Ford Motor Company Driving Innovation 2005 Annual Report

Ford.com Ford Motor Company 2005 Annual Report

Driving Innovation Driving Innovation

Ford Motor Company

One American Road, Dearborn, Michigan 48126
About this report Global Overview
Innovation is Ford Motor Company’s legacy. Innovation is Ford’s future.
We established much of our American innovation design language with Ford Fusion, shown on the
cover, our new midsize sedan with an attitude. With its distinct, authoritative three-bar grille setting the design
tone and driving dynamics that are nothing short of engaging, Fusion embodies the bold, American design Automotive Core and Affiliate Brands
and innovation of our vehicles going forward. And this sedan is poised to help us win customers and market
share in the highly competitive midsize-car segment.
This report is a visual journey highlighting how Ford is unleashing the spirit of innovation. The
company is knocking down the walls of “business as usual” to uncover bold initiatives that are inspiring
technological, safety and design innovations throughout the company.
Dealers and 10,134 dealers 1,422 dealers 1,971 dealers 5,594 dealers 125 dealers 880 dealers 2,400 dealers 1,400 dealers
Markets
105 markets 32 markets 26 markets 141 markets 29 markets 68 markets 100 markets 100 markets
About this company Retail 5,572,143 132,496 203,794 1,224,631* 4,400 89,802 443,963 185,120
Ford Motor Company, a global automotive industry leader based in Dearborn, Michigan, Vehicle Sales
and Sales Mix: Sales Mix: Sales Mix: Sales Mix: Sales Mix: Sales Mix: Sales Mix: Sales Mix:
manufactures and distributes automobiles in 200 markets across six continents. With approximately Sales Mix 55% N. America 99% N. America 97% N. America 45% Asia Pacific 60% Europe 53% Europe 57% Europe 60% Europe
300,000 employees and 108 plants worldwide, the company’s core and affiliated automotive brands include 27% Europe 1% Rest-of- 3% Rest-of- 27% N. America 35% N. America 36% N. America 31% N. America 26% N. America
7% Asia Pacific world world 23% Europe 5% Rest-of- 7% Asia Pacific 7% Asia Pacific 7% Asia Pacific
Ford, Lincoln, Mercury, Mazda, Volvo, Jaguar, Land Rover and Aston Martin. Its automotive financing 6% S. America 3% Rest-of- world 4% Rest-of- 5% Rest-of- 5% Rest-of-
business is Ford Motor Credit Company. 5% Rest-of- world world world world
world 2% S. America 2% S. America

Customer 1.800.392.3673 1.800.521.4140 1.800.392.3673 1.800.222.5500 +44.1908 610620 1.800.452.4827 1.800.458.1552 1.800.637.6837
Assistance
www. www. www. www. www. www. www. www.
fordvehicles.com lincolnvehicles.com mercuryvehicles.com mazdausa.com astonmartin.com jaguar.com volvocars.com landrover.com

Click on “contact us” Click on “contact us” Click on “contact us” customerassistance@ enquiry@ jaguarowner@ customercare@ [email protected]
mazdausa.com astonmartin.com jaguar.com volvocars.com

Financial Services Customer Services

Operations – Operations in 36 countries – A total service experience for Motorcraft Parts Extended Service Business
Contents – Provides automotive financing Ford, Lincoln and Mercury owners – New and remanufactured parts – Providing comprehensive vehicle service
for Ford, Lincoln, Mercury, Aston available only at Ford and Lincoln designed, engineered and contract and maintenance programs
Operating Highlights 1 Martin, Jaguar, Land Rover, Mazda Mercury dealerships — designed recommended by Ford Motor Company
A Message from the Chairman 2 and Volvo dealers and customers to deliver customer satisfaction and available in Ford, Lincoln and Ford Extended Service Plan (ESP)
Technological Innovation 6 – One of the world’s largest and repeat purchase intent Mercury franchised dealerships, Ford – Major customers include Ford,
automotive finance companies. – Parts engineered to Ford Motor authorized distributors and thousands Lincoln and Mercury vehicle dealers,
Safety Innovation 10 If Ford Motor Credit were a bank, it Company specifications of major retail and repair locations commercial customers and fleets
Design Innovation 14 would be the 13th largest in the U.S. – Technicians trained and certified of Ford Motor Company vehicles
– From 1986-2005, provided specifically on Ford, Lincoln Genuine Ford Accessories
Product Innovation 18 39 percent of Ford Motor and Mercury vehicles – Wide variety of customer accessories Automobile Protection Corporation (APCO)
Board of Directors and Executives 19 Company’s pretax profits and designed to personalize Ford, – Major customers include Mazda, Volvo,
$20 billion in dividends Lincoln and Mercury vehicles Jaguar and Land Rover vehicle dealers
Financial Contents 21 – Has been profitable every year
Shareholder Information 104 since its 1959 founding
Global Overview 105
2005 – Recorded net income of – For the second consecutive year, Motorcraft Parts Extended Service Business
Highlights $2.5 billion Lincoln was the “#1 nameplate in – The Motorcraft Web site has been – Industry-leading sales of 1.8 million
– Paid Ford Motor Company Customer Satisfaction with Dealer updated to include cataloging, contracts in North America
dividends totaling $2.75 billion Service” according to the J.D. Power product details, technical resources,
– Managed $150 billion in receivables and Associates 2005 Customer training and information on where ESP
– Placed approximately 2.7 million Service Index Study. Lincoln is consumers can purchase products – Managing more than
vehicle financing contracts the only domestic nameplate 6.9 million active contracts
to win 2 consecutive years Genuine Ford Accessories
– Record service satisfaction – Growing portfolio of products to APCO
performance as measured by enhance Ford Motor Company – Managing more than
Ford Motor Company’s Customer vehicles including: exciting new 20” 1.4 million active contracts
Viewpoint service experience survey wheels, new Sport Liner™ (bedliner
– Daily Parts Advantage continues to product), and chrome packages (grille,
provide Ford, Lincoln and Mercury wheel, running board, bug shield)
dealers with record parts availability
and on-time daily delivery

Customer 1.800.727.7000 Ford/Mercury Motorcraft Parts ESP

Assistance www.fordcredit.com 1.800.392.3673 www.motorcraft.com 1.800.521.4144
www.genuineservice.com
Lincoln Genuine Ford Accessories
1.800.521.4140 www.fordaccessoriesstore.com APCO
www.genuineservice.com www.lincolnaccessories.com 1.800.538.4181
www.ford.com www.mercuryaccessories.com www.easycare.com
Click on “contact us”

* As an unconsolidated subsidiary, all of Mazda sales are not consolidated into Ford Motor Company vehicle unit sales.
Only vehicles built or distributed by Ford for Mazda are included in total Ford unit sales summaries.

Ford Motor Company Annual Report 2005 105

Operating Highlights

2005 2004
Sales and Revenues
Worldwide vehicle unit sales of cars and
trucks by automotive business unit (in thousands)

The Americas 3,779 3,915

Ford Europe and PAG 2,542 2,476
Ford Asia Pacific and Africa/Mazda 497 407

Total 6,818 6,798

Sales and revenues (in billions)

Automotive $ 153.5 $ 147.1

Financial Services 23.6 24.5

Total $ 177.1 $ 171.6

Financial Results
Income/(loss) before taxes (in billions)

Automotive $ (3.9) $ (0.2)

Financial Services 5.9 5.0

Total $ 2.0 $ 4.8

Net income (in billions) $ 2.0 $ 3.5

Diluted net income per share of Common and Class B Stock $ 1.05 $ 1.73

Cash and Spending

Automotive capital expenditures

Amount (in billions) $ 7.1 $ 6.3

As a percentage of automotive sales 4.6% 4.3%

Automotive cash at year end (in billions)

Cash, marketable and loaned securities

and assets held in short-term VEBA trust (a) $ 25.1 $ 23.6
Cash net of debt (b) 7.2 5.2

Shareholder Value
Dividends per share $ 0.40 $ 0.40
Total shareholder returns % (c) (45)% (6)%

(a) Short-term Voluntary Employee Beneficiary Association (VEBA) trust, in which $1.4 billion of financial assets were held at
the end of 2005 and $4.1 billion at the end of 2004 to fund certain future employee benefit obligations in the near term.
(b) Automotive cash, marketable and loaned securities and assets held in a short-term VEBA trust less Automotive debt.
(c) Change in value of Ford stock assuming dividends are reinvested in Ford stock. (Source: Bloomberg)

Ford Motor Company Annual Report 2005 1

A Message from the Chairman
William Clay Ford, Jr.
Chairman and Chief Executive Officer

Driving Innovation: The Way Forward Today our automotive operations in Europe, Asia
Ford Motor Company was solidly profitable and and South America are all profitable, and our global brands
growing around the world in 2005. The major exception was are thriving. Mazda is enjoying its best performance ever.
our automotive operations in North America, where short- Aston Martin is expanding. Land Rover’s largest-ever
and long-term challenges continued to slow our progress. introduction of new products is winning in the marketplace.
The next chapter in our history will be defined by our Jaguar is addressing its unique cost structure issues and
renewed commitment to innovation and our bold plan to bringing out groundbreaking new cars. And Volvo is entering its
address those challenges. most aggressive product period ever, with five new models
We have recommitted ourselves to sustainable in 18 months.
and profitable growth, to a renewed focus on our customers, In parts of the world where the car market is growing
and to boundless innovation in everything we do: from design, sharply, so are we. We are doing especially well in Russia,
to safety, to fuel-efficiency, to efficiency on our factory floors. Turkey and Hungary. Last October I traveled to India to help
We are going to use our size to accelerate change, and introduce Ford Fiesta, our most important new product there
build a culture that encourages fresh new thinking and in years. Ford sales in China, the fastest growing market in the
breakthrough ideas. world, were up 46 percent in 2005.
When I took over as CEO at the end of 2001, We are proud of our success around the world. But in
Ford Motor Company was unprofitable, losing more than our North American automotive operations, we lost money in
$5 billion that year. In 2002, we launched a major effort to 2005. Commodity prices, including oil and steel, rose sharply;
revitalize our company. competition from around the world intensified; and rising fuel
We concentrated on improving our core automotive prices caused demand for SUVs to drop sooner and faster than
business. We divested several non-core companies, we had anticipated.
lowered our costs, refocused our financial operations on We took a number of important steps in 2005 to
supporting our automotive business and launched the biggest address these issues. To strengthen our balance sheet and
wave of new products in our history. As a result, we have cut costs, we sold The Hertz Corporation and restructured our
been profitable every year since 2003, including a net income agreement with Visteon, our parts supplier spin-off. We reached
of $2 billion in 2005. an agreement with the UAW that will help us reduce health care
costs in a reasonable way. We began a major rationalization of
our supply base, identifying key suppliers to form partnerships
that will provide for more stable relationships.
But the conditions we confronted represented a
turning point in our industry unlike anything we’ve experienced
in the last 50 years. The automotive business had shifted,
completely and permanently, to full-scale global competition.
The days of unlimited, inexpensive gasoline are gone forever.
It is time for a bold new approach that goes beyond anything
we have done in the past.

Ford Motor Company Annual Report 2005 2

1

2
01 4
03

3 5

1 Bill Ford 3 China 4 Ford Volunteer Corps 5 India

Chairman and CEO Bill Ford, Changan Ford Automobile Co. Ltd. Ford materials expediter Craig Glover Rathinasabapathy Pushpalatha
against the backdrop of the living President and CEO Phil Spender (left) works with many Detroit-area children (center), a paint shop employee at
roof of the Dearborn Truck Plant in and Executive Vice President Zou in challenging circumstances as a Ford’s assembly plant near Chennai,
the Ford Rouge Center. Wenchao present the first made-in- volunteer for the Motor City Striders India, listens with other employees at a
China Ford Focus on Sept. 12, 2005, amateur track club. Ford volunteers in town hall meeting with Chairman and
2 Ford Motor Credit in Chongqing. Focus is the fourth Ford 2005 contributed to myriad causes, CEO Bill Ford in October 2005. During
Ford Motor Credit Company’s Beth vehicle produced locally for the China including a multimillion-dollar relief and his visit to India, Ford also hosted the
Stasko (left) demonstrates to Dean market, following Transit, Fiesta and recovery effort following Hurricanes launch of a new Ford Fiesta developed
Adams and Rebecca Rodriguez of Mondeo. Ford sales in China were up Katrina and Rita, mentoring programs specifically for that market by the
Tom Holzer Ford in Farmington Hills, 46 percent in 2005. and environmental initiatives. The Ford company’s global engineering team.
Michigan, the new Electronic Tier Volunteer Corps recently celebrated its
Analysis (ETA) system, one of several first anniversary.
innovative Web tools to make it easier
for dealers to do business with Ford
Motor Credit. ETA, which was piloted
in 2005, enables dealers to evaluate
and restructure loan offerings more
quickly and at any time.

Ford Motor Company Annual Report 2005 3

 This plan will restore our North American automotive
operations to profitability by 2008. It reflects lessons from our
successes around the world – including Mazda, where Mark led
a remarkable turnaround by telling his team: “Change or die.”
The Way Forward has similar strong medicine for our
North American business. But it also contains the vision and
strategic focus to rebuild the business, because we know we
can’t just cut our way to success. Along with our substantial
cost restructuring, we are changing the business model that’s
existed for many decades at Ford.
F-150 How will we do this?
In 2005, Ford F-Series recorded its 24th straight year as America’s best-selling First, we are taking a more far-sighted approach to
vehicle with models such as the F-150 pickup. For 2006, Ford is offering an creating shareholder value. Because of the tremendous volatility
ethanol-capable F-150, as well as Ford Crown Victoria, Mercury Grand Marquis
and Lincoln Town Car with an option to run on a mixture of clean, renewable of market conditions, we will no longer issue quarterly or annual
ethanol and gasoline. earnings guidance. We still have extremely rigorous targets for
costs, capacity utilization and other traditional metrics. But we
want to underscore an important point inside the company and
So, in January 2006, we launched the most out: We cannot succeed in the long run if we’re focused only on
fundamental restructuring in our history, which we call the “Way the short term.
Forward” plan. Developed by senior executives Mark Fields and Instead, we are guided by our long-term goals of
Anne Stevens and their team, Way Forward is a comprehensive building brand, satisfying customers, developing strong
plan for restructuring and reinvigorating our automotive business products and accelerating innovation. We also will be managing
in North America. It touches every piece of our North American to allow our employees more freedom, to take smart risks
business to make it more customer-focused, product-driven and and to demonstrate their creativity. Over time, we believe this
efficient, including: approach will lead to sustainable profitability. You’ll be able to
judge our results as we report our progress.
– A renewed commitment to bold design, improved safety Second, we’re going to sharpen our focus on the
and technological innovation to differentiate Ford Motor people who determine our success – our customers. We’re
Company and its products in the marketplace. going to go way beyond what we’ve ever done before at Ford
– New product investments using Ford’s global to find out what’s on their minds. Our business decisions will
architectures and scale to deliver more new products originate from our knowledge of what our customers want, both
faster, including more crossovers, hybrid vehicles and today and tomorrow. We’re going to figure out what they want
new small cars, as well as increased spending to before they even know it, and we’re going to give it to them.
strengthen Ford’s truck leadership and launch products In the past, our product decisions were sometimes
in new segments to reach more customers. driven by plant capacity concerns. From now on, our
– More clarity for the Ford, Lincoln and Mercury brands, products will be designed and built to satisfy customers,
with a sharper focus on the customer and a clear point not just fill factories.
of view that will appeal to more buyers. This is going to require change number three: We are
– Pricing that is clear, credible and simple, which will unleashing our spirit of American innovation. To me, innovation is
further improve residual values. seeing what others can’t see, and using that vision to build what
– North American capacity will be realigned to match others have never built. Innovation resolves contradictions and
demand – with 14 manufacturing facilities to be idled – flattens old barriers. It’s the heart of all progress.
resulting in significant cost savings and reduced We have a proud history of innovation at Ford. It is what
employment of 25,000-30,000. Capacity will be built our company and made it great. Innovation helped
reduced by 1.2 million units, or 26 percent, by 2008, us create the first affordable car and put the world on
which represents the majority of actions within the plan’s wheels. We are going to reclaim this legacy to build a distinct
2006-2012 period. competitive advantage.
– Salary-related costs cut 10 percent in North America, We will use innovation to drive the bold American
with the reduction of the equivalent of 4,000 salaried designs of our cars and trucks, giving them the uniquely
positions by the end of the first quarter 2006. In American look and feel that reflect our country’s spirit, ingenuity
addition, the company’s officer ranks are being reduced and sense of adventure.
12 percent by the end of the first quarter.
– Material cost reductions, excluding special items, of at
least $6 billion by 2010.*
– A new low-cost manufacturing site is planned for
the future.

*At constant volume, mix and exchange, and net of new product content and regulatory changes.

Ford Motor Company Annual Report 2005 4

 We also will use innovation to drive breakthrough This is what it is going to be like at Ford: far-sighted,
advances in safety. Ford and Volvo engineers are exemplifying customer-focused and innovative. The Way Forward has
that by working together on safety features such as a new already begun, and the proof is in our products.
collision-avoidance system, night-enhanced vision and the next- In 2005, for the first time since 1993, we gained car
generation air bag. The 2006 Ford Five Hundred and Mercury market share in the U.S. That gain was due to strong sales of
Montego with optional side air bags, were the world’s only large a number of great new products such as Ford Mustang, Five
sedans to earn the Insurance Institute for Highway Safety’s Hundred and Fusion; Mercury Montego and Milan; and Lincoln
highest “Top Safety Pick-Gold” rating. The chassis of these Zephyr. We also had the best-selling crossover utility vehicle
vehicles was co-designed by Ford and Volvo engineers. (CUV) in the U.S., Ford Escape, and increased our total CUV
Finally, American innovation will drive our new advances sales by 28 percent. Ford F-Series was the best-selling truck in
in fuel-efficiency, to offset high gas prices and reduce our the U.S. for the 29th year in a row, selling more than 900,000
impact on the environment and dependence on foreign oil. units for the second straight year.
Currently, we are offering four new flexible-fuel vehicles for We have more great products on the way. We have
2006 that run on a mixture of gasoline and ethanol, a renewable a comprehensive and realistic plan to move us forward. And
resource, including the Ford F-150 pickup truck. By 2010, we have the dedicated and talented people of Ford Motor
more than half our Ford, Lincoln and Mercury products will Company determined to deliver outstanding results. All of which
have hybrid capability. We will have the capacity to produce gives me great confidence in our future.
up to a quarter of a million hybrids a year, and scale up as the Addressing the challenges we face, particularly in North
market demands. America, is going to be difficult and at times painful. Winning will
A good example of innovation in action is Ford Escape require sacrifices by the people of Ford, and there will be fewer
Hybrid. Escape was the first hybrid ever designed, engineered of us in the future than there are today. We take these tough
and built by an American automaker. It generated more than a actions with a sense of compassion and gratitude for those
hundred patents as well as new design techniques that we are who have served us with all their hearts. But we are pressing
using now to develop other products. ahead rapidly for the good of all of our stakeholders.
The Ford Rouge Center in Michigan is another We are embarked on a journey that will be seen
example of where innovation will take us. Despite cynicism and as a turning point in our history. We are determined to seize
institutional barriers, we built the most progressive assembly our heritage of innovation and emerge stronger than
plant in the world at the Rouge. It marries lean, flexible and we’ve ever been.
environmentally responsible manufacturing to produce America’s
best-selling vehicle, the F-Series truck. Over time, the
Rouge will save us many millions of dollars, not just because Thank you for your support.
of its plant-covered roof, but in energy costs for heating,
cooling and lighting.
Projects like these are going to be the rule at Ford, not
the exception. We are moving from a culture that discourages
innovation back to a company that celebrates it. William Clay Ford, Jr.
As part of that effort, we recently sent out a mailing Chairman and CEO
to 120,000 U.S. dealers, employees and retirees asking for March 9, 2006
ideas. We also launched an innovation Web site in November
to solicit ideas from employees. In its first month, we received
more than 1,000 ideas, and we are following up on some very
promising ones.
We also are going to design compensation plans
that reward new thinking. This company was founded by an
innovator; we want to make sure that today the company is
overflowing with innovators. We will find them, encourage them
and reward them.

Ford Motor Company Annual Report 2005 5

Technological Innovation
Mercury Mariner Hybrid

Ford Motor Company Annual Report 2005 6

Sustainable Mobility
The Ford Model T wasn’t the first car. However, with the moving assembly line and other
technological innovations, it became the first widely available and affordable car. The stage was set
for a stream of innovations in the following years – the flathead V-8, factory-installed safety belts
and fuel cell vehicles, to name a few.
Today, the same spirit of innovation thrives at Ford as we blaze new technological trails to
reduce our environmental footprint and further improve our vehicles, our plants and our processes.
The 2006 Mercury Mariner Hybrid, seen here overlooking the city of San Francisco, is a
marvel of technological innovation, helping drivers in stop-and-go city traffic maximize fuel economy
and minimize emissions. The San Francisco Bay area is among the top-selling markets for Ford
Escape Hybrid and Mercury Mariner Hybrid sport utility vehicles.

Ford Motor Company Annual Report 2005 7

Shunsuke Okubo, Hybrid Calibration Engineer “In our home and in our lives, we try to minimize our
Carol Okubo, Hybrid Controls Engineer impact on the environment. We recycle, we compost, we have
Carol and Shunsuke Okubo are proud to be on a Ford a garden,” Shunsuke says.
team that reflects their personal philosophy. “One of the things that attracted us to the hybrid
The couple, members of the Hybrid Electric Vehicle program is that it lets us be directly involved in reducing the
team that developed the groundbreaking Vehicle System strain on oil, one of the planet’s limited resources,” Carol adds.
Controller (VSC) in the Mercury Mariner Hybrid, are shown In developing the VSC, Shunsuke estimates he drove
above with the vehicle in San Francisco. The VSC parent more than 45,000 miles in Mariner Hybrid vehicles, experimenting
system is critical for ensuring that the vehicle's controllers and with different inputs and their effects on vehicle systems. Carol
subsystems work together to produce the desired attributes for developed computer strategies and methodologies for the VSC;
fuel economy, performance and drive. Shunsuke’s team then took over for testing.
“Our team’s strength is in taking the big ideas and then
using creative thinking and innovation to really get those ideas to
work,” she says.

Ford Motor Company Annual Report 2005 8

Technological Innovation
Mercury Mariner Hybrid

Our Mercury Mariner Hybrid is technological innovation in motion. This companion to the Ford Escape
Hybrid is the second of our hybrids. Ford plans to bring 250,000 hybrids to market annually by 2010.
To advance the development of gasoline-electric hybrid technology, we boosted the size of our
Sustainable Mobility Technical Team. This enabled us to accelerate engineering and validation testing
and to pull ahead Mariner Hybrid production by a full year. We not only are dedicated to technological
solutions, we also are determined to bring them to customers sooner.
Mariner Hybrid operates on a four-cylinder gasoline engine and a pair of alternating current (AC)
motors, powered by a battery pack that is recharged with energy captured every time the driver brakes.
The major components of this powertrain were orchestrated to work seamlessly together to dramatically
increase driving efficiency and lower emissions while maintaining full functionality and performance. In fact,
Ford Motor Company has earned more than 40 patents, and has another 70 pending, for technologies
related to this system.
For years, we have been developing a range of alternative technologies that will put highly
advanced vehicles on the road. Ford is pouring resources and research into the leading technologies –
hybrid-electric, clean diesel, hydrogen internal combustion, hydrogen fuel cells and ethanol – aimed at
improving upon the performance of the conventional internal combustion engine. In the United States,
we are offering four new flexible-fuel vehicles for 2006 that run on a mixture of gasoline and ethanol
including the Ford F-150 pickup truck. We will continue to step up ethanol – a renewable resource –
as an alternative to gasoline.
Because we understand that the importance of technological advances transcends our company,
we also have invested with other automakers and the U.S. government in research into lightweight
materials and advanced battery technologies. We are partnering in the growth of the alternative fuel
infrastructure. We have transformed our historic Rouge manufacturing facility, where the Ford F-150 is
built, into one of the most technologically and environmentally advanced in the world. We are converting
many facilities into highly efficient and productive flexible operations to maximize capability.
Around the world, we are using solar power, geothermal cooling, hydroelectricity, wind, landfill
gases and even paint fumes to power our plants in clean, sustainable ways. Seventeen of our facilities
are wildlife habitat sites. Since 2000, our facilities worldwide have cut their energy use by more than
18 percent and reduced CO2 emissions by more than 15 percent.
As with our facilities, we want to make all of our vehicles around the world more sustainable
and environmentally responsible.

Ford Motor Company Annual Report 2005 9

Safety Innovation
Volvo C70

Ford Motor Company Annual Report 2005 10

Commitment to Leadership
Safety – for the driver, for the passengers, for the family in the other vehicle and for our employees –
is paramount for Ford.
We brought laminated glass windshields to market in 1927. We began factory installing safety belts
in 1956. In 1999, we introduced BeltMinder™, which has significantly increased safety-belt usage. We were
® ®
first to offer head and chest side air bags, standard emergency trunk releases and AdvanceTrac with RSC
(Roll Stability Control). Our Ford Five Hundred and Mercury Montego are the only full-size cars to earn the
Insurance Institute for Highway Safety “Top Safety Pick-Gold” award in 2005. The vehicles tested were
equipped with side air bags, as included in an optional safety package. Ford and Volvo engineers continue
working together to develop new safety innovations.
We consider safety innovation a responsibility to our company, our customers and our world. The
Volvo C70, pictured above in the Nevada desert, features an all-new innovative air-bag system and other
advances that help enhance safety for our customers.

Ford Motor Company Annual Report 2005 11

Safety Innovation
Volvo C70

Beauty and innovation are far more than skin deep for the all-new Volvo C70. It marks our debut of the
door-mounted inflatable curtain, specially created for this convertible.
Appealing, functional vehicles are only part of our equation for success. At Ford, safety is paramount
at every stage of development. A vehicle without a fixed roof structure requires innovation to provide new
levels of safety. In developing the door-mounted inflatable curtain (DMIC) on C70, we forged a method to
provide passengers with uniquely tailored air-bag protection.
Vehicle air-bag curtains typically are mounted in the roof beams and inflate downward to help
protect occupants in an accident. In C70, engineers found a way to anchor the curtains in the doors. In an
accident, the C70 curtains inflate upward.
To further compensate for top-down driving, the door-mounted curtains have an extra-stiff structure
composed of overlapping rows of cells that stay upright and help protect the head. They also deflate more
slowly to help provide added protection in the event of a rollover accident.
Door-mounted curtains aren’t the only unique solution we developed to address the safety
challenges posed by a convertible. From the rounded fenders to the engine location, C70 has been
engineered for safety, as was the first C70 launched in 1996:

– Engineers cordoned C70 into zones with different types of steel to help control damage and absorb
and divert crash energy.
– C70's windscreen pillars withstand more than twice the car’s weight.
– C70's engine is positioned to reduce the chance of it entering the passenger compartment
in a crash.
– Rounded shapes and smooth surfaces help reduce the risk of injury to pedestrians,
cyclists or others.
– C70’s Intelligent Driver Information System monitors steering wheel movement, accelerator position,
braking and other functions, processes the information and, if necessary, automatically delays
phone calling or other activity that is not crucial to safety.

As a responsible leader in safety innovation, Ford shares lifesaving technologies without hesitation.
®
Ford is making the BeltMinder™ safety-belt reminder system and RSC (Roll Stability Control), one of the
world’s most advanced vehicle stability features, available to other manufacturers and suppliers. We know
that the two most important ways to help prevent injuries are getting people to buckle up and preventing
accidents in the first place. We’ll keep driving innovation to advance the cause.

Ford Motor Company Annual Report 2005 12

 Anne Bélec, President and CEO, C70’s appealing profile belies the safety advances
Volvo Cars North America underneath – the door-mounted inflatable curtain air bag,
With its three-piece retractable hardtop and dramatic strategic use of several grades of steel for maximum protection
good looks, it would be only natural to market Volvo’s new C70 and other reassuring touches.
as a wind-in-your-hair adventurer. “Like our vehicle development, marketing for C70 and
But Anne Bélec knows the truly innovative way to go our other vehicles is holistic,” says Bélec. “Our customers’
is to look beyond that to the safety within. C70 embodies the attitudes are complex. Their lives are made up of concerns for
notion that a safe vehicle can be beautiful, and vice versa. safety and the environment, but also emotional enjoyment and
“We are thoughtful in developing our vehicles – in terms reward. We embrace that ‘completeness’ in both our vehicles
of the environment, reusable materials, safety and reliability,” and our efforts to reach the customer.”
says Bélec, shown above with a new C70 in Nevada.
“But that doesn’t mean we aren’t also giving our customers
beautiful vehicles, and C70 is an excellent example.”

Ford Motor Company Annual Report 2005 13

Design Innovation
Ford iosis

Ford Motor Company Annual Report 2005 14

More Emotion in the Metal
Ford is a leader in innovative technologies and solutions that make our vehicles functional, safe,
reliable and fun to drive. We also extend innovation to the realm of design, distilling emotion and themes
of national identity into sheet metal befitting each of our eight brands.
For Ford in North America, we launched our bold, American design direction in 2005 with the
Ford Fusion midsize sedan. Fusion’s distinctive chrome three-bar grille establishes the new face of Ford
in America – and its low, wide, sloping hood, steeply raked windshield and strong character line sweeping
from front to rear hint at the performance this all-new sedan delivers.
An ocean away, the Ford iosis concept car, shown above in the mountains of southern France, signals
a new design direction – described as “kinetic design” – for Ford customers in Europe. The concept car, which
also debuted in 2005, shows how designers have been able to visually capture the energy of vehicles in motion.
As one of the most emotional purchases many people ever make, we understand that our vehicles
must be compelling, expressing emotions and values while transcending diverse cultures.

