.-government five-star safety-rated vehicles than any other brand. In the fourth quarter of 2008, we also began production of the 2010 Ford Fusion, Mercury Milan and Lincoln MKZ sedans, as well as Fusion and Milan hybrids; the Fusion and Milan gasoline and hybrid versions offer best-in-class fuel economy. The 2010 Ford Mustang debuted with a new exterior and interior, and will arrive in dealerships in spring 2009. Ford Europe. In Europe, 2009 will mark the first full sales year for the Fiesta, which was named “Car of the Year” by What Car? magazine, Britain’s leading source of new car advice. Fiesta was the United Kingdom's best-selling model in November and December of 2008 and again in January 2009, and is already the second best-selling Ford model in Europe. The new Ford Ka reached full production in Europe and is off to a strong sales start. Ford Galaxy and Ford S-MAX were named No. 1 for reliability among Multi-Activity Vehicles by DEKRA, the German vehicle testing agency. In addition, the Ford Kuga crossover will be available for the first time with a 2.5-litre 5-cylinder Duratec Turbo gas engine and Durashift 5-tronic automatic transmission. Based on the strength of its product portfolio, Ford Europe improved its fourth quarter and full-year 2008 market share in the 19 markets we track, and Ford became the No. 2 selling brand in Europe. Ford South America. In South America, 2009 will demonstrate the growing strength of our “One Ford” plan. We are bringing the new European-based Ford Focus to Brazil, Argentina, and Venezuela. Also in Brazil, the North American- based Ford Edge will arrive in dealerships, along with the European-based Transit, building on Ford South America’s business and product success. Six additional product actions also are planned for introduction in the region in 2009.

Ford Motor Company | 2008 Annual Report 13 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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14 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations such as 911 Assist and Vehicle Health Reports, and will upgrade SYNC again in the summer of 2009 with new features such as real-time traffic reports and turn-by-turn directions. We currently offer SYNC in North America and plan to roll out the technology globally beginning in 2010, starting in Europe and then migrating to Asia Pacific. We also are developing industry-leading human-machine interface technology to improve the overall driving experience. SmartGauge™ with EcoGuide helps coach Fusion Hybrid drivers to optimize performance of their vehicle for maximum fuel efficiency. It features two high-resolution, full-color liquid crystal display screens on either side of the analog speedometer that can be configured to show different levels of information, including fuel and battery power levels, and average and instant miles per gallon reports.

Finance Our Plan and Improve Our Balance Sheet

The costs associated with the transformation of our business, combined with the effects of the sudden and substantial decline in industry sales volume that accompanied this global economic crisis and other pressures, contributed to substantial negative operating-related and other cash flow during 2008. We have announced and are on track to achieve $14 billion to $17 billion in Automotive cash improvement actions designed to improve our balance sheet in the 2009 – 2010 period, with about one half of the efforts occurring by the end of 2009 and the remainder in 2010. These announced actions include: x Reducing North American salaried personnel-related costs by an additional 10 percent by the end of January 2009, in addition to personnel-related cost actions already taken or underway globally. x Eliminating merit pay increases for North America salaried employees in 2009, and eliminating performance bonuses for global salaried employees, including the Annual Incentive Compensation Plan for the 2008 performance year. x Suspending matching funds for U.S. salaried employees participating in Ford’s Savings and Stock Investment Plan. x Reducing annual capital spending to between $5 billion and $5.5 billion, primarily enabled by reduced launch costs and increased efficiencies in Ford’s global product development system. x Reducing engineering, manufacturing, information technology and advertising costs through greater global efficiencies. x Reducing inventories globally and achieving other working capital improvements. x Returning capital from Ford Credit consistent with its plan for a smaller balance sheet and focus on core Ford brands. x Continuing to develop incremental sources of Automotive funding, including divesting non-core operations and assets, and reducing our debt.

See "Outlook" for discussion of additional factors that we expect will improve our Automotive cash flow in 2009 as compared with 2008.

In addition, as discussed in "Liquidity and Capital Resources", we already have taken further actions in 2009 to improve our Automotive liquidity, including obtaining access to $2.3 billion of Temporary Asset Account ("TAA") assets (as defined in Note 23 of the Notes to the Financial Statements) for use during 2009 and borrowing $10.1 billion under our secured revolving credit facility.

We also applied for $11 billion in loans over time pursuant to Section 136 of the Energy Independence and Security Act of 2007 for the design and production of "advanced technology vehicles" (as defined in the Act). Our application has been determined by the U.S. Department of Energy ("DOE") to be "substantially complete", but remains pending and we have not received notice of the timing by which the loans may be funded. In addition, we are applying for loans from the European Investment Bank ("EIB") of up to €2.3 billion for eligible CO2/emissions-reduction projects over the 2008 to 2012 period. Between the DOE and EIB loans for which we have applied, we expect to receive about $2 billion in 2009.

Two of our competitors with substantial legacy costs and debt, General Motors and Chrysler, currently are engaged in discussions concerning U.S. government-funded restructurings that, if successful, would reduce their legacy costs, align their employee benefit costs with those of other competitors, and substantially reduce their debt. For example, the government proposal for restructuring would require that a significant portion of our competitors’ debt and post-retirement benefit obligations be converted into equity. While we do not anticipate entering into a government-funded restructuring, we are pursuing similar restructuring actions to remain competitive.

In February 2009, for example, we reached a tentative agreement with the UAW that includes modified labor costs, benefits, and operating practices to allow us to reach competitive parity with foreign automakers’ U.S. manufacturing operations. In addition to this tentative agreement, we tentatively reached agreement with the UAW to provide us the option to settle with Ford Common Stock up to 50% of our future cash payment obligations to the Voluntary Employee

Ford Motor Company | 2008 Annual Report 15 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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16 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 17 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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18 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 19 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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20 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 21 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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22 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 23 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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24 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 25 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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26 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

7 ! R7.-- ,.7 7 ! 7- 7 .- 7=@;J73!--! 7. 7237D@87B>>K87!-$ !7.3 $ 7=B@>72!--! 7 7 - 7!7(! !7 ! 7,! 7! 7$ . 7.$2 ! 7 $7 7- ,7.$ ! 7(.-$7 $!7B>>K;77&7.-- ,.7 7 ! 7- 7!7!2.!-7.7$ ! 7 7 -! 7$.-! 87! !.-7- 7 2.87. 7!(.3-7-(-;7 7 '7$.!7 .!-7!.7. 7-.7 . 87 7 ! 7$7.7 ! .7 !7 27 . 7-.!!7 . 7 $!7(.-7. 87$7.7 ! 73$.$7! 2. ! 87'7 87$ 27.. ! !87. 7 . 7 .. ! !;77'7. ! ! 7 7 7 ! C7 ! .7 !7 287! 7 ! 7 7. 87$7.72- 2 7 ! 87!.!.-7 .3!-! 87. 7..! 7 7.;777 7237D@87B>>K87.3 $ 7F?7 7 7 $ . !7*;";7 .!-7!.7 . 7-.7 . 7!7 7 ! R7(! 7 -! 7,7-.!! 7.7!7!)7. 7 . 7! ! 87.3 $ 7 7.27.7 .9 7B>>J;7 7 #-,6 (6 2 7 ! 7!71 7 7! $.-7!)7 7 . !7-.7. 7!2!-.73.-- 7.2 7 $ 7,7 7$ 27 2.7 $7 7!. 7(!-7 7 7 ! ;77! $.-7!)7!7 7 !3!-! 7 . 7 7.2 $ 7 7 ! 7 3 .!7 27 $ 7(!-7,!--737-7 .7! 7 !2. 7 7 71 7! $.-7(.-$7 7 7(!-;77 7 ! 7 !2. 7 7 1 7! $.-7(.-$737(.-$. !7 7.$ ! 7(.-$87 $7( -$27 7! 7-. 7(!-87! $ 9,! 7$ 7 (!-7!872.) !7! !(7-.87. 7(!-7$.-! 7 . .;77 7. ! ! .-7 !$! 877:! !.-7 $ !7 !2. 7L7$2$-. 7!. ! 7 7/!-7"$3% 7 7. !7.;:7 7 '7 7 7$. 7 7B>>K87!7$-7!7. 7 7,.)7 2!7-!2. 7!7 72!.7$- 7!7.7 $ 7! 7!7 $277 27$--9! 7 $)7. 7 . ! ! .-7 7$ !-! 7(!-7 72.--872 7$-9 !! 7(!-;77&!7! 7!77.$ 7.7!!!. 7 $ ! 7!7.$ ! 7(.-$;777.7$- 7 7 72.) 7 . 7. 7 7 ! R7B>>K7 7$. 7. $.7 $ 7$- 87 7 ! 7 7.79 .17!2.!2 7.7 7=B;@73!--! 7 !7 7.2 $ 737,!7 7.!7(.-$7 7 .!7(!-7-!7!7 $7-.7 -! 71 7 !7.!7(.-$7E7:! !.-7 $ !7 !2. 7L7 7 ! 7 72!.7'( 2 7!7. !7.:5;777 7 2.+2+*2 +2+2- 7 7 7 ! 7$7(.! $7 . ! !7 72 ! 7! 7! $.-7!)O7 7 S7 -.2 7( -$272.$7 7$237 7-.7 7 ! 7$.7!7.7!(7! P7 7 S7 &2!. ! 7( -$272.$7 7$237 7(!-7 7,!7 7-.7.7 7!7 7!(7! P7. 7 7 S7 $7( -$27- 7 7$237 7(!-7 $ 7 7 7 ! 737$ 27. 7-.9 ;7 7 &7 -- ,!7 .3-7 ,7 . !7-.7-.2 87 2!. ! 87. 7 $7( -$27 7 7 ! R7 72!.7 2 87,!7. $ 7 7.3 $ 7MK?7 7! 7 .-7!( 2 7!7 . !7-.7. 7237D@87B>>K7E!7 $. 87 1 7 7 .5O7 7 )XOO>K87-.2 7( -$27,7 ,7@IJ8>>>7$! 7 2. 7,! 7B>>J87!2.!-7- !7- ,7! $ 7.-7 ( -$287 $7- ,72.) 7.87. 7.7!7 $72.) !7 .27,!72.! 7 .!-7! .--2 7.-7 . ;77&2!. ! 7. 7 $7( -$27!. 7D8>>>7$! 7. 7BJ8>>>7$! 87 !(-87 2. 7,! 7-. 7.87 !2.!-7- !7 , 7!7-.7-.2 7!7B>>F7. 7!7 $7. 87 ! 7,! 7.$ ! 7(.-$7 . 7 ,7- ,7 .71 7. 7 7 !27 7 . 7$.7. 7.7.-7! 7!7 $277.,.7 27$--9 ! 7 $)7. 7 . ! ! .-7 7$ !-! 7(!-;7 7

