Ford Accelerates Transformation Plan With Small Car Offensive, Manufacturing Realignment

The Ford, Lincoln, Mercury line will be almost completely upgraded by the end of 2010, including:

-- 2009 Ford F-150, on sale in late fall with the most capability, most choice and most smart features of any full-size pickup, and with more than a 7 percent fuel economy improvement

-- 2010 Ford Fusion, Mercury Milan, Lincoln MKZ sedans, on sale in early 2009, with Fusion's and Milan's four-cylinder fuel economy expected to top Honda Accord and Toyota Camry

-- 2010 Ford Fusion Hybrid and Mercury Milan Hybrid, beginning production late this year and on sale in early 2009 -- with fuel economy expected to top the Toyota Camry hybrid

-- New Ford Mustang -- coupe, convertible, and glass-roof models -- in early 2009

-- New Ford Taurus sedan -- with EcoBoost engine and even more advanced safety and convenience technologies -- in mid-2009

-- New European Transit Connect small multi-purpose van in mid-2009

-- New Lincoln seven-passenger crossover -- with EcoBoost engine -- in mid-2009

-- New European Ford Fiesta, in both four- and five-door versions, in early 2010

-- New European Ford Focus, in both four- and five-door versions, in 2010

-- New Mercury small car in 2010

-- New European small vehicle that will be a "whitespace" entry in North America in 2010

-- Next-generation Ford Explorer -- with unibody construction, EcoBoost, six-speed, weight savings and improved aerodynamics for up to 25 percent better fuel economy - in 2010

With every new product, Ford expects to be the best or among the best for fuel economy. This is aided by one of the most extensive powertrain upgrades ever for Ford. By the end of 2010, nearly all of Ford's North American engines will be upgraded or replaced. In addition, within two years, nearly all of Ford's North American lineup will offer fuel-saving six-speed automatic transmissions.

The improvements build on several Ford fuel economy leaders today, such as:

-- 2009 Ford Flex, which is the most fuel-efficient standard seven-passenger vehicle on the market, topping the 2009 Honda Pilot

-- 2009 Ford Focus, with highway fuel economy of up to 35 mpg -- better than the smaller 2008 Honda Fit and 2009 Nissan Versa SL and a key reason Focus retail sales are up 50 percent

-- 2009 Escape, with a new 2.5-liter four-cylinder engine and six-speed transmission delivering best-in-class highway fuel economy of 28 mpg -- ahead of Toyota RAV4 and Honda CR-V

-- 2009 Ford Escape Hybrid, delivering 34 mpg in the city and 31 mpg on the highway, making it the most fuel-efficient utility vehicle available

Coming in 2009 are the first applications of Ford's new EcoBoost engines. EcoBoost uses gasoline turbocharged direct-injection technology for up to 20 percent better fuel economy, up to 15 percent fewer CO2 emissions and superior driving performance versus larger-displacement engines.

EcoBoost V-6 engines will be introduced on several vehicles next year, beginning with the Lincoln MKS and Ford Taurus sedans, and Ford Flex crossover. Four-cylinder EcoBoost engines will debut in 2010 in both North America and Europe. Ford will offer EcoBoost on more than 80 percent of its North American lineup by the end of 2012.

Ford also plans to double capacity for North American four-cylinder engines to more than 1 million units by 2011, to meet the consumer trend toward downsized engines for fuel economy. The smaller engines will deliver significant fuel savings.

In addition, Ford plans to double its hybrid volume and offerings next year -- and is looking to expand further going forward. Production of the all-new 2010 Ford Fusion Hybrid and Mercury Milan Hybrid begins in December -- with fuel economy expected to top the Toyota Camry hybrid.

With these new models, the Ford Escape Hybrid -- now in its fifth year of production -- and the Mercury Mariner Hybrid, Ford will offer four hybrid vehicles. That will make Ford the largest domestic producer of full hybrid vehicles in North America, second only to Toyota in sales volume.

Ford also is introducing six-speeds with PowerShift that offers the fuel economy of a manual transmission and convenience of an automatic; start-stop engines that shut off when the vehicle stops; electric power steering; direct injection, and Twin Independent Variable Cam Timing engines. These technologies will be progressively introduced within the North American lineup by 2012.

"One Ford"

Driving Ford's product transformation is the company's "One Ford" global product development vision, which will deliver more vehicles worldwide from fewer core platforms, further reduce costs and allow for the increased use of common parts and systems.

In the next five years, Ford will build more than 1 million vehicles a year worldwide off its global B-car platform and nearly 2 million units worldwide off its global C-car platform.

"Ford is investing most where consumer growth is taking place -- and that's in highly fuel-efficient global small cars," said Derrick Kuzak, Ford group vice president of Global Product Development. "One of every four vehicles in the world today is a 'C' or Ford Focus-sized vehicle, and we expect the segment to grow more than 20 percent to 6 million units in North America and 25 million worldwide by 2012. We see similar strong growth in the B-segment, where the Fiesta competes."

With Ford's global product development plan, all of the company's vehicles competing in global segments will be common in North America, Europe and Asia within five years. In addition to B- and C-sized small cars, the company's Fusion- and Mondeo-sized C/D cars and utilities will be common globally. The same will be true for commercial vans.

Ford said it is uniquely positioned to take advantage of its scale, already acclaimed global products and the strength of the Ford brand around the world to respond to the current changing marketplace and to begin to grow profitably. The company said its success in growing market share and profits with smaller, more fuel-efficient vehicles in Europe is now the template around the world.

"We remain absolutely committed to creating an exciting, viable Ford going forward -- and to transforming Ford into a lean global enterprise delivering profitable growth over the long term," Mulally said. "We continue to make progress on every element of our transformation plan, and we are taking decisive steps in the near term to ensure our long-term success."

Risk Factors

Statements included herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:

-- Continued decline in market share;

-- Continued or increased price competition resulting from industry overcapacity, currency fluctuations or other factors;

-- An increase in or acceleration of market shift away from sales of trucks, sport utility vehicles, or other more profitable vehicles, particularly in the United States;

-- A significant decline in industry sales, particularly in the United States, Europe or South America, resulting from slowing economic growth, geo-political events or other factors;

-- Lower-than-anticipated market acceptance of new or existing products;

-- Continued or increased high prices for or reduced availability of fuel;

-- Currency or commodity price fluctuations;


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