Ford Motor Company Annual Report 2005 15

 Martin Smith, Executive Design Director, “Kinetic design expresses energy and movement, and
Ford Europe visualizes the dynamic driving qualities of the vehicle even when
To Martin Smith, design should clearly communicate standing still,” says Smith, shown above with iosis.
a brand’s character. “In iosis, we brought together all of the elements of a
“Design is not an arbitrary process,” he says. new design language,” he says. “This vehicle represents not so
“Each line should serve a purpose and each surface fulfill much a new chapter, but a new book for Ford Europe.”
a visual function.”
“Kinetic design,” as Smith describes it, is the vision
driving the design of his Ford iosis, the concept car that will
influence all Ford European vehicle designs going forward.

Ford Motor Company Annual Report 2005 16

Design Innovation
Ford iosis

Ford is undergoing a worldwide design revolution.

In the United States, for example, designers are distilling the “American-ness” running through
the Ford F-150 and Mustang, becoming more consistent and innovative in applying what we know about
the extroverted optimism of the American culture. A more overt form language and bold designs, such as
those developed for the Ford Fusion, are expressive – and right for American customers.
The Blue Oval design revolution also is unfolding in Europe, with designs that have been purposely
developed to appeal to a cross section of customers from Scandinavia to the Mediterranean.
We pulled the wraps off the Ford iosis concept at the 2005 Frankfurt Auto Show. Ford iosis
represents the vision of Ford Europe’s future design language – described as “kinetic design.” This new
design DNA is defined by strong proportions, married to a form language defined by dynamic lines and
spanned by full surfaces. On iosis, for example, the strong shoulder is supported by an undercut line,
imparting a dynamic quality from front fender to taillight.
Another important element that will help distinguish the face of Ford in Europe is the inverted
trapezoid below the grille, as seen on iosis, which also features dramatic double-pivoting doors that
open to reveal an interior with a futuristic mix of color, materials and textures woven to complete the
design vision.
Sweeping shapes and forms, echoing and flowing in harmony through the interior and exterior,
are the future of Ford Europe. They represent kinetic design – energy in motion.
Elements of the Ford DNA visualized through iosis, an exciting blend of a four-seat sedan
configuration encapsulated within a muscular coupe profile, will make their production debut this year in the
new European S-MAX – a sport activity vehicle with room for up to seven passengers.
The design revolution for Ford Motor Company continues unfolding around the globe, as we
distill the DNA of our eight unique brands into compelling designs aimed at winning the hearts and minds
of customers the world over.

Ford Motor Company Annual Report 2005 17

 1 4

2 5

3 6

Product Innovation
1 Mazda CX-7 2 Aston Martin V8 Vantage 4 Jaguar XK 5 Ford Shelby GT500
“Practical” rarely feels as sporty as it In 2005, Aston Martin launched the There’s new excitement in the world The 2007 Ford Shelby GT500, the
does in Mazda’s new CX-7 crossover highly anticipated production version of Jaguar, thanks in large part to most powerful production Mustang
sport utility vehicle due out in 2006. of its V8 Vantage, first shown as a the new Jaguar XK. In design and ever, cranks out 475 horsepower. It’s
Designed specifically for the pivotal concept in 2003. It is the third model engineering, XK reinforces the the product of a rekindled relationship
North American market, the five- in the Aston Martin range that also marque’s reputation for turning out with Carroll Shelby, one of the
passenger CX-7 grew out of the 2005 includes the Vanquish S and DB9. vehicles that are as rewarding to drive legendary innovators of racing. Ford
MX-Crossport concept that brings The agile V8 Vantage helps advance as they are hot to look at. With XK, took the modern Mustang muscle
together functionality and Mazda’s a strategy to reinvigorate and attract Jaguar further establishes its position car and classic Shelby performance
“soul of a sports car” signature. younger customers to the brand. as a world leader in lightweight vehicle cues, mixed thoroughly and fashioned
technology. a modern successor to the famous
3 Lincoln MKX Shelby GT500 of the 1960s. It goes on
Lincoln is enthusiastically embracing sale later in 2006.
modern designs and innovations.
For instance, when the Lincoln MKX 6 Land Rover Range Rover Sport
goes on sale later in 2006, this The Range Rover Sport launched to
five-passenger crossover utility vehicle great acclaim in 2006, completing a
aims to appeal to a new generation product renaissance for Land Rover.
of luxury buyers who reward their The Range Rover Sport embodies the
successes in more understated, combination of style and substance
self-confident ways. that characterize modern Land Rover
vehicles. As the brand’s first entry into
the performance sport utility market, it
delivers a dynamic driving experience
on-road and true Land Rover capability
off-road.

Ford Motor Company Annual Report 2005 18

Board of Directors and Executives

Board of Directors Executive Officers Group Other Vice Presidents

As of April 1, 2006 As of April 1, 2006 As of April 1, 2006

John R.H. Bond William Clay Ford, Jr. Marvin W. Adams Antonio Maciel
(2,4,5) Chairman of the Board and Senior Vice President, Corporate President, South America
Stephen G. Butler Chief Executive Officer Strategy and Chief Information Officer Paul A. Mascarenas
(1,5) James J. Padilla Thomas K. Brown North American Engineering
Kimberly A. Casiano President and Chief Operating Officer Senior Vice President, Martin J. Mulloy
(3,4,5) Lewis W. K. Booth Global Purchasing Labor Affairs
Edsel B. Ford II Executive Vice President, Ford Europe Darryl B. Hazel Stephen T. Odell
(3,4) and Premier Automotive Group, and Senior Vice President and President, Marketing, Sales and Service,
William Clay Ford, Jr. Chairman, Ford Europe, Jaguar and Ford Customer Service Division Ford Europe
(3,4) Land Rover Hans-Olov Olsson John G. Parker
Irvine O. Hockaday, Jr. Mark Fields Senior Vice President and Vice President
(1,5) Executive Vice President Chief Marketing Officer Ann Marie Petach
Marie-Josée Kravis and President, The Americas (Non-Executive Chairman, Volvo Cars) Treasurer
(2,5) Donat R. Leclair, Jr. Fredrik Arp Geoff P. Polites
Richard A. Manoogian Executive Vice President President and Chief Executive Officer, Chief Executive Officer,
(2,5) and Chief Financial Officer Volvo Cars Jaguar and Land Rover
Ellen R. Marram Mark A. Schulz Joseph Bakaj Barb J. Samardzich
(1,3,5) Executive Vice President Product Development, Ford Europe Powertrain Operations
Dr. Homer A. Neal and President, International Stephen E. Biegun Gerhard Schmidt
(3,4,5) Operations International Governmental Affairs Research and Advanced
Jorma Ollila Anne L. Stevens Mei Wei Cheng Engineering
(1,3,5) Executive Vice President and President, Ford Motor (China) Ltd. Robert L. Shanks
James J. Padilla Chief Operating Officer, The Americas Susan M. Cischke Controller, The Americas
Carl E. Reichardt Michael E. Bannister Environmental and Safety Engineering James P. Tetreault
(4) Group Vice President, Chairman Peter J. Daniel Manufacturing, Ford Europe
Robert E. Rubin and Chief Executive Officer, Chief Operating Officer, Alex P. Ver
(2,4,5) Ford Motor Credit Company Ford Asia Pacific and Africa Chief Executive Officer
John L. Thornton Francisco N. Codina Felicia J. Fields and Chief Operating Officer,
(4,5) Group Vice President, North America Human Resources Automotive Component Holdings
Marketing, Sales and Service Bennie W. Fowler A.J. Wagner
Committee Memberships John Fleming Corporate Quality and President, Ford Motor Credit
(1) Audit Group Vice President, President and Advanced Manufacturing Engineering Company North America
(2) Compensation Chief Executive Officer, Ford Europe Al J. Giombetti
(3) Environmental and Public Policy Derrick M. Kuzak Ford and Lincoln Mercury
(4) Finance Group Vice President, Marketing and Sales
(5) Nominating and Governance Product Development, The Americas Louise K. Goeser
Joe W. Laymon President and Chief Executive Officer,
Group Vice President, Ford of Mexico
Corporate Human Resources Steven K. Hamp
and Labor Affairs Chief of Staff
J Mays Joseph R. Hinrichs
Group Vice President, Design, North America Vehicle Operations
and Chief Creative Officer Charles B. Holleran
Ziad S. Ojakli Chief Communications Officer
Group Vice President,
Corporate Affairs
Richard Parry-Jones
Group Vice President,
Global Product Development
and Chief Technical Officer
David T. Szczupak
Group Vice President,
Manufacturing, The Americas
David G. Leitch
Senior Vice President
and General Counsel
James C. Gouin
Vice President and Controller

Ford Motor Company Annual Report 2005 19

Net Income $ 3.5 Total Sales and Revenues $171.6 $177.1
In billions of dollars In billions of dollars $164.3

2005 net income was Total sales and revenues were

$2.0 billion, down from $3.5 $177.1 billion in 2005,
billion in 2004. $ 2.0 up $5.5 billion from 2004.

$ 0.5

2003 2004 2005 2003 2004 2005

Automotive Cash $ 25.9 $ 25.1

In billions of dollars $ 23.6

Ford ended 2005 with $25.1 billion

of automotive gross cash, including
marketable and loaned securities and
assets held in a short-term VEBA trust.

2003 2004 2005

Worldwide Vehicle Unit Sales 6,736 6,798 6,818 U.S. Market Share 20.5% 19.3%
In thousands Ford ranks second in the 18.2%
U.S. market with a total market share
Worldwide vehicle unit of 18.2%, including our
sales were 6,818,000 in 2005, Premier Automotive Group brands.
up 20,000 from 2004.

2003 2004 2005 2003 2004 2005

European Market Share 10.7% 10.9% 10.8%

Ford’s market share in
Europe was 10.8% in 2005,
down from 10.9% in 2004.

2003 2004 2005

Ford Motor Company Annual Report 2005 20

Financial Contents
Management’s Discussion and Analysis of Financial
Condition and Results of Operations 22
Quantitative and Qualitative Disclosures About Market Risk 49
Consolidated Statement of Income 53
Sector Statement of Income 54
Consolidated Balance Sheet 55
Sector Balance Sheet 56
Consolidated Statement of Cash Flows 57
Sector Statement of Cash Flows 58
Consolidated Statement of Stockholders’ Equity 59
Notes to the Financial Statements 60
Report of Independent Registered Public Accounting Firm 99
Selected Financial Data 101
Employment Data 102
Management’s Report on Internal Control Over Financial Reporting 103
New York Stock Exchange and Pacific Exchange Required Disclosures 103

Ford Motor Company Annual Report 2005 21

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

OVERVIEW

Generation of Revenue, Income and Cash

Our Automotive sectorʼs revenue, income and cash are generated primarily from sales of vehicles to our dealers and distributors
(i.e., our customers). Vehicles we produce generally are subject to firm orders from our customers and generally are deemed sold
(with the proceeds from such sale recognized in revenue) immediately after they are produced and shipped to our customers. This is
not the case, however, with respect to vehicles produced for sale to daily rental car companies that are subject to a guaranteed
repurchase option or vehicles produced for use in our own fleet (including management evaluation vehicles). Vehicles sold to daily
rental car companies that are subject to a guaranteed repurchase option are accounted for as operating leases, with lease revenue and
profits recognized over the term of the lease. When we sell the vehicle at auction, we recognize a gain or loss on the difference, if
any, between actual auction value and the projected auction value. Therefore, except for the impact of the daily rental units sold
subject to a guaranteed repurchase option and those units placed into our own fleet, vehicle production is closely linked with unit sales
and revenue from such sales.

Most of the vehicles sold by us to our dealers and distributors are financed at wholesale by Ford Credit. Upon Ford Credit
originating the wholesale receivable related to a dealerʼs purchase of a vehicle, Ford Credit pays cash to the relevant legal entity in our
Automotive sector in payment of the dealerʼs obligation for the purchase price of the vehicle. The dealer then pays off the wholesale
finance receivable when it sells the vehicle to a retail customer.

Our Financial Services sectorʼs revenue is generated primarily from interest on finance receivables, net of certain deferred
origination costs that are included as a reduction of financing revenue, and such revenue is recognized over the term of the receivable
using the interest method. Also, revenue from operating leases, net of certain deferred origination costs, is recognized on a straight-
line basis over the term of the lease. Income is generated to the extent revenues exceed expenses, most of which are interest and
operating expenses.

Transactions between the Automotive and Financial Services sectors occur in the ordinary course of business. For example, Ford
Credit receives interest supplements and other support cost payments from the Automotive sector in connection with special vehicle
financing and leasing programs that it sponsors. Ford Credit records these payments as revenue, and the Automotive sector makes the
related cash payments, over the term of the related finance receivable or operating lease. The Automotive sector records the estimated
costs of marketing incentives, including dealer and retail customer cash payments (e.g., rebates) and costs of special financing and
leasing programs, as a reduction to revenue at the later of the date the related vehicle sales are recorded or at the date the incentive
program is both approved and communicated. See Note 1 of the Notes to Financial Statements for a more detailed discussion of
transactions and payments between the Automotive and Financial Services sectors.

Key Economic Factors and Trends Affecting the Automotive Industry

Excess Capacity. According to CSM Worldwide, an automotive research firm, in 2005 the estimated automotive industry global
production capacity for light vehicles (about 77 million units) significantly exceeded global production of cars and trucks (about
62 million units). In North America and Europe, the two regions where the majority of revenue and profits are earned in the industry,
excess capacity was an estimated 17% and 14%, respectively. According to production capacity data projected by CSM Worldwide,
excess capacity conditions in North America could continue for several more years, but would be mitigated by the capacity reductions
announced by us and General Motors Corporation when these planned reductions are completed.

Pricing Pressure. Excess capacity, coupled with a proliferation of new products being introduced in key segments by the industry,
will keep pressure on manufacturers' ability to increase prices on their products. In addition, the incremental new U.S. manufacturing
capacity of foreign manufacturers (so-called "transplants") in recent years has contributed, and is likely to continue to contribute, to
the severe pricing pressure in that market. For example, in 2006, Toyota Motor Corporation is expected to complete construction of
an assembly plant in Texas that reportedly will be capable of producing at least 200,000 full-size pick-up trucks per year. The
reduction of real prices for similarly contented vehicles in the United States has become more pronounced since the late 1990s, and we
expect that a challenging pricing environment will continue for some time to come. In Europe, the automotive industry also has
experienced intense pricing pressure for several years for the same reasons discussed above, exacerbated in recent years by the Block
Exemption Regulation.

Ford Motor Company Annual Report 2005 22

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

Consumer Spending Trends. We expect, however, that a decline in or the inability to increase vehicle prices could be offset by the
spending habits of consumers and their propensity to purchase over time higher-end, more expensive vehicles and/or vehicles with
more features. Over the next decade, in the United States and other mature markets, we expect that growth in spending on vehicle mix
and content will change generally in line with GDP. The benefits of this to revenue growth in the automotive industry are significant.
In the United States, for example, consumers in the highest income bracket are buying more often and are more frequently buying
upscale.

Although growth in vehicle unit sales (i.e., volume) will be greatest in emerging markets in the next decade, we expect that the
mature automotive markets (e.g., North America, Western Europe, and Japan) will continue to be the source of a majority of global
industry revenues. We also expect that the North American market will continue as the single largest source of revenue for the
automotive industry in the world.

Health Care Expenses. In 2005, our health care expenses for U.S. employees, retirees, and their dependents were $3.5 billion,
with about $2.4 billion for postretirement health care and the balance for active employee health care. In 2005, prescription drugs
continued to represent approximately one-third of our total health care expense.

Although we have taken measures to have employees and retirees bear a higher portion of the costs of their health care benefits,
we expect our health care costs to continue to increase. For 2006, our trend assumptions for U.S. health care costs include an initial
trend rate of 7%, gradually declining to a steady state trend rate of 5% reached in 2011. These assumptions include the effect of
actions we are taking and expect to take to offset health care inflation, including eligibility management, employee education and
wellness programs, competitive sourcing, and appropriate employee cost sharing.

Commodity and Energy Price Increases. Commodity price increases, particularly for steel and resins (which are our two largest
commodity exposures and among the most difficult to hedge), have occurred recently and are continuing during a period of strong
global demand for these materials. In addition, energy prices increased significantly in 2005. In particular, gasoline prices in the
United States increased in volatility and rose to levels well over $2.00 per gallon in 2005, and have remained at levels significantly
higher than 2004. This has had an adverse effect on the demand for full- and medium-sized sport utility vehicles in the United States.

Currency Exchange Rate Volatility. The U.S. dollar has depreciated against most major currencies since 2002. This created
downward margin pressure on auto manufacturers that have U.S. dollar revenue with foreign currency cost. Because we produce
vehicles in Europe (e.g., Jaguar, Land Rover and Volvo models) for sale in the United States and produce components in Europe (e.g.,
engines) for use in some of our North American vehicles, we experienced margin pressure. Although this pressure was offset partially
by gains on foreign exchange derivatives, this offset reduces over time due to the expiration of favorable hedges previously put in
place. We, like many other automotive manufacturers with sales in the United States, are not always able to price for depreciation of
the U.S. dollar due to the extremely competitive pricing environment in the United States.

Ford Motor Company Annual Report 2005 23

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

Trends and Strategies – the Way Forward Plan

The global automotive marketplace has become increasingly fragmented and crowded, and we anticipate that this trend will
accelerate into the future. Anticipating little growth in the overall volume of vehicles sold in North America for the foreseeable
future, we expect more manufacturers to offer an increasing number of products. Presently, there are about 255 different nameplates
being offered in the United States, compared with 215 in 2002 and a projected 300 or more by 2010. In order to stabilize and grow
our U.S. market share in this increasingly competitive environment and generally improve our business, we are implementing a
business improvement plan for our North American automotive operations that we refer to as our Way Forward plan. This plan
focuses on the following key areas: renewed customer focus and brand differentiation, commitment to innovation, clear pricing, and
cost reductions.

Customer Focus and Brand Differentiation

To compete more effectively in today's global marketplace, a sharpened customer focus is essential. Toward that end, we have
developed a new customer segmentation model using a proprietary large-scale quantitative survey to better understand the values and
attitudes in the U.S. marketplace. This model focuses on values and attitudes that drive purchase behaviors and that cross traditional
demographic lines of age, lifestage, gender and cultural identity. Using this new segmentation model, we selected target customer
segments for our Ford, Lincoln, and Mercury brands. These target customer segments will provide a sharper focus for our business,
and we will use this focus to ensure all aspects of our business will be aligned to satisfy our customers' current needs and anticipate
their future needs.

To effectively leverage our global resources, we must focus on differentiating our brand identities, especially within the crowded
North American marketplace. Going forward, we intend to have clear and distinct identities for our brands. Our Ford brand in the
United States stands for bold American design that exudes strength and progress; a number of our products already reflect that design
philosophy, including our award-winning Mustang, F-Series, and Fusion models. We plan to continue this brand philosophy in future
Ford-brand models, such as the new Ford Edge crossover vehicle. Mercury appeals to consumers with different values and attitudes,
and brings conquest purchasers to us. Our strategy for the Mercury brand is to create vehicles that offer modern, expressive design for
the American consumer, while maintaining common product functionality with the Ford brand. The Mercury Mariner and Mercury
Milan are examples of products delivering the intended brand identity and product functionality. Our strategy for Lincoln is to appeal
to self-made American consumers who are achieving their dreams, by offering these consumers refined and dynamic vehicle design,
smooth power on demand, and a personalized environment. The Lincoln Zephyr and Lincoln Navigator are examples of products
delivering this brand identity today, and this brand philosophy will be continued in future products, such as the new Lincoln MKX
crossover vehicle.

Innovation Initiative

To continue delivering the cutting-edge technology consumers desire, we also are rededicating ourselves to driving innovation
through our entire business, beginning with the way we analyze the marketplace, develop and produce products, and continuing
through the sales and service channels. Our innovation initiative demands creative and original thinking, implemented through a
disciplined process, throughout our global operations, which we can then maximize through global synergies in order to create more
new products and features, more flexible plants, more common processes and economies of scale to deliver more new product faster to
all of our markets and for all of our brands. Our strategy is to differentiate ourselves in the marketplace through design innovation,
safety innovation, and new environmentally-friendly technologies.

Clear Pricing

We began introducing clear, simple pricing two years ago with the introduction of the new Mustang, and have continued this
strategy with new models such as the Ford Fusion, Mercury Milan and Lincoln Zephyr. These vehicles are proving that well priced
products with great appeal can reduce our reliance on incentives. Our plan is to extend this strategy to all of our vehicles over time.
This is a key component of communicating our brand philosophy to our customers through bold styling and clear, simple pricing.
Ford will continue this approach of bringing sticker prices in line with actual transaction prices by reducing rebates over time as we
introduce new models into the marketplace. Our customers will benefit from a simpler purchase experience and improved residual
values and cost of ownership.

Ford Motor Company Annual Report 2005 24

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

Cost Savings

To improve our business and profitability, we plan to reduce our costs through material cost actions, health care cost reductions,
and capacity and personnel reductions.

Material Cost Actions. During 2005, we announced an initiative to enter into new long-term agreements with select strategic
suppliers globally in order to strengthen collaboration and develop a sustainable business model to drive mutual profitability and
technology development. This new Aligned Business Framework is expected to establish closer relationships with a smaller number
of suppliers, reducing by approximately 50 percent the number of suppliers to whom we source new business for 20 high-impact
component systems. These systems, including seats, wiring, restraint systems, and instrument and trim panels, represent about half of
our annual production purchases globally. In addition, we have established cross-functional component systems teams with common
objectives and processes to establish component systems business plans with the goal of further reducing material costs. With these
actions, we are targeting net material cost reductions excluding special items of at least $6 billion by 2010 at constant volume, mix and
exchange, net of new product content and regulatory changes.

As disclosed in our Current Report on Form 8-K dated October 1, 2005, we also finalized an agreement with Visteon Corporation
("Visteon"), our largest supplier, in which we assumed control of 17 plants and six other facilities in the United States and Mexico.
These assets were transferred to Automotive Components Holdings, LLC ("ACH"), a temporary business controlled and managed by
us, to protect the flow of critical parts and components in the near-term and, over time, to improve our sourcing flexibility and cost
competitiveness. ACH's mission is to prepare most of the acquired businesses for sale to companies with the capital and expertise to
supply us with high-quality components and systems at competitive prices. As we prepare these businesses for sale, we also are
taking actions to reduce hourly employment at ACH by approximately 5,000 positions, primarily through buyouts.

Health Care Cost Reductions. Effective January 1, 2007 for U.S. salaried employees hired before June 1, 2001, we established a
company contribution limit set at 2006 levels for retiree health care benefits (U.S. salaried employees hired on or after June 1, 2001
participate in a defined contribution retiree health care plan). In addition, for U.S. salaried employees hired before January 1, 2004
who retire on or after June 1, 2006, company-paid retiree life insurance benefits are limited to $50,000 (employees hired on or after
January 1, 2004 do not receive company-paid retiree life insurance benefits). These benefit changes resulted in a decrease in the year-
end 2005 other postretirement employee benefit ("OPEB") obligation of about $3 billion and a reduction in 2006 and ongoing expense
of about $400 million annually. The related cash savings will grow over time.

In December 2005, we reached an agreement with the UAW that would increase retiree health care cost sharing. As part of the
agreement, an independent defined contribution Voluntary Employee Benefit Association trust would be established for the purpose of
mitigating the financial impact of increased cost sharing to retirees. This trust would be funded primarily through (i) wage diversions
from active hourly employees, (ii) specified cash contributions aggregating $108 million to be made by us over several years, and
(iii) potential cash contributions to be made by us based on any price appreciation above $8.145 per share of a notional amount of
8,750,000 shares of Ford Common Stock. The agreement is subject to court approval of a proposed settlement of a purported class
action challenging our decision to modify the retiree health care plan; additional retirees have expressed their objection to the
agreement by moving to intervene in the pending lawsuit and filing a follow-on suit of their own. If the settlement of the purported
class action receives court approval, the agreement is expected to reduce our OPEB obligation by about $5 billion, with projected
average annual cost savings of about $650 million and reduced average annual cash outlays of about $200 million.

Capacity and Personnel Reductions. Our North American operations presently have the capacity to support a U.S. market share
significantly in excess of the 17% share our Ford, Lincoln, and Mercury brands achieved in 2005. As a result, our plant utilization
rate in North America has been about 75%, which is not sustainable. Given the continued proliferation of new model offerings by
current and potential participants in the U.S. automotive market, we recognize the need to match our North American production
capacity to realistic volume and market share expectations. Accordingly, we plan to idle and cease operations at 14 manufacturing
facilities in North America by 2012, including seven vehicle assembly plants. Associated with these plant idlings, we intend to reduce
our manufacturing employment by 25,000 to 30,000 people during the same period. These personnel reductions do not include
actions at ACH, and are in addition to the previously announced reduction of the equivalent of 4,000 salaried positions by the end of
the first quarter of 2006, as well as a reduction in our officer ranks by 12 percent by the end of the first quarter of 2006.

Ford Motor Company Annual Report 2005 25

Management’s Discussion and Analysis of Financial
Condition and Results of Operations

The first facility to be idled pursuant to the Way Forward plan will be our St. Louis Assembly Plant, which is targeted to cease
production by the end of the first quarter of 2006. Further, we have announced plans to idle the following facilities through 2008:
Atlanta Assembly Plant, Wixom Assembly Plant, Batavia Transmission Plant, Windsor Casting Plant, and two additional assembly
plants to be determined later this year. In addition, production at our St. Thomas Assembly Plant will be reduced to one shift. These
actions should reduce our North American assembly capacity by 1.2 million units or 26% and help improve our assembly capacity
utilization rate.

RESULTS OF OPERATIONS

We have reclassified certain prior year amounts to conform to current year presentation.

FULL-YEAR 2005 RESULTS OF OPERATIONS

Our worldwide net income was $2.0 billion or $1.05 per share of Common and Class B stock in 2005, down $1.5 billion from a
profit of $3.5 billion or $1.73 per share in 2004.

Results by business sector for 2005, 2004 and 2003 are shown below (in millions):
2005 2004 2003
Income/(loss) before income taxes
Automotive sector ..................................................................................................................................................... $ (3,895) $ (155) $ (1,908)
Financial Services sector............................................................................................................................................ 5,891 5,008 3,247
Total Company........................................................................................................................................................ 1,996 4,853 1,339
Provision for/(benefit from) income taxes (a) ................................................................................................................ (512) 938 123
Minority interests in net income/(loss) of subsidiaries (b) .............................................................................................. 280 282 314
Income/(loss) from continuing operations.................................................................................................................. 2,228 3,633 902
Income/(loss) from discontinued operations ................................................................................................................ 47 (146) (143)
Cumulative effect of change in accounting principle (c) .............................................................................................. (251) — (264)
Net income/(loss)........................................................................................................................................................ $ 2,024 $ 3,487 $ 495
__________
(a) See Note 3 of the Notes to the Financial Statements for disclosure regarding 2005 effective tax rate.
(b) Primarily related to Ford Europe’s consolidated less-than-100%-owned affiliates.
(c) See Notes 17 and 27 of the Notes to the Financial Statements.

Included in Income/(loss) before income taxes are items we do not consider indicative of our ongoing operating activities ("special
items"). The following table details the 2005, 2004, and 2003 special items by business unit (in millions):

2005 2004 2003

Automotive Sector
Ford North America
Visteon-related charges *............................................................................................................................................ $ (468) $ (600) $ (1,597)
Personnel-reduction programs ..................................................................................................................................... (401) — —
Fuel-cell technology charges....................................................................................................................................... (116) (182) —
Changes in state non-income tax law ........................................................................................................................... 85 — —
Divestiture of non-core business (Beanstalk Group, LLC) ............................................................................................ (59) — —
Ford Europe
Personnel-reduction programs ..................................................................................................................................... (510) (49) (513)
Premier Automotive Group ("PAG")
Jaguar/Land Rover impairment ................................................................................................................................... (1,300) — —
Personnel-reduction programs ..................................................................................................................................... (245) (110) —
Ford Asia Pacific and Africa
Divestiture of non-core business (certain Australia dealerships) .................................................................................... 14 (81) —
Personnel-reduction programs ..................................................................................................................................... (33) — —
Other Automotive
Divestiture of non-core businesses (primarily related to Kwik-Fit Group Limited) ......................................................... 152 17 49
Total Automotive sector ............................................................................................................................................ (2,881) (1,005) (2,061)
Financial Services Sector
Divestiture of non-core business (The Hertz Corporation ("Hertz"))................................................................................ 1,499 — —
Property clean-up settlement ......................................................................................................................................... — 45 —
Total .......................................................................................................................................................................... $ (1,382) $ (960) $ (2,061)
__________
* See Notes 4 and 23 of the Notes to the Financial Statements for discussion of Visteon-related charges.