Ford Motor Company | 2008 Annual Report 27 Management’s Discussion and Analysis of Financial Condition and Results of Operations

While Ford Credit continues to offer leasing to customers who prefer this product, lower auction values and the present funding environment have made leasing less economical for Ford Credit and for consumers. This has contributed to a reduction in Ford Credit's lease originations and over time will reduce its residual risk exposure.

U.S. Ford, Lincoln, and Mercury Brand Retail Operating Lease Experience

The following table shows return volumes for Ford Credit's Ford, Lincoln, and Mercury brand U.S. operating lease portfolio. Also included are auction values at constant fourth quarter 2008 vehicle mix for lease terms comprising about 65% of Ford Credit's active Ford, Lincoln, and Mercury brand U.S. operating lease portfolio (in thousands, except for percentages):

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0HPR 5HWXUQUDWHV $XFWLRQ9DOXHVDW&RQVWDQW)RXUWK4XDUWHU9HKLFOH0L[ 0RQWKWHUP 0RQWKWHUP

In 2008, Ford, Lincoln, and Mercury brand U.S. return volumes were down 9,000 units compared with 2007, primarily reflecting a shift in lease term placement mix from 24-month to 36-month in 2006, partially offset by higher return rates. Auction values at constant fourth quarter 2008 mix were down $2,505 per unit from 2007 levels for vehicles under 24-month leases, and down $1,975 for vehicles under 36-month leases, primarily reflecting the overall auction value deterioration in the used vehicle market and a shift in consumer preferences from full-size trucks and traditional sport utility vehicles to smaller, more fuel-efficient vehicles.

2007 Compared with 2006

Details of the full-year Financial Services sector Revenues and Income/(Loss) before income taxes for 2007 and 2006 are shown below:

5HYHQXHV ,QFRPH /RVV %HIRUH,QFRPH7D[HV LQELOOLRQV LQPLOOLRQV 2YHU 8QGHU 2YHU 8QGHU )RUG&UHGLW 2WKHU)LQDQFLDO6HUYLFHV ಧ 7RWDO

Ford Credit

The decrease in pre-tax earnings primarily reflected a higher provision for credit losses primarily related to the non- recurrence of credit loss reserve reductions (about $500 million), lower financing margin primarily related to higher borrowing costs (about $400 million), unfavorable lease residual performance reflected in higher depreciation expense for leased vehicles (about $400 million), and higher other costs primarily due to Ford Credit's North American business transformation initiative (about $100 million). These factors were offset partially by lower expenses primarily reflecting improved operating costs (about $400 million) and lower net losses related to market valuation adjustments to derivatives (about $300 million).

28 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 29 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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30 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 31 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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32 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 33 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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34 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 35 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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36 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 37 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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38 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 39 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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40 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 41 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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42 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 43 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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44 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 45 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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46 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 47 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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48 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 49 Management’s Discussion and Analysis of Financial Condition and Results of Operations

.$2 ! 7!7 7( -. !-7 2!7(! 2 7!7,!7,7$ -7 . 87,73-!(7,7.(7. %$ 7 $7.!7 (.-$7.$2 ! 7. !. -;777 !$ 7!7:((!,8:7,7 -7. $ 7 . 7,7.7(.-$. !7 . !7 ! 7 7/ -( 87!-$ !7.7 !3-7.-;7747.(7.- 7 ! 7!7 $7..-!7! 2. ! 7,!7.73 27 .(.!-.3-7 7$7 $!7 $7(.-$. ! 7,!7.7$ 7 $7 -$! 7 . 7 7!2.!2 7 7 ,!--7!7.;77 7,7 $ 7 7(!.3!-! 7 7 $7 ! 87,7. !!. 7 . 7,7,!--7!(7. ! ! .-7! 2. ! 7 . 7,!--7.-- ,7$7 7$ 7 !7 $7.$2 ! 7. 73 7(.-$. 7 7!2. 7 7 7$ 7 2!7(! 2 7 7 7.!7(.-$7 7 $7/ -( 7 !7$! ;77'7 !7! 2. ! 7- 7.7- ,7.!7(.-$7 !2. 7 .7 -7.$2 87,7,!--7..!7.7 7 / -( 7 !7$! 7 ,!--7 7!2.!2 7,!7 $- 7$- 7!7.7. ! ! .-7.;7 7 2! 62747 2 7 $7.$.-7 ,!--7 !7!7 7 $ 7$. 7 7B>>K;77*!7$ . 73$!7. 7 2!7 % ! 87,7. 7 . 7 7.!7(.-$7 7 $7 7$ 7 !7$! 7. 7237D@87B>>K7 ! 7 7 1 7! 7.!7(.-$;77'7 7 73$!7-!2. 7 !$7,! $ 7! !. ! 7 7.72 !$29 27!2 (2 87(! 7 3$!7 % ! 7. 7 , 7. 7.$2 ! 7 $- 7$- 7!7$ $7!2.!2 ;7 7 % ) )-)* ) ) ) 7 !$ 7!7:((!,8:7 7$ 7. 7$3 . !.-7 -!7!7- 3.-7! $ 7.-7( -$287 23! 7,! 7 ! 7 ! 72.) 87 7 2!7. 7. 7 87. 7 7. !. 7,! 7 . 2!7 $73$!87.(7$ 7 !!!. 7$7 7 7 ! .3!-! 7. 7-!$! ! 7 7 $7- 9-!( 7. 7 $;7747- -71.2! 7.7 7 $7. 7 $7 7 !!7( 7. 7 7 -$! 7 7 7.2 7 7.7. 7 $7.7.7 -- ,O7 7 7 2 2.+C22$7 7.! -9.!7*;";72.) 7 ! ! 7!7B>>K87,7 7 7- 9-!( 7. 7 7 $7 7 72!.72 7. 7 7.79 .17!2.!2 7.7 7=G;D73!--! ;7 7 7 2 !2.+C77 7B>>K87 $7 7" $ 72!.72 7 !$ 7 737 ! .3-7. 7. 7 ! !(7 7.7- ,;77& $7 7 $ 7$. 7 7B>>K87 7 . !7$- 7,7 ! 7,! 7 % 7$- P7 87,7 ! 7 7.(7.7 !!7( ;7 7 7 2! C77 7B>>K87 $7 7$ 72 7 !$ 7 737 ! .3-;77 ! 7$- 7,7 ! 7,! 7 % ! 87. 7.7- ,7!7 % 7 737 ! !(7!7B>>M;77. 7 7 !87,7 ! 7 7.(7.7 !!7( ;7 7 7 , *% C2247 7 7- 9-!( 7. 7 7 $7/ -( 72 7 $!7B>>K7 $7 7 7$ 9! 7.7- ,7- 7 23! 7,! 7.7! 7 7.7- ,7- 7. 7.7 % ! 7 7.7 -!7!7 7.7- ,73. 7 7$ . 72.) 7 % ! 7- !7 7! $ 7.-7( -$2;7747. 7 . 7 7.!7(.-$7 7 $7- 9-!( 7. 7 ,.7 (.3-;7747.- 7. 7 . 7 7.!7(.-$7 7 $7/ -( 7 !7$! 7 ! 7 71 7! 7.!7(.-$;7 7 7 2+2+2+C22$7 7 7.! 7 ! . ! 7!73$!7-!2. 7 $ $ 7 7!.7.!!7! 7,!7 $- 7!7.7- ,7- 7 % ! 87,7 7 7- 9-!( 7. 7 7 $7 7!.7.!!7!.72 7. 7 . 7 . 7 7.!7(.-$7,.7 (.3-;777 2 '7 7- 3.-73$!7-!2. 7.7! 71! 7. 7237D@87B>>K7 !$7 7, 7,! $ 7! !. ! 7 7.72 !$29 27!2 (2 87(! 73$!7 % ! 7 7 . !7$- 7 $- 7$- 7!7$ $7!2.!2 ;7 7 "7 7@D7. 7@F7 7 7 7 7 7!.!.-7" . 2 7 72 7! 2. ! 7. !7!2.!2 7 7 ,!--7. 7 - 9-!( 7. ;7 2 %2+*;777 !$ 7.3 (87 $7 7.! -9.!7*;";72.) 7 ! ! 7!7 7 7$. 7 7B>>K7 E !$ 7!7 7@D7 7 7 7 7 7!.!.-7" . 2 587,7 7 7- 9-!( 7. 7 7 $7 7 72!.7 2 ;77&7$- !7!2.!2 7- 7.7!7 7.$2 ! 7$ 7 72.$7 7.!7(.-$7 7 7. 7 $7 3. 7 7 7.! -9.!72.) 7 ! ! 7E!-$ !7.7 7 $73$!7 % ! 5;77&72 7 .3-7 .7!7 $73$!7. 7 2!7 % ! 7!-$ [email protected] 7 $ 7. 7.-. 7! 7!7 $27 7.,.7 27$--9! 7 $)7. 7 . ! ! .-7"*/7 72.--7. 72 7$-9!! 7(!-7.7.7$- 7 7!7 $-7!87,! 7.7 $7 (7 !27 7.7-(-73 ,7 .R72!17. 7 7-(-P7EB57- , 7*;";7! $ 7 2. 7!7 7 .7 287,! 7.7 $7 7 7-(-7.7 7*;";7 27 (7$3$ 7 7B>@>P7. 7ED57!7 22 ! 7 7 (7 73$!7-.7! 7 2. 7,! 7! 7 % ! ;77 7. ! ! .-7 !$! 7 7 7-.!7.$2 ! 7$ 87 7 7:$ - ):7 !$! 7!7 $7$. -7 7 7 27@>97 7 7! 7 7+$7D>87B>>K;777 7