Ford Motor Company Annual Report 2005 26

Management’s Discussion and Analysis of Financial
Condition and Results of Operations

AUTOMOTIVE SECTOR RESULTS OF OPERATIONS

2005 Compared with 2004

Details by Automotive business unit of Income/(loss) before income taxes are shown below (in millions):
Income/(Loss) Before
Income Taxes
2005
Over/
(Under)
2005 2004 2004
The Americas
— Ford North America ........................................................................................................................................................... $ (2,500) $ 684 $ (3,184)
— Ford South America ........................................................................................................................................................... 389 140 249
Total The Americas ............................................................................................................................................................... (2,111) 824 (2,935)
Ford Europe and PAG
— Ford Europe ....................................................................................................................................................................... (381) 65 (446)
— PAG ................................................................................................................................................................................... (1,645) (850) (795)
Total Ford Europe and PAG .................................................................................................................................................. (2,026) (785) (1,241)
Ford Asia Pacific and Africa/Mazda
— Ford Asia Pacific and Africa.............................................................................................................................................. 42 (36) 78
— Mazda and Associated Operations ..................................................................................................................................... 255 118 137
Total Ford Asia Pacific and Africa/Mazda............................................................................................................................. 297 82 215
Other Automotive ................................................................................................................................................................. (55) (276) 221
Total Automotive sector ..................................................................................................................................................... $ (3,895) $ (155) $ (3,740)

Details of Automotive sector sales and vehicle unit sales by Automotive business unit for 2005 and 2004 are shown below:

Sales Vehicle Unit Sales (a)

(in billions) (in thousands)
2005 2005
Over/(Under) Over/(Under)
2005 2004 2004 2005 2004 2004
The Americas
— Ford North America .............................................................................................. $ 80.6 $ 83.0 $ (2.4) (3)% 3,443 3,623 (180) (5)%
— Ford South America .............................................................................................. 4.3 3.0 1.3 43 336 292 44 15
Total The Americas........................................................................................... 84.9 86.0 (1.1) (1) 3,779 3,915 (136) (3)
Ford Europe and PAG
— Ford Europe .......................................................................................................... 30.0 26.5 3.5 13 1,785 1,705 80 5
— PAG ...................................................................................................................... 30.3 27.6 2.7 10 757 771 (14) (2)
Total Ford Europe and PAG.............................................................................. 60.3 54.1 6.2 11 2,542 2,476 66 3
Ford Asia Pacific and Africa/Mazda
— Ford Asia Pacific and Africa (b) ........................................................................... 7.7 7.0 0.7 10 465 407 58 14
— Mazda and Associated Operations (c)................................................................... 0.6 — 0.6 — 32 — 32 —
Total Ford Asia Pacific and Africa/Mazda........................................................ 8.3 7.0 1.3 19 497 407 90 22
Total Automotive sector ............................................................................. $ 153.5 $ 147.1 $ 6.4 4 6,818 6,798 20 —
__________
(a) Vehicle unit sales generally are reported on a where-sold basis, and include sales of all Ford-badged units and units manufactured by Ford and sold to other
manufacturers, as well as units distributed for other manufacturers. Vehicles sold to daily rental car companies that are returned to us pursuant to a guaranteed
repurchase option and vehicles used in our own fleet (including management evaluation vehicles) are included in vehicle unit sales at the time they are disposed
of by us through used car channels. 2005 vehicle unit sales include about 50,000 units transferred to Hertz which were still being used in Hertz operations as of
the date we sold Hertz; "sales" above does not include revenue from these units.
(b) Included in vehicle unit sales of Ford Asia Pacific and Africa are Ford-badged vehicles sold in China and Malaysia by certain unconsolidated affiliates totaling
about 87,000 and 66,000 units in 2005 and 2004, respectively. "Sales" above does not include revenue from these units.
(c) Reflects sales of Mazda6 by our consolidated subsidiary, AutoAlliance International, Inc. ("AAI"), beginning with the consolidation of AAI in the third quarter
of 2005. See Note 17 of the Notes to the Financial Statements.

Ford Motor Company Annual Report 2005 27

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

Details of Automotive sector market share for selected markets for 2005 and 2004 are shown below:

Dealer-Owned Stocks (a)

Market Share (in thousands)
2005 2005
Over/(Under) Over/(Under)
Market 2005 2004 2004 2005 2004 2004

U.S. (b) ................................................... 17.0% 18.0% (1.0) pts. 733 794 (61)
Brazil (b)................................................. 12.4 11.8 0.6 18 19 (1)
Europe (b) (c) ......................................... 8.5 8.6 (0.1) 342 356 (14)
PAG - U.S./Europe (c) .......................... 1.2/2.3 1.3/2.3 (0.1)/0 45/69 41/68 4/1
Australia (b)............................................ 13.1 14.2 (1.1) 18 19 (1)
__________
(a) Dealer-owned stocks represent our estimate of vehicles shipped to our customers (dealers) and not yet sold by the dealers to their retail customers, as well
as some vehicles reflected in our inventory.
(b) Includes only Ford and, in the United States, Lincoln and Mercury brands.
(c) European market share is based, in part, on estimated 2005 vehicle registrations for our 19 major European markets.

Overall Automotive Sector

The decline in results reflected losses at our Ford North America business unit, an impairment charge for long-lived assets of
Jaguar/Land Rover operations, and higher charges for personnel reduction programs, offset partially by more favorable market
performance at Land Rover and improved results of our Ford South America business unit, Other Automotive, and Ford Asia Pacific
and Africa/Mazda segment.

The table below details our 2005 cost performance (in billions):

2005 Costs*
Better/(Worse)
Explanation of Cost Performance than 2004
Net product costs New product and commodities-related cost increases, offset partially by pricing reductions from
our suppliers and design cost reductions on existing products. ............................................................................. $ (1.0)

Pension and health care Primarily the effect of lower discount rates ........................................................................................................... (0.8)

Quality-related Warranty performance on prior model-year vehicles, offset partially by cost recoveries from suppliers
(including Bridgestone-Firestone North American Tire, LLC) ............................................................................. (0.4)

Depreciation and amortization Primarily related to investments for new vehicles and acceleration of depreciation in a number
of our operations..................................................................................................................................................... (0.3)

Overhead Primarily reductions in salaried personnel............................................................................................................. 0.3

Manufacturing and engineering Primarily hourly and salaried personnel reductions and ongoing
efficiencies in our plants......................................................................................................................................... 0.9

Total ................................................................................................................................................................... $ (1.3)

__________
* At constant volume, mix and exchange and excluding special items and discontinued operations.

The Americas Segment

Ford North America. The decline in results primarily reflected unfavorable cost performance, lower U.S. market share, lower
dealer stock levels, charges for personnel-reduction programs, and unfavorable currency exchange. Unfavorable cost performance
primarily reflected higher warranty and material costs.

Ford South America. The increase in earnings primarily reflected favorable net pricing in excess of higher commodity costs,
higher vehicle unit sales and favorable currency exchange.

Ford Motor Company Annual Report 2005 28

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

Ford Europe and PAG Segment

Ford Europe. The decline in results primarily reflected higher charges for personnel-reduction programs, negative net pricing, and
adverse product and market mix, offset partially by favorable cost performance and exchange.

PAG. The decline in results primarily reflected an impairment charge for long-lived assets of the Jaguar/Land Rover operations,
unfavorable currency exchange, and higher charges for personnel-reduction programs, offset partially by favorable net pricing,
improved product mix primarily reflecting the impact of new Land Rover products, and favorable cost performance. For additional
discussion of the impairment charge, see Note 9 of the Notes to the Financial Statements.

Ford Asia Pacific and Africa/Mazda Segment

Ford Asia Pacific and Africa. The improvement in earnings primarily reflected the non-recurrence of 2004 charges related to the
disposition of certain dealerships, favorable changes in exchange rates, and a gain on the disposal of our investment in Mahindra &
Mahindra Ltd., offset partially by unfavorable product mix, higher costs associated with new products and facilities in China and
charges for personnel-reduction programs.

Mazda and Associated Operations. The increase in earnings primarily reflected gains on our investment in Mazda convertible
bonds and improved Mazda operating results. In the second half of 2005, we converted to equity about 82.5% of our Mazda
convertible bonds, and, therefore, expect diminished income effects in future periods from mark-to-market adjustments for these
bonds.

Other Automotive

The improvement primarily reflected higher returns on invested cash and a gain on the sale of non-core businesses, offset partially
by lower interest on tax refunds from prior-year federal and state tax matters (about $450 million in 2005 compared with $600 million
in 2004).

2004 Compared with 2003

Details by Automotive business unit of Income/(loss) before income taxes are shown below (in millions):
Income/(Loss) Before
Income Taxes
2004
Over/(Under)
2004 2003 2003
The Americas
— Ford North America ........................................................................................................................................................ $ 684 $ 196 $ 488
— Ford South America ........................................................................................................................................................ 140 (129) 269
Total The Americas............................................................................................................................................................. 824 67 757
Ford Europe and PAG
— Ford Europe ..................................................................................................................................................................... 65 (1,620) 1,685
— PAG ................................................................................................................................................................................. (850) 171 (1,021)
Total Ford Europe and PAG ............................................................................................................................................... (785) (1,449) 664
Ford Asia Pacific and Africa/Mazda
— Ford Asia Pacific and Africa........................................................................................................................................... (36) (23) (13)
— Mazda and Associated Operations .................................................................................................................................. 118 69 49
Total Ford Asia Pacific and Africa/Mazda ......................................................................................................................... 82 46 36
Other Automotive............................................................................................................................................................... (276) (572) 296
Total Automotive sector..................................................................................................................................................... $ (155) $ (1,908) $ 1,753

Ford Motor Company Annual Report 2005 29

Management’s Discussion and Analysis of Financial
Condition and Results of Operations

Details of Automotive sector sales and vehicle unit sales by Automotive business unit for 2004 and 2003 are shown below:

Sales Vehicle Unit Sales (a)

(in billions) (in thousands)
2004 2004
Over/(Under) Over/(Under)
2003 2004 2004
2003 2003 2003
The Americas
— Ford North America .............................................................................................. $ 83.0 $ 83.6 $ (0.6) (1)% 3,623 3,810 (187) (5)%
— Ford South America .............................................................................................. 3.0 1.9 1.1 58 292 210 82 39
Total The Americas........................................................................................... 86.0 85.5 0.5 1 3,915 4,020 (105) (3)
Ford Europe and PAG
— Ford Europe .......................................................................................................... 26.5 22.2 4.3 19 1,705 1,609 96 6
— PAG ...................................................................................................................... 27.6 24.8 2.8 11 771 754 17 2
Total Ford Europe and PAG.............................................................................. 54.1 47.0 7.1 15 2,476 2,363 113 5
Ford Asia Pacific and Africa/Mazda
— Ford Asia Pacific and Africa (b) ........................................................................... 7.0 5.8 1.2 21 407 353 54 15
— Mazda and Associated Operations ........................................................................ — — — — — — — —
Total Ford Asia Pacific and Africa/Mazda........................................................ 7.0 5.8 1.2 21 407 353 54 15
Other Automotive ....................................................................................................
Total Automotive sector ............................................................................. $ 147.1 $ 138.3 $ 8.8 6 6,798 6,736 62 1
__________
(a) Vehicle unit sales generally are reported on a where-sold basis, and include sales of all Ford-badged units and units manufactured by Ford and sold to other
manufacturers, as well as units distributed for other manufacturers. Vehicles sold to daily rental car companies that are returned to us pursuant to a guaranteed
repurchase option and vehicles used in our own fleet (including management evaluation vehicles) are included in vehicle unit sales at the time they are disposed
of by us through used car channels.
(b) Included in vehicle unit sales of Ford Asia Pacific and Africa are Ford-badged vehicles sold in China and Malaysia by certain unconsolidated affiliates totaling
about 66,000 and 34,000 units in 2004 and 2003, respectively. "Sales" above does not include revenue from these units.

Details of Automotive sector market share for selected markets for 2004 and 2003 are shown below:

Dealer-Owned Stocks (a)

Market Share (in thousands)
2004 2004
Over/(Under) Over/(Under)
Market 2004 2003 2003 2004 2003 2003

U.S. (b) .................................................. 18.0% 19.2% (1.2) pts. 794 791 3

Brazil (b)................................................ 11.8 11.5 0.3 19 12 7
Europe (b) (c)......................................... 8.7 8.6 0.1 356 403 (47)
PAG – U.S./Europe (c) ......................... 1.3/2.3 1.3/2.1 0/ 0.2 41/68 47/59 (6)/9
Australia (b)........................................... 14.2 13.9 0.3 19 18 1
__________
(a) Dealer-owned stocks represent our estimate of vehicles shipped to our customers (dealers) and not yet sold by the dealers to their retail customers, as well as
some vehicles reflected in our inventory.
(b) Includes only Ford and, in the United States, Lincoln and Mercury brands.
(c) European market share is based on vehicle registrations for our 19 major European markets.

Overall Automotive Sector

The improvement in Income/(loss) before income taxes primarily reflected lower Visteon-related charges, higher net pricing,
favorable cost performance and the favorable effect of tax-related interest on refunds and settlements of prior-year federal and state
audits, offset partially by lower vehicle unit sales and unfavorable changes in currency exchange rates.

The Americas Segment

Ford North America. The improvement in earnings primarily reflected the non-recurrence of $1.6 billion of charges in 2003
related to Visteon, offset by a charge of $600 million to establish an allowance against a receivable from Visteon in 2004.

In addition, the improvement in earnings reflected positive net pricing and favorable cost performance, offset partially by lower
vehicle unit sales, unfavorable changes in currency exchange rates (primarily weakening of the U.S. dollar compared with the Euro
and the Canadian dollar) and a charge of $182 million related to our investment in Ballard Power Systems Inc., a provider of fuel-cell
technology.

Ford Motor Company Annual Report 2005 30

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

Ford South America. The improvement in earnings primarily reflected positive net pricing and higher vehicle unit sales, offset
partially by higher commodity costs.

Ford Europe and PAG Segment

Ford Europe. The improvement in earnings primarily reflected favorable cost performance, lower charges related to the Ford
Europe Improvement Plan (primarily employee separation charges) and higher profits at our Ford Otosan joint venture in Turkey.

PAG. The increased loss primarily reflected unfavorable changes in currency exchange rates, as well as vehicle production
reductions and employee separation charges at Jaguar related to the implementation of the PAG Improvement Plan and higher costs
for launching new vehicles, offset partially by positive net pricing.

Ford Asia Pacific and Africa/Mazda Segment

Ford Asia Pacific and Africa. The decline in earnings reflected a charge related to the disposition of certain dealerships, offset
partially by favorable changes in exchange rates and higher vehicle unit sales.

Mazda and Associated Operations. The change primarily reflected improvements in our Mazda-related investments.

Other Automotive

The improvement in results primarily reflected higher tax-related interest on refund claims and the favorable effect on interest
expense of the settlements in 2004 of prior-year federal and state tax audits and 2004 debt repurchases. This was offset partially by
the reclassification of interest expense on our 6.50% Junior Subordinated Debentures due 2032 held by a subsidiary trust, Ford Motor
Company Capital Trust II.

FINANCIAL SERVICES SECTOR RESULTS OF OPERATIONS

2005 Compared with 2004

Details of the full year Financial Services sector Income/(loss) before income taxes for 2005 and 2004 are shown below (in
millions):

Income/(Loss)
Before Income Taxes
2005
Over/(Under)
2005
2004 2004
Ford Credit................................................................................................................................................................................... $ 3,861 $ 4,431
$ (570)
Hertz operating results (a) ........................................................................................................................................................... 974
481 493
Other Financial Services operating results.................................................................................................................................. (39)
(123) 84
Gain on sale of Hertz (b) ............................................................................................................................................................... 1,095
1,095 —
Total Financial Services sector............................................................................................................................................. $ 5,891 $ 5,008
$ 883
__________
(a) Includes amortization expense related to intangibles recognized upon consolidation of Hertz.
(b) The segment presentation of the gain on sale of Hertz in Note 24 of the Notes to the Financial Statements is $1,006 million in the Hertz segment and $89 million in
Other Financial Services.

Ford Credit

Ford Credit's income before income taxes was down $570 million. The decrease in earnings primarily reflected higher borrowing
costs and the impact of lower retail receivable levels, offset partially by improved credit loss performance.

Ford Credit reviews its business performance from several perspectives, including:

• On-balance sheet basis. Includes the receivables Ford Credit owns and receivables sold for legal purposes that remain on Ford
Creditʼs balance sheet;

Ford Motor Company Annual Report 2005 31

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

• Securitized off-balance sheet basis. Includes receivables sold in securitization transactions that are not reflected on Ford
Creditʼs balance sheet;

• Managed basis. Includes on-balance sheet and securitized off-balance sheet receivables that Ford Credit continues to service;
and

• Serviced basis. Includes managed receivables and receivables sold in whole-loan sale transactions where Ford Credit retains
no interest in the sold receivables, but which it continues to service.

Ford Credit analyzes its financial performance primarily on an on-balance sheet and managed basis. It retains interests in
receivables sold in off-balance sheet securitizations and, with respect to subordinated retained interests, has credit risk. As a result, it
evaluates credit losses, receivables and leverage on a managed basis as well as on an on-balance sheet basis. In contrast, Ford Credit
does not have the same financial interest in the performance of receivables sold in whole-loan sale transactions, and as a result, Ford
Credit generally reviews the performance of its serviced portfolio only to evaluate the effectiveness of its origination and collection
activities. To evaluate the performance of these activities, Ford Credit monitors a number of measures, such as repossession statistics,
losses on repossessions and the number of bankruptcy filings.

Ford Creditʼs operating results are impacted significantly by the level of its receivables, which are shown below (in billions):

December 31,
2005 2004
On-Balance Sheet (including on-balance sheet securitizations)
Finance receivables
Retail installment .................................................................................................................................................................................................. $ 65.7 $ 81.7
Wholesale.............................................................................................................................................................................................................. 39.6 23.8
Other...................................................................................................................................................................................................................... 4.6 5.3
Total finance receivables, net........................................................................................................................................................................... 109.9 110.8
Net investment in operating leases ......................................................................................................................................................................... 22.2 21.9
Total on-balance sheet*.................................................................................................................................................................................... $ 132.1 $ 132.7
Memo: Allowance for credit losses included above............................................................................................................................................... $ 1.6 $ 2.4
Securitized Off-Balance Sheet
Finance receivables
Retail installment .................................................................................................................................................................................................. $ 18.0 $ 16.7
Wholesale.............................................................................................................................................................................................................. — 18.9
Other...................................................................................................................................................................................................................... — —
Total finance receivables.................................................................................................................................................................................. 18.0 35.6
Net investment in operating leases ......................................................................................................................................................................... — —
Total securitized off-balance sheet .................................................................................................................................................................. $ 18.0 $ 35.6
Managed
Finance receivables
Retail installment .................................................................................................................................................................................................. $ 83.7 $ 98.4
Wholesale.............................................................................................................................................................................................................. 39.6 42.7
Other...................................................................................................................................................................................................................... 4.6 5.3
Total finance receivables, net........................................................................................................................................................................... 127.9 146.4
Net investment in operating leases ......................................................................................................................................................................... 22.2 21.9
Total managed .................................................................................................................................................................................................. $ 150.1 $ 168.3
Serviced..................................................................................................................................................................................................................... $ 153.0 $ 172.3
__________
* At December 31, 2005 and December 31, 2004, finance receivables of $44.7 billion and $16.9 billion, respectively, have been sold for legal purposes to consolidated
securitization special purpose entities ("SPEs"). In addition, at December 31, 2005, and December 31, 2004, interests in operating leases and the related vehicles of
$6.5 billion and $2.5 billion, respectively, have been transferred for legal purposes to consolidated securitization SPEs. These receivables and interests in operating
leases and the related vehicles are available only for repayment of debt issued by those entities, and to pay other securitization investors and other participants; they
are not available to pay Ford Creditʼs other obligations or the claims of Ford Creditʼs other creditors.

On-Balance Sheet Receivables. On-balance sheet receivables decreased from year-end 2004 primarily reflecting lower retail
contract placement volumes. The decrease was largely offset by the accounting consolidation of Ford Credit's off-balance sheet
wholesale securitization program as a result of certain changes made to the program in the fourth quarter of 2005, which caused the
receivables previously sold by Ford Credit to this program to be reported on-balance sheet.

Securitized Off-Balance Sheet Receivables. Total securitized off-balance sheet receivables declined primarily reflecting the
accounting consolidation discussed above.

Managed and serviced receivables decreased from year-end 2004 primarily reflecting lower retail contract placement volumes.

Ford Motor Company Annual Report 2005 32

 Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

The following table shows worldwide credit losses net of recoveries ("charge-offs") for Ford Credit for the various categories of
financing during the periods indicated. The loss-to-receivables ratios, which equal charge-offs divided by the average amount of
receivables outstanding for the period, are shown below for Ford Credit's on-balance sheet and managed portfolios.
2005
Over/(Under)
2005 2004 2004
Charge-offs (in millions)
On-Balance Sheet
Retail installment and lease .......................................................................................................................................... $ 681 $ 1,281 $ (600)
Wholesale...................................................................................................................................................................... 23 43 (20)
Other.............................................................................................................................................................................. 2 3 (1)
Total on-balance sheet ................................................................................................................................................ $ 706 $ 1,327 $ (621)

Reacquired Receivables (retail)* .............................................................................................................................. $ 22 $ 74 $ (52)

Securitized Off-Balance Sheet

Retail installment and lease .......................................................................................................................................... $ 127 $ 244 $ (117)
Wholesale...................................................................................................................................................................... — — —
Other.............................................................................................................................................................................. — — —
Total securitized off-balance sheet............................................................................................................................. $ 127 $ 244 $ (117)
Managed
Retail installment and lease .......................................................................................................................................... $ 830 $ 1,599 $ (769)
Wholesale...................................................................................................................................................................... 23 43 (20)
Other.............................................................................................................................................................................. 2 3 (1)
Total managed ............................................................................................................................................................ $ 855 $ 1,645 $ (790)
Loss-to-Receivables Ratios
On-Balance Sheet
Retail installment and lease .......................................................................................................................................... 0.72% 1.25% (0.53) pts.
Wholesale...................................................................................................................................................................... 0.09 0.20 (0.11)
Total including other .................................................................................................................................................. 0.57% 1.02% (0.45) pts.
Managed
Retail installment and lease .......................................................................................................................................... 0.73% 1.29% (0.56) pts.
Wholesale...................................................................................................................................................................... 0.06 0.10 (0.04)
Total including other .................................................................................................................................................. 0.54% 0.96% (0.42) pts.
__________
* Reacquired receivables reflect the amount of receivables that resulted from the accounting consolidation of Ford Credit's FCAR Owner Trust retail securitization
program ("FCAR") in the second quarter of 2003.

Charge-offs and loss-to-receivable ratios for Ford Credit's on-balance sheet, securitized off-balance sheet and managed portfolios
declined from a year ago, primarily reflecting fewer repossessions and a lower average loss per repossession. These improvements
resulted from a higher-quality retail installment and lease portfolio, higher used vehicle prices and enhancements to Ford Credit's
collection practices. Lower levels of retail installment receivables also contributed to reduced charge-offs.

Shown below is an analysis of Ford Creditʼs allowance for credit losses related to finance receivables and operating leases for the
years ended December 31 (dollar amounts in billions):
2005 2004
Allowance for Credit Losses
Balance, beginning of year.................................................................................................................................................................................... $ 2.4 $ 2.9
Provision for credit losses ................................................................................................................................................................................... 0.2 0.9
Deductions
Charge-offs ....................................................................................................................................................................................................... 1.2 1.8
Recoveries......................................................................................................................................................................................................... (0.5) (0.5)
Net charge-offs ............................................................................................................................................................................................... 0.7 1.3
Other changes, principally amounts related to finance receivables sold and translation adjustments ............................................................ 0.3 0.1
Net deductions ................................................................................................................................................................................................ 1.0 1.4
Balance, end of year .............................................................................................................................................................................................. $ 1.6 $ 2.4
Allowance for credit losses as a percentage of end-of-period net receivables..................................................................................................... 1.19% 1.80%

The allowance for credit losses decreased about $800 million from year-end 2004, primarily reflecting improved charge-off
performance and the effect of lower retail receivable levels.

Ford Motor Company Annual Report 2005 33

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

Hertz Operating Results

The improvement in Hertz operating results primarily reflected the cessation of depreciation on long-lived assets from the point
Hertz was held for sale (i.e., September 2005) until it was sold, higher car and equipment rental volumes and improved pricing for
equipment rental.

Other Financial Services Operating Results

The decrease in earnings primarily reflected the non-recurrence of a 2004 property clean-up settlement, and, in 2005, lower
property sales and the write-off of aircraft leases related to the bankruptcy of Delta Air Lines.

2004 Compared with 2003

Details of the full-year Financial Services sector Income/(loss) before income taxes for 2004 and 2003 are shown below (in
millions):
Income/(Loss)
Before Income Taxes
2004
Over/(Under)
2004 2003 2003
Ford Credit................................................................................................................................................................................. $ 4,431 $ 2,956 $ 1,475
Hertz* ........................................................................................................................................................................................ 493 228 265
Other Financial Services ........................................................................................................................................................... 84 63 21
Total Financial Services sector ............................................................................................................................................... $ 5,008 $ 3,247 $ 1,761
__________
* Includes amortization expense related to intangibles recognized upon consolidation of Hertz.

Ford Credit

The increase in income before income taxes primarily reflected improved credit loss performance and improved leasing results.
The improved credit loss performance primarily resulted from fewer repossessions and a lower average loss per repossession. The
improvement in leasing results primarily reflected higher used vehicle prices and a reduction in the percentage of vehicles returned to
Ford Credit at lease termination.

Hertz

The improvement in earnings primarily reflected higher vehicle and equipment rental volumes, lower fleet costs and higher
proceeds received in excess of book value on the disposal of used vehicle and equipment, offset partially by lower pricing.

LIQUIDITY AND CAPITAL RESOURCES

Automotive Sector
Our strategy is to ensure we have sufficient funding available with a high degree of certainty throughout the business cycle. The
key elements of this strategy include maintaining large gross cash balances, generating cash from operating-related activities, having a
long-dated debt maturity profile, maintaining committed credit facilities and funding long-term liabilities over time.

Ford Motor Company Annual Report 2005 34

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

Gross Cash. Automotive gross cash includes cash and cash equivalents, marketable and loaned securities and assets contained in a
short-term 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. Gross cash as of December 31, 2005, 2004 and 2003 is detailed below (in
billions):
December 31,
2005 2004 2003
Cash and cash equivalents.......................................................................................................................................................................... $ 13.4 $ 10.1 $ 6.9
Marketable securities.................................................................................................................................................................................. 6.9 8.3 9.3
Loaned securities* ...................................................................................................................................................................................... 3.4 1.1 5.7
Total cash, marketable securities and loaned securities .......................................................................................................................... 23.7 19.5 21.9
Short-term VEBA assets ............................................................................................................................................................................ 1.4 4.1 4.0
Gross cash ................................................................................................................................................................................................ $ 25.1 $ 23.6 $ 25.9
__________
* As part of our investment strategy, we engage in securities lending to improve the returns on our cash portfolios. See Note 5 of the Notes to the Financial
Statements for additional discussion on securities lending.

In managing our business, we classify changes in Automotive gross cash into two categories: operating-related and other (which
primarily includes pension and long-term VEBA contributions, tax refunds, capital transactions with the Financial Services sector, and
acquisitions and divestitures). Our key metric is operating-related cash flow, which best represents the ability of our Automotive
operations to generate cash. We believe the cash flow analysis reflected in the table below, which differs from a cash flow statement
presented in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"), is useful to investors
because it includes cash flow elements that we consider to be related to our operating activities (e.g., capital spending) that are not
included in Net cash flows from operating activities, the most directly comparable U.S. GAAP financial measure.

Changes in Automotive gross cash for the last three years are summarized below (in billions):

2005 2004 2003

Gross cash at end of period ........................................................................................................................................................................ $ 25.1 $ 23.6 $ 25.9
Gross cash at beginning of period.............................................................................................................................................................. 23.6 25.9 25.3
Total change in gross cash ....................................................................................................................................................................... $ 1.5 $ (2.3) $ 0.6

Operating-related cash flow

Automotive income/(loss) before income taxes ...................................................................................................................................... $ (3.9) $ (0.2) $ (1.9)
Non-cash portion of special items............................................................................................................................................................ 1.2 1.1 2.0
Capital expenditures................................................................................................................................................................................. (7.1) (6.3) (7.4)
Depreciation and special tools amortization............................................................................................................................................ 8.1 6.4 5.5
Changes in receivables, inventory and trade payables (a)....................................................................................................................... 1.3 (0.4) (1.0)
Other (b) ................................................................................................................................................................................................... (1.3) 0.4 2.9
Total operating-related cash flows ...................................................................................................................................................... (1.7) 1.0 0.1

Other changes in cash

Funded pension plans/long-term VEBA contributions ........................................................................................................................... (2.7) (5.0) (4.8)
Tax refunds............................................................................................................................................................................................... 0.3 0.3 1.7
Capital transactions with Financial Services sector (c) ........................................................................................................................... 2.3 4.2 3.6
Acquisitions and divestitures (d) ............................................................................................................................................................. 5.3 0.4 0.5
Dividends paid to shareholders................................................................................................................................................................ (0.7) (0.7) (0.7)
Changes in total Automotive sector debt................................................................................................................................................. (0.5) (2.4) (0.1)
Cash from Variable Interest Entity ("VIE") consolidations (e)............................................................................................................... — — 0.3
Other (f) ................................................................................................................................................................................................... (0.8) (0.1) —
Total change in gross cash ..................................................................................................................................................................... $ 1.5 $ (2.3) $ 0.6
__________
(a) In 2005, we took measures to improve our working capital, including reducing inventory (both production materials and finished vehicles) and changing the way
our European affiliates pay suppliers.
(b) Primarily expense and payment timing differences for items such as marketing, warranty, pension and OPEB.
(c) Primarily dividends received from Ford Credit, excluding proceeds from Financial Services sector divestitures paid to the Automotive sector.
(d) In 2005, primarily proceeds from the sale of Hertz and the final payment for the Land Rover acquisition.
(e) See Note 17 of the Notes to the Financial Statements for a discussion of VIEs.
(f) In 2005, primarily cash flow associated with the acquisition of ACH from Visteon (an outflow of about $700 million), dividends to minority shareholders of
consolidated subsidiaries (an outflow of about $200 million), and the net issuance of Ford Common stock under employee savings plans (an inflow of about
$200 million).