50 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

$7 !7 $!7 7 7$. 7 7B>>K7$- 7!7.79 .17!2.!2 7.7 7=G;D73!--! ;77&7!2.!2 7 ,.7 !(7.-2 7 !-737 ! . ! 7!7 % 7.7- ,7 7 $7.9 273$!7-.7! 87. !3$ .3-7 7 .7!7 $73$!7. 7 2!7 % ! 7.7 !$ 7.3 (;77 -- ,!7 !7!2.!2 87 7 72!.7. 7 =@@73!--! 7 7 7 7 7!7 $7!.!.-7 . 2 7.7 7+$7D>87B>>K;777 7 7 73$!7. 7 2!7 % ! 7 !$ 7.3 (87,7.- 7$ . 7 $7.$2 ! 7,! 7. 7 7- 9 27 , 7. 7 ! $ 7. ;77&7- 9 27 , 7. 7.$2 ! 7$ 7!7 $7 7$. 7B>>K7 !7!7!2!-.7 7 . 7$ 7!7 $7B>>I7 72!.7!2.!2 7 !87,7,7-. 7. 7.7!2.!2 7 7 72!.7!1 7. ;77 &!7 , 7. 87 ,(87,7.-! 7 7- , 73$!7-.7! 7 % ! 87$- 7!7.7-7.( .3-7 $ ! $ 7- 9 27 $ - );77&!7 $ - )7!7 ! 7,! 7 $7 7 % ! 7 7- ,72.!87$- !7!2.!-7 27 7 7! 7!7 $277 !$ 7.3 (;7747 !2. 7 . 7.7>;G7 .7 ! 7 .7!7 7 - 9 27 , 7. 7.$2 7!7 $7 7$. 7!2.!2 7 !7, $- 7.(7 . 7 7.!7(.-$7 !2. 737 .3 $ 7=K>>72!--! ;777 7 &7 ! $ 7. 7 . 7,7$ 7!7 $7 7$. 7!2.!2 7 !7,.7 ! 7,! 7.7,! 9.(.7 7 7.! .-7 . 7,7 !2. 7.7 !.-72.) 7. !!. 7, $- 7$;77&!7 ! $ 7. 7,.7- ,7 .7 . 7$ 7!7 $7 B>>I7!2.!2 7 !87!2.!-7- !7 7.7!7- 9 27 $ - )7 !$ 7.3 (;777>;G7 .7 ! 7 !.7!7 7 ! $ 7. 7.$2 ! 7$ 7!7 7!2.!2 7 !7, $- 7.(7 . 7 7.!7(.-$7 !2. 737 .3 $ 7=@;F73!--! ;777 7 $!7 7 ! 7$. 7 7B>>K87,71! 7.7(7 ! . ! 7!7*;";7 ! 72.) 87,!7. (-7. 7 2!7 ! ! 7. 7 7.$ 2 !(7.-;777.7$- 7 7 !7!!!. 7. (7.7!7 7*;";73$!7 -!2. 87,7..!7 7 7- 9-!( 7. 7 7 $7 7 72!.72 ;77*!7$ . 73$!7. 7 2!7 % ! 87,7. 7 . 7 7.!7(.-$7 7 $7- 9-!( 7. 7. 7" 237D>87B>>K7 ! 7 71 7 !7.!7 (.-$;7747$ 7 7.27- 9 27 , 7. 7.7$ 7!7 $7 7$. 7 !7.7,73-!(7 . 7- 9 27 2!7 ! ! 7.(7 7 ! . 7.7.7$- 7 7 7 7 ! 7!!;7747 !2. 7 . 7.7>;G7 .7 ! 7 .7!7 7- 9 27 , 7. 7.$2 7!7 $7 ! 7$. 7!2.!2 7 !7, $- 7.(7 . 7 7.!7(.-$7 !2. 737.3 $ 7=K>>72!--! ;77 ! ! .--87,7$ 7 7.27 ! $ 7. 7.7$ 7!7 $7 7$. 7 !;77&!7 !73. 7 7 7.$2 ! 7 . 7 7 7 ! 7!!7 7 7.(7.72. !.-7!2. 7 7 7,! 7 7 7.! .-7!7 72 !$297 7- 9 27E ! 7,! 7 $7-.!7 ! 5;777>;G7 .7 ! 7!.7!7 7 ! $ 7. 7 .$2 ! 7$ 7!7 7!2.!2 7 !7, $- 7.(7 . 7 7.!7(.-$7 !2. 737.3 $ 7=@;D73!--! ;7 7 - $7. 7 !7 !27,7 7 7. !!. 7. ! ! .-7!2.!2 7.87.7$ 7 ! . ! 7 7 73$!7-!2. 7 , $- 7!2. 7 7.$2 ! 7,7$7!7 2!7$ $7!2.!2 7 7. 7 $- 7$- 7!7. ! ! .-7!2.!2 ;77 (7 !287.7,71. 7 $7 $ 7-!9$7!7 7*! 7" . 7 7!-$ 7. ! ! .-72.--872 7$-9!! 7(!-87 $7 $ 7 -! 7,!--72 7- -72. 7 7 (.--72.) ;77 ! ! .--87,7 !$7 7 .)7 7 72 7- -7 .-!7 $7 $ ! 7..! 7,! 7! $ 7.-7( -$27. 72.) 7.;777 $7-.7 87,7,!--737-7 1 7 7.! 7.7!7(!-72!17. 7 2. 87. 7-7$ !3-7 7$ $7!2.!2 7 7- 9-!( 7. ;77 7 $ 7 !$! 7 7. ! 7,7.7 .)!7 7 7 7.!72.) 7 ! ! 877:((!,:7.3 (;7 7 ##") ) )-)) ) )% #) % )) #) # ) 6 !. 2+ 2 +2' ;777 7.3 (87,72.$7 7.!7(.-$7 7.7. 7 $73. 7 72.) 7!7 E!;;87 7.2 $ 7 7,!7 7. 7 $- 737 - 7 7.7 ! 7. 587,7.(.!-.3-;77472.) 7!7.7 7.(.!-.3-87 ,7 !2. 7 7.!7(.-$7 7 7. 7 $7$!7 7! 27. .;77&7! 27. .7$7 ! $ 7.7- ,7 % ! ;77 7 ! 72.$7 7.!7(.-$7 7! 7 72!.7 . !7-.7 -! 7$!7 7 % 7.7- ,7 3. 7 7 7 27 7 7 . !7-.7 . ;77' 7!7 7.7- ,7.$2 ! 7.7 !2. 7 !( 7 27! 7 $. -7 . !7-.7 -! 7. $.7 $ 7 7.$2$-. 7 !. ! ;77.7 7 7. 7$ 7!72.$!7.!7 (.-$7.7 $ ! 7 7 -7 72..2 87. 7 7.$2 ! 7. 7 !2. 72.7.7!7$ $7! ;77 7 .7!7.$2 ! 7 7 !2. 72.72. !.--7. 7 7.!7(.-$72.$2 7 7.7. 7 $87. 7 7 2.7. 7 7.2 $ 7 7 7!2.!2 ;77&7 -- ,!7.7)7.$2 ! 7,7$7!72.)!7.7- ,7 % ! 7 7 7 ! R7 . !7-.O7 7 7 ! 2%+*!622 7 ! R7 % ! 7 7 72.) 7(.-$7 7 7(!-7,7 7 ! 7--7 27. 7 7 7 7 7-.;27 7 7 !2% *!.;77 7 ! R7 % ! 7 7 7$237 7(!-7 . 7,!--737 $ 7. 7-.9 ;77

Ford Motor Company | 2008 Annual Report 51 Management’s Discussion and Analysis of Financial Condition and Results of Operations