Ford Motor Company Annual Report 2005 35

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

Shown in the table below is a reconciliation between financial statement Net cash flows from operating activities and operating-
related cash flows (calculated as shown in the table above), for the last three years (in billions):

2005 2004 2003

Net cash flows from operating activities ................................................................................................................................................ $ 5.4 $ 7.0 $ 2.9
Items included in operating-related cash flow
Capital expenditures.............................................................................................................................................................................. (7.1) (6.3) (7.3)
Net transactions between Automotive and Financial Services sectors (a)........................................................................................... (0.4) 1.3 1.2
Net sales/(purchases) of trading securities............................................................................................................................................ 0.6 (5.6) (1.6)
Other (b) ................................................................................................................................................................................................ (2.6) (0.1) 1.8
Items not included in operating-related cash flow
Pension and long-term VEBA contributions ........................................................................................................................................ 2.7 5.0 4.8
Tax refunds............................................................................................................................................................................................ (0.3) (0.3) (1.7)
Operating-related cash flows................................................................................................................................................................... $ (1.7) $ 1.0 $ 0.1
__________
(a) Primarily payables and receivables between the sectors in the normal course of business, as shown in our Condensed Sector Statement of Cash Flows for the
Automotive sector.
(b) Primarily the exclusion of cash flow from short-term VEBA contribution/(drawdown).

Debt and Net Cash. At December 31, 2005, our Automotive sector had total debt of $17.9 billion, compared with $18.4 billion a
year ago. Total senior debt at December 31, 2005 was $12.7 billion, compared with $13.1 billion at December 31, 2004. The
decrease in senior debt primarily reflected repurchases of debt securities in the open market. Ford Motor Company Capital Trust II
had outstanding $5.0 billion of trust preferred securities at December 31, 2005 and 2004.

At December 31, 2005, our Automotive sector had net cash (defined as gross cash less total senior and subordinated debt) of
$7.2 billion, compared with $5.2 billion at the end of 2004.

The weighted-average maturity of our total long-term debt (including subordinated debt), substantially all of which is fixed-rate
debt, is approximately 25 years with $4.3 billion maturing by December 31, 2025. The weighted-average maturity of total debt (long-
term and short-term including subordinated debt) is approximately 25 years. For additional information on debt, see Note 16 of the
Notes to the Financial Statements.

Seasonal Working Capital Funding. In July 2005, we raised $2.0 billion of seasonal working capital funding to reduce the cash
volatility that results from our summer plant shutdown period. The funding was in the form of 60-day bank loans which were repaid
in early September.

Credit Facilities. At December 31, 2005, the Automotive sector had $7.1 billion of contractually committed credit facilities with
financial institutions, of which $6.9 billion were available for use. For further discussion of our committed credit facilities, see Note
16 of the Notes to the Financial Statements.

Pension Plan Contributions. In 2005, U.S. pension funding reform proposals were passed in both the House of Representatives
and the Senate. Although a final bill has not yet been completed, it is likely that a final bill will be passed and signed into law in 2006.
It is anticipated that this law would institute more stringent funding requirements for U.S. defined benefit pension plans beginning in
2007. U.K. pension reform was passed in November 2004, and could affect funding requirements beginning in 2007. For a
discussion of pension plan contributions we have made in 2005 and expect to make in 2006, see Note 23 of the Notes to the Financial
Statements.

Financial Services Sector

Ford Credit

Ford Credit's funding strategy is to maintain liquidity and access to diverse funding sources that are cost effective. As a result of
lower credit ratings, Ford Credit's unsecured borrowing costs have increased, its access to the unsecured debt market has become more
restricted, and its outstanding short- and long-term unsecured debt balances have declined. In response, Ford Credit has increased its
use of securitization and other asset-related sources of liquidity, and will continue to expand and diversify its asset-backed funding by
asset class, region and channel. In addition, Ford Credit will continue to participate in the whole-loan market and access the
unsecured term-debt market opportunistically. Over time, Ford Credit may also need to reduce further the amount of receivables it
purchases. A significant reduction in the amount of purchased receivables would significantly reduce Ford Credit's ongoing profits,
and could adversely affect its ability to support the sale of our vehicles.

Debt and Cash. Ford Creditʼs total debt was $134.5 billion at December 31, 2005, down $9.8 billion compared with a year ago,
primarily reflecting repayment of maturing debt and lower funding requirements due to lower asset levels. Ford Creditʼs outstanding

Ford Motor Company Annual Report 2005 36

Management’s Discussion and Analysis of Financial
Condition and Results of Operations

unsecured commercial paper at December 31, 2005 totaled $1.0 billion, down $7.9 billion compared with a year ago, reflecting
decreased investor demand.

At December 31, 2005, Ford Credit had cash and cash equivalents of $17.9 billion, compared with $12.7 billion at year-end 2004.
In the normal course of its funding activities, Ford Credit may generate more proceeds than are necessary for its immediate funding
needs. These excess amounts are maintained primarily as highly liquid investments, which provide liquidity for Ford Credit’s short-
term funding needs and give Ford Credit flexibility in the use of its other funding programs.

Funding. Ford Credit requires substantial funding in the normal course of business. Ford Credit’s funding requirements are driven
mainly by the need to: (i) purchase retail installment sale contracts and retail lease contracts to support the sale of Ford products,
which are influenced by Ford-sponsored special financing programs that are available exclusively through Ford Credit, (ii) provide
wholesale financing and capital financing for Ford dealers, and (iii) repay its debt obligations.

Ford Credit’s funding sources include sales of receivables in securitizations and other structured financings, unsecured debt
issuances and bank borrowings. Unsecured debt issuance consists of short- and long-term unsecured debt, placed directly by Ford
Credit or through securities dealers or underwriters in U.S. and international capital markets, and reaches both retail and institutional
investors. During 2005, Ford Credit continued to meet a significant portion of its funding requirements through securitizations
because of their lower relative costs given our credit ratings (as described below), the stability of the market for asset-backed
securities, and the diversity of funding sources that they provide. Securitized funding (both on- and off-balance sheet, net of retained
interests) as a percent of total managed receivables was as follows at the end of each of the last three years: 2005 – 38%,
2004 – 26%, 2003 – 25%.

Ford Credit issues unsecured commercial paper in the United States, Europe and other international markets, with sales mostly to
qualified institutional investors. In addition to its commercial paper programs, Ford Credit also obtains short-term funding from the
sale of floating rate demand notes under a program referred to as Ford Interest Advantage, and such notes may be redeemed at any
time at the option of the holder thereof without restriction. At December 31, 2005, the principal amount outstanding of such notes was
$6.7 billion. Ford Credit does not hold reserves to fund the payment of the demand notes or any other short-term funding obligation.
Ford Credit’s policy is to have sufficient cash and cash equivalents, unused committed bank-sponsored asset-backed commercial
paper issuer ("conduit") capacity, securitizable assets, and back-up credit facilities to provide liquidity for all of its short-term funding
obligations.

The following table illustrates Ford Credit’s term public funding issuances for 2004 and 2005 and its planned issuances for 2006
(in billions):
2006
Forecast 2005 2004
Unsecured Term Debt
Institutional............................................................................................................................................................................. $ 0–2 $ 8 $ 7
Retail...................................................................................................................................................................................... 0–1 1 5
Total unsecured term debt...................................................................................................................................................... 0–3 9 12
Term Public Securitization (a) ................................................................................................................................................. 8 – 12 12 6
Total term public funding....................................................................................................................................................... $ 8 – 15 $ 21 $ 18
Memo – Not Included Above
Private transactions (b) ......................................................................................................................................................... $ 25 – 35 $ 18 $ 10

__________
(a) Reflects new issuance and includes funding from discontinued operations in 2004; excludes whole-loan sales and other structured financings.
(b) Includes private securitizations, other structured financings and whole-loan sales; excludes sales to Ford Credit's on-balance sheet asset-backed commercial paper
programs and proceeds from revolving transactions.

The cost of both debt and funding in securitizations is based on a margin or spread over a benchmark interest rate, such as interest
rates paid on U.S. Treasury securities of similar maturities. Ford Credit's unsecured spreads have been very volatile over the last three
years, as a result of market perception and its lower credit ratings, whereas its securitized funding spreads (which are based on the
underlying finance receivables and credit enhancements) have not. In 2005, Ford Credit's unsecured long-term debt funding spreads
fluctuated between 165 and 660 basis points above comparable U.S. Treasury securities, while its spreads on securitized funding
fluctuated between 42 and 58 basis points above comparable U.S. Treasury securities.

Ford Credit has a program to sell retail installment sale contracts in transactions where it retains no interest and thus no exposure to
the sold assets. These transactions, referred to as "whole-loan sale transactions," provide liquidity by enabling Ford Credit to reduce
its managed receivables and its need for funding to support those receivables. In 2005, Ford Credit sold $1.5 billion of receivables in
a whole-loan sale transaction. Total outstanding receivables sold in whole-loan sale transactions at December 31, 2005 were
$2.9 billion.

Ford Motor Company Annual Report 2005 37

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

For additional funding and to maintain liquidity, Ford Credit and its majority-owned subsidiaries, including FCE Bank plc ("FCE"),
have contractually committed credit facilities with financial institutions that totaled $6.2 billion at December 31, 2005, of which
$5.1 billion were available for use. Of the lines available for use, 36% are committed through June 30, 2010. Of the $6.2 billion,
$3.8 billion constitute Ford Credit facilities ($3.2 billion global and about $600 million non-global) and $2.4 billion constitute FCE
facilities ($2.3 billion global and about $100 million non-global). In addition, at December 31, 2005, banks provided $18.7 billion of
contractually committed liquidity facilities exclusively to support Ford Credit's two on-balance sheet asset-backed commercial paper
programs; $18.2 billion supported Ford Credit's FCAR retail program and $500 million supported Ford Credit's wholesale securitization
program ("Motown Notes"). Ford Credit also has entered into agreements with several bank-sponsored conduits under which such
conduits are contractually committed to purchase from Ford Credit, at Ford Creditʼs option, retail receivables for proceeds of up to
approximately $16.2 billion. At December 31, 2005, $5.5 billion of these conduit commitments were in use. For further discussion of
these facilities and agreements, see Note 16 of the Notes to the Financial Statements.

Leverage. Ford Credit uses leverage, or the debt-to-equity ratio, to make various business decisions, including establishing pricing
for retail, wholesale and lease financing and assessing its capital structure. Ford Credit calculates leverage on a financial statement
basis and on a managed basis using the following formulas:
Financial Statement Leverage = Total Debt
Equity
Retained
Interest in
Securitized Securitized Fair Value Hedge
Off-Balance Off-Balance Cash Accounting
Sheet Sheet and Cash Adjustments
Total Debt + Receivables - Receivables - Equivalents - on Total Debt
Managed Leverage =
Equity + Minority - Fair Value Hedge
Interest Accounting
Adjustments
on Equity

The following table illustrates the calculation of Ford Creditʼs financial statement leverage (in billions, except for ratios):

December 31,
2005 2004 2003
Total debt.......................................................................................................................................................................................... $ 134.5 $ 144.3 $ 149.7
Total stockholderʼs equity ................................................................................................................................................................ 10.7 11.5 12.5
Debt-to-equity ratio (to 1) ................................................................................................................................................................ 12.5 12.6 12.0

The following table illustrates the calculation of Ford Creditʼs managed leverage (in billions, except for ratios):

December 31,
2005 2004 2003
Total debt....................................................................................................................................................................................... $ 134.5 $ 144.3 $ 149.7
Securitized off-balance sheet receivables outstanding (a)............................................................................................................ 18.0 37.7 49.4
Retained interest in securitized off-balance sheet receivables (b)................................................................................................ (1.4) (9.5) (13.0)
Adjustments for cash and cash equivalents................................................................................................................................... (17.9) (12.7) (15.7)
Fair value hedge accounting adjustments ..................................................................................................................................... (1.6) (3.2) (4.7)
Total adjusted debt ...................................................................................................................................................................... $ 131.6 $ 156.6 $ 165.7
Total stockholderʼs equity (including minority interest) .............................................................................................................. $ 10.7 $ 11.5 $ 12.5
Fair value hedge accounting adjustments ..................................................................................................................................... — (0.1) 0.2
Total adjusted equity ................................................................................................................................................................... $ 10.7 $ 11.4 $ 12.7
Managed debt-to-equity ratio (to 1) .............................................................................................................................................. 12.3 13.7 13.0
__________
(a) Includes securitized funding from discontinued operations in 2003 and 2004.
(b) Includes retained interest in securitized receivables from discontinued operations in 2003 and 2004.

Ford Credit believes that managed leverage is useful to its investors because it reflects the way Ford Credit manages its business.
Ford Credit retains interests in receivables sold in off-balance sheet securitization transactions and, with respect to subordinated
retained interests, is exposed to credit risk. Accordingly, Ford Credit considers securitization as an alternative source of funding and
evaluates charge-offs, receivables and leverage on a managed as well as a financial statement basis. Ford Credit also deducts cash and
cash equivalents because they generally correspond to excess debt beyond the amount required to support its operations. In addition,
Ford Credit adds its minority interests to its financial statement equity because all of the debt of such consolidated entities is included
in its total debt. Ford Credit makes fair value hedge accounting adjustments to its assets, debt and equity positions to reflect the
impact of interest rate instruments Ford Credit uses in connection with its term-debt issuances and securitizations. The fair value
hedge accounting adjustments vary over the term of the underlying debt and securitized funding obligations based on changes in

Ford Motor Company Annual Report 2005 38

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

market interest rates. Ford Credit generally repays its debt obligations as they mature. As a result, Ford Credit excludes the impact of
the fair value hedge accounting adjustments on both the numerator and denominator in order to exclude the interim effects of changes
in market interest rates. Accordingly, the managed leverage measure provides Ford Creditʼs investors with meaningful information
regarding managementʼs decision-making processes.

Ford Credit's managed leverage strategy involves establishing a leverage level that takes into consideration prevailing market
conditions and reflects the risk characteristics of its business. At December 31, 2005, Ford Credit's managed leverage was 12.3 to 1,
compared with 13.7 to 1 a year ago. Ford Credit plans to continue to reduce its managed leverage in 2006. In 2005, Ford Credit paid
cash dividends of $2.75 billion.

Total Company

Stockholders' Equity. Our stockholders' equity was $13.0 billion at December 31, 2005, down $3.1 billion compared with
December 31, 2004. The decrease primarily reflected foreign currency translation adjustments, net losses on derivative instruments,
and cash dividends, offset partially by net income. For additional discussion of foreign currency translation adjustments and
derivative instruments, see Notes 1 and 20, respectively, of the Notes to the Financial Statements.

Credit Ratings. Our short- and long-term debt is rated by four credit rating agencies designated as nationally recognized statistical
rating organizations ("NRSROs") by the Securities and Exchange Commission:

• Dominion Bond Rating Service Limited ("DBRS");

• Fitch, Inc. ("Fitch");

• Moodyʼs Investors Service, Inc. ("Moody's"); and

• Standard & Poorʼs Rating Services, a division of McGraw-Hill Companies, Inc. ("S&P").

In several markets, locally recognized rating agencies also rate us. A credit rating reflects an assessment by the rating agency of
the credit risk associated with particular securities we issue, based on information provided by us and other sources. Credit ratings are
not recommendations to buy, sell or hold securities and are subject to revision or withdrawal at any time by the assigning rating
agency. Each rating agency may have different criteria for evaluating company risk, and therefore ratings should be evaluated
independently for each rating agency. Lower credit ratings generally result in higher borrowing costs and reduced access to capital
markets. The NRSROs have indicated that our lower ratings are primarily a reflection of the rating agencies' concerns regarding our
automotive cash flow and profitability, declining market share, excess industry capacity, industry pricing pressure and rising health
care costs.

Ford. In December 2005, Fitch lowered Ford's long-term rating to BB+ from BBB-, lowered our short-term rating to B from F2
and maintained our outlook at Negative. In January 2006, S&P lowered our long-term rating to BB- from BB+, lowered our short-
term rating to B-2 from B-1 and maintained our outlook at Negative. In January 2006, Moody's lowered our long-term rating to Ba3
from Ba1 and maintained our outlook at Negative. In January 2006, DBRS lowered our long-term rating to BB (low) from BB (high),
affirmed our short-term rating at R-3 (high) and maintained our trend at Negative.

Ford Credit. In December 2005, Fitch lowered Ford Credit's long-term rating to BB+ from BBB-, lowered Ford Credit's short-
term rating to B from F2 and maintained Ford Credit's outlook at Negative. In January 2006, S&P lowered Ford Credit's long-term
rating to BB- from BB+, lowered Ford Credit's short-term debt rating to B-2 from B-1 and maintained Ford Credit's outlook at
Negative. In January 2006, Moody's lowered Ford Credit's long-term rating to Ba2 from Baa3, lowered Ford Credit's short-term
rating to Not Prime ("NP") from P3 and maintained Ford Credit's outlook at Negative. In January 2006, DBRS lowered Ford Credit's
long-term rating to BB from BBB (low), lowered Ford Credit's short-term rating to R-3 (high) from R-2 (low) and maintained Ford
Credit's trend at Negative.

Ford Motor Company Annual Report 2005 39

Management’s Discussion and Analysis of Financial
Condition and Results of Operations

The following chart summarizes our present credit ratings and the outlook assigned by four of the nationally recognized statistical
rating organizations:

DBRS Fitch Moody's S&P

Long- Short- Long- Short- Long- Short- Long- Short-

Term Term Trend Term Term Outlook Term Term Outlook Term Term Outlook
Ford BB (low) R-3 (high) Negative BB+ B Negative Ba3 NA Negative BB- B-2 Negative
Ford
Credit BB R-3 (high) Negative BB+ B Negative Ba2 NP Negative BB- B-2 Negative

OUTLOOK

We have set and communicated the following planning assumptions and operational metrics:
Industry Volume (SAAR incl. heavy trucks) Planning Assumptions
U.S. .............................................................................................................................................................................................. 17.0 million units
Europe .......................................................................................................................................................................................... 17.3 million units

Industry Net Pricing

U.S. .............................................................................................................................................................................................. Slightly negative
Europe .......................................................................................................................................................................................... Slightly negative

Operation Metrics 2006 Milestones

Quality........................................................................................................................................................................................... Improved
Market share .................................................................................................................................................................................. Flat to improved
Automotive cost performance*........................................................................................................................................................ Favorable
Capital spending............................................................................................................................................................................. About $7 billion
__________
* At constant volume, mix and exchange; excluding special items.

Automotive Cost Performance. We expect commodity costs to continue to increase in 2006. We also expect depreciation and
amortization expenses to increase in 2006 compared with 2005, primarily because capacity reduction actions pursuant to our Way
Forward plan will result in accelerated depreciation of assets at certain manufacturing facilities. We expect our quality-related costs in
2006 to be about the same as in 2005; although we expect favorable performance in our vehicle quality, we will not have the
recurrence of the favorable impact of a $240 million settlement reached in 2005 with Bridgestone-Firestone North American
Tire, LLC. Pension and OPEB expenses in 2006 also are expected to be about the same as last year, with the modifications to retiree
health care programs (discussed above under "Overview") offsetting the impact of these expenses for our employees previously
assigned to Visteon, as well as lower discount rates and lower assumed rates of return. Manufacturing, engineering and overhead
costs are expected to be lower in 2006, reflecting personnel reductions and other efficiencies. Product costs are expected to be
favorable in 2006 compared with 2005, as we begin to see the benefits of the material cost reduction plan discussed above under
"Overview." Overall, excluding special items and at constant volume, mix, and exchange, we expect our cost performance to be
favorable in 2006, compared with 2005.

Automotive Results. Our automotive operations in North America are projected to post a pre-tax loss in 2006. However, subject to
the risks described below, we expect these operations to be profitable no later than 2008, although the progression to profitability will
not necessarily be linear or smooth. Subject to the risks described below, we expect each of our other automotive business units to be
profitable on a pre-tax basis in 2006. Overall, we expect our total automotive operations to be unprofitable in 2006 due to the
expected performance of our North American operations.

These expected results include certain pre-tax charges (i.e., special items) of about $1 billion that we anticipate in 2006. These
charges will include the costs associated with the Way Forward plan through 2006, which are estimated to include pre-tax charges and
cash expenditures of $250 million for hourly personnel reductions, and pre-tax charges (primarily non-cash) of $250 million for fixed
asset write-offs. The remainder of these charges relates to personnel reduction actions in Europe and, to a lesser extent, at our ACH
operations.

In addition, in connection with the Way Forward plan, we are reviewing costs relating to the guaranteed employment numbers
("GEN") provision of our collective bargaining agreement with the UAW. Under this GEN provision, we are required to pay idled
workers who meet certain conditions substantially all of their wages and benefits for the term of the current agreement. Heretofore,
we have had relatively few employees subject to the GEN provision; however, we expect the number of employees subject to the GEN
provision to grow in the near term as a result of the hourly personnel reduction actions that are part of the Way Forward plan. We are

Ford Motor Company Annual Report 2005 40

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

presently assessing the appropriate accounting treatment for and amount of these GEN costs, including the extent, if any, to which
future GEN costs should be accrued in the first quarter of 2006.

Financial Services Results. Our Financial Services sector is projected to be profitable in 2006, but less profitable than in 2005
because of the absence of earnings from Hertz (including the gain on sale) and lower expected earnings at Ford Credit. For 2006, we
expect Ford Credit's managed receivables to decline to between $140 billion and $145 billion. Ford Credit's 2006 earnings are
expected to be lower than in 2005 because of the impact of the lower level of receivables and the impact of higher interest rates.

Risk Factors

Statements included or incorporated by reference 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;
� A market shift (or an increase in or acceleration of market shift) away from sales of trucks or sport utility vehicles, or from
sales of other more profitable vehicles in the United States;
� A significant decline in industry sales, particularly in the United States or Europe, 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;
� Adverse effects from the bankruptcy or insolvency of a major competitor;
� Economic distress of suppliers that has in the past and may in the future require us to provide financial support or take other
measures to ensure supplies of components or materials;
� Work stoppages at Ford or supplier facilities or other interruptions of supplies;
� Single-source supply of components or materials;
� Labor or other constraints on our ability to restructure our business;
� Worse-than-assumed economic and demographic experience for our postretirement benefit plans (e.g., discount rates,
investment returns, and health care cost trends);
� The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns or increased warranty costs;
� Increased safety, emissions, fuel economy or other (e.g., pension funding) regulation resulting in higher costs, cash
expenditures, and/or sales restrictions;
� Unusual or significant litigation or governmental investigations arising out of alleged defects in our products or otherwise;
� A change in our requirements for parts or materials where we have entered into long-term supply arrangements that commit
us to purchase minimum or fixed quantities of certain parts or materials, or to pay a minimum amount to the seller ("take-or-
pay contracts");
� Inability to access debt or securitization markets around the world at competitive rates or in sufficient amounts due to
additional credit rating downgrades or otherwise;
� Higher-than-expected credit losses;
� Increased competition from banks or other financial institutions seeking to increase their share of financing Ford vehicles;
� Changes in interest rates;
� Collection and servicing problems related to finance receivables and net investment in operating leases;
� Lower-than-anticipated residual values or higher-than-expected return volumes for leased vehicles;
� New or increased credit, consumer or data protection or other regulations resulting in higher costs and/or additional financing
restrictions; and
� Inability to implement the Way Forward plan.

We cannot be certain that any expectation, forecast or assumption made by management in preparing these forward-looking
statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between
projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not
undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future
events or otherwise.

Ford Motor Company Annual Report 2005 41

Management’s Discussion and Analysis of Financial
Condition and Results of Operations

CRITICAL ACCOUNTING ESTIMATES

We consider an accounting estimate to be critical if: 1) the accounting estimate requires us to make assumptions about matters that
were highly uncertain at the time the accounting estimate was made, and 2) changes in the estimate that are reasonably likely to occur
from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material
impact on our financial condition or results of operations.

Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our
Board of Directors. In addition, there are other items within our financial statements that require estimation, but are not deemed
critical as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements.

Warranty and Additional Service Actions

Nature of Estimates Required. The estimated warranty and additional service action costs are accrued for each vehicle at the time
of sale. Estimates are principally based on assumptions regarding the lifetime warranty costs of each vehicle line and each model year
of that vehicle line, where little or no claims experience may exist. In addition, the number and magnitude of additional service
actions expected to be approved, and policies related to additional service actions, are taken into consideration. Due to the uncertainty
and potential volatility of these estimated factors, changes in our assumptions could materially affect net income.

Assumptions and Approach Used. Our estimate of warranty and additional service action obligations is re-evaluated on a quarterly
basis. Experience has shown that initial data for any given model year can be volatile; therefore, our process relies upon long-term
historical averages until sufficient data are available. As actual experience becomes available, it is used to modify the historical
averages to ensure that the forecast is within the range of likely outcomes. Resulting balances are then compared with present
spending rates to ensure that the accruals are adequate to meet expected future obligations.

See Note 27 of the Notes to the Financial Statements for more information regarding costs and assumptions for warranties and
additional service actions.

Pensions

Nature of Estimates Required. The estimation of our pension obligations, costs and liabilities requires that we make use of
estimates of the present value of the projected future payments to all participants, taking into consideration the likelihood of potential
future events such as salary increases and demographic experience. These assumptions may have an effect on the amount and timing
of future contributions.

Assumptions and Approach Used. The assumptions used in developing the required estimates include the following key factors:

• Discount rates
• Salary growth
• Retirement rates
• Expected contributions
• Inflation
• Expected return on plan assets
• Mortality rates

We base the discount rate assumption primarily on the results of a cash flow matching analysis, which matches the future cash
outflows for each major plan to a yield curve comprised of high quality bonds specific to the country of the plan. Our inflation
assumption is based on an evaluation of external market indicators. The salary growth assumption reflects our long-term actual
experience, the near-term outlook, and assumed inflation. The expected return on plan assets assumption reflects historical plan
returns and long-run inputs from a range of internal and external advisors for capital market returns, inflation, bond yields, and other
variables, adjusted for specific aspects of our investment strategy. We also consider peer data in setting the expected return on asset
assumption. The expected amount and timing of contributions is based on an assessment of minimum requirements, and additional
amounts based on cash availability and other considerations (e.g., funded status, avoidance of Pension Benefit Guaranty Corporation
("PBGC") penalty premiums, U.K. Pension Protection Fund levies, and tax efficiency). Retirement and mortality rates are developed
to reflect actual and projected plan experience. Plan obligations and costs are based on existing retirement plan provisions. No
assumption is made regarding any potential future changes to benefit provisions beyond those to which we are presently committed
(e.g., in existing labor contracts). The effects of actual results differing from our assumptions and the effects of changing assumptions

Ford Motor Company Annual Report 2005 42

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

are included in unamortized net gains and losses. Unamortized gains and losses are amortized over future periods and, therefore,
generally affect our recognized expense in future periods.

See Note 23 of the Notes to the Financial Statements for more information regarding costs and assumptions for employee
retirement benefits.

Sensitivity Analysis. The December 31, 2005 funded status of our pension plans is affected by December 31, 2005 assumptions.
Pension expense for 2005 is based on the plan design and assumptions as of December 31, 2004. Note that these sensitivities may be
asymmetric, and are specific to 2005. They also may not be additive, so the impact of changing multiple factors simultaneously
cannot be calculated by combining the individual sensitivities shown. The effect of the indicated increase/(decrease) in selected
factors is shown below (in millions):

Increase/(Decrease) in:
Percentage December 31, 2005
Point U.S. Plans Non-U.S. Plans 2005 Expense
Assumption Change Funded Status Funded Status Equity U.S. Plans Non-U.S. Plans
Discount rate.......................................... +/- 1.0 pt. $4,690/$(5,250) $4,280/$(5,310) $3,450/$(6,560) $(110)/$320 $(330)/$430
Actual return on assets .......................... +/- 1.0 390/(390) 180/(180) 1,400/(200) — —
Expected return on assets ...................... +/- 1.0 — — — (380)/380 (150)/150

The foregoing indicates that changes in the discount rate and return on assets can have a significant effect on the funded status of
our pension plans, stockholders' equity and expense. We cannot predict these changes in discount rates or investment returns and,
therefore, cannot reasonably estimate whether adjustments to our stockholders' equity for minimum pension liability in subsequent
years will be significant.

Other Postretirement Employee Benefits (Retiree Health Care and Life Insurance)

Nature of Estimates Required. The estimation of our obligations, costs and liabilities associated with other postretirement
employee benefits ("OPEB") (i.e., retiree health care and life insurance) requires that we make use of estimates of the present value of
the projected future payments to all participants, taking into consideration the likelihood of potential future events such as health care
cost increases, salary increases and demographic experience, which may have an effect on the amount and timing of future payments.

Assumptions and Approach Used. The assumptions used in developing the required estimates include the following key factors:

� Discount rates
� Salary growth
� Retirement rates
� Expected contributions
� Health care cost trends
� Expected return on plan assets
� Mortality rates
Our health care cost trend assumptions are developed based on historical cost data, the near-term outlook, anticipated efficiencies
and other cost-mitigation actions (including eligibility management, employee education and wellness, competitive sourcing and
appropriate employee cost sharing) and an assessment of likely long-term trends. We base the discount rate assumption primarily on
the results of a cash flow matching analysis, which matches the future cash outflows for each plan to a yield curve comprised of high
quality bonds specific to the country of the plan. The salary growth assumptions reflect our long-term actual experience, the near-term
outlook and assumed inflation. The expected return on plan assets assumption reflects historical plan returns and inputs from a range
of internal and external advisors for capital market returns, inflation, bond yields, and other variables, adjusted for specific aspects of
our investment strategy. We also consider peer data in setting the expected return on asset assumption. The expected amount and
timing of contributions is based on an assessment of cash availability and other considerations (e.g., funded status and tax efficiency).
Retirement and mortality rates are developed to reflect actual and projected plan experience. Plan obligations and costs are based on
existing retirement plan provisions. No assumption is made regarding any potential future changes to benefit provisions beyond those
to which we are presently committed (e.g., in existing labor contracts). The effects of actual results differing from our assumptions
and the effects of changing assumptions are included in unamortized net gains and losses. Unamortized gains and losses are
amortized over future periods and, therefore, generally affect our recognized expense in future periods.

Ford Motor Company Annual Report 2005 43

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

See Note 23 of the Notes to the Financial Statements for more information regarding costs and assumptions for other
postretirement benefits.

Sensitivity Analysis. The December 31, 2005 OPEB obligation is affected by December 31, 2005 assumptions. OPEB expense for
2005 is based on the plan design and assumptions as of December 31, 2004. Note that these sensitivities may be asymmetric, and are
specific to 2005. They are not additive, so the impact of changing multiple factors simultaneously cannot be calculated by combining
the individual sensitivities shown. The effect of the indicated increase/(decrease) in selected assumptions is shown below (in
millions):

Effect on U.S. and Canadian Plans:

Increase/(Decrease)
Percentage December 31, 2005 2005
Assumption Point Change Obligation Expense
Discount rate..................................................................................................................... +/- 1.0 pt. $(5,540)/$6,330 $(460)/$530
Health care cost trend rates — total expense ................................................................... +/- 1.0 4,910/(3,890) 830/(650)
Health care cost trend rates — service and interest expense ........................................... +/- 1.0 4,910/(3,890) 490/(380)

Allowance for Credit Losses — Financial Services Sector

The allowance for credit losses is Ford Credit's estimate of credit losses related to impaired finance receivables and operating
leases at the date of the financial statements. Ford Credit monitors credit loss performance monthly and assesses the adequacy of its
allowance for credit losses quarterly. Because credit losses can vary substantially over time, estimating credit losses requires a
number of assumptions about matters that are uncertain.

Nature of Estimates Required. Ford Credit estimates the credit losses related to impaired finance receivables and operating leases
by evaluating several factors including historical credit loss trends, the credit quality of its present portfolio, trends in historical and
projected used vehicle values and general economic measures.

Assumptions Used. Ford Credit makes projections of two key assumptions:

• Frequency. The number of finance receivables and operating lease contracts that it expects will default over a period of time,
measured as repossessions; and

• Loss severity. The expected difference between the amount a customer owes Ford Credit when it charges off the finance
contract and the amount it receives, net of expenses, from selling the repossessed vehicle, including any recoveries from the
customer.

Ford Credit uses these assumptions to assist in setting its allowance for credit losses. See Note 14 of the Notes to the Financial
Statements for more information regarding allowance for credit losses.

Sensitivity Analysis. Changes in the assumptions used to derive frequency and severity would affect the allowance for credit
losses. The effect of the indicated increase/decrease in the assumptions is shown below for Ford, Lincoln and Mercury brand vehicles
in the United States (in millions):

Increase/(Decrease)
December 31, 2005
Percentage Allowance for 2005
Assumption Point Change Credit Losses Expense
Repossession rates *......................................................................................................... +/- 0.1 pt. $40/$(40) $40/$(40)
Loss severity ..................................................................................................................... +/- 1.0 10/(10) 10/(10)
__________
* Reflects the number of finance receivables and operating lease contracts that we expect will default over a period of time relative to the average number of
contracts outstanding.

Changes in our assumptions affect the Provision for credit losses on our income statement and the allowance for credit losses
contained within Finance receivables, net on our balance sheet.

Ford Motor Company Annual Report 2005 44

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

Accumulated Depreciation on Vehicles Subject to Operating Leases

Accumulated depreciation on vehicles subject to operating leases reduces the value of the leased vehicles in our operating lease
portfolio from their original acquisition value to their expected residual value at the end of the lease term. These vehicles primarily
consist of retail lease contracts for Ford Credit and vehicles sold to daily rental car companies subject to a guaranteed repurchase
option ("rental repurchase vehicles") for the Automotive sector.

We monitor residual values each month, and we review the adequacy of our accumulated depreciation on a quarterly basis. If we
believe that the expected residual values for our vehicles have changed, we revise depreciation to ensure that our net investment in
operating leases (equal to our acquisition value of the vehicles minus accumulated depreciation) will be adjusted to reflect our revised
estimate of the expected residual value at the end of the lease term. For retail leases, such adjustments to depreciation expense would
result in a change in the depreciation rates of the vehicles subject to operating leases, and are recorded on a straight-line basis.

For retail leases, each lease customer has the option to buy the leased vehicle at the end of the lease or to return the vehicle to the
dealer. If the customer returns the vehicle to the dealer, the dealer may buy the vehicle from us or return it to us. Over the last three
years, about 68% of Ford Creditʼs North America operating lease vehicles have been returned to us. For rental repurchase vehicles,
practically all vehicles are returned to us.

Nature of Estimates Required. For vehicles subject to operating leases, we establish an expected residual value for the vehicle.
We estimate the expected residual value by evaluating historical auction values, historical return volumes for our retail leased
vehicles, industry-wide used vehicle prices, our marketing plans and vehicle quality data.

Assumptions Used. For retail leases, our accumulated depreciation on vehicles subject to operating leases is based on our
assumptions of:

• Auction value. The market value of the vehicles when we sell them at the end of the lease; and

• Return volume. The number of vehicles that will be returned to us at lease end.

See Note 12 of the Notes to the Financial Statements for more information regarding accumulated depreciation on vehicles subject
to operating leases.

Sensitivity Analysis. For returned vehicles, we face a risk that the amount we obtain from the vehicle sold at auction will be less
than our estimate of the expected residual value for the vehicle. At year-end 2005, if future auction values for retail operating leases
on Ford, Lincoln and Mercury brand vehicles in the United States were to decrease by one percent from our present estimates, the
impact would be to increase our depreciation on these vehicles by about $40 million. Similarly, if return volumes for our existing
portfolio of retail operating leases on Ford, Lincoln and Mercury brand vehicles in the United States were to increase by one percent
from our present estimates, the impact would be to increase our depreciation on these vehicles by about $5 million. These increases in
depreciation would be charged to depreciation expense during the 2006 through 2008 period so that the net investment in retail
operating leases at the end of the lease term for these vehicles is equal to the revised expected residual value. Adjustments to the
amount of accumulated depreciation on retail operating leases will be reflected on our balance sheet in Net investment in operating
leases and on our income statement in Depreciation, in each case under the Financial Services sector.

ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections – a replacement of APB Opinion
No. 20 and SFAS No. 3. This statement changes the requirements for accounting and reporting of a voluntary change in accounting
principle and changes required by an accounting pronouncement when the specific transition provisions are absent. This statement
requires retrospective application to prior periods' financial statements of changes in accounting principle. If it is impracticable to
determine either the period-specific effects or the cumulative effect of the change, this statement requires that the new accounting
principle be adopted prospectively from the earliest practicable date. SFAS No. 154 is effective in fiscal years beginning after
December 15, 2005. We do not expect any impact on our financial position and results of operations.

Ford Motor Company Annual Report 2005 45

Management’s Discussion and Analysis of Financial
Condition and Results of Operations

OFF-BALANCE SHEET ARRANGEMENTS

We have entered into various arrangements not reflected on our balance sheet that have or are reasonably likely to have a current or
future effect on our financial condition, results of operations or liquidity. These include sales of receivables by Ford Credit in off-
balance sheet transactions, variable interest entities and guarantees, each of which is discussed below.

Sales of Receivables by Ford Credit

Securitization. Ford Credit sells receivables in securitizations and other structured financings and in whole-loan sale transactions.
Some of these arrangements satisfy accounting sale treatment and are not reflected on Ford Credit's balance sheet in the same way as
debt funding. The remainder of these arrangements do not satisfy the requirements for accounting sale treatment and the sold
receivables and associated debt are not removed from Ford Credit's balance sheet.

Securitization involves the sale of a pool of receivables to a special purpose entity ("SPE"), typically a trust. The SPE issues
interest-bearing securities, commonly called asset-backed securities, that are backed by the sold receivables. The SPE uses proceeds
from the sale of these securities to pay the purchase price for the sold receivables. The SPE may only purchase the receivables, issue
asset-backed securities and make payments on the securities. The SPE has a limited duration and generally is dissolved when
investors holding the asset-backed securities have been paid all amounts owed to them. Ford Credit's use of SPEs in securitizations is
consistent with conventional practices in the securitization industry. The sale to the SPE achieves isolation of the sold receivables for
the benefit of securitization investors and protects them from the claims of Ford Credit's creditors. The use of SPEs combined with
the structure of these transactions means that the payment of the asset-backed securities is based on the creditworthiness of the
underlying finance receivables and any enhancements (as discussed below), and not Ford Credit's creditworthiness. As a result, the
senior asset-backed securities issued by the SPEs generally receive the highest short-term credit ratings and among the highest long-
term credit ratings from the credit rating agencies that rate them and are sold to securitization investors at cost-effective pricing.

Ford Credit's typical U.S. retail securitization is a two-step transaction. Ford Credit sells a pool of its retail installment sale
contracts to a wholly owned, bankruptcy-remote special purpose subsidiary that establishes a separate SPE, usually a trust, and
transfers the receivables to the SPE in exchange for the proceeds from securities issued by the SPE. The securities issued by the trust,
usually notes of various maturities and interest rates, are paid by the SPE from collections on the pool of receivables it owns. These
securities are usually structured into senior and subordinated classes. The senior classes have priority over the subordinated classes in
receiving collections from the sold receivables. The receivables acquired by the SPE and the asset-backed securities issued by the
SPE are assets and obligations of the SPE.

The following simplified diagram shows Ford Credit’s typical U.S. retail securitization transaction:

Bankruptcy Off - Balance Sheet

Remote Transaction (if
Transaction applicable)

Receivables Receivables Securitization Securities

Ford Special Purpose Trust

Credit Subsidiary (Qualifying Special Investors
Purpose Entity, if
Proceeds Proceeds applicable) Proceeds

Ford Credit selects receivables at random for its securitization transactions using selection criteria designed for the specific
transaction. For securitizations of retail installment sale contracts, the selection criteria are based on factors such as location of the
obligor, contract term, payment schedule, interest rate, financing program, and the type of financed vehicle. In general, the criteria also
require receivables to be active and in good standing.

Ford Credit retains interests in receivables sold through securitizations. The retained interests may include senior and subordinated
securities issued by the SPE, restricted cash held for the benefit of the SPE (for example, a reserve fund) and residual interests in
securitization transactions. Income from residual interests in securitization transactions represents the right to receive collections on
the sold finance receivables in excess of amounts needed by the SPE to pay interest and principal to investors, servicing fees and other
required payments. Ford Credit retains credit risk in securitizations. Ford Credit’s retained interests usually include the most
subordinated interests in the SPE, which are the first to absorb credit losses on the sold receivables. Ford Credit's securitizations are
structured to protect the holders of the senior asset-backed securities such that, based on past experience, any credit losses in the pool
of sold receivables would likely be limited to Ford Credit's retained interests.

Ford Motor Company Annual Report 2005 46

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

At December 31, 2005 and 2004, the total outstanding principal amount of receivables sold by Ford Credit in off-balance sheet
securitizations was $18.0 billion and $35.6 billion, respectively. At December 31, 2005 and 2004, Ford Creditʼs retained interests in
such sold receivables were $1.4 billion and $9.2 billion, respectively. The decline primarily reflected Ford Credit's accounting
consolidation of its off-balance sheet wholesale securitization program as a result of certain changes made to the program during the
fourth quarter of 2005.

Ford Credit generally has no obligation to repurchase or replace any receivable sold to an SPE that subsequently becomes
delinquent in payment or otherwise is in default. Investors holding securities issued by an SPE have no recourse to Ford Credit or its
other assets for credit losses on the sold receivables and have no right to require it to repurchase the securities. Ford Credit does not
guarantee any asset-backed securities and has no obligation to provide liquidity or make monetary contributions or contributions of
additional receivables to its SPEs either due to the performance of the sold receivables or the credit rating of Ford Credit's short-term
or long-term debt. However, as the seller and servicer of the finance receivables to the SPE, Ford Credit is obligated to provide
certain kinds of support to its securitizations, which are customary in the securitization industry. These obligations consist of
indemnifications, receivable repurchase obligations on receivables that do not meet eligibility criteria or that have been materially
modified, the mandatory sale of additional receivables in revolving transactions, and, in some cases, servicer advances of interest
shortfalls.

Risks to Continued Funding under Securitization Programs. The following securitization programs contain structural features that
could prevent Ford Credit from using these sources of funding in certain circumstances:

� FCAR. If credit losses or delinquencies in Ford Credit's portfolio of retail, wholesale or lease receivables exceed specified
levels, FCAR is not permitted to purchase additional asset-backed securities of the affected type for so long as such levels are
exceeded. FCAR is permitted to purchase only highly-rated asset-backed securities, and if the credit enhancement on any
asset-backed security purchased by FCAR is reduced to zero, FCAR may not purchase any additional asset-backed securities
and would wind down its operations.

� Conduits. If credit losses or delinquencies on the pool of sold receivables held by a conduit exceed specified levels, or if the
level of overcollateralization for such pool decreases below a specified level, Ford Credit will be unable to sell additional
pools of receivables to that conduit.

� Wholesale Securitization and Motown Notes Program. If the payment rates on wholesale receivables are lower than
specified levels, the SPE will be unable to issue additional securities and any existing securities would begin to amortize.

Based on its experience, Ford Credit does not expect that any of these features will have a material adverse impact on its ability to
use securitization to fund its operations.

In addition to the specific transaction-related structural features discussed above, Ford Creditʼs ability to sell receivables in any of
its securitization programs may be affected by the following factors: the amount and credit quality of receivables available to sell, the
performance of receivables in its previous receivables sales, general demand for the type of receivables supporting the asset-backed
securities, market capacity for Ford Credit and Ford Credit-sponsored investments, accounting and regulatory changes, Ford Creditʼs
credit rating, and the availability of liquidity facilities. If as a result of any of these or other factors the cost of securitized funding
were to increase significantly or funding through securitizations were no longer available to Ford Credit, it would have a material
adverse impact on Ford Credit's financial condition, results of operations or liquidity.

Variable Interest Entities

See Note 17 of the Notes to the Financial Statements for a discussion of our variable interest entities.

Guarantees

See Note 27 of the Notes to the Financial Statements for a discussion of our guarantees.

Ford Motor Company Annual Report 2005 47

Managementʼs Discussion and Analysis of Financial
Condition and Results of Operations

AGGREGATE CONTRACTUAL OBLIGATIONS

We are party to many contractual obligations involving commitments to make payments to third parties. Most of these are debt
obligations incurred by our Financial Services sector. In addition, as part of our normal business practices, we enter into contracts
with suppliers for purchases of certain raw materials, components and services. These arrangements may contain fixed or minimum
quantity purchase requirements. We enter into such arrangements to facilitate adequate supply of these materials and services.
"Purchase obligations" are defined as off-balance sheet agreements to purchase goods or services that are enforceable and legally
binding on the company and that specify all significant terms.

The table below summarizes our contractual obligations as of December 31, 2005 (in millions):

Payments Due by Period

Financial 2011 and
Automotive Services Total 2006 2007-2008 2009-2010 Thereafter
On-balance sheet
Long-term debt*............................................................................. $ 17,627 $ 104,119 $ 121,746 $ 27,318 $ 45,623 $ 20,414 $ 28,391
Capital lease ................................................................................... 375 — 375 56 118 111 90
Off-balance sheet
Purchase obligations ...................................................................... 4,013 271 4,284 1,185 1,521 1,086 492
Operating lease............................................................................... 1,758 516 2,274 596 852 442 384
Total ............................................................................................. $ 23,773 $ 104,906 $ 128,679 $ 29,155 $ 48,114 $ 22,053 $ 29,357
__________
* Principal obligations only.

For additional information to our long-term debt and operating lease obligations, see Notes 16 and 27, respectively, of the Notes to
the Financial Statements.

Ford Motor Company Annual Report 2005 48

Quantitative and Qualitative Disclosures About Market Risk

OVERVIEW

We are exposed to a variety of market and other risks, including the effects of changes in foreign currency exchange rates,
commodity prices, interest rates, as well as risks to availability of funding sources, hazard events, and specific asset risks.

These risks affect our Automotive and Financial Services sectors differently. We monitor and manage these exposures as an
integral part of our overall risk management program, which includes regular reports to a central management committee, the Global
Risk Management Committee ("GRMC"). The GRMC is chaired by our Chief Financial Officer, and its members include our
Treasurer, our Controller, and other members of senior management.

Our Automotive and Financial Services sectors are exposed to liquidity risk, or the possibility of having to curtail their businesses
or being unable to meet present and future financial obligations as they come due because funding sources may be reduced or become
unavailable. We, and particularly Ford Credit, which comprises substantially all of our Financial Services sector, maintain plans for
sources of funding to ensure liquidity through a variety of economic or business cycles. As discussed in greater detail in
"Managementʼs Discussion and Analysis of Financial Condition and Results of Operations," our funding sources include sales of
receivables in securitizations and other structured financings, unsecured debt issuances and bank borrowings.

We are exposed to a variety of insurable risks, such as loss or damage to property, liability claims, and employee injury. We
protect against these risks through a combination of self-insurance and the purchase of commercial insurance designed to protect
against events that could generate significant losses.

Direct responsibility for the execution of our market risk management strategies resides with our Treasurerʼs Office and is
governed by written polices and procedures. Separation of duties is maintained between the development and authorization of
derivative trades, the transaction of derivatives, and the settlement of cash flows. Regular audits are conducted to ensure that
appropriate controls are in place and that they remain effective. In addition, our market risk exposures and our use of derivatives to
manage these exposures are reviewed by the GRMC, and the Audit and Finance Committees of our Board of Directors.

In accordance with corporate risk management policies, we use derivative instruments, such as forward contracts, swaps and
options that economically hedge certain exposures (foreign currency, commodity, and interest rates). Derivative positions are used to
manage underlying exposures; we do not use derivative contracts for speculative purposes. In certain instances, we forgo hedge
accounting, which results in unrealized gains and losses that are recognized currently in net income; examples of economic hedges
that do not qualify for hedge accounting include foreign currency hedges of inter-company loans and dividends and certain
transactions that use multiple hedge instruments. For additional information on our derivatives, see Note 20 of the Notes to the
Financial Statements.

The market and counterparty risks of our Automotive sector and Ford Credit are discussed and quantified below.

AUTOMOTIVE MARKET AND COUNTERPARTY RISK

Our Automotive sector frequently has expenditures and receipts denominated in foreign currencies, including the following:
purchases and sales of finished vehicles and production parts, debt and other payables, subsidiary dividends, and investments in
foreign operations. These expenditures and receipts create exposures to changes in exchange rates. We also are exposed to changes in
prices of commodities used in our Automotive sector and changes in interest rates.

Beginning with this report, we have changed our risk disclosure methodology for foreign currency risk and commodity risk to
sensitivity analysis, which we believe is a more commonly used and more easily understood disclosure alternative.

Foreign currency risk and commodity risk are measured and quantified using a model to evaluate the sensitivity of the fair value of
currency and commodity derivative instruments with exposure to market risk that assumes instantaneous, parallel shifts in rates and/or
prices. For options and instruments with non-linear returns, appropriate models are utilized to determine the impact of shifts in rates
and prices.

Foreign Currency Risk. Foreign currency risk is the possibility that our financial results could be better or worse than planned
because of changes in foreign currency exchange rates. Accordingly, we use derivative instruments to hedge our economic exposure
with respect to forecasted revenues and costs, assets, liabilities, investments in foreign operations, and firm commitments denominated
in foreign currencies. In our hedging actions, we use primarily instruments commonly used by corporations to reduce foreign
exchange risk (e.g., forward contracts and options).

Ford Motor Company Annual Report 2005 49

Quantitative and Qualitative Disclosures About Market Risk

The net fair value of financial instruments with exposure to cash flow foreign currency risk was a liability of $400 million as of
December 31, 2005 compared to a net fair value asset of $1.4 billion as of December 31, 2004. The potential decrease in fair value for
such financial instruments, assuming a 10% adverse change in quoted foreign currency exchange rates, would be $1.3 billion and
$1.5 billion at December 31, 2005 and December 31, 2004, respectively.

Commodity Price Risk. Commodity price risk is the possibility of higher or lower costs due to changes in the prices of
commodities, such as non-ferrous metals (e.g., aluminum), precious metals (e.g., palladium), ferrous metals (e.g., steel and iron
castings), energy (e.g., natural gas and electricity), and plastics/resins (e.g., polypropylene), which we use in the production of motor
vehicles. Steel and resins are our two largest commodity exposures and are among the most difficult to hedge.

We use derivative instruments to hedge the price risk associated with the purchase of those commodities that we can economically
hedge (primarily non-ferrous metals, precious metals and energies). In our hedging actions, we primarily use instruments commonly
used by corporations to reduce commodity price risk (e.g., financially settled forward contracts, swaps, and options).

The net fair value asset of commodity forward and option contracts as of December 31, 2005 and December 31, 2004 was
$664 million and $294 million, respectively. The potential decrease in fair value of commodity forward and option contracts,
assuming a 10% adverse change in the underlying commodity price, would be approximately $200 million at both December 31, 2005
and December 31, 2004.

In addition, our purchasing organization (with guidance from the GRMC as appropriate) negotiates contracts to ensure continuous
supply of raw materials. In some cases, these contracts stipulate minimum purchase amounts and specific prices, and as such, play a
role in managing price risk.

Interest Rate Risk. Interest rate risk relates to the gain or loss we could incur in our Automotive investment portfolio due to a
change in interest rates. Our interest rate sensitivity analysis on the investment portfolio includes cash and cash equivalents,
marketable and loaned securities and short-term VEBA assets. At December 31, 2005, we had $25.1 billion in our Automotive
investment portfolio, compared to $23.6 billion at December 31, 2004. We invest the portfolio in securities of various types and
maturities, the value of which are subject to fluctuations in interest rates. These securities are generally classified as either trading or
available-for-sale. The trading portfolio gains and losses (unrealized and realized) are reported in the income statement. The
available-for-sale portfolio realized gains or losses are reported in the income statement, and unrealized gains and losses are reported
in the Consolidated Statement of Stockholdersʼ Equity in other comprehensive income. The investment strategy is based on clearly
defined risk and liquidity guidelines to maintain liquidity, minimize risk, and earn a reasonable return on the short-term investment.

At any time, a rise in interest rates could have a material adverse impact on the fair value of our trading and available-for-sale
portfolios. As of December 31, 2005, the value of our trading portfolio was $22.6 billion, which is $3.0 billion higher than
December 31, 2004. The value of our available-for-sale portfolio was $2.5 billion, which is $1.5 billion lower than
December 31, 2004.

Assuming a hypothetical increase in interest rates of one percentage point, the value of our trading and available-for-sale portfolios
would be reduced by $91 million and $28 million, respectively. This compares to $88 million and $45 million, respectively, as
calculated as of December 31, 2004. While these are our best estimates of the impact of the specified interest rate scenario, actual
results could differ from those projected. The sensitivity analysis presented assumes interest rate changes are instantaneous, parallel
shifts in the yield curve. In reality, interest rate changes of this magnitude are rarely instantaneous or parallel.

Counterparty Risk. The use of derivatives to manage market risk results in counterparty risk, which is the loss we could incur if a
counterparty defaulted on a derivative contract. We enter into master agreements with counterparties that allow netting of certain
exposures in order to manage this risk. Exposures primarily relate to derivative contracts used for managing interest rate, foreign
currency exchange rate and commodity price risk. We, together with Ford Credit, establish exposure limits for each counterparty to
minimize risk and provide counterparty diversification.

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 Monte Carlo simulation technique to assess our potential exposure by tenor, defined at a 95%
confidence level. We monitor and report our exposures to the Treasurer on a monthly basis.

Substantially all of our counterparty exposures are with counterparties that are rated single-A or better. Our guidelines for
counterparty minimum long-term ratings is BBB-. Exceptions to these guidelines require prior approval by management.

Ford Motor Company Annual Report 2005 50

Quantitative and Qualitative Disclosures About Market Risk

For additional information about derivative notional amount and fair value of derivatives, please refer to Note 20 of the Notes to
the Financial Statements.

FORD CREDIT MARKET RISKS

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:

• Market risk. The possibility that changes in interest and currency exchange rates or prices will have an adverse impact on
operating results;

• Credit risk. The possibility of loss from a customerʼs failure to make payments according to contract terms;

• Residual risk. The possibility that the actual proceeds Ford Credit receives at lease termination will be lower than its
projections or return rates will be higher than its projections; and,

• Liquidity risk. The possibility that Ford Credit may be unable to meet all current and future obligations in a timely manner.

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

Foreign Currency Risk. To meet funding objectives, Ford Credit issues debt or, for its international affiliates, draws on local credit
lines in a variety of currencies. Ford Credit faces exposure to currency exchange rate changes if a mismatch exists between the
currency of its 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 seeks to
minimize the impact of currency exchange rates on operating results by executing foreign currency derivatives. These derivatives
convert substantially all of its foreign currency debt obligations to the local country currency of the receivables. As a result, Ford
Creditʼs market risk exposure relating to currency exchange rates is believed to be immaterial.

Interest Rate Risk. Interest rate risk is the primary market risk to which Ford Credit is exposed and consists principally of "re-
pricing risk" or differences in the re-pricing characteristics of assets and liabilities. An instrumentʼs re-pricing period is a term used
by financial institutions to describe how an interest rate-sensitive instrument responds to changes in interest rates. It refers to the time
it takes an instrumentʼs interest rate to reflect a change in market interest rates. For fixed-rate instruments, the re-pricing period is
equal to the maturity for repayment of the instrumentʼs principal because, with a fixed interest rate, the principal is considered to re-
price only when re-invested in a new instrument. For a floating-rate instrument, the re-pricing period is the period of time before the
interest rate adjusts to the market rate. For instance, a floating-rate loan whose interest rate is reset to a market index annually on
December 31 would have a re-pricing period of one year on January 1, regardless of the instrumentʼs maturity.

Ford Creditʼs receivables consist primarily of fixed-rate retail installment sale and lease contracts and floating-rate wholesale
receivables. Fixed-rate retail installment sale and lease contracts are originated principally with maturities ranging between two and
six years and generally require customers to make equal monthly payments over the life of the contract. Ford Creditʼs funding sources
consist primarily of sales of receivables in securitizations and short- and long-term unsecured debt. In the case of unsecured term
debt, and in an effort to have funds available throughout the business cycle, Ford Credit may issue debt with five- to ten-year
maturities, which is generally longer than the terms of its assets. These debt instruments are principally fixed-rate and require fixed
and equal interest payments over the life of the instrument and a single principal payment at maturity.

Ford Credit is exposed to interest rate risk to the extent that a difference exists between the re-pricing profile of its assets and debt.
Specifically, without derivatives, Ford Creditʼs assets would re-price more quickly than its debt.

Ford Creditʼs interest rate risk management objective is to maximize its financing margin while limiting fluctuations caused by
changes in interest rates. Ford Credit achieves this objective by setting an established risk tolerance range and staying within this
tolerance range through an interest rate risk management program that includes entering into derivatives commonly known as interest
rate swaps.

Ford Motor Company Annual Report 2005 51

Quantitative and Qualitative Disclosures About Market Risk

On a monthly basis, Ford Credit determines the sensitivity of the economic value of its portfolio of interest rate-sensitive assets
and liabilities (its economic value) to hypothetical changes in interest rates. Economic value is a measure of the present value of all
future expected cash flows, discounted by market interest rates, and is equal to the present value of interest rate-sensitive assets minus
the present value of interest rate-sensitive liabilities. Ford Credit then enters into interest rate swaps, effectively converting portions of
its floating-rate debt to fixed or its fixed-rate debt to floating, to ensure that the sensitivity of its economic value falls within an
established target range. Ford Credit also monitors the sensitivity of its earnings to interest rates using pre-tax net interest income
simulation techniques. These simulations calculate the projected pre-tax net interest income of its portfolio of interest rate-sensitive
assets and liabilities under various interest rate scenarios, including both parallel and non-parallel shifts in the yield curve. These
quantifications of interest rate risk are reported to our Treasurer each month.

The process described above is used to measure and manage the interest rate risk of Ford Creditʼs operations in the United States,
Canada and the United Kingdom, which together represented approximately 80% of its total on-balance sheet finance receivables at
December 31, 2005. For its other international affiliates, Ford Credit uses a technique commonly referred to as "gap analysis," to
measure re-pricing mismatch. This process uses re-pricing schedules, which group assets, debt and swaps into discrete time bands
based on their re-pricing characteristics. Under this process, Ford Credit enters into interest rate swaps, which effectively change the
re-pricing profile of its debt, to ensure that any re-pricing mismatch (between assets and liabilities) existing in a particular time band
falls within an established tolerance.