7 !2+622 7 ! R7 !2. ! 7 7 7 ! $ 7. 87- !7 !.-72.) 7.$2 ! 7. !7 3 ,!7. 87 ! 7- 7. 87. 7! $.-7(.-$7!);777 7 "7 7B7. 7@D7 7 7 7 7 7!.!.-7" . 2 7 72 7! 2. ! 7. !7!2.!2 7 7- 9-!( 7 . ;777 2 %2+*;77#!7$-7!7. 7 7,.)7 2!7-!2. 7!7 7*! 7" . 7. 7.. .7 $!7 7 7$. 7 7B>>K7.$ 7.72 7 $ 7. 7.-. 7! 7!7 $277.,.7 27$--9! 7 $)7. 7 . ! ! .-7"*/7 72.--872 7$-9!! 7(!-;77&!7! 7!7 $2787 23! 7,! 7 7 ,.)7 2!7-!2. 87.$ 7.7!!!. 7 $ ! 7!7.$ ! 7(.-$7 7$ 7$--9! 7 $)7. 7 . ! ! .-7"*/7E.7 !$ 7!7 7@D7 7 7 7 7 7!.!.-7" . 2 5;77 ! !7 7.! -9.!72.) 7 ! ! 87 7 ! 7 7! 7*;";7. 7.. !.7!( 2 7!7 . !7-.7 7 (.3!-! ;777.7$- 7 7 !7 !87 7 ! 7 -$ 7 . 7 7 . !7-.7 -! 7,.7!2.! 7. 7,7. 7 7 ! 7 7.79 .17.7 7 =B;@73!--! 7!7 7$. 7B>>K7!.!.-7 . 2 ;77&!7.7 7 7.2 $ 737,!7 7.!7(.-$7 7 .!7(!-7-!7!7 7 ! R7-.7 -! 87!2.!-7$--9! 7 $)7. 7 . ! ! .-7"*/871 7 !7.!7(.-$;77 "7:! $.-7!):7 !$! 7.3 (7 7. ! ! .-7! 2. ! 7. !7 7!!!. 7 .7!7.$ ! 7(.-$;777 7 7 7 !27 7 7!2.!2 87 7 ! 7 !2. 7 . 7.7 7 7 .7!7 7.$ ! 7(.-$7 7 7!2.! 7 (!-7.$2 7!7 7!2.!2 7 !7, $- 7.(7 . 7 7.!7(.-$7 !2. 737.3 $ 7=G>72!--! ;777 7 .7 ! 7!.7!7 7 $7. 7 7 7!2.! 7(!-7.$2 7!7 7!2.!2 7 !7, $- 7.(7 . 7 7.!7(.-$7 !2. 737.3 $ 7=D>72!--! ;777 7 .7 ! 7!.7!7 7 ! $ 7. 7.$2 7!7 7!2.!2 7 !7, $- 7.(7 . 7 7.!7(.-$7 !2. 737.3 $ 7=@>>72!--! ;777 7 $-7!7 -! 7!7 7 7.-7 7B>>KP7 ,(87,73-!(7 . 7 7 $ 7! 7!7 $277 27$--9! 7 $)7. 7 7$ !-! 7(!-7 72.--872 7$-9!! 7(!-7!72. ;77&7 2!7-!2. 7 ,.) 7$ 7!7 7 7.-7 7B>>K7. 7.$ ! 7(.-$7.(7.- 7 -! 7!2.!-7. !3$ .3-7 7.7. 7 (7(!-;77471 7.$ ! 7(.-$7 72.--872 7$-9!! 7(!-7 7!2 (7!7 7$ $P7 ,(87!7 . .7,! 7 $7 2.-7 87,7(!, 7 7. $.7 7 $7.$2$-. 7 !. ! 7. 87 $!7 7 7 .-7 7B>>K87!. 7 $7 !. ! 7. 7 7 .!7(!-7,! !7 $7 . !7-.7 -! 7.7. !. ;77 7 . ! ! .-7! 2. ! 7 7! $.-7!)7 7 . !7-.877 7:! !.-7 $ !7 !2. 7L7$2$-. 7 !. ! 7 7/!-7"$3% 7 7. !7.;:7 7 - $7. 7 !7 !27,7 7 7. !!. 7. ! ! .-7!2.!2 7.87.7 ! . ! 7 7 73$!7-!2. 7, $- 7 !2. 7 7.$2 ! 7,7$7!7$ $7!2.!2 7 !7. 7 $- 7$- 7!7. ! ! .-7!2.!2 ;7 6 .-,#- 6 6 6%-06 62 2 +!2 2.+2! 677 7 .17. 7. 7-!.3!-! !7.7 ! 73. 7 7 7$ $7 .17 $7 . !3$ .3-7 7 2 .7 !7 . 71! 73 ,7 7!.!.-7 . 2 7.!7(.-$7 7. 7. 7-!.3!-! !7. 7 !7 !(7 .173.87. 7 . !7- 7. 7 .17 ! 7. ,. 7 7.7 .1!7%$! ! ! 73.!;77472.$7 7 .17. 7. 7-!.3!-! !7$!7. 7 .17. 7 . 7,!--7.-7!7 7.7!7,!7,71 7 7 2 .7 !7 737 ( 7 7.! ;7 7 " . 2 7 7!.!.-7 $ !7" . . 7E:"":57 ;7@>M87 !2 2$ .2#+-7E:""7 ;7@>M:57 $!7.7 $ ! 7 7 7.!7.2 $ 7 7 7 .17. 737 !7.7(.-$. ! 7.-- ,.7!873. 7 7 7 .(.!-.3-7(! 87! 7!72 7-!)-7 .7 7E ! 737""7 ;7@>M7.7.7-!)-! 7 72 7 .7G>?57$7. 7,!--7 737.-! ;77&7(.-$. ! 7 7 7 .17. 7$!7%$ 2 7!7.!7 7-!)-7$ $7 .17 $7 7 ( 7 . 7.(737 ! 7!7 $7!.!.-7 . 2 7 7 .17 $7. 7$ $7 ! .3!-! ;77$7. $ !7 7 7 .17 $7 7 $73 7 !2. 7 7 7$ $7( ;77.7!7 $7$ 7 !2. 87 $7 7 $. !!. 7( 7 7 ,!87 $- 7.(7.72. !.-7!2. 7 7 $7!.!.-7 ! ! 7. 7$- 7 7 . ! ;7 7 !. 2+ 2 +2' 622'7.!7 7 7 7.7(.-$. ! 7.-- ,.87,7 ! 73 7 ! !(7. 7 . !(7(! 7-. 7 7 7-!)-! 7 7.-! . ! 7 7 7 7 .17. ;77'873. 7 7 7,! 7 7.(.!-.3-7 (! 87! 7!72 7-!)-7 .7 7 7 7 .17. 7,!--7 737.-! 87,7 7.7(.-$. ! 7.-- ,.;77&7 ,! 7!(7 7 7 ! !(7. 7. !(7(! 7!7 22$. 7,! 7 71 7 7,!7 7(! 72.737 3% !(-7(!! ;777$87! 7!7.--7 !!$- 7 7 ! !(7(! 7. !7 % 7$ $7 .1.3-7! 27 1-$!(7 7(!7 .1.3-7 2 .7 !7 7 $ ,!7 3% !(7. !(7(! 7 7 7!.!.-7 !7