As a result of its interest rate risk management process, including derivatives, Ford Creditʼs debt re-prices faster than its assets.
Other things being equal, this means that during a period of rising interest rates, the interest rates paid on Ford Creditʼs debt will
increase more rapidly than the interest rates earned on its assets, thereby initially reducing Ford Creditʼs pre-tax net interest income.
Correspondingly, during a period of falling interest rates, Ford Creditʼs pre-tax net interest income would be expected to initially
increase. To provide a quantitative measure of the sensitivity of its pre-tax net interest income to changes in interest rates, Ford Credit
uses interest rate scenarios that assume a hypothetical, instantaneous increase or decrease in interest rates of one percentage point
across all maturities (a "parallel shift"), as well as a base case that assumes that interest rates remain constant at existing levels. The
differences between these scenarios and the base case over a twelve-month period represent an estimate of the sensitivity of Ford
Creditʼs pre-tax net interest income. The sensitivity as of year-end 2005 and 2004 was as follows:

Pre-tax Net Interest Pre-tax Net Interest

Income impact given a Income impact given a
one percentage point one percentage point
instantaneous increase instantaneous decrease
in interest rates in interest rates
(in millions) (in millions)
December 31, 2005 ............................................................................................................. $ (40) $ 40
December 31, 2004 ............................................................................................................. (93) 93

Based on assumptions included in the analysis, sensitivity to a one percentage point instantaneous change in interest rates was
lower at year-end 2005 than at year-end 2004. This change primarily reflects the results of normal fluctuations within the approved
tolerances of risk management strategy. While the sensitivity analysis presented is Ford Creditʼs best estimate of the impacts of
specified assumed interest rate scenarios, the model Ford Credit uses for this analysis is heavily dependent on assumptions, so that
actual results could differ from those projected. Embedded in the model Ford Credit uses are assumptions regarding the reinvestment
of maturing asset principal, refinancing of maturing debt, and predicted repayment of retail installment sale and lease contracts ahead
of contractual maturity. Ford Creditʼs repayment projections of retail installment sale and lease contracts ahead of contractual
maturity are based on historical experience. If interest rates or other factors were to change, the actual prepayment experience could
be different than projected.

Additionally, interest rate changes of one percentage point or more are rarely instantaneous or parallel, and rates could move more
or less than the one percentage point assumed in Ford Creditʼs analysis. As a result, the actual impact to pre-tax net interest income
could be higher or lower than the results detailed above. The model used to conduct this analysis also relies heavily on assumptions
regarding the reinvestment of maturing asset principal, refinancing of maturing debt, and predicted repayment of sale and lease
contracts ahead of contractual maturity.

The fair value of Ford Creditʼs net derivative financial instruments (derivative assets less derivative liabilities) as reported in
Note 20 of the Notes to the Financial Statements as of December 31, 2005 was $1.9 billion. This was approximately $4.2 billion
lower than a year ago. This decrease primarily reflects weakening of foreign currencies relative to the U.S. dollar (primarily Euro,
British Pound and Yen), the maturity of swaps that were in the money, and lower mark-to-market adjustments resulting from interest
rate changes. For additional information on Ford Credit derivatives, please refer to the "Financial Services Sector" discussion in
Note 20 of the Notes to the Financial Statements.

Ford Motor Company Annual Report 2005 52

Consolidated Statement of Income

Ford Motor Company and Subsidiaries

For the Years Ended December 31, 2005, 2004 and 2003
(in millions, except per share amounts)

2005 2004 2003

Sales and revenues
Automotive sales ....................................................................................................................................................... $ 153,503 $ 147,128 $ 138,253
Financial Services revenues ...................................................................................................................................... 23,586 24,518 26,078
Total sales and revenues ....................................................................................................................................... 177,089 171,646 164,331
Costs and expenses
Cost of sales............................................................................................................................................................... 144,944 135,852 129,683
Selling, administrative and other expenses ............................................................................................................... 24,652 23,901 24,389
Interest expense ......................................................................................................................................................... 7,643 7,071 7,643
Financial Services provision for credit and insurance losses ................................................................................... 483 1,212 2,248
Total costs and expenses....................................................................................................................................... 177,722 168,036 163,963
Automotive interest income and other non-operating income/(expense), net.......................................................... 1,249 988 897
Automotive equity in net income/(loss) of affiliated companies.............................................................................. 285 255 74
Gain on sale of The Hertz Corporation ("Hertz") (Note 4) ...................................................................................... 1,095 — —
Income/(loss) before income taxes ......................................................................................................................... 1,996 4,853 1,339
Provision for/(benefit from) income taxes (Note 3) ................................................................................................. (512) 938 123
Income/(loss) before minority interests................................................................................................................. 2,508 3,915 1,216
Minority interests in net income/(loss) of subsidiaries............................................................................................. 280 282 314
Income/(loss) from continuing operations ............................................................................................................ 2,228 3,633 902
Income/(loss) from discontinued operations (Note 4) .............................................................................................. 47 (146) (143)
Income/(loss) before cumulative effects of changes in accounting principles................................................... 2,275 3,487 759
Cumulative effects of changes in accounting principles (Notes 27 and 17) ............................................................ (251) — (264)
Net income/(loss)...................................................................................................................................................... $ 2,024 $ 3,487 $ 495

Average number of shares of Common and Class B stock outstanding................................................................... 1,846 1,830 1,832

AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK (Note 18)

Basic income/(loss)
Income/(loss) from continuing operations.............................................................................................................. $ 1.21 $ 1.99 $ 0.49
Income/(loss) from discontinued operations .......................................................................................................... 0.03 (0.08) (0.08)
Cumulative effects of changes in accounting principles ........................................................................................ (0.14) — (0.14)
Net income/(loss) .................................................................................................................................................... $ 1.10 $ 1.91 $ 0.27

Diluted income/(loss)
Income/(loss) from continuing operations.............................................................................................................. $ 1.14 $ 1.80 $ 0.49
Income/(loss) from discontinued operations .......................................................................................................... 0.02 (0.07) (0.08)
Cumulative effects of changes in accounting principles ........................................................................................ (0.11) — (0.14)
Net income/(loss) .................................................................................................................................................... $ 1.05 $ 1.73 $ 0.27

Cash dividends ......................................................................................................................................................... $ 0.40 $ 0.40 $ 0.40

The accompanying notes are part of the financial statements.

Ford Motor Company Annual Report 2005 53

Sector Statement of Income

Ford Motor Company and Subsidiaries

For the Years Ended December 31, 2005, 2004 and 2003
(in millions, except per share amounts)

2005 2004 2003

AUTOMOTIVE
Sales ........................................................................................................................................................................... $ 153,503 $ 147,128 $ 138,253
Costs and expenses
Cost of sales................................................................................................................................................................. 144,944 135,852 129,683
Selling, administrative and other expenses................................................................................................................. 12,768 11,453 10,126
Total costs and expenses......................................................................................................................................... 157,712 147,305 139,809
Operating income/(loss) ............................................................................................................................................ (4,209) (177) (1,556)

Interest expense ........................................................................................................................................................... 1,220 1,221 1,323

Interest income and other non-operating income/(expense), net................................................................................ 1,249 988 897
Equity in net income/(loss) of affiliated companies ................................................................................................... 285 255 74
Income/(loss) before income taxes — Automotive ................................................................................................. (3,895) (155) (1,908)

FINANCIAL SERVICES
Revenues..................................................................................................................................................................... 23,586 24,518 26,078
Costs and expenses
Interest expense ........................................................................................................................................................... 6,423 5,850 6,320
Depreciation ................................................................................................................................................................ 5,854 6,618 8,771
Operating and other expenses ..................................................................................................................................... 6,030 5,830 5,492
Provision for credit and insurance losses.................................................................................................................... 483 1,212 2,248
Total costs and expenses......................................................................................................................................... 18,790 19,510 22,831
Gain on sale of Hertz (Note 4) ................................................................................................................................... 1,095 — —
Income/(loss) before income taxes — Financial Services ........................................................................................ 5,891 5,008 3,247

TOTAL COMPANY
Income/(loss) before income taxes ........................................................................................................................... 1,996 4,853 1,339
Provision for/(benefit from) income taxes (Note 3) ................................................................................................... (512) 938 123
Income/(loss) before minority interests................................................................................................................... 2,508 3,915 1,216
Minority interests in net income/(loss) of subsidiaries............................................................................................... 280 282 314
Income/(loss) from continuing operations .............................................................................................................. 2,228 3,633 902
Income/(loss) from discontinued operations (Note 4) ................................................................................................ 47 (146) (143)
Income/(loss) before cumulative effects of changes in accounting principles..................................................... 2,275 3,487 759
Cumulative effects of changes in accounting principles (Note 27 and 17)................................................................ (251) — (264)
Net income/(loss)........................................................................................................................................................ $ 2,024 $ 3,487 $ 495

Average number of shares of Common and Class B stock outstanding..................................................................... 1,846 1,830 1,832

AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK (Note 18)

Basic income/(loss)
Income/(loss) from continuing operations................................................................................................................ $ 1.21 $ 1.99 $ 0.49
Income/(loss) from discontinued operations ............................................................................................................ 0.03 (0.08) (0.08)
Cumulative effects of changes in accounting principles .......................................................................................... (0.14) — (0.14)
Net income/(loss) ...................................................................................................................................................... $ 1.10 $ 1.91 $ 0.27

Diluted income/(loss)
Income/(loss) from continuing operations................................................................................................................ $ 1.14 $ 1.80 $ 0.49
Income/(loss) from discontinued operations ............................................................................................................ 0.02 (0.07) (0.08)
Cumulative effects of changes in accounting principles .......................................................................................... (0.11) — (0.14)
Net income/(loss) ...................................................................................................................................................... $ 1.05 $ 1.73 $ 0.27

Cash dividends........................................................................................................................................................... $ 0.40 $ 0.40 $ 0.40

The accompanying notes are part of the financial statements.

Ford Motor Company Annual Report 2005 54

Consolidated Balance Sheet

Ford Motor Company and Subsidiaries

(in millions)

December 31, December 31,

2005 2004

ASSETS
Cash and cash equivalents........................................................................................................................................................... $ 31,499 $ 22,831
Marketable securities (Note 5) .................................................................................................................................................... 7,583 8,946
Loaned securities (Note 5) .......................................................................................................................................................... 3,461 1,058
Finance receivables, net .............................................................................................................................................................. 105,975 109,544
Other receivables, net .................................................................................................................................................................. 8,522 5,891
Net investment in operating leases (Note 12) ............................................................................................................................. 27,099 25,564
Retained interest in sold receivables (Note 13) .......................................................................................................................... 1,420 9,166
Inventories (Note 6)..................................................................................................................................................................... 10,271 10,766
Equity in net assets of affiliated companies................................................................................................................................ 2,579 2,835
Net property (Note 8) .................................................................................................................................................................. 40,707 43,313
Deferred income taxes................................................................................................................................................................. 5,881 6,686
Goodwill and other intangible assets (Note 10).......................................................................................................................... 5,945 6,394
Assets of discontinued/held-for-sale operations ......................................................................................................................... — 16,346
Other assets.................................................................................................................................................................................. 18,534 26,166
Total assets............................................................................................................................................................................. $ 269,476 $ 295,506

LIABILITIES AND STOCKHOLDERSʼ EQUITY

Payables ...................................................................................................................................................................................... $ 22,813 $ 21,991
Accrued liabilities and deferred revenue (Note 15) .................................................................................................................... 72,977 73,592
Debt (Note 16) ............................................................................................................................................................................ 154,332 164,337
Deferred income taxes................................................................................................................................................................. 5,275 7,187
Liabilities of discontinued/held-for-sale operations ................................................................................................................... — 11,477
Total liabilities ........................................................................................................................................................................ 255,397 278,584

Minority interests ........................................................................................................................................................................ 1,122 877

Stockholdersʼ equity
Capital stock (Note 18)
Common Stock, par value $0.01 per share (1,837 million shares issued; 6,000 million shares authorized) .......................... 18 18
Class B Stock, par value $0.01 per share (71 million shares issued; 530 million shares authorized) ..................................... 1 1
Capital in excess of par value of stock........................................................................................................................................ 4,872 5,321
Accumulated other comprehensive income/(loss) ...................................................................................................................... (3,562) 1,258
Treasury stock ............................................................................................................................................................................. (833) (1,728)
Earnings retained for use in business .......................................................................................................................................... 12,461 11,175
Total stockholdersʼ equity ...................................................................................................................................................... 12,957 16,045
Total liabilities and stockholdersʼ equity ........................................................................................................................... $ 269,476 $ 295,506

The accompanying notes are part of the financial statements.

Ford Motor Company Annual Report 2005 55

Sector Balance Sheet

Ford Motor Company and Subsidiaries

(in millions)

December 31, December 31,

2005 2004

ASSETS
Automotive
Cash and cash equivalents.................................................................................................................................................................... $ 13,392 $ 10,142
Marketable securities (Note 5) ............................................................................................................................................................. 6,860 8,291
Loaned securities (Note 5) ................................................................................................................................................................... 3,461 1,058
Total cash, marketable and loaned securities .................................................................................................................................. 23,713 19,491
Receivables, less allowances of $298 and $388 .................................................................................................................................. 3,061 2,894
Inventories (Note 6).............................................................................................................................................................................. 10,271 10,766
Deferred income taxes.......................................................................................................................................................................... 1,187 2,200
Other current assets .............................................................................................................................................................................. 8,177 8,916
Total current assets .......................................................................................................................................................................... 46,409 44,267
Equity in net assets of affiliated companies......................................................................................................................................... 1,756 1,907
Net property (Note 8) ........................................................................................................................................................................... 40,379 42,904
Deferred income taxes.......................................................................................................................................................................... 11,049 8,164
Goodwill and other intangible assets (Note 10)................................................................................................................................... 5,928 6,374
Assets of discontinued/held-for-sale operations .................................................................................................................................. — 188
Other assets........................................................................................................................................................................................... 8,308 9,247
Total Automotive assets................................................................................................................................................................... 113,829 113,051
Financial Services
Cash and cash equivalents.................................................................................................................................................................... 18,107 12,689
Investments in securities (Note 5)........................................................................................................................................................ 723 655
Finance receivables, net (Note 11)....................................................................................................................................................... 111,436 112,541
Net investment in operating leases (Note 12) ...................................................................................................................................... 22,951 22,652
Retained interest in sold receivables (Note 13) ................................................................................................................................... 1,420 9,166
Goodwill and other intangible assets (Note 10)................................................................................................................................... 17 20
Assets of discontinued/held-for-sale operations .................................................................................................................................. — 16,158
Other assets........................................................................................................................................................................................... 7,457 12,466
Receivable from Automotive (Note 1)................................................................................................................................................. 83 2,753
Total Financial Services assets ........................................................................................................................................................ 162,194 189,100
Intersector elimination ..................................................................................................................................................................... (83) (2,753)
Total assets...................................................................................................................................................................................... $ 275,940 $ 299,398

LIABILITIES AND STOCKHOLDERSʼ EQUITY

Automotive
Trade payables...................................................................................................................................................................................... $ 16,554 $ 16,026
Other liabilities ..................................................................................................................................................................................... 4,222 4,269
Accrued liabilities and deferred revenue (Note 15) ............................................................................................................................. 28,733 29,700
Deferred income taxes.......................................................................................................................................................................... 804 877
Debt payable within one year (Note 16) .............................................................................................................................................. 978 977
Current payable to Financial Services (Note 1) ................................................................................................................................... 83 1,382
Total current liabilities..................................................................................................................................................................... 51,374 53,231
Long-term debt (Note 16) .................................................................................................................................................................... 16,900 17,250
Other liabilities (Note 15) .................................................................................................................................................................... 38,639 37,058
Deferred income taxes.......................................................................................................................................................................... 586 312
Liabilities of discontinued/held-for-sale operations ............................................................................................................................ — 46
Payable to Financial Services (Note 1) ................................................................................................................................................ — 1,371
Total Automotive liabilities ............................................................................................................................................................. 107,499 109,268
Financial Services
Payables ................................................................................................................................................................................................ 2,037 1,696
Debt (Note 16)...................................................................................................................................................................................... 136,454 146,110
Deferred income taxes.......................................................................................................................................................................... 10,349 9,890
Other liabilities and deferred income................................................................................................................................................... 5,605 6,834
Liabilities of discontinued/held-for-sale operations ............................................................................................................................ — 11,431
Total Financial Services liabilities .................................................................................................................................................. 154,445 175,961
Minority Interests ................................................................................................................................................................................. 1,122 877
Stockholdersʼ equity
Capital stock (Note 18)
Common Stock, par value $0.01 per share (1,837 million shares issued; 6,000 million shares authorized) ................................... 18 18
Class B Stock, par value $0.01 per share (71 million shares issued; 530 million shares authorized) .............................................. 1 1
Capital in excess of par value of stock................................................................................................................................................. 4,872 5,321
Accumulated other comprehensive income/(loss) ............................................................................................................................... (3,562) 1,258
Treasury stock ...................................................................................................................................................................................... (833) (1,728)
Earnings retained for use in business ................................................................................................................................................... 12,461 11,175
Total stockholdersʼ equity ............................................................................................................................................................... 12,957 16,045
Intersector elimination ..................................................................................................................................................................... (83) (2,753)
Total liabilities and stockholdersʼ equity .................................................................................................................................... $ 275,940 $ 299,398

The accompanying notes are part of the financial statements.

Ford Motor Company Annual Report 2005 56

Consolidated Statement of Cash Flows

Ford Motor Company And Subsidiaries

For the Years Ended December 31, 2005, 2004 and 2003
(in millions)

Revised – See Note 1

2005 2004 2003

Cash flows from operating activities of continuing operations

Net cash flows from operating activities (Note 21) ................................................................................................. $ 21,674 $ 24,562 $ 17,256

Cash flows from investing activities of continuing operations

Capital expenditures.................................................................................................................................................... (7,517) (6,738) (7,726)
Acquisitions of retail and other finance receivables and operating leases ................................................................. (54,024) (63,284) (59,503)
Collections of retail and other finance receivables and operating leases ................................................................... 48,238 51,024 44,476
Net acquisitions of daily rental vehicles ..................................................................................................................... (1,552) (2,492) (1,505)
Purchases of securities ................................................................................................................................................ (6,278) (8,470) (10,074)
Sales and maturities of securities................................................................................................................................ 6,154 8,414 9,382
Proceeds from sales of retail and other finance receivables and operating leases ..................................................... 17,288 6,481 18,401
Proceeds from sale of businesses................................................................................................................................ 7,937 537 1,702
Transfer of cash balances upon disposition of discontinued/held-for-sale operations .............................................. (1,255) (39) (10)
Cash paid for acquisitions ........................................................................................................................................... (2,031) (30) —
Cash recognized on initial consolidation of joint ventures......................................................................................... — — 256
Other............................................................................................................................................................................ 497 (364) 1,599
Net cash (used in)/provided by investing activities.................................................................................................. 7,457 (14,961) (3,002)

Cash flows from financing activities of continuing operations

Cash dividends ............................................................................................................................................................ (738) (733) (733)
Net sales/(purchases) of Common Stock .................................................................................................................... 325 (151) 9
Changes in short-term debt ......................................................................................................................................... (8,591) 4,937 1,305
Proceeds from issuance of other debt ......................................................................................................................... 24,559 22,223 23,086
Principal payments on other debt................................................................................................................................ (36,080) (36,000) (28,765)
Other............................................................................................................................................................................ (126) (120) (82)
Net cash (used in)/provided by financing activities ................................................................................................. (20,651) (9,844) (5,180)

Effect of exchange rate changes on cash ...................................................................................................................... (496) 505 811

Net increase/(decrease) in cash and cash equivalents from continuing operations ......................................... 7,984 262 9,885

Cash from discontinued operations

Cash flows from operating activities of discontinued operations................................................................................. 54 316 308
Cash flows from investing activities of discontinued operations ................................................................................. (49) (320) (280)
Cash flows from financing activities of discontinued operations................................................................................. — — (6)

Net increase/(decrease) in cash and cash equivalents ......................................................................................... $ 7,989 $ 258 $ 9,907

Cash and cash equivalents at January 1 ................................................................................................................... $ 22,831 $ 22,599 $ 13,124

Cash and cash equivalents of discontinued/held-for-sale operations at January 1....................................................... 679 653 221
Net increase/(decrease) in cash and cash equivalents................................................................................................... 7,989 258 9,907
Less: cash and cash equivalents of discontinued/held-for-sale operations at December 31 ........................................ — (679) (653)
Cash and cash equivalents at December 31 .............................................................................................................. $ 31,499 $ 22,831 $ 22,599

The accompanying notes are part of the financial statements.

Ford Motor Company Annual Report 2005 57

Sector Statement of Cash Flows

Ford Motor Company And Subsidiaries

For the Years Ended December 31, 2005, 2004 and 2003
(in millions)

Revised – See Note 1

2005 2004 2003
Financial Financial Financial
Automotive Services Automotive Services Automotive Services

Cash flows from operating activities of continuing operations

Net cash flows from operating activities (Note 21) .................................. $ 5,436 $ 9,384 $ 6,969 $ 15,592 $ 2,923 $ 16,487
Cash flows from investing activities of continuing operations
Capital expenditures..................................................................................... (7,123) (394) (6,280) (458) (7,347) (379)
Acquisitions of retail and other finance receivables and operating
leases .......................................................................................................... — (54,024) — (63,284) — (59,503)
Collections of retail and other finance receivables and operating
leases .......................................................................................................... — 48,226 — 51,242 — 44,118
Net (increase)/decrease in wholesale receivables........................................ — 3,563 — (2,174) — (2,762)
Net acquisitions of daily rental vehicles ...................................................... — (1,988) — (2,492) — (1,505)
Purchases of securities ................................................................................. (5,714) (564) (7,590) (880) (8,925) (1,149)
Sales and maturities of securities................................................................. 5,106 1,048 7,615 799 8,673 709
Proceeds from sales of retail and other finance receivables and
operating leases .......................................................................................... — 17,288 — 6,481 — 18,401
Proceeds from sale of wholesale receivables............................................... — 3,739 — 3,957 — 966
Proceeds from sale of businesses................................................................. 280 7,657 125 412 77 1,625
Transfer of cash balances upon disposition of discontinued/held-for-
sale operations............................................................................................ — (1,255) (26) (13) (10) —
Net investing activity with Financial Services ............................................ 8,407 — 4,361 — 3,708 —
Cash paid for acquisitions ............................................................................ (2,031) — (30) — — —
Cash recognized on initial consolidation of joint ventures.......................... — — — — 256 —
Other............................................................................................................. 384 113 101 (465) 716 883
Net cash (used in)/provided by investing activities................................... (691) 23,409 (1,724) (6,875) (2,852) 1,404
Cash flows from financing activities of continuing operations
Cash dividends ............................................................................................. (738) — (733) — (733) —
Net sales/(purchases) of Common Stock ..................................................... 325 — (151) — 9 —
Changes in short-term debt .......................................................................... (115) (8,476) (342) 5,279 (237) 1,542
Proceeds from issuance of other debt .......................................................... 385 24,174 469 21,754 1,144 21,942
Principal payments on other debt................................................................. (758) (35,322) (2,564) (33,436) (1,082) (27,683)
Net financing activity with Automotive ...................................................... — (8,407) — (4,361) — (3,708)
Other............................................................................................................. (177) 51 (39) (81) (15) (67)
Net cash (used in)/provided by financing activities .................................. (1,078) (27,980) (3,360) (10,845) (914) (7,974)

Effect of exchange rate changes on cash ....................................................... (23) (473) 117 388 260 551
Net change in intersector receivables/payables and other liabilities ............. (394) 394 1,258 (1,258) 1,186 (1,186)
Net increase/(decrease) in cash and cash equivalents from
continuing operations ............................................................................ 3,250 4,734 3,260 (2,998) 603 9,282

Cash from discontinued operations

Cash flows from operating activities of discontinued operations.................. (17) 71 (148) 464 26 282
Cash flows from investing activities of discontinued operations .................. 17 (66) 137 (457) (4) (276)
Cash flows from financing activities of discontinued operations.................. — — — — (6) —

Net increase/(decrease) in cash and cash equivalents ............................ $ 3,250 $ 4,739 $ 3,249 $ (2,991) $ 619 $ 9,288

Cash and cash equivalents at January 1 .................................................... $ 10,142 $ 12,689 $ 6,856 $ 15,743 $ 6,243 $ 6,881
Cash and cash equivalents of discontinued/held-for-sale operations at
January 1....................................................................................................... — 679 37 616 31 190
Net increase/(decrease) in cash and cash equivalents.................................... 3,250 4,739 3,249 (2,991) 619 9,288
Less: cash and cash equivalents of discontinued/held-for-sale
operations at December 31........................................................................... — — — (679) (37) (616)
Cash and cash equivalents at December 31 ............................................... $ 13,392 $ 18,107 $ 10,142 $ 12,689 $ 6,856 $ 15,743

The accompanying notes are part of the financial statements.

Ford Motor Company Annual Report 2005 58

Consolidated Statement Of Stockholdersʼ Equity

Ford Motor Company and Subsidiaries

For the Years Ended December 31, 2005, 2004 and 2003
(in millions)

Capital
in Accumulated Other Comprehensive
Excess Income/(Loss)
of Par Foreign Minimum Derivative
Capital Value of Retained Currency Pension Instruments
Stock Stock Earnings Translation Liability and Other Other Total
YEAR ENDED DECEMBER 31, 2003
Balance at beginning of year.......................................................... $ 19 $ 5,420 $ 8,659 $ (1,291) $ (5,776) $ 536 $ (1,977) $ 5,590
Comprehensive income/(loss)
Net income..................................................................................... 495 495
Foreign currency translation.......................................................... 3,075 3,075
Net gain /(loss) on derivative instruments (net of tax of $430) .... (191) 989 798
Minimum pension liability (net of tax of $1,208)......................... 2,243 2,243
Net holding gain/(loss) (net of tax of $1)...................................... 1 1
Comprehensive income/(loss)...................................................... 6,612
Common Stock issued for employee benefit plans and other........ (46) (46)
ESOP loan and treasury stock ........................................................ 228 228
Cash dividends................................................................................ (733) (733)
Balance at end of year .................................................................... $ 19 $ 5,374 $ 8,421 $ 1,593 $ (3,533) $ 1,526 $ (1,749) $ 11,651

YEAR ENDED DECEMBER 31, 2004

Balance at beginning of year.......................................................... $ 19 $ 5,374 $ 8,421 $ 1,593 $ (3,533) $ 1,526 $ (1,749) $ 11,651
Comprehensive income/(loss)
Net income..................................................................................... 3,487 3,487
Foreign currency translation.......................................................... 2,352 2,352
Net gain/(loss) on derivative instruments (net of tax of $98) ...... (121) (62) (183)
Minimum pension liability (net of tax of $255)............................ (473) (473)
Net holding gain/(loss) (net of tax of $13).................................... (24) (24)
Comprehensive income/(loss)...................................................... 5,159
Common Stock issued for employee benefit plans and other........ (53) (53)
ESOP loan and Treasury stock....................................................... 21 21
Cash dividends................................................................................ (733) (733)
Balance at end of year .................................................................... $ 19 $ 5,321 $ 11,175 $ 3,824 $ (4,006) $ 1,440 $ (1,728) $ 16,045

YEAR ENDED DECEMBER 31, 2005

Balance at beginning of year.......................................................... $ 19 $ 5,321 $ 11,175 $ 3,824 $ (4,006) $ 1,440 $ (1,728) $ 16,045
Comprehensive income/(loss)
Net income..................................................................................... 2,024 2,024
Foreign currency translation (Note 2) ........................................... (3,446) (3,446)
Net gain/(loss) on derivative instruments (net of tax of $501) ..... 284 (1,214) (930)
Minimum pension liability (net of tax of $210)............................ (390) (390)
Net holding gain/(loss) (net of tax of $29)..................................... (54) (54)
Comprehensive income/(loss)...................................................... (2,796)
Common Stock issued for employee benefit plans and other........ (449) (449)
ESOP loan and treasury stock ........................................................ 895 895
Cash dividends................................................................................ (738) (738)
Balance at end of year .................................................................... $ 19 $ 4,872 $ 12,461 $ 662 $ (4,396) $ 172 $ (833) $ 12,957

The accompanying notes are part of the financial statements.

Ford Motor Company Annual Report 2005 59

Notes to the Financial Statements

NOTE 1. PRINCIPLES OF PRESENTATION AND CONSOLIDATION

Our financial statements are presented in accordance with principles generally accepted in the United States and are shown on
two bases: 1) consolidated basis and 2) sector basis for Automotive and Financial Services. We believe the additional information
provided in the sector basis statements enables the reader to better understand the operating performance, financial position, cash
flow and liquidity of our two very different businesses. The primary difference between the presentation of our sector balance sheet
and our consolidated balance sheet is the netting of deferred tax assets and liabilities.

Our financial statements include consolidated majority-owned subsidiaries and, beginning July 1, 2003, consolidated Variable
Interest Entities (“VIEs”) of which we are the primary beneficiary. Affiliates that we do not consolidate, but over whose operating
and financial policies we have significant influence are accounted for using the equity method. See Note 2 for discussion of
accounting policies.

We have reclassified certain prior year amounts to conform to current year presentation.

Presentation of Cash Flows

Beginning with our year ended December 31, 2005 statement of cash flows, we have changed the presentation of cash flows to
separately disclose the operating, investing, and financing portions of the cash flows attributable to our discontinued operations.
This change is in response to public statements by the staff of the Securities and Exchange Commission ("SEC") concerning
classification of discontinued operations within the statement of cash flows. Beginning with our year ended December 31, 2004
consolidated statement of cash flows, we have changed our presentation of cash flows from wholesale finance receivables. This
change also stemmed from concerns raised by the SEC about the previous presentation. Prior year disclosures have been revised
to conform to current year presentation.

Certain Transactions Between Automotive and Financial Services Sectors

Intersector transactions occur in the ordinary course of business. We formally documented certain long-standing business
practices with Ford Motor Credit Company (“Ford Credit”), a wholly owned subsidiary, in a 2001 agreement. Additional details
on certain transactions and the effect on each sectorʼs balance sheet at December 31 are shown below (in billions):
2005 2004
Financial Financial
Automotive Services Automotive Services
Finance receivables, net (a)....................................................................................................................... $ 5.5 $ 3.0
Other assets (b).......................................................................................................................................... 1.1 0.8
Intersector receivables/(payables) (c) ....................................................................................................... $ (0.1) 0.1 $ (2.8) 2.8
__________
(a) Automotive sector receivables (generated primarily from vehicle and parts sales to third parties) sold to Ford Credit. These receivables are classified as
Other receivables, net on our consolidated balance sheet and Finance Receivables, net on our sector balance sheet.
(b) Primarily used vehicles purchased by Ford Credit pursuant to the Automotive sectorʼs obligation to repurchase such vehicles from daily rental car
companies, including Hertz. These vehicles are subsequently sold at auction.
(c) At December 31, 2005, primarily amounts due the Automotive sector from Ford Credit under a tax sharing agreement and net result of all other transactions
including receivables of Ford Credit from the Automotive sector's consolidated dealerships. At December 31, 2004, primarily amounts due Ford Credit and
Hertz from the Automotive sector under tax sharing agreements and net result of all other transactions including receivables of Ford Credit from the
Automotive sector's consolidated dealerships.

Additionally, amounts recorded as revenue by the Financial Services sector and billed to the Automotive sector for interest and
special financing and leasing programs were $3.3 billion in 2005, $3.4 billion in 2004, and $3.5 billion in 2003. At
December 31, 2005, the Automotive sector has accrued in Accrued liabilities and deferred revenue approximately $3.0 billion for
interest supplements and approximately $800 million for residual-value supplements in the United States and Canada to be paid to
Ford Credit over the term of the finance contracts.

Ford Motor Company Annual Report 2005 60

Notes to the Financial Statements

NOTE 2. SUMMARY OF ACCOUNTING POLICIES

Cash and Cash Equivalents
Cash and all highly liquid investments with a maturity of three months or less at the date of purchase, including short-term time
deposits and government agency and corporate obligations, are classified as Cash and cash equivalents.

Revenue Recognition — Automotive Sector

Sales are generally recorded when products are shipped, and the risks and rewards of ownership are transferred to our
customers (generally dealers).

We also sell vehicles to daily rental car companies that are subject to guaranteed repurchase options. These vehicles are
accounted for as operating leases. At the time of sale, the proceeds are recorded as deferred revenue in Accrued liabilities and
deferred revenue. The difference between the proceeds and the guaranteed repurchase amount is recognized in Sales over the term
of the lease. Also at the time of sale, the costs of the vehicles are recorded as operating leases in Other current assets. The
difference between the cost of the vehicle and the estimated auction value is depreciated as Cost of sales over the term of the lease.
At December 31, 2005 and 2004, included in Accrued liabilities and deferred revenue was $4.6 billion and $3.5 billion,
respectively and included in Other current assets was $4.1 billion and $2.9 billion, respectively for these vehicles.

Automotive marketing incentives, including customer and dealer cash payments and costs for special financing and leasing
programs paid to the Financial Services sector, are recognized as revenue reductions and are accrued at the later of the date the
related vehicle sales are recorded or the date the incentive program is both approved and communicated. Costs for marketing
incentives are based on assumptions regarding the number of vehicles that will have a specific incentive applied against them.

Income generated from cash and cash equivalents, investments in marketable securities, loaned securities and other
miscellaneous receivables is reported as Interest income and other non-operating income/(expense), net.
Revenue Recognition — Financial Services Sector
Revenue from finance receivables is recognized using the interest method. Certain origination costs on receivables are
deferred and amortized, using the interest method, over the term of the related receivable as a reduction in financing revenue.
Rental revenue on operating leases is recognized on a straight-line basis over the term of the lease. Initial direct costs related to
leases are deferred and amortized over the term of the lease. The accrual of interest on receivables is discontinued at the time a
receivable is determined to be uncollectible. Interest supplements paid by the Automotive sector are recognized over the term of
the receivable or operating lease.

Use of Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”)
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and revenue and expenses during the periods reported.
Estimates are used when accounting for certain items such as marketing accruals, warranty costs, employee benefit programs, etc.
Estimates are based on historical experience, where applicable, and assumptions that management believes are reasonable under
the circumstances. Due to the inherent uncertainty involved with estimates, actual results may differ from those estimates.

Selected Other Costs

Freight, engineering and research and development costs are included in cost of sales; advertising costs are included in selling,
administrative and other expenses. Advertising, engineering and research and development costs are expensed as incurred and
were as follows (in billions):
2005 2004 2003
Advertising .................................................................................................................................................................................................. $ 5.0 $ 4.6 $ 4.1
Engineering, research and development ..................................................................................................................................................... 8.0 7.4 7.3

Ford Motor Company Annual Report 2005 61

Notes to the Financial Statements

NOTE 2. SUMMARY OF ACCOUNTING POLICIES (Continued)

Sale of Receivables

Ford Credit sells finance receivables in securitization and whole-loan sales transactions to fund our operations and to maintain
liquidity. In many of our securitization transactions, we surrender control over these assets by selling finance receivables to
securitization special purpose entities (“SPEs”). Securitization entities are a common, required element of securitization
transactions to meet certain legal and transaction requirements that assure that the sold assets have been isolated from our creditors
and us. The securitization entities generally issue interest-bearing securities collateralized by future collections on the sold
receivables.

Receivables are considered sold for accounting purposes when the receivables are transferred beyond the reach of our creditors,
the transferee has the right to pledge or exchange the assets and we have surrendered control over the rights and obligations of the
receivables. If these criteria are satisfied, the receivables are removed from our balance sheet at the time they are sold.

For off-balance sheet sales of receivables, estimated gains or losses are recognized in the period in which the sale occurs. We
retain certain interests in receivables sold in securitization transactions. These interests are recorded at fair value with unrealized
gains or losses recorded, net of tax, in Accumulated other comprehensive income/(loss), a component of stockholders' equity.

In whole-loan sale transactions, we sell retail installment sale contracts to a buyer who either retains them or sells them in a
subsequent asset-backed securitization. We do not retain any interests in the sold receivables but continue to service such
receivables for a fee.

Certain sales of receivables do not qualify for off-balance sheet treatment. As a result, the sold receivables and associated debt
are not removed from our balance sheet and no gain or loss is recorded for these transactions.

Foreign Currency Translation

The assets and liabilities of foreign subsidiaries using the local currency as their functional currency are translated to U.S.
dollars based on current exchange rates and any resulting translation adjustments are included in Accumulated other
comprehensive income/(loss). The net translation adjustment for 2005 was a decrease of $3.4 billion (net of tax of $299 million).
The net adjustment reflects amounts transferred to net income as a result of the sale or liquidation of an entity, resulting in a
$116 million gain (primarily from the sale of Hertz).

Also included in net income are the gains and losses arising from transactions denominated in a currency other than the
functional currency of a location, the impact of re-measuring assets and liabilities of foreign subsidiaries using U.S. dollars as their
functional currency, and the results of our foreign currency hedging activities; for additional discussion of hedging activities, see
Note 20. The net after-tax income effects of these adjustments were gains of $609 million, $596 million and $454 million in 2005,
2004, and 2003 respectively.

Depreciation and Amortization of Property, Plant and Equipment

Property and equipment are stated at cost and depreciated primarily using the straight-line method over the estimated useful life
of the asset. Useful lives range from 3 years to 36 years. The estimated useful lives generally are 14.5 years for machinery and
equipment and 30 years for buildings and land improvements. Special tools placed in service beginning in 1999 are amortized
using the units-of-production method over the expected vehicle model cycle life. Maintenance, repairs, and rearrangement costs
are expensed as incurred.

Ford Motor Company Annual Report 2005 62

Notes to the Financial Statements

NOTE 2. SUMMARY OF ACCOUNTING POLICIES (Continued)

Asset Impairments

Discontinued and Held-for-Sale Operations. We perform an impairment test on an asset group to be discontinued, held for sale,
or otherwise disposed of when management has committed to the action and the action is expected to be completed within one
year. We estimate fair value to approximate the expected proceeds to be received, less transaction costs and compare it to the
carrying value of the asset group. An impairment charge is recognized when the carrying value exceeds the estimated fair market
value. When the estimated fair market value exceeds the carrying value of the asset group, gain is recognized upon disposal.

Long-Lived Assets. We monitor the carrying value of long-lived asset groups held and used for potential impairment when
certain triggering events have occurred. These events include current period losses combined with a history of losses or a
projection of continuing losses, or a significant decrease in the market value. When a triggering event occurs for long-lived asset
groups held and used, a test for recoverability is performed, comparing projected undiscounted future cash flows, utilizing current
cash flow information and expected growth rates, to the carrying value of the asset group. If the test for recoverability identifies a
possible impairment, internal and external valuation experts are consulted. The asset group fair value is measured relying
primarily on the discounted cash flow methodology. Additionally, we consider various market multiples (e.g., revenue and
EBITDA) within the same industry.

Supplier Price Adjustments

We frequently negotiate price adjustments with our suppliers throughout a production cycle, even after receiving production
material. These price adjustments relate to changes in design specifications or to other commercial terms such as economics,
productivity, and competitive pricing and are recognized in income when settled. In general, we avoid price changes in
consideration of future business; however when these occur, our policy is to defer the financial statement impact of any such price
change given explicitly in consideration of future business where guaranteed volumes are specified.

Ford Motor Company Annual Report 2005 63

Notes to the Financial Statements

NOTE 3. INCOME TAXES

Components of income taxes, excluding discontinued operations, cumulative effects of changes in accounting principles and
equity in net results of affiliated companies accounted for after-tax, are as follows:
2005 2004 2003
Income/(loss) before income taxes, excluding equity in net results of affiliated companies accounted for
after-tax (in millions)
U.S. ............................................................................................................................................................................. $ 848 $ 3,099 $ (246)
Non-U.S. ..................................................................................................................................................................... 852 1,501 1,501
Total....................................................................................................................................................................... $ 1,700 $ 4,600 $ 1,255

Provision for income taxes (in millions)

Current
Federal........................................................................................................................................................................ $ 26 $ (119) $ (149)
Non-U.S. ................................................................................................................................................................... 764 1,038 653
State and local............................................................................................................................................................. 43 (148) 32
Total Current ............................................................................................................................................................ 833 771 536
Deferred
Federal........................................................................................................................................................................ (485) 959 (209)
Non-U.S. .................................................................................................................................................................... (784) (804) (141)
State and local............................................................................................................................................................. (76) 12 (63)
Total Deferred .......................................................................................................................................................... (1,345) 167 (413)
Total....................................................................................................................................................................... $ (512) $ 938 $ 123

Reconciliation of effective tax rate

U.S. tax at statutory rate................................................................................................................................................ 35% 35% 35%
Non-U.S. income taxes ................................................................................................................................................. (5) (2) —
State and local income taxes ......................................................................................................................................... (1) 1 (2)
Deductible dividends .................................................................................................................................................... (9) (3) (4)
General business credits................................................................................................................................................ (7) (3) (12)
Dispositions and restructurings ..................................................................................................................................... 7 — —
Medicare prescription drug benefit ............................................................................................................................... (6) (2) —
Repatriation of foreign earnings under The American Jobs Creation Act of 2004 ........................................................ (15) — —
Prior year settlements and claims.................................................................................................................................. (23) (6) —
Other............................................................................................................................................................................. (6) — (7)
Effective rate ............................................................................................................................................................ (30)% 20% 10%

Annual tax provisions include amounts considered sufficient to pay probable assessments for examination of prior-year tax
returns by federal, foreign, state and local jurisdictions; actual assessments may differ. We do not expect that such differences
would have a material effect on the future financial statements for a particular year, although such an outcome is possible. No
provision for deferred taxes has been made on $550 million of unremitted earnings that are considered to be indefinitely invested
in non-U.S. subsidiaries. Deferred taxes for these unremitted earnings are not practicable to estimate.

The components of deferred tax assets and liabilities at December 31 were as follows (in millions):
2005 2004
Deferred tax assets
Employee benefit plans....................................................................................................................................................................... $ 7,142 $ 6,005
Dealer and customer allowances and claims ....................................................................................................................................... 3,000 3,196
Tax credit carryforwards..................................................................................................................................................................... 2,173 2,736
Other foreign deferred tax assets......................................................................................................................................................... 2,905 2,639
Allowance for credit losses ................................................................................................................................................................ 1,764 1,957
All other.............................................................................................................................................................................................. 6,103 5,623
Total gross deferred tax assets .......................................................................................................................................................... 23,087 22,156
Less: valuation allowance................................................................................................................................................................ (248) (169)
Total net deferred tax assets ............................................................................................................................................................. 22,839 21,987

Deferred tax liabilities

Leasing transactions............................................................................................................................................................................ 7,736 7,913
Depreciation and amortization (excluding leasing transactions) ......................................................................................................... 5,130 5,554
Finance receivables............................................................................................................................................................................. 2,839 2,826
All other.............................................................................................................................................................................................. 6,528 6,195
Total deferred tax liabilities.............................................................................................................................................................. 22,233 22,488
Net deferred tax assets/(liabilities).................................................................................................................................................. $ 606 $ (501)

Ford Motor Company Annual Report 2005 64

Notes to the Financial Statements

NOTE 3. INCOME TAXES (Continued)

Operating loss carryforwards for tax purposes were $4.2 billion at December 31, 2005. A substantial portion of these losses
has an indefinite carryforward period; the remaining losses will begin to expire in 2006. Tax credits available to offset future tax
liabilities are $2.2 billion. A substantial portion has an indefinite carryforward period; the remainder begins to expire in 2017.
Tax benefits of operating loss and tax credit carryforwards are evaluated on an ongoing basis, including a review of historical and
projected future operating results, the eligible carryforward period, and other circumstances. Management believes that it is more
likely than not that a substantial amount of the deferred tax assets will be realized; a valuation allowance has been established for
the remainder. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if
estimates of future U.S. taxable income are lower than expected.

On October 22, 2004, President Bush signed into law The American Jobs Creation Act of 2004 ("the Act"). The Act provides
for a one-year period to repatriate certain foreign earnings at a special tax rate if those earnings are invested in certain U.S.
activities. We remitted such earnings during the year. As identified in our dividend reinvestment plan, our primary U.S.
investment of the dividend amount was cash compensation and benefits (excluding executive compensation) to or for the benefit of
employees performing services in the United States. Our fourth quarter results reflect a $250 million tax benefit related to this
provision.

During the second quarter of 2005, we settled, on a favorable basis, various claims and disputes related to prior year taxes. A
significant portion related to foreign tax credits.

NOTE 4. DISCONTINUED OPERATIONS, HELD-FOR-SALE OPERATIONS, OTHER DISPOSITIONS, AND

ACQUISITIONS

Automotive Sector

Discontinued Operations. In 2004, the Automotive sector completed the disposition of several of its non-core businesses
initiated in 2002 and 2003, including our former automotive recycling businesses in the United States and Canada, our electric
vehicle business in Norway, and our insurance-related products and services business in the United Kingdom. Associated with the
disposition of these entities, we recorded pre-tax charges of $9 million and $105 million in 2004 and 2003, respectively, reflected
in Income/(loss) from discontinued operations.

In 2004, we sold our Formula One racing operations as these operations were not consistent with our Premier Automotive
Group ("PAG") Improvement Plan nor our goals to build on the basics and focus on our core business. We recorded pre-tax
charges of $204 million for impairment of goodwill, $23 million related to write-down of inventory and $77 million for loss on
sale.

The results of all discontinued Automotive sector operations are as follows (in millions):
2005 2004 2003
Sales......................................................................................................................................................................................... $ 3 $ 192 $ 410

Operating income/(loss) from discontinued operations.......................................................................................................... $ (4) $ (184) $ (65)

Gain/(loss) on discontinued operations................................................................................................................................... 13 (165) (105)
(Provision for)/benefit from income taxes.............................................................................................................................. (3) 122 29
Income/(loss) from discontinued operations.................................................................................................................... $ 6 $ (227) $ (141)

At December 31, 2005 and 2004, there were no significant assets or liabilities remaining on our balance sheet related to
discontinued operations.

Held-for-Sale Operations. In 2004, management committed to sell certain consolidated dealerships in the Asia Pacific and
Africa/Mazda segment as the sale of the dealerships would allow us to concentrate on the production and marketing of our
products in the Asia Pacific region rather than the day-to-day retailing operations. In 2004, we recorded pre-tax charges of
$64 million reflected in Cost of sales for the impairment of goodwill and $16 million in Interest income and other non-operating
income/(expense), net for the estimated loss on disposal. In 2005, we completed the sale and recognized a pre-tax gain of
$14 million reflected in Interest income and other non-operating income/(expense), net.

Ford Motor Company Annual Report 2005 65

Notes to the Financial Statements

NOTE 4. DISCONTINUED OPERATIONS, HELD-FOR-SALE OPERATIONS, OTHER DISPOSITIONS, AND

ACQUISITIONS (Continued)

In 2005, we acquired the minority interest in the Beanstalk Group, LLC ("Beanstalk"), a majority-owned subsidiary that
licensed trademarks, and subsequently sold our 100% interest. Its operations were not consistent with our objective to focus on
our core automotive business. We recorded pre-tax charges of $53 million for the impairment of intangible assets and goodwill in
Cost of sales and $12 million in Interest income and other non-operating income/(expense), net for the loss on sale.

At December 31, 2005, there were no assets or liabilities on our balance sheet related to held-for-sale operations. At
December 31, 2004, the assets of the held-for-sale operations consisted primarily of receivables and inventory totaling
approximately $49 million and $114 million, respectively.

Other Dispositions. In 2005, we completed the sale of our interests in Mahindra & Mahindra Ltd. (approximately 5% interest),
Vastera, Inc. (approximately 19% interest), and Kwik-Fit Group Limited (approximately 18% interest). As a result of the sales, we
recognized pre-tax gains of approximately $22 million, $11 million, and $152 million, respectively in Interest income and other
non-operating income/(expense), net.

We also completed the exchange of 8.3 million shares in Ballard Power Systems Inc. ("Ballard") for an equity interest (50%)
in NuCellSys, GmbH, a 50/50 joint venture with DaimlerChrysler Corporation. As a result of the exchange and the retirement of
certain restrictions, we recognized in Cost of sales a pre-tax charge of $61 million. Our ownership interest in Ballard is 11.5%.
We continue to report this investment under the equity method.

Acquisitions. We also finalized an agreement with Visteon Corporation ("Visteon"), our largest supplier, in which we assumed
control of 17 plants and six other facilities in the United States and Mexico. These assets were transferred to Automotive
Components Holdings, LLC ("ACH"), a temporary business controlled and managed by us, to protect the flow of critical parts and
components in the near-term and, over time, to improve our sourcing flexibility and cost competitiveness. ACH's mission is to
prepare most of the acquired businesses for sale to companies with the capital and expertise to supply us with high-quality
components and systems at competitive prices. We consolidated ACH on October 1, 2005 as part of The Americas segment.

The total 2005 pre-tax loss from the transaction was $468 million reflected in Cost of sales, summarized as follows
(in millions):
Value of ACH Assets/(Liabilities) Received on October 1, 2005
Net property........................................................................................................................................................................................................................ $ 427
Inventory ............................................................................................................................................................................................................................ 299
Warrants for purchase of Visteon stock............................................................................................................................................................................. 165
Other net liabilities............................................................................................................................................................................................................. (10)
Total ................................................................................................................................................................................................................................. $ 881

Cash Paid/Liabilities Assumed

Forgiveness of employee-related liabilities* ..................................................................................................................................................................... $ (500)
Cash paid to escrow account for Visteon restructuring..................................................................................................................................................... (400)
Cash paid for inventories ................................................................................................................................................................................................... (299)
Liability recorded for Visteon restructuring ...................................................................................................................................................................... (150)
Total ................................................................................................................................................................................................................................. $ (1,349)
__________
* As part of the transaction, we forgave $1.1 billion of Visteon's liability to us for employee-related costs of which $600 million was recognized in 2004 as an
allowance for doubtful accounts.

In 2004, we acquired 100% ownership of ZF Batavia, LLC (renamed Batavia Transmissions, LLC) from ZF Transmissions
Technologies LLC. ZF Transmission Technologies LLC, is a company we jointly own (49%) with ZF Friedrichshafen Germany
(51%).

In June 2000, we purchased the Land Rover sport utility vehicle business from the BMW Group. As part of the acquisition, we
agreed to pay two-thirds of the purchase price at closing with the remainder being paid in 2005. During 2005, we made the final
payment of approximately $1.3 billion.

Ford Motor Company Annual Report 2005 66

Notes to the Financial Statements

NOTE 4. DISCONTINUED OPERATIONS, HELD-FOR-SALE OPERATIONS, OTHER DISPOSITIONS, AND

ACQUISITIONS (Continued)

Financial Services Sector

Discontinued Operations. Consistent with our strategy to focus on our core business, we completed the disposition of the
operations discussed below.

In 2004, we committed to a plan to sell Triad Financial Corporation, our operation in the United States that specialized in
automobile retail installment sales contracts with borrowers who generally would not be expected to qualify, based on their credit
worthiness, for traditional financing sources such as those provided by commercial banks or automobile manufacturers' affiliated
finance companies. During 2005, we completed the sale of this business and recognized a pre-tax loss of approximately
$16 million.

In 2004, we completed the sale of AMI Leasing and Fleet Management Services, our operation in the United States that offered
full service car and truck leasing. During 2003, we recognized a pre-tax charge of $50 million, reflected in Income/(loss) from
discontinued operations for the loss on sale. This amount represented the difference between the selling price of these assets, less
costs to sell them, and their recorded book value.

In 2003, we completed the sale of Axus, our all-makes vehicle fleet leasing operations in Europe, New Zealand and Australia.
In 2002, we recognized a pre-tax charge of $31 million, reflected in Income/(loss) from discontinued operations for the loss on
sale. This amount represented the difference between the selling price of these assets, less costs to sell them, and their recorded
book value.

The results of all discontinued Financial Services sector operations are as follows (in millions):
2005 2004 2003
Revenues ................................................................................................................................................................................................. $ 118 $ 493 $ 550

Operating income/(loss) from discontinued operations.......................................................................................................................... $ 59 $ 138 $ 84

Gain/(loss) on discontinued operations................................................................................................................................................... (16) — (50)
(Provision for)/benefit from income taxes.............................................................................................................................................. (2) (57) (36)
Income/(loss) from discontinued operations ...................................................................................................................................... $ 41 $ 81 $ (2)

At December 31, 2004, assets of our discontinued operations totaled $2.2 billion and consisted primarily of net finance
receivables of $1.7 billion and retained interest in securitized assets of about $350 million.

Held-for-Sale Operations. During 2005, management committed to sell Hertz as it is not core to our Automotive business. On
September 12, 2005, we entered into a definitive agreement with an investor group of private equity firms under which we agreed
to sell Hertz in a transaction valued at approximately $15 billion including debt. On December 21, 2005, we completed, through
our wholly-owned subsidiary Ford Holdings LLC, the sale of our 100% ownership interest in Hertz to CCMG Investor, LLC.

We received $5.6 billion in cash for the sale of Hertz. As part of the transaction, we provided cash-collateralized letters of
credit in an aggregate amount of $200 million to support the asset-backed portion of the buyer's financing for the transaction.
These letters of credit will expire no later than December 21, 2011. As a result of the sale, we recognized in Gain on sale of Hertz
a pre-tax gain of $1.1 billion, inclusive of $27 million of charges to record the estimated fair value of the letters of credit. For
further discussion of these letters of credit, see Note 27.

Ford Motor Company Annual Report 2005 67

Notes to the Financial Statements

NOTE 4. DISCONTINUED OPERATIONS, HELD-FOR-SALE OPERATIONS, OTHER DISPOSITIONS, AND

ACQUISITIONS (Continued)

At December 31, 2005, there were no assets or liabilities on our balance sheet related to held-for-sale operations. The assets
and liabilities of Hertz classified as discontinued/held-for-sale operations at December 31, 2004 are summarized as follows
(in millions):

December 31,
2004
Assets
Cash and cash equivalents ............................................................................................................................................................................................. $ 679
Finance receivables........................................................................................................................................................................................................ 1,283
Net investment in operating leases ................................................................................................................................................................................ 9,111
Goodwill and other intangibles...................................................................................................................................................................................... 877
Other assets .................................................................................................................................................................................................................... 2,022
Total assets of held-for-sale operations .................................................................................................................................................................... $ 13,972

Liabilities
Payables ......................................................................................................................................................................................................................... $ 1,538
Debt ................................................................................................................................................................................................................................ 8,428
Other liabilities............................................................................................................................................................................................................... 1,372
Total liabilities of held-for-sale operations .............................................................................................................................................................. $ 11,338

NOTE 5. MARKETABLE, LOANED AND OTHER SECURITIES

Trading securities are recorded at fair value with unrealized gains and losses included in income. Available-for-sale securities
are recorded at fair value with net unrealized holding gains and losses reported, net of tax, in Accumulated other comprehensive
income/(loss). Held-to-maturity securities are recorded at amortized cost. Realized gains and losses are accounted for using the
specific identification method.

The fair value of substantially all securities is determined by quoted market prices. The estimated fair value of securities for
which there are no quoted market prices is based on similar types of securities that are traded in the market. Book value
approximates fair value for all securities.

Expected maturities of debt securities may differ from contractual maturities because borrowers may have the right to call or
prepay obligations with or without penalty.

We loan certain securities from our portfolio to other institutions. Such securities are classified as Loaned securities.
Collateral for the loaned securities, consisting of cash or other securities, is required to be maintained at a rate of 102% of the
market value of a loaned security. We received securities as collateral in the amount of $2.8 billion and $399 million for 2005 and
2004, respectively. This collateral has not been pledged or sold. Cash collateral received is recorded as an asset in Other current
assets, offset by an obligation to return the collateral in Other liabilities. Income received from loaning securities is recorded as
Interest income and other non-operating income/(expense), net.

Ford Motor Company Annual Report 2005 68

Notes to the Financial Statements

NOTE 5. MARKETABLE, LOANED AND OTHER SECURITIES (Continued)

Investments in marketable and loaned securities at December 31 were as follows (in millions):
2005 2004

Amortized Unrealized Fair Amortized Unrealized Fair

Cost Gains Losses Value Cost Gains Losses Value
Automotive Sector
Trading ....................................................................................... $ 8,028 $ 13 $ 24 $ 8,017 $ 7,648 $ 12 $ 23 $ 7,637
Available-for-sale
U.S. government ....................................................................... 1,063 — 6 1,057 933 1 9 925
Mortgage-backed securities....................................................... 527 1 4 524 212 2 1 213
Other debt securities.................................................................. 729 1 7 723 582 1 9 574
Subtotal.................................................................................... 2,319 2 17 2,304 1,727 4 19 1,712
Total ....................................................................................... $ 10,347 $ 15 $ 41 $ 10,321 $ 9,375 $ 16 $ 42 $ 9,349

Financial Services Sector

Trading ....................................................................................... $ 2 $ 1 $ — $ 3 $ 2 $ — $ — $ 2
Available-for-sale
U.S. government........................................................................ 92 1 — 93 101 2 — 103
Mortgage-backed securities....................................................... 282 1 4 279 184 3 — 187
Other debt securities.................................................................. 242 1 3 240 264 9 1 272
Equity........................................................................................ 65 38 1 102 50 37 3 84
Subtotal.................................................................................... 681 41 8 714 599 51 4 646
Held-to-maturity
U.S. government........................................................................ 6 — — 6 7 — — 7
Total ....................................................................................... $ 689 $ 42 $ 8 $ 723 $ 608 $ 51 $ 4 $ 655

The proceeds and gains/(losses) from sales of available-for-sale securities were as follows (in millions):
Proceeds Gains/(Losses)
2005 2004 2003 2005 2004 2003
Automotive Sector .................................................................................................................................. $5,106 $ 7,615 $ 8,673 $ (57) $ (12) $ 9
Financial Services Sector........................................................................................................................ 482 768 693 4 6 14

The amortized cost and fair value of investments in available-for-sale and held-to-maturity securities by contractual maturity
for our sectors at December 31, 2005 were as follows (in millions):
Automotive Financial Services
Available-for-Sale Available-for-Sale Held-to-Maturity
Amortized Fair Amortized Fair Amortized Fair
Contractual Maturity Cost Value Cost Value Cost Value
1 year ..................................................................................................................... $ 129 $ 129 $ 14 $ 14 $ 1 $ 1
2-5 years ................................................................................................................ 1,506 1,496 180 178 3 3
6-10 years .............................................................................................................. 39 38 60 59 — —
11 years and later ................................................................................................... 118 117 80 82 1 1
Mortgage-backed securities ................................................................................... 527 524 282 279 1 1
Equity securities..................................................................................................... — — 65 102 — —
Total .................................................................................................................... $ 2,319 $ 2,304 $ 681 $ 714 $ 6 $ 6

Ford Motor Company Annual Report 2005 69

Notes to the Financial Statements

NOTE 5. MARKETABLE, LOANED AND OTHER SECURITIES (Continued)

The fair value of our investments in an unrealized loss position at December 31, 2005, aggregated by investment category and
length of time that the investments have been in a continuous loss position, are as follows (in millions):
Less Than 12 Months
12 Months or Greater Total
Gross Gross Gross
Fair Unrealized Fair Unrealized Fair Unrealized
Description of Securities Value Losses Value Losses Value Losses
Automotive Sector
U.S. government ................................................................................................ $ 805 $ 4 $ 105 $ 2 $ 910 $ 6
Mortgage-backed securities ................................................................................. 288 2 89 2 377 4
Other debt securities ............................................................................................ 321 2 230 5 551 7
Total .................................................................................................................. $ 1,414 $ 8 $ 424 $ 9 $ 1,838 $ 17

Financial Services Sector

U.S. government ................................................................................................ $ 29 $ — $ — $ — $ 29 $ —
Mortgage-backed securities ................................................................................. 139 3 33 1 172 4
Other debt securities ............................................................................................ 85 1 75 2 160 3
Equity securities................................................................................................... 3 — 2 1 5 1
Total .................................................................................................................. $ 256 $ 4 $ 110 $ 4 $ 366 $ 8

We also hold an additional $822 million investment in marketable securities at December 31, 2005 in a Voluntary Employees
Beneficiary Association trust ("VEBA"), which assets are used to fund certain employee benefit obligations in the near term.
These investments are recorded at fair value and included in Other assets on our balance sheet. At December 31, 2005, the fair
value and unrealized loss of these assets that have been in a continuous loss position for less that twelve months was $318 million
and $1 million, respectively, and the fair value and unrealized loss of these assets in a continuous loss position for twelve months
or greater was $128 million and $1 million, respectively.