52 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

- ;77""7 ;7@>M7 . 7 . 7.7$2$-. !(7- 7!7 7.7!7.7!!!. 7!7 7. !(7(! 7 . 7!7 !!$- 7 7 ( 27!7 2!!7 . 7.7(.-$. ! 7.-- ,.7!7 7 7..! 7 7 .17. ;7 7 &!7.2 87,!7!7 2- 7 7.7 .1!7%$! ! ! 73.!87 .)7! 7. $ 7.7$237 7 7 7(! 87 !-$ !7 7 -- ,!O7 7 7 +!32!32+ 2%2 2!2+ 2!.!*+%2++*2 2* ;777. 7 7 3% !(-7 2.$ 7 7!.!.-7 !7- 7!7.(!-7,! 7.7.7 $7 7. !(7(! ;77'7 .!7 !$2 .87! !.-7! 2. ! 72.7 737.7-(. 7 $7 7. 7!$2 .P7 7 7 !2 2!!2+-+/*2 .627$ $7(.-7 71! !7 2 .7 !7.7.(!-9,! 7 $7 7 3% !(-7(!!.3-7 ! !(7(! ;77 % ! 7 7$ $7 .1.3-7! 271-$!(7 7(!7 2 .7 !7.7.7 $7 7 ! !(7(! 7 -7,7 7 % ! 7.7 23! 7,! 7.7! 7 7 7 ! 7 . 7.737. .3-7 !2. ;77 ,!87 7 % ! 7.7 ! 7! -7$3% !(7. 7.--7 ,!--7 737$!! 7 7 ( 27. !(7(! 7 . 7!-$ 7-(. 7$2$-. !(7- 7!7 7.87 . !$-.-7!7 7 % 7$ $7 .1.3-7! 27!7 7 7.7. !!. 7 $. $ 7 7 ! .3!-! 7 . 7.7 7 737.!( ;77'7$7.87,7.--7!(7 7 % ! 7 7$ $7 .1.3-7! 27 7,! 7 7 7 $ 7 7 $7(.-$. ! 7.-- ,.7.2 7$$. 7 7""7 ;7@>MP7. 7 7 7 #+-2 *+2+627'7.7. 7.(.!-.3-87 .17-.!7 . !7, $- 737!2-2 7 7.-. 7 .1.3-7.2 $ 7 7$ !-! 71!!7. ,. ;77&7 . !7, $- 737.7 $7 7. ! ! .-7 ! !(7(! 7 . 87 !7 7 !7. $87 $- 737.(!-7,! ;7 7 "7 7@M7 7 7 7 7 7!.!.-7" . 2 7 72 7! 2. ! 7. !7 7 .17. ;7 7 %2+*677'7B>>I87 $7 7 7 .17 ! ! 7!7 7*! 7" . 7. 7 27.7 7 7 .17-!.3!-! 7 ! ! 7 7.7 7 7 .17. 7 ! ! ;77'7 $7.2 7 7 7 7 7.7(.-$. ! 7.-- ,.87. 7.7$! 737 ""7 ;7@>M87,7.(!-7,! 7 7. !(7(! 7 7$2$-. !(7!.!.-7 !7- 7!7 7! 7. 7 7 ! !(7(! 7 7$ $7(.-7 71! !7 2 .7 !;77- $7.7! .3-7 ! 7 7 $7 7 2!.7- 7!7 7.7,7 7$- 7 7.7!$ 7 7 $ $!7. ! 87!2.!2 87. 7 7 !.-7! 287(7,! $ 7 7.7,7 !--7, $- 7.(7!$ 7!!!. 7 . !7- ;77 !-87,7 ! 7 $7. 7 7 7- 7 737-(. 7 7 $7..-!;77 ! !7 !7. 7 7 7-(. 7- 7 . 7 7$ .! !7. !. 7,! 7 % 7$ $7 .1.3-7! 271-$!(7 7(!7 2 .7 !87,7 .(7 7,! 7 7 % ! 7 ,!7$ $7*;";7 .1.3-7! 27 7$ 7 7.!7 7 7 7.7(.-$. ! 7 .-- ,.;777.7$- 7 7 $7.2 87,7 -$ 7 . 7 7 7 7 .17. 7 7 $7*;";7 ! !7$! 7.7$--7 (.-$. ! 7.-- ,.;7747.- 7 7.7$--7(.-$. ! 7.-- ,.7 7 7 7 7 .17. 7 7 .!7 !7 ! !87 $7.7 2.87.. .87. 7".!87.7 7.-! . ! 7 7 7 !7 7 .17. 7.7-!. 7$ 7*;";9 $7 .1.3-7! 2;777 7 7237D@87B>>I87,7 7.7=J;B73!--! 7(.-$. ! 7.-- ,.7..! 7 $7 7 .17. 7E!-$ !7 =B;J73!--! 7$- !7 27 7. ! 7 7""7 ;7@GK87. * E2 !2 2 22 2+ 22 .2*+2A2+2+. .2 2 2 +.2 62@?32@@3298>32+ 29;:<12E:""7 ;7@GK:55;77$!7B>>J87 ,7 7.7. ! ! .-7(.-$. ! 7.-- ,.7 7=@;F73!--! 7E!-$ !7.3 $ 7=J>>72!--! 7$- !7 27 7. ! 7 7 ' . ! 7 ;7FK87 !2 2'+22$ .2#+-2A2+2 + 2 2 2 +.2 6298B2 E:' 7FK:55;77&.1.3-7- 7 $!7B>>K87!2.!-7!7 7*! 7" . 87!. 7 7(.-$. ! 7.-- ,.737=M;D73!--! 7 7 .73.-.7 7=@J;K73!--! 7. 7237D@87B>>K;777 7 7 $7 7 ! .3!-! 7!7 $7 72!.7 . ! 7, $- 7$- 7!7.7(.-7 7.7 ! 7 7 7(.-$. ! 7.-- ,.7 -. !7 7.-! 7 7 .17. 873$ 7,72.7 7.7 $7%$ 2 7 7 7 7 7.7$--7(.-$. ! 7.-- ,.7 7 $72.!!7 7 .17. ;777$ .! 7! 7 7 72!.7 ! .3!-! 7 $- 7.$7.7.7!7 $7%$ 2 7 .3 $ 7 7.-! .3!-! 7 7 72.!!7 7 .17. ;77'7 . 7.87! 7!7-!)-7 . 7,7, $- 7(7 27 7.--7 7 7 2.!!7 7 .17. 7(.-$. ! 7.-- ,.;777 !$ 7.3 (87 ,(87,7.(7.(!-7,! 7 7 3% !(-92.$ 7 7!.!.-7 !7- 7. 87 7 7$ 87!(7 7,! 7 7$3% !(-7 2! 7 % ! 7 7$ $7 .1.3-7! 271-$!(7 7(!7 2 .7 !87. 7 -$ 7.7 7237D@87B>>K7 . 7! 7!72 7-!)-7 .7 7$7 7 .17. 7,!--7 737.-! 7E!7, -7 7!7. 587. 7. !-87,7.(7 7.7$--7(.-$. ! 7.-- ,.7..! 7 7 7 7 .17. ;7 7

Ford Motor Company | 2008 Annual Report 53 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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54 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 55 Management’s Discussion and Analysis of Financial Condition and Results of Operations

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56 Ford Motor Company | 2008 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Ford Motor Company | 2008 Annual Report 57 Quantitative and Qualitative Disclosures About Market Risk

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58 Ford Motor Company | 2008 Annual Report Quantitative and Qualitative Disclosures About Market Risk

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Ford Motor Company | 2008 Annual Report 59 Quantitative and Qualitative Disclosures About Market Risk

Our approach to managing counterparty risk is forward-looking and proactive, allowing us to take risk mitigation actions before risks become losses. We establish exposure limits for both net fair value and future potential exposure, based on our overall risk tolerance and ratings-based historical default probabilities. The exposure limits are lower for lower-rated counterparties and for longer-dated exposures. We use a model to assess our potential exposure, defined at a 95% confidence level. Our exposures are monitored on a regular basis and included in periodic reporting to our Treasurer.

Substantially all of our counterparty exposures are with counterparties that are rated single-A or better. Our guideline for counterparty minimum long-term ratings is BBB-.

For additional information about derivative notional amount and fair value of derivatives, please refer to Note 22 of the Notes to the Financial Statements.

FORD CREDIT MARKET RISK

Overview. Ford Credit is exposed to a variety of risks in the normal course of its business activities. In addition to counterparty risk discussed above, Ford Credit is subject to the following additional types of risks that it seeks to identify, assess, monitor, and manage, in accordance with defined policies and procedures:

x Market risk — the possibility that changes in interest and currency exchange rates will adversely affect cash flow and economic value; x Credit risk — the possibility of loss from a customer’s failure to make payments according to contract terms; x Residual risk — the possibility that the actual proceeds received at lease termination will be lower than projections or return volumes will be higher than projections; and x Liquidity risk — the possibility that Ford Credit may be unable to meet all of its current and future obligations in a timely manner.

Each form of risk is uniquely managed in the context of its contribution to Ford Credit's overall global risk. Business decisions are evaluated on a risk-adjusted basis and services are priced consistent with these risks. Credit and residual risks are discussed above in "Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates" and liquidity risk is discussed above in "Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources". A discussion of Ford Credit's market risks (foreign currency risk and interest rate risk) is included below.

Foreign Currency Risk. Ford Credit's policy is to minimize exposure to changes in currency exchange rates. To meet funding objectives, Ford Credit borrows in a variety of currencies, principally U.S. dollars and Euros. Ford Credit faces exposure to currency exchange rates if a mismatch exists between the currency of receivables and the currency of the debt funding those receivables. When possible, receivables are funded with debt in the same currency, minimizing exposure to exchange rate movements. When a different currency is used, Ford Credit may execute the following foreign currency derivatives to convert substantially all of foreign currency debt obligations to the local country currency of the receivables:

x Foreign currency swap — an agreement to convert non-U.S. dollar long-term debt to U.S. dollar-denominated payments or non-local market debt to local market debt for our international affiliates; or x Foreign currency forward — an agreement to buy or sell an amount of funds in an agreed currency at a certain time in the future for a certain price.

As a result of this policy, Ford Credit believes its market risk exposure relating to changes in currency exchange rates is insignificant.

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Ford Motor Company | 2008 Annual Report 61 Quantitative and Qualitative Disclosures About Market Risk

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Ford Motor Company | 2008 Annual Report 63 Consolidated Statement of Income

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64 Ford Motor Company | 2008 Annual Report Sector Statement of Income 6 6 6 1-6- 6!#2 - 6 6 6 -6 6126><76=;;D76=;;C6- 6=;;B6 ? 61 ,, 760 66-6-1 # 46 $872027,9($872027,9( 6DOHV6DOHV &RVWVDQGH[SHQVHV&RVWVDQGH[SHQVHV &RVWRIVDOHV 6HOOLQJDGPLQLVWUDWLYHDQGRWKHUH[SHQVHV *RRGZLOOLPSDLUPHQW ಧ ಧ 7RWDOFRVWVDQGH[SHQVHV 2SHUDWLQJLQFRPH ORVV 2SHUDWLQJLQFRPH ORVV ,QWHUHVWH[SHQVH ,QWHUHVWLQFRPHDQGRWKHUQRQRSHUDWLQJLQFRPH H[SHQVH QHW (TXLW\LQQHWLQFRPH ORVV RIDIILOLDWHGFRPSDQLHV ,QFRPH /RVV EHIRUHLQFRPHWD[HV,QFRPH /RVV EHIRUHLQFRPHWD[HVಧಧಧ$XWRPRWLYH$XWRPRWLYH$XWRPRWLYH ),1$1&,$/6(59,&(6),1$1&,$/6(59,&(6 5HYHQXHV &RVWVDQGH[SHQVHV&RVWVDQGH[SHQVHV ,QWHUHVWH[SHQVH 'HSUHFLDWLRQ 2SHUDWLQJDQGRWKHUH[SHQVHV 3URYLVLRQIRUFUHGLWDQGLQVXUDQFHORVVHV 7RWDOFRVWVDQGH[SHQVHV ,QFRPH /RVV EHIRUHLQFRPHWD[HV,QFRPH /RVV EHIRUHLQFRPHWD[HVಧಧಧ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ಧ 1HWLQFRPH ORVV 'LOXWHGLQFRPH ORVV 'LOXWHGLQFRPH ORVV ,QFRPH /RVV IURPFRQWLQXLQJRSHUDWLRQV ,QFRPH /RVV IURPGLVFRQWLQXHGRSHUDWLRQV ಧ 1HWLQFRPH ORVV &DVKGLYLGHQGV ಧ ಧ &7. 2.!7 7.7. 7 7 7!.!.-7 . 2 ;7

Ford Motor Company | 2008 Annual Report 65 Consolidated Balance Sheet

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66 Ford Motor Company | 2008 Annual Report Sector Balance Sheet

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68 Ford Motor Company | 2008 Annual Report Sector Statement of Cash Flows

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Ford Motor Company | 2008 Annual Report 69 Consolidated Statement of Stockholders’ Equity

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70 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 71 Notes to the Financial Statements

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72 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 73 Notes to the Financial Statements

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74 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 75 Notes to the Financial Statements

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76 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 77 Notes to the Financial Statements

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78 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

%6=966!) 66) %& 6&&!6, () 6 )**622$7 -!7!7 7 27.$.-7 !7 7 ,!--7. 7 .!7 7 7! .!3-7. 7 $!7 7 $ 7 $. 7 7 2!7, 7.7!2.!2 7.7 $ ;77 ,!--7!2.!2 7 !7!7.- 7 2 7 -- ,!7.7 .-- . ! 7 7 ,!--7 7.73$!7 737 ! 87 7 -- ,!7.7 !!7( 7 7 7- 9-!( 7. 7!2.!2 7 ;77 & !7!7 $ 7. 7 7 !7$! 7-(-87,!7!7 7.27-(-7.7 $7 . !72 ;77& 7 7 7 ,!--7 !2.!2 87 7.!7(.-$7 7.7 !7$! 7!7 2. 7,! 7! 7.!7(.-$;77.!7(.-$7!72.$ 7-!7 !2.!-7 7 7! 27. .737.-!7.7 ! $ 7.7- ,72 - ;77 ! ! .--87,72.72.$7.!7 (.-$7$ 7 72.) 7. .;77&!7. .7 ! 7(.! $72.) 72$- !-7E;;87 7 . !7($7. 7 .!73 7! 87 .187. 7 !. ! 7. 7.2 ! . ! 7E:'&:557 7 2.!7 . 7.7. 7!7 7 .27 7!2!-.7-!7 73$!;7 6 -,6 6 1 62, - 66 6 47.$7 7 7-. 7 7-.-7 3-!. ! 7 7 27 .!7. !(! !7!7 ! 7,! 7 7 !2 87 ! .-7 7.3. 2 7 7. 7 7,!7 7.!7(.-$7 7 7-!.3!-! 7.737. .3-7 !2. ;77 .!7 ! ! .-7. 7 !2 7 3-!. ! 71! 7 . 7.7 7 7 7 $73.-.7 87!-$ !7$-. 7$3 .;77&7 7.7 7 !2.3-7$ !-7.7 !!7( 7 $7E;;87-. 7- !57 $7 7 7.37 7! !.-7 87.7 7 !.-7 -2 7 . 7. 7(.!.3!-! 7.2 7-. ;777.7 !!7( 7 $7. 7 7.!7(.-$7 7 7. 7 !2 7 3-!. ! 7.737 !2. 87 7 7.7!-$ 7.7. 7 7 7-!.3!-! ;6 6 6#6%-,- 6 6 &7. 7. 7-!.3!-! !7 7 !7$3! !.!7$!7 7- .-7$7.7 !7$ ! .-7$7.7 .-. 7 7 *;";7 --.7$!7 9 9! 71.7. 7. 7.7$- !7 .-. ! 7. %$ 2 7.7 7!7!.!*+ 2 2 . %2 .7<* 1677&7 7 .-. ! 7. %$ 2 7 7B>>K7,.7.7 .7!7 7. 7. 7 !.!*+ 2 2 . %2 .7<* 12 7=G;I73!--! 7E 7 7 .17 7=>5;7&7 7 .-. ! 7. %$ 2 7 7B>>K7 .- 7- 7.2 $ 7 . 7 7 7! 27.7.7$- 7 7 7.-7 7-!$! . ! 7 7.7 ! 87$- !7!7.7.!7 7 =@;K73!--! 7E!2.!-7 27 7.-7 7+.$.7. 7 (7. 7.7 ! 7 7 $7 .)7!7. .5;77'7B>>J7. 7B>>I87 7 7 .-. ! 7. %$ 2 7,7.7!.7!7 7. 7. 7!.!*+ 2 2 . %2 .7<* 17 7 =@;K73!--! 7. 7=B;I73!--! 7E 7 7 .17 7=>7 7B>>J7. 7=D72!--! 73! 7 7B>>I587 !(-;7 6 - 7!-$ 7!7! . %2 2 2+*32! . %22 .7+ 2 2 4 +2 .7<- 13232 . 7++*2 %2%!7.7.!7 7- 7.!!7 27 .. ! 7 2!. 7!7$!7 7 .7 7 $ ! .-7$7 7 7- . ! 87 7 7 792.$!7. 7. 7-!.3!-! !7 7 !7$3! !.!7$!7*;";7 --.7.7 !7$ ! .-7$87. 7 7$- 7 7 $7 !7$7 !7. !(! !;77 7. ! ! .-7 !$! 7 7 !7. !(! !877 7BB;77&7 7. 9 .17! 27 7 7 7. %$ 2 7,7.7.!7 7=MBB72!--! 7!7 B>>K87.7.!7 7=B@J72!--! 7!7B>>J87. 7.7- 7 7=@J72!--! 7!7B>>I;7 6 '#6 6F6# 1 '6! 66 77 7 $ 2 !(7.-7 ! 7!2.!-7 7($7. 7 27 7.-7 7(!-;77".-7.7 7,7 7!)7 . 7,. 7 7 ,!7.7 . 7 7 $7$ 27E.--7 .-7. 7 ! !3$ 5;77 7 72.% ! 7 7 $7 .-87 !7 $7,7 $ 7.7! 7 27 $72.$. $!7.!-! !7 7. 7 7 ! 7 7 -!(;7747(!-7 .7! 7 7$ 27 72 !!7 7 !2 87($7!7 ! 7,7 7(!-7!7 - 7 7 7$- !2. 7 $ 2;777 7 47.- 7--7(!-7 7 .!-7 .-7.7 2.!7$3% 7 7$.. 7$.7 ! ;77&7(!-7.7 . $ 7 7.7 . !7-.;77 7 7 !27 7 .87 7 7.7 7.7 7($7!7! 2 *+/*2+ 2 2%!;77&7 !73 ,7 7 7. 7 7$.. 7$.7.2 $ 7!7 ! 7!7! . %7+*7 (7 7 27 7 7-.87$!7.7 .! 9-!72 ;77- 7. 7 7 !27 7 .87 7 7 7 7(!-7!7 7!72!2+;77&7 !73 ,7 7 7 7 7(!-7. 7 7 !2. 7 .$ ! 7(.-$7!7 !. 7!7! . %7 2 2+*7 (7 7 27 7 7-.;77 7237D@87B>>K7. 7B>>J87 !-$ 7!7! 2*+/*2+ 2 2%!2,.7=B;M73!--! 7. 7=D;B73!--! 87 !(-87. 7!-$ 7!72 !2+2,.7=B;I73!--! 7. 7=B;M73!--! 87 !(-87 7 7(!-;7 7 ' 27. 7 27.7. 7.7$!(.- 87!( 2 7!72.) .3-7$! !87- . 7$! !7. 7 7 2!--. $7!(.3-7!7 7!7! . %22 .2+ 2 2 4 +2 .7<- 132;7

Ford Motor Company | 2008 Annual Report 79 Notes to the Financial Statements

%6=966!) 66) %& 6&&!6, (7 ) '#6 6F6 - -,6!' 6! 66 6 ($7 27!.7!(.3-7E!-$ !7 ! 7!.!7-.57!7 ! 7$!7 7! 72 ;77 .!7 !!. ! 7 7 7!(.3-7.7 7. 7.2 ! 87$!7 7! 72 87 (7 7 27 7 7-. 7 !(.3-7.7.7 $ ! 7!7!.!7($;77 .-7($7 7 . !7-.7!7 ! 7 7.7 .! 9-!73.!7 (7 7 27 7 7-.;77'! !.-7 ! 7 7-. 7 7-.7.7 7. 7.2 ! 7 7.7 .! 9-!73.!7 (7 7 27 7 7-.;77&7.$.-7 7 .-7.2 7 7 . !7-.7. 7! 7 7!(.3-7!7 ! !$ 7. 7 7 !27.7!(.3-7!7 2! 7 737$ -- !3-;777 7 ' 27. 7 27.7. 7.7$!(.- 87!( 2 7!72.) .3-7$! !87. 7 72!--. $7 !(.3-7!7 7!7++*2 %2%!;7 6 -( 6& '6- 6& 6!#,1 66 6 .) !7! !(87!-$ !7$ 27. 7 .-7.7.2 7. 7 7 7!.-7!.!7. 7-.!7 .27.! 7 7 7!.!.-7"(!7 87.7.--7 ! 737 7$ 2 !(7 7.7($7 $ ! 7!7 ! . %2+*;77&7($7 $ ! 7.7.$ 7. 7 7-. 7 7 7 . 7 7-. 7(!-7.-7 7 7 .-7.7 7 7 7 . 7 7! !(7 .27!73 7. ( 7. 7 22$!. ;7747.--7 !2. 7 7.$.-7 $!72.) !7! !(7 . 7.7. ( 7.7 7 73.-.7 7 . 7. 7.71 7 737 !(7. 7 73!!7 7 7$3$ 7! ;77&7!.!.-7"(!7 7! !!7.2 7 7!.-7!.!7. 7-.!7 .27.7 ! 7$-2 7 7 7$ 7 7. 7 ! 7 27 ! 7,! 7 7.!7 7 7 7$ -!7 !(.3-7 7 . !7-.;777 6 1, 6!-- 6 6- 60 6- 6 -,6 ' 6 6 7 * 7 $7 -- !(73..!!7.2 87,7.7$! 7 7.73! 7 7 $7 $-72- 7. 7.!-! !7 . 7 ,!--737- ;77&73! 7.71 7!7! . %2 2 2+*2,7! 73 27 3.3-7 . 7 72- 7,!--7 372. -7! - ;774717 7. !. 7,! 7 72.--7$237 72- 7, 7.7 2 .!-7! - 7 7.7 .9!$ 73.!;7 7 &7 7 7( -$ .72- 7.. ! 7. ! 7!7 7. 7 7 !27 7.72- R7. .87$-7 7 . .7$!71-!! 7. (.-737 7 2.;77&7 7 7 ! ! .-7( -$ .7.. ! 7.7.$ 7,7 .--7 ! ! 7.7. !! ;77&7 7 7!( -$ .7.. ! 7 .27.7.$ 7,72..2 7.7. ( 7 7 .27. 7 7. 72- 7.7! !! ;777 6 !-8- 6 1- 6 7 47. 7 2.7. 7 !293. 7 ! 7 )7$! 7 7 $72- ;77 ! 7 )7$! 7.,. 7!7 )7 E:"*9 ):57 (! 7 7!! 7,! 7 7! 7 7.7 7 )7. 7.7 ! ! 7! ;77&7.!7(.-$7 7 7$! 7 . 7$ 7 7@MMK7 9 27' !(7-.7E:&':57!7 7.(.7 7 7!7. 7- ,72.) 7!7 7 $7 22 7 " )7 7 7. 7 . ;77&7.!7(.-$7 7 7$! 7. 7$ 7 7B>>K7&'7!7 7- !7!7 7 $7 22 7" )7 7 7. 7 . ;77$ . !7"*9 )7.7! 7 ! -7 !293. 7 7.7 23!. ! 7 7 2.7. 7 !293. ;77 &!293. 7"*9 )7.,. 7!$ 7!7B>>I7. 7! 87( 7. 7 7 7 7 7 ! ! 7! 7. 7 717!7 .)7 $.--7 (7 7 ! ! 7! ;77 7 !293. 7"*9 )7.,. 7!$ 7!7. 7. 7B>>J87 7.,. 7.--7( 7 $ 7 7. 7( !72 ;779 ! 7 7 7"*9 )7.,. 7( 7. 7 7! 7.!(.7 7 7. 7 . 87 9 ! 7. 7 7 7.!(.87. 7 9 ! 7. 7 7 ! 7.!(.;77&717!7 ! 7!7 . .7,! 7 !7. 7( !72 ;77* 73 72 87. 7 7 7 7 7 ! ! 7! 87 7"*9 )7!7 $--71 7!7 **32+ .+%32+ 2 2- ;77 2.7"*9 )7.(7.7 2.7! 7 E$$.--7@9D7.57. 7.7 ! ! 7! 7E$$.--7@9D7.5;77 2. ! 717 7 2.7"*9 )7 .,. 7!7 7 ! 7$ !-7! 7!7 3.3-7. 7 !2.3-;7717!7 7 ! 7 (7 7 2.7. 7 ! ! 7! 73. 7 7 7.!72.) 7(.-$7 7 7 )7. 7. 7 . ;7

80 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 81 Notes to the Financial Statements

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82 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 83 Notes to the Financial Statements

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84 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 85 Notes to the Financial Statements

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86 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 87 Notes to the Financial Statements

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88 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 89 Notes to the Financial Statements

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90 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 91 Notes to the Financial Statements

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92 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 93 Notes to the Financial Statements

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94 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 95 Notes to the Financial Statements

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96 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 97 Notes to the Financial Statements

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98 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 99 Notes to the Financial Statements

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100 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 101 Notes to the Financial Statements

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102 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 103 Notes to the Financial Statements

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104 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 105 Notes to the Financial Statements

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106 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 107 Notes to the Financial Statements

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108 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 109 Notes to the Financial Statements

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110 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 111 Notes to the Financial Statements

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112 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 113 Notes to the Financial Statements

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114 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 115 Notes to the Financial Statements

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116 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 117 Notes to the Financial Statements

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118 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 119 Notes to the Financial Statements

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120 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 121 Notes to the Financial Statements

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122 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 125 Notes to the Financial Statements

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126 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 127 Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 131 Notes to the Financial Statements

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132 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 133 Notes to the Financial Statements

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134 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 135 Notes to the Financial Statements

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136 Ford Motor Company | 2008 Annual Report Notes to the Financial Statements

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Ford Motor Company | 2008 Annual Report 137 Notes to the Financial Statements

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ಧ (QGLQJEDODQFH

138 Ford Motor Company | 2008 Annual Report Report of Independent Registered Public Accounting Firm 6 & 7 7 . 7 7! 7. 7" ) - 77 7 7 2.O77 7 '7 $7 !! 87 7. 2.!7 -! . 73.-.7 7. 7 7-. 7 -! . 7 . 2 7 7! 287 7 ) - R7$! 7. 7 7.7- ,7 7.!-87!7.--72. !.-7 87 7!.!.-7 ! ! 7 7 7 7 2.7 . 7! 7$3! !.!7. 7237D@87B>>K7. 7237D@87B>>J87. 7 7$- 7 7 !7 . ! 7. 7 !7.7 - ,7 7.7 7 7 7.7!7 7! 7 7237D@87B>>K7!7 2! 7,! 7. $ !7!!-7 .--7. 7!7 7*! 7" . 7 72!.;77- 7!7 $7 !! 87 7 2.72.! .! 87!7.--72. !.-7 87 !(7! .-7 -7 (7!.!.-7 !7.7 7237D@87B>>K873. 7 7! !.7 .3-! 7!7$+*2 *2 42$+ 2+.) &7!$ 737 7 22! 7 7" !7.! . ! 7 7 7&. ,.7 22!! 7E"5;77 &7 2.R72..2 7!7 !3-7 7 7!.!.-7 . 2 87 72.! .!!7 !(7! .-7 -7 (7 !.!.-7 !7. 7 7! 7.2 7 7 7 !(7 7! .-7 -7 (7!.!.-7 !87!-$ 7!7 ..2 R7 7 7' .-7 -7(7!.!.-7 !7!7 !7$.-7 ;77$7 !3!-! 7!7 717 !! 7 7 7!.!.-7 . 2 87. 7 7 7 2.R7! .-7 -7 (7!.!.-7 !73. 7 7 $7 ! . 7.$ ! ;7747 $ 7 $7.$ ! 7!7. .7,! 7 7 . . 7 7 7$3-!7 2.7 $ !7 (! 7 . 7E*! 7" . 5;77& 7 . . 7$!7 . 7,7-.7. 7 27 7.$ ! 7 7 3 .!7. .3-7 .$.7.3 $ 7, 7 7!.!.-7 . 2 7.77 72. !.-72! . 2 7. 7, 7 !(7! .-7 -7 (7!.!.-7 !7,.72.! .! 7!7.--72. !.-7 ;77$7.$ ! 7 7 7!.!.-7 . 2 7!-$ 7 1.2!!87 7.7 73.!87(! 7$ !7 7.2 $ 7. 7 !- $7!7 7!.!.-7 . 2 87.!7 7 . $ !7!!-7$ 7. 7!!!. 7 !2. 72. 7372..2 87. 7(.-$. !7 7 (.--7!.!.-7 . 2 7 . ! ;77$7.$ ! 7 7! .-7 -7 (7!.!.-7 !7!-$ 7 3 .!!7.7$ . !7 7! .-7 -7 (7!.!.-7 !87.!7 7!)7 . 7.72. !.-7,.)71! 87. 7 !7. 7(.-$. !7 7 !7. 7 . !7 !(7 7! .-7 -73. 7 7 7. 7!);77$7.$ ! 7.- 7!-$ 7 2!7$7 7 $7.7,7 ! 7.7!7 7!$2 .;77473-!(7 . 7 $7.$ ! 7 (! 7.7. .3-73.!7 7 $7 !! ;77 7 $7.$ ! 7,7 $ 7 7 7$ 7 7 2!7.7 !! 7 7 73.!7!.!.-7 . 2 7 .)7.7.7, -;77&7 . 2.!7 73.-.7 7. 7 7-. 7 7 . 2 7 7! 27. 7 7.7- ,7.7 7 7 $ 7 7. ! ! .-7..-!7. 7.7 7.7$! 7. 7 7 73.!7!.!.-7 . 2 ;77"$7! 2. ! 7.737 $3% 7 7 7.$ ! !7 $7.-! 7!7 7.$ ! 7 7 73.!7!.!.-7 . 2 7. 87!7 $7 !! 87.7.!-7 . 7!7.--72. !.-7 7!7-. ! 7 7 73.!7!.!.-7 . 2 7 .)7.7.7, -;77 7 7 !$ 7!7 7@M7 7 7 -! . 7!.!.-7 . 2 87 7 2.7. 7 72.7!7,!7! 7. $ 7 7$ .!7 .17 ! ! 7!7B>>J;777 !$ 7!7 7BD87 7 2.7. 7 72.7!7,!7! 7. $ 7 7 ! 73! 7! 7. 7 7 !2 7-.7!7B>>I;7777 7 &7- 3.-7 27!7$ -7.!7.7!.!.-7!!7. 7(7! 87,!7.7- 7 7!!!. 7$7 7 7 2.7. 7 7.$ 2 !(7! $ 7.--;77&, 7 7 7 2.R72.% 7 2 ! 7.(7$32! 7(!.3!-! 7-.7 !7 ! 7,! 7*;";7 (2 9$ 7 $ $!7 7. 7!2!-.7$ 7 7 (2 7!.!.-7$ 7 .(7372. 7 73.-7 72 7(!-7$-!;777 !$ 7$ 7!$! ! 7!7 7@7 7 7 -! . 7 !.!.-7" . 2 87 7 2.7. 7! 7 . ! 7 !$7 737. 737 7! $ 7. 7 2!7 ! ! ;777 7 7 2.C7! .-7 -7 (7!.!.-7 !7!7.7 7 ! 7 7 (! 7. .3-7.$.7. !7 7 -!.3!-! 7 7!.!.-7 !7. 7 7.. ! 7 7!.!.-7 . 2 7 71 .-7$ 7!7. .7,! 7 .--7. 7. $ !7!!-;777 2.C7! .-7 -7 (7!.!.-7 !7!-$ 7 7 -!!7 . 7 $7 . 7E!57 .!7 7 72.! .7 7 7 . 87!7. .3-7 .!-87.$. -7. 7.!-7- 7 7 .. ! 7. 7 ! ! ! 7 7 7. 7 7 7 2.P7E!!57 (! 7. .3-7.$.7 . 7 .. ! 7.7 7.7.7 72! 7.. ! 7 7!.!.-7 . 2 7!7. .7,! 7.--7. 7. $ !7 !!-87. 7 . 7! 7. 71 ! $7 7 7 2.7.73!72. 7 -7!7. .7,! 7.$ ! . ! 7 7 2..2 7. 7 ! 7 7 7 2.P7. 7E!!!57 (! 7. .3-7.$.7. !7( ! 7 7 !2-7

Ford Motor Company | 2008 Annual Report 139 Report of Independent Registered Public Accounting Firm

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140 Ford Motor Company | 2008 Annual Report Selected Financial Data

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Ford Motor Company | 2008 Annual Report 141 Employment Data / Management’s Report on Internal Control over Financial Reporting / NYSE Required Disclosure

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142 Ford Motor Company | 2008 Annual Report Stock Performance Graph

6(&UXOHVUHTXLUHDQQXDOUHSRUWVWRFRQWDLQDSHUIRUPDQFHJUDSKFRPSDULQJRYHUD¿YH\HDUSHULRGWKH performance of our common stock against the Standard & Poor’s 500 Stock Index and against either a published industry or line-of-business index or a group of peer issuers. Ford chose the other principal U.S. auto manufacturer – General Motors – as its peer issuer for the graph. We think this approach is more informative since a relevant line-of- business index would merely combine the U.S. automakers. The graph assumes an initial investment of $100 and the reinvestment of dividends.

COMPARISON OF FIVE-YEAR CUMULATIVE SHAREHOLDER RETURN

$200

$150

$100

$50

$0 2003 2004 2005 2006 2007 2008

Total Return To Shareholders (Includes reinvestment of dividends)

Indexed Returns

Base Years Ending Period Dec. Dec. Dec. Dec. Dec. Dec. Company / Index 2003 2004 2005 2006 2007 2008 FORD MOTOR COMPANY 100 94 52 52 47 16

S&P 500 INDEX 100 111 116 135 142 90

GENERAL MOTORS CORPORATION 100 79 41 67 56 7

Ford Motor Company | 2008 Annual Report 143 Shareholder Information CORPORATE HEADQUARTERS Ford Motor Company One American Road Dearborn, MI 48126 (313) 322-3000

SHAREHOLDER ACCOUNT ASSISTANCE Computershare Trust Company, our transfer agent, maintains the records for our registered stockholders and can help you with a variety of stockholder-related services. Computershare offers the DirectSERVICE Investment and Stock Purchase Program. This shareholder-paid program provides an alternative to traditional retail brokerage methods of purchasing, holding, and selling Ford Common Stock. You can contact Computershare through the following methods:

Ford Shareholder Services Group Telephone: (800) 279-1237 (U.S. and Canada) c/o Computershare Trust Company, N.A. (781) 575-2732 (International) P.O. Box 43087 Providence, Rhode Island 02940-3087 E-mail: [email protected]

INVESTOR INFORMATION Investor information including this report, quarterly financial results, press releases, and various other reports are available online at www.shareholder.ford.com. Alternatively, individual investors may contact us at:

Ford Motor Company Telephone: (800) 555-5259 (U.S. and Canada) Shareholder Relations (313) 845-8540 (International) One American Road Fax: (313) 845-6073 Dearborn, MI 48126 E-mail: [email protected]

Security analysts and institutional investors may contact:

Ford Motor Company Telephone: (313) 390-4563 Investor Relations Fax: (313) 845-6073 One American Road Dearborn, MI 48126 E-mail: [email protected]

STOCK EXCHANGES Ford Common Stock is listed and traded on the New York Stock Exchange in the United States and on stock exchanges in Belgium, France, Switzerland, and the United Kingdom. Depository shares representing the Convertible Trust Preferred Securities of Ford Motor Company Capital Trust II are listed and traded on the New York Stock Exchange (NYSE) only.

The NYSE trading symbols are as follows:

F Common Stock F.PrS 6.5% Convertible Trust Preferred Securities of Ford Motor Company Capital Trust II

ANNUAL MEETING The 2009 Annual Meeting of Shareholders will be held in Wilmington, Delaware on May 14, 2009. A notice of the meeting and instructions for voting will be mailed to shareholders in advance of the meeting.

The report was printed on paper with 30% post consumer waste content. Please recycle.

144 Ford Motor Company | 2008 Annual Report Global Overview Automotive Brands

Dealers* 11,827 dealers 1,427 dealers 1,871 dealers 2,341 dealers and 110 markets 30 markets 20 markets 103 markets Markets

Retail 4,765,528 118,462 129,839 385,185 Vehicle Sales Sales Mix: Sales Mix: Sales Mix: Sales Mix: and 42% N. America 98% N. America 94% N. America 65% Europe Sales Mix 38% Europe 2% Rest-of-world 6% Rest-of-world 22% N. America 9% Asia Paciﬁc 11% Asia Paciﬁc 9% S. America 2% Rest-of-world 2% Rest-of-world

Customer 1.800.392.3673 1.800.521.4140 1.800.392.3673 1.800.458.1552 Assistance www.fordvehicles.com www.lincoln.com www.mercuryvehicles.com www.volvocars.com

Click on “contact us” Click on “contact us” Click on “contact us” [email protected]

Financial Services Customer Services

Operations – Provides a wide variety – A total service experience Motorcraft Parts Extended Service of dealer and customer for Ford, Lincoln and – New and remanufactured Business financing products and Mercury owners available parts designed, – Providing comprehensive services globally in only at Ford and Lincoln engineered and vehicle service contract support of Ford Motor Mercury dealerships — recommended by Ford and maintenance Company vehicle sales designed to deliver Motor Company and programs – One of the world’s largest customer satisfaction and available in Ford, Lincoln automotive finance repeat purchase intent and Mercury franchised Ford Extended companies, with – Parts engineered to dealerships, Ford Service Plan (ESP) managed receivables Ford Motor Company authorized distributors – Major customers include of $118 billion at specifications and thousands of major Ford, Lincoln and year-end 2008 – Technicians trained and retail and repair locations Mercury vehicle dealers, certified specifically commercial customers on Ford, Lincoln and Genuine Ford and fleets of Ford Motor Mercury vehicles Accessories Company vehicles – Wide variety of customer accessories designed to personalize Ford, Lincoln and Mercury vehicles

Customer 1.800.727.7000 Ford/Mercury Genuine Ford ESP Assistance www.fordcredit.com 1.800.392.3673 Accessories 1.800.521.4144 www.fordaccessories.com www.genuineservice.com Lincoln www.lincolnaccessories.com 1.800.521.4140 www.mercuryaccessories.com www.genuineservice.com www.ford.com

* Because many of these dealerships distribute more than one of our brands from the same sales location, a single dealership may be counted under more than one brand.

Ford Motor Company | 2008 Annual Report 145 Ford Motor Company One American Road Dearborn, Michigan 48126

www.ford.com

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