Management has determined that the unrealized losses on our investments in debt and equity securities at December 31, 2005
are temporary in nature. Factors considered in determining whether a loss is temporary include the length of time and extent to
which fair value has been below cost, the financial condition and near-term prospects of the issuer and our ability and intent to
hold the investment for a period of time sufficient to allow for any anticipated recovery.

NOTE 6. INVENTORIES — AUTOMOTIVE SECTOR

Inventories at December 31 were as follows (in millions):

2005 2004
Raw materials, work-in-process and supplies ................................................................................................................................... $ 4,056 $ 3,968
Finished products.............................................................................................................................................................................. 7,224 7,799
Total inventories at FIFO................................................................................................................................................................ 11,280 11,767
Less: LIFO adjustment ................................................................................................................................................................... (1,009) (1,001)
Total inventories............................................................................................................................................................................. $ 10,271 $ 10,766

Inventories are stated at lower of cost or market. About one-fourth of inventories were determined under the last-in, first-out
method ("LIFO").

During 2005, inventory quantities were reduced, resulting in a liquidation of LIFO inventory quantities carried at lower costs
prevailing in prior years as compared with the cost of 2005 purchases, the effect of which decreased cost of goods sold by
approximately $12 million.

Ford Motor Company Annual Report 2005 70

Notes to the Financial Statements

NOTE 7. SIGNIFICANT UNCONSOLIDATED AFFILIATES

Mazda Motor Corporation ("Mazda") and Blue Diamond Parts, LLC. ("Blue Diamond Parts"), accounted for under the equity
method, are considered significant unconsolidated affiliates.

Mazda-Related Investments. At December 31, 2005, our ownership interest in Mazda was 33.9%. The carrying value of our
investment in Mazda was $928 million and $768 million at December 31, 2005 and 2004, respectively. Included in our investment
of Mazda was $171 million of goodwill. Dividends received from Mazda were $11 million, $8 million and $7 million for the
years ended December 31, 2005, 2004, and 2003, respectively. The market value of our investment in Mazda at
December 31, 2005 was $2.1 billion.

Summarized income statement information from the published Mazdaʼs financial statements for the twelve months ended
September 30, 2005, 2004, and 2003 are as follows (in millions):

2005 2004 2003

Net sales .................................................................................................................................................................................. $ 26,555 $ 28,015 $ 20,281
Cost and expenses ................................................................................................................................................................... 25,696 27,226 19,740
Income from continuing operations ........................................................................................................................................ 333 419 368
Net income .............................................................................................................................................................................. 566 384 250

Included in our Equity in net income/(loss) of affiliated companies was income of $148 million, $108 million and $74 million
in 2005, 2004, and 2003, respectively, representing our share of Mazda's results on a U.S. GAAP basis. There have been no events
at Mazda subsequent to September 30, 2005 that would materially affect our balance sheet or statement of income. Balance sheet
information for Mazda is insignificant to our consolidated balance sheet.

Included in our investment in Mazda are convertible bonds issued by Mazda. The bonds are accounted for as an available-for-
sale security and at December 31, 2005 and 2004, these bonds had a fair value of $52 million and $219 million, respectively. In
the second half of 2005, we converted to equity 82.5% of these.

Blue Diamond Parts, LLC. We have a 50% voting interest in Blue Diamond Parts, LLC. Blue Diamond Parts manages
sourcing, merchandising, and distribution of various replacement parts. The carrying value of our investment in Blue Diamond
Parts was $7 million and $23 million at December 31, 2005 and 2004, respectively. Dividends received from Blue Diamond Parts
were $99 million, $41 million and $31 million for the years ended December 31, 2005, 2004, and 2003, respectively.

Summarized income statement information from Blue Diamond Parts' financial statements for the twelve months ended
December 31, 2005, 2004, and 2003 are as follows (in millions):

2005 2004 2003

Net service revenue ................................................................................................................................................................. $ 194 $ 113 $ 93
Net other expenses .................................................................................................................................................................. 28 20 17
Income from continuing operations ........................................................................................................................................ 166 93 75
Net income .............................................................................................................................................................................. 164 91 75

Included in our Equity in net income/(loss) of affiliated companies was income of $83 million, $48 million and $39 million for
the years ended December 31, 2005, 2004 and 2003, respectively. Balance sheet information for Blue Diamond Parts is
insignificant to our consolidated balance sheet.

Ford Motor Company Annual Report 2005 71

Notes to the Financial Statements

NOTE 8. NET PROPERTY AND RELATED EXPENSES

Net property at December 31 was as follows (in millions):

2005 2004
Land........................................................................................................................................................................................... $ 697 $ 727
Buildings and land improvements ................................................................................................................................................ 12,833 12,598
Machinery, equipment and other.................................................................................................................................................. 45,680 46,383
Construction in progress.............................................................................................................................................................. 2,736 2,089
Total land, plant and equipment................................................................................................................................................. 61,946 61,797
Accumulated depreciation ........................................................................................................................................................... (32,617) (31,011)
Net land, plant and equipment ................................................................................................................................................... 29,329 30,786
Special tools, net of amortization ................................................................................................................................................. 11,050 12,118
Net Automotive Sector property ................................................................................................................................................ 40,379 42,904
Net Financial Services Sector property....................................................................................................................................... 328 409
Total .................................................................................................................................................................................... $ 40,707 $ 43,313

Automotive sector property-related expenses were as follows (in millions):

2005 2004 2003
Amortization of special tools ................................................................................................................................ $ 3,966 $ 3,156 $ 2,658
Depreciation and other amortization....................................................................................................................... 4,167 3,241 2,800
Total .............................................................................................................................................................. $ 8,133 $ 6,397 $ 5,458

Maintenance and rearrangement ............................................................................................................................ $ 1,895 $ 1,971 $ 1,791

NOTE 9. IMPAIRMENT OF LONG-LIVED ASSETS

During 2005, we updated our PAG Improvement Plan for the Jaguar/Land Rover operating unit within our Ford Europe and
PAG segment. We project a decline in net cash flows for the Jaguar/Land Rover operating unit based on updated market
projections primarily reflecting recent market performance for Jaguar. As a result, we tested the long-lived assets of this operating
unit for recoverability and recorded a pre-tax impairment charge of $1.3 billion in Cost of sales as the carrying value of these
assets exceeded the fair value.

During the fourth quarter of 2005, we reviewed the Way Forward plan for the Ford North America business unit of our The
Americas segment. The Way Forward plan was approved in the first quarter of 2006. In the fourth quarter of 2005, we tested the
long-lived assets of the Ford North America business unit for recoverability using net cash flows revised for the Way Forward
plan. We concluded the long-lived assets of Ford North America are not impaired.

As a result of these actions, we also re-evaluated our annual goodwill impairment test performed in the second quarter of 2005
and have determined that an impairment charge is not warranted.

NOTE 10. GOODWILL AND OTHER INTANGIBLES

Our policy is to perform annual testing on goodwill and certain other intangible assets to determine if any impairment has
occurred. The test is conducted on a reporting unit level that is aligned with our current senior management structure. To test for
impairment, the carrying value of each reporting unit is compared with its fair value. Fair value is estimated using the present
value of free cash flows method. In the second and fourth quarter of 2005, fair value was calculated using our best available
estimate of future free cash flows. No impairment resulted from this testing.

Changes in the carrying amount of goodwill are as follows (in millions):

Financial Services
Automotive Sector Sector
The Ford Europe
Americas and PAG Ford Credit
Beginning balance, December 31, 2004......................................................................................... $ 188 $ 5,248 $ 20
Goodwill acquired ..................................................................................................................... 55 — —
Goodwill impairment ................................................................................................................. (34) — —
Exchange translation/other ......................................................................................................... (7) (342) (3)
Ending balance, December 31, 2005 ............................................................................................. $ 202 $ 4,906 $ 17

Ford Motor Company Annual Report 2005 72

Notes to the Financial Statements

NOTE 10. GOODWILL AND OTHER INTANGIBLES (Continued)

During the first quarter of 2005, we impaired $34 million of goodwill and $19 million of net intangibles in The Americas
segment related to our then held-for-sale subsidiary, Beanstalk. In measuring the impairment, the carrying value of these
operations, including goodwill, was compared to a third-party valuation. Beanstalk was subsequently sold in October 2005. In
connection with the acquisition of several dealerships, we acquired $55 million of goodwill in 2005.

In addition to the goodwill presented in the above table, during the fourth quarter of 2005, we sold Hertz, including
$640 million in goodwill and $232 million in intangibles which were classified as Assets of discontinued/held-for-sale operations.
Additionally, included in Equity in net assets of affiliated companies was goodwill of $217 million at December 31, 2005. This
included an increase of $83 million related to the conversion of our investment in Mazda convertible bonds to an investment in
Mazda's equity, and a decrease of $32 million related primarily to our investment in Ballard.

The components of identifiable intangible assets at December 31 were as follows (in millions):

2005 2004
Financial Financial
Automotive Sector Services Sector Automotive Sector Services Sector
Non- Non-
Amortizable amortizable Amortizable Amortizable amortizable Amortizable
Gross carrying amount ................................................. $ 558 $ 431 $ 4 $ 604 $ 484 $ 4
Less: accumulated amortization................................... (169) — (4) (150) — (4)
Net intangible assets..................................................... $ 389 $ 431 $ — $ 454 $ 484 $ —

Pre-tax amortization expense related to these intangible assets for the year ended December 31, 2005 was $55 million.
Intangible asset amortization is forecasted to range from $30 million to $40 million per year for the next five years, excluding the
impact of foreign currency translation.

NOTE 11. FINANCE RECEIVABLES — FINANCIAL SERVICES SECTOR

Net finance receivables at December 31 were as follows (in millions):

2005 2004
Retail ................................................................................................................................................................................................ $ 67,928 $ 84,843
Wholesale ......................................................................................................................................................................................... 38,522 22,666
Other finance receivables................................................................................................................................................................. 6,320 7,096
Total finance receivables ............................................................................................................................................................... 112,770 114,605
Allowance for credit losses .............................................................................................................................................................. (1,400) (2,136)
Other................................................................................................................................................................................................. 66 72
Net finance and other receivables.................................................................................................................................................. $ 111,436 $ 112,541

Net finance receivables subject to fair value*............................................................................................................................... $ 105,481 $ 104,874

Fair Value....................................................................................................................................................................................... $ 105,004 $ 105,113
__________
* December 31, 2005 and 2004, excludes $5.5 billion and $7.7 billion, respectively, of certain receivables (primarily direct financing leases) that are not financial
instruments.

Finance receivables that originated outside the United States were $46.4 billion and $51.9 billion at December 31, 2005 and
2004, respectively. Other finance receivables consisted primarily of real estate, commercial and other collateralized loans and
accrued interest.

Included in net finance and other receivables at December 31, 2005 and 2004 were $44.7 billion and $16.9 billion,
respectively, of receivables that have been sold for legal purposes to consolidated securitization SPEs and are available only for
repayment of debt issued by those entities, and to pay other securitization investors and other participants; they are not available to
pay our other obligations or the claims of our other creditors.

The fair value of most finance receivables is calculated by discounting future cash flows using an estimated discount rate that
reflects the current credit, interest rate and prepayments risks associated with similar types of instruments. For receivables with
short maturities, the book value approximates fair value.

Ford Motor Company Annual Report 2005 73

Notes to the Financial Statements

NOTE 11. FINANCE RECEIVABLES — FINANCIAL SERVICES SECTOR (Continued)

At December 31, 2005, finance receivables included $1.6 billion owed by the three customers with the largest receivables
balances.

Future maturities of total finance receivables, including minimum lease rentals are $74.3 billion for 2006, $20.5 billion for
2007, $10.9 billion for 2008, and $7.1 billion thereafter. Experience indicates that a substantial portion of the portfolio generally is
repaid before the contractual maturity dates.

Included in retail receivables above are investments in direct financing leases. The net investment at December 31 was as
follows (in millions):
2005 2004
Total minimum lease rentals to be received ............................................................................................................................................. $ 3,978 $ 4,972
Less: Unearned income........................................................................................................................................................................... (555) (758)
Loan origination costs............................................................................................................................................................................... 41 50
Estimated residual values.......................................................................................................................................................................... 2,394 3,367
Less: Allowance for credit losses ........................................................................................................................................................... (59) (82)
Net investment in direct financing leases ................................................................................................................................................. $ 5,799 $ 7,549

The investment in direct financing leases relates to the leasing of vehicles, various types of transportation and other equipment
and facilities. Future maturities of minimum lease rentals, as included above, are $1.7 billion for 2006, $1.1 billion for 2007, about
$800 million for 2008, and about $400 million thereafter.

NOTE 12. NET INVESTMENT IN OPERATING LEASES

The net investment in operating leases at December 31 was as follows (in millions):
2005 2004
Financial Services Sector
Vehicles and other equipment, at cost ...................................................................................................................................................... $ 29,489 $ 30,799
Accumulated depreciation......................................................................................................................................................................... (6,344) (7,842)
Allowances for credit losses ..................................................................................................................................................................... (194) (305)
Total Financial Services.......................................................................................................................................................................... 22,951 22,652
Automotive Sector
Vehicles, net of depreciation .................................................................................................................................................................... 4,148 2,912
Total.................................................................................................................................................................................................... $ 27,099 $ 25,564

Financial Services Sector

Included in net investment in operating leases at December 31, 2005 were interests in operating leases and the related vehicles
of $6.5 billion that have been transferred for legal purposes to consolidated securitization SPEs and are available only for
repayment of debt issued by those entities, and to pay other securitization investors and other participants; they are not available to
pay our other obligations or the claims of our other creditors.

The amounts contractually due for minimum rentals on operating leases are $3.5 billion for 2006, $3.0 billion for 2007,
$1.8 billion for 2008, $441 million for 2009, $75 million for 2010, and $285 million thereafter.

Assets subject to operating leases are depreciated primarily on the straight-line method over the term of the lease to reduce the
asset to its estimated residual value. Estimated residual values are based on assumptions for used vehicle prices at lease
termination and the number of vehicles that are expected to be returned. Operating lease depreciation expense (which includes
gains and losses on disposal of assets) was $5.7 billion in 2005, $6.4 billion in 2004, and $8.5 billion in 2003.

Ford Motor Company Annual Report 2005 74

Notes to the Financial Statements

NOTE 13. SALES OF RECEIVABLES — FINANCIAL SERVICES SECTOR

Servicing Portfolio

We retain servicing rights for receivables sold in off-balance sheet securitization and whole-loan sale transactions. The
servicing portfolio is summarized in the following table (in millions):
Retail Wholesale Total
Servicing portfolio at December 31, 2003.............................................................................................................. $ 33,921 $ 20,249 $ 54,170
Receivables sales .................................................................................................................................................. 6,933 — 6,933
Collections ............................................................................................................................................................ (20,185) (1,345) (21,530)
Servicing portfolio at December 31, 2004.............................................................................................................. 20,669 18,904 39,573
Receivables sales .................................................................................................................................................. 18,138 1,561 19,699
Collections and re-acquired receivables ............................................................................................................... (17,886) (20,465) (38,351)
Servicing portfolio at December 31, 2005.............................................................................................................. $ 20,921 $ — $ 20,921

In the fourth quarter of 2005, we consolidated our off-balance sheet wholesale securitization program as a result of certain
changes authorized in accordance with the transaction documents. The accounting consolidation did not have an impact on our
earnings, back-up credit facilities, unsecured debt programs or other securitization programs. This transaction was primarily non-
cash and increased receivables $17.9 billion and debt $15.8 billion upon consolidation.

Retained Interest

Components of retained interest in off-balance sheet securitized assets at December 31 include (in millions):
2005 2004
Residual interest in securitization transactions................................................................................................................................ $ 1,094 $ 756
Restricted cash held for benefit of securitization SPEs................................................................................................................... 199 503
Subordinated securities .................................................................................................................................................................... 127 875
Interest in sold wholesale receivables and other trust assets........................................................................................................... — 6,904
Senior securities ............................................................................................................................................................................... — 128
Retained interest in securitized assets ........................................................................................................................................... $ 1,420 $ 9,166

Investments in subordinated securities and restricted cash are senior to the residual interest in securitization transactions.
Retained interests are recorded at fair value. The fair value of subordinated and senior securities is estimated based on market
prices. In determining the fair value of residual interest in securitization transactions, we discount the present value of the
projected cash flows retained at the transaction discount rate.

Investment and Other Income

The following table summarizes the activity related to off-balance sheet sales of receivables reported in Revenues for the years
ended December 31 (in millions):
2005 2004 2003
Net gain on sales of receivables......................................................................................................................... $ 74 $ 155 $ 373
Income on interest in sold wholesale receivables and retained securities......................................................... 327 588 679
Servicing fees ..................................................................................................................................................... 376 372 618
Income on residual interest and other ................................................................................................................ 721 815 941
Investment and other income related to sales of receivables .......................................................................... $ 1,498 $ 1,930 $ 2,611

For the year ended December 31, 2005, we utilized certain point-of-sale assumptions in our retail transactions, which included
a discount rate of 11.0%, prepayment speeds of 0.9% to 1.5% (which represents expected payments earlier than scheduled maturity
dates) and credit losses of 0.1% to 2.3% over the life of sold receivables. The weighted-average life of the underlying assets was
51.9 months. For the year ended December 31, 2004, point-of-sale assumptions in our retail transactions included discount rates
of 11.0% to 13.5%, prepayment speeds of 0.8% to 1.5% and credit losses of 0.8% to 2.8% over the life of sold receivables. For the
year ended December 31, 2004, the weighted-average life of the underlying assets was 50.2 months.

Ford Motor Company Annual Report 2005 75

Notes to the Financial Statements

NOTE 13. SALES OF RECEIVABLES — FINANCIAL SERVICES SECTOR (Continued)

Cash Flow

The following table summarizes the cash flow movements between the transferees and us in our off-balance sheet sales of
receivables for the years ended December 31 (in millions):
2005 2004 2003
Proceeds from sales of receivables
Proceeds from sales of retail receivables ................................................................................................................... $ 15,549 $ 4,795 $ 15,761
Proceeds from interest in sold wholesale receivables ................................................................................................ 3,739 3,957 966
Proceeds from revolving-period securitizations......................................................................................................... 1,349 1,567 2,610
Proceeds from sale of retained notes – retail.............................................................................................................. 298 — —
Total ......................................................................................................................................................................... $ 20,935 $ 10,319 $ 19,337

Cash flows related to net change in retained interest

Interest in sold retail receivables ................................................................................................................................ $ 708 $ 1,457 $ 893
Interest in sold wholesale receivables ........................................................................................................................ 2,684 (1,831) 1,140
Total ......................................................................................................................................................................... $ 3,392 $ (374) $ 2,033

Servicing fees
Retail........................................................................................................................................................................... $ 260 $ 260 $ 409
Wholesale ................................................................................................................................................................... 116 112 209
Total ......................................................................................................................................................................... $ 376 $ 372 $ 618

Other cash flows received on interests retained (which are reflected in securitization income)
Retail........................................................................................................................................................................... $ 276 $ 356 $ 735
Wholesale ................................................................................................................................................................... 507 802 810
Total ......................................................................................................................................................................... $ 783 $ 1,158 $ 1,545

Repurchased retail receivables....................................................................................................................................... $ (43) $ (143) $ (193)

Other Disclosures

The following table summarizes key assumptions used in estimating cash flows from sold retail receivables and the
corresponding sensitivity of the current fair values to 10% and 20% adverse changes (in millions):

Impact on Fair Value Based

Assumption on Adverse Change
Percentage 10% Change 20% Change
(annual rate)
Cash flow discount rate........................................................................................................................... 11% $ (12) $ (24)
Estimated net credit loss rate .................................................................................................................. 0.1% - 5.0% (19) (38)
Prepayment speed.................................................................................................................................... 0.9% - 1.5% (3) (6)

The effect of a variation in a particular assumption on the fair value of residual interest in securitization transactions was
calculated without changing any other assumptions and changes in one factor may result in changes in another.

Outstanding delinquencies over 30 days related to the off-balance sheet securitized portfolio were $386 million and
$410 million at December 31, 2005 and 2004, respectively. Credit losses, net of recoveries, were $127 million and $244 million
for the years ended December 31, 2005 and 2004, respectively. Expected static pool credit losses related to outstanding securitized
retail receivables were 1.55% at December 31, 2005. To calculate the static pool credit losses, actual and projected future credit
losses are added together and divided by the original balance of each pool of assets.

Ford Motor Company Annual Report 2005 76

Notes to the Financial Statements

NOTE 13. SALES OF RECEIVABLES — FINANCIAL SERVICES SECTOR (Continued)

On-Balance Sheet Securitization Special Purpose Entities

At December 31, 2005 and 2004, about $44.7 billion and $16.9 billion, respectively, of finance receivables have been sold for
legal purposes to consolidated securitization SPEs. In addition, at December 31, 2005 and 2004, interests in operating leases and
the related vehicles of about $6.5 billion and $2.5 billion, respectively, have been transferred for legal purposes to consolidated
securitization SPEs. These receivables and interests in operating leases and the related vehicles are only for repayment of debt
issued by those entities, and to pay other securitization investors and other participants; they are not available to pay our other
obligations or the claims of our other creditors. At December 31, 2005 and 2004, associated debt of $39.8 billion and
$16.5 billion, respectively, was issued by the SPEs and includes both asset-backed commercial paper and notes payable out of
collections on these receivables and interests in operating leases and the related vehicles. This debt is the legal obligation of the
SPEs, but for financial statement reporting purposes is reported as debt on our balance sheet.

NOTE 14. ALLOWANCE FOR CREDIT LOSSES — FINANCIAL SERVICES SECTOR

The allowance for credit losses is our estimate of the credit losses related to impaired receivables and operating leases at the
date of the financial statements. This allowance is based on factors including historical credit loss trends, the credit quality of our
present portfolio, trends in historical and projected used vehicle values and general economic measures. Additions to the
allowance for credit losses are made by recording charges to the provision for credit losses on our statement of income. Finance
receivables and lease investments are charged to the allowance for credit losses at the earlier of when an account is deemed to be
uncollectible or when an account is 120 days delinquent, taking into consideration the financial condition of the borrower or
lessee, the value of the collateral, recourse to guarantors and other factors. Recoveries on finance receivables and lease
investments previously charged off as uncollectible are credited to the allowance for credit losses.

The allowance for credit losses is included in Finance receivables, net and Net investment in operating leases. Changes in the
allowance for credit losses for finance receivables, investment in direct financing leases and investment in operating leases were as
follows (in millions):
2005 2004 2003
Beginning balance..................................................................................................................................................... $ 2,471 $ 2,962 $ 3,054
Provision for credit losses....................................................................................................................................... 167 923 1,928
Total charge-offs and recoveries
Charge-offs ........................................................................................................................................................... (1,184) (1,843) (2,409)
Recoveries............................................................................................................................................................. 478 477 475
Net charge-offs ................................................................................................................................................... (706) (1,366) (1,934)
Other changes, principally amounts related to finance receivables sold and translation adjustments .................. (338) (48) (86)
Ending balance .......................................................................................................................................................... $ 1,594 $ 2,471 $ 2,962

Ford Motor Company Annual Report 2005 77

Notes to the Financial Statements

NOTE 15. ACCRUED LIABILITIES AND DEFERRED REVENUE (in millions)

2005 2004
Automotive Sector
Current
Dealer and customer allowances and claims ........................................................................................................................................ $ 12,953 $ 14,082
Deferred revenue ............................................................................................................................................................................... 5,697 4,417
Employee benefit plans ...................................................................................................................................................................... 2,070 1,921
Other postretirement employee benefits .............................................................................................................................................. 1,442 1,572
Accrued interest................................................................................................................................................................................. 1,248 1,538
Pension liability ................................................................................................................................................................................. 398 69
Other ................................................................................................................................................................................................ 4,925 6,101
Total Automotive current ................................................................................................................................................................ 28,733 29,700
Non-current
Other postretirement employee benefits............................................................................................................................................... 17,778 15,306
Dealer and customer allowances and claims......................................................................................................................................... 7,359 7,728
Pension liability ................................................................................................................................................................................. 7,156 7,639
Deferred revenue................................................................................................................................................................................ 2,130 2,188
Employee benefit plans....................................................................................................................................................................... 1,121 1,106
Other ................................................................................................................................................................................................ 3,095 3,091
Total Automotive non-current .......................................................................................................................................................... 38,639 37,058
Total Automotive Sector ................................................................................................................................................................ 67,372 66,758
Financial Services Sector.................................................................................................................................................................. 5,605 6,834
Total ........................................................................................................................................................................................... $ 72,977 $ 73,592

NOTE 16. DEBT AND COMMITMENTS

Debt at December 31 was as follows (in millions):

Weighted
Average Rate (a) Amount
2005 2004 2005 2004
Automotive Sector
Debt payable within one year
Short-term ........................................................................................................................................... 6.0% 8.6% $ 251 $ 270
Long-term payable within one year
Senior indebtedness........................................................................................................................... 727 707
Total debt payable within one year..................................................................................................... 978 977
Long-term debt
Senior indebtedness
Notes and bank debt .......................................................................................................................... 7.5% 7.4% 11,942 12,303
Unamortized discount........................................................................................................................ (197) (208)
Total senior indebtedness ................................................................................................................. 11,745 12,095
Subordinated indebtedness ................................................................................................................... 6.5% 6.5% 5,155 5,155
Total long-term debt ........................................................................................................................ 16,900 17,250
Total debt...................................................................................................................................... $ 17,878 $ 18,227
Fair value (b) ....................................................................................................................................... $ 13,179 $ 18,074
Financial Services Sector
Short-term debt
Asset-backed commercial paper (c)....................................................................................................... $ 21,751 $ 12,612
Commercial paper................................................................................................................................ 1,041 8,916
Other short-term .................................................................................................................................. 9,543 10,590
Total short-term debt......................................................................................................................... 5.0% 2.8% 32,335 32,118
Long-term debt
Senior indebtedness
Notes payable within one year ........................................................................................................... 21,234 29,661
Notes payable after one year .............................................................................................................. 64,924 80,556
Unamortized discount........................................................................................................................ (63) (70)
Asset-backed debt (d)
Notes payable within one year .......................................................................................................... 5,357 624
Notes payable after one year ............................................................................................................. 12,667 3,221
Total long-term debt ........................................................................................................................ 5.1% 4.4% 104,119 113,992
Total debt...................................................................................................................................... $ 136,454 $ 146,110
Fair value (b) ....................................................................................................................................... $ 131,233 $ 148,334

Ford Motor Company Annual Report 2005 78

Notes to the Financial Statements

NOTE 16. DEBT AND COMMITMENTS (Continued)

Long-term debt maturities at December 31, 2005 are as follows (in millions):

Maturity
Average
Long-term debt maturities 2006 2007 2008 2009 2010 Thereafter (Years)
Automotive Sector ............................................................................... $ 727 $ 801 $ 400 $ 184 $ 663 $ 14,852 25
Financial Services Sector ..................................................................... 26,591 26,532 17,890 12,778 6,789 13,539 3
__________
(a) Includes the effect of interest rate swaps.
(b) Based on quoted market prices or current rates for similar debt with the same remaining maturities.
(c) Amounts represent asset-backed commercial paper issued by consolidated securitization SPEs and are payable out of collections on the finance receivables.
This debt is the legal obligation of the securitization SPEs.
(d) Asset-backed debt is issued by consolidated securitization SPEs and is payable out of collections on the finance receivables or interests in operating leases
and the related vehicles transferred to the SPEs. This debt is the legal obligation of the securitization SPEs.

Subordinated Indebtedness

Ford Motor Company Capital Trust II, a subsidiary trust ("Trust II"), has outstanding 6.50% Cumulative Convertible Trust
Preferred Securities with an aggregate liquidation preference of $5 billion (the "Trust II Preferred Securities"). The sole assets of
Trust II are $5.2 billion principal amount of 6.50% Junior Subordinated Debentures due 2032 of Ford Motor Company (the
"Subordinated Debentures"). At our option, we may redeem the Subordinated Debentures, in whole or in part, on or after
January 15, 2007. To the extent we redeem the Subordinated Debentures or upon the maturity of the Subordinated Debentures,
Trust II is required to redeem the Trust II Preferred Securities at $50 per share plus accrued and unpaid distributions. We
guarantee the payment of all distribution and other payments of the Trust II Preferred Securities to the extent not paid by Trust II,
but only if and to the extent we have made a payment of interest or principal on the Subordinated Debentures. Trust II is not
consolidated by us as it is a VIE in which we do not have a significant variable interest and of which we are not the primary
beneficiary.

Credit Facilities*

Automotive Sector

At December 31, 2005, the Automotive sector had $7.1 billion of contractually committed credit facilities with financial
institutions, of which $6.9 billion were available for use. Of the lines available for use, 74% are committed through June 30, 2010.
Of the $7.1 billion, $6.5 billion constitute global credit facilities and may be used, at our option, by any of our direct or indirect
majority-owned subsidiaries on a guaranteed basis. We also have the ability to transfer, on a non-guaranteed basis, $2.2 billion of
such global credit facilities to Ford Credit and approximately $500 million to FCE Bank plc ("FCE"), Ford Credit's European
operation. All of the global credit facilities are free of material adverse change clauses and restrictive financial covenants (for
example, debt-to-equity limitations, minimum net worth requirements and credit rating triggers) that would limit our ability to
borrow.

Financial Services Sector

At December 31, 2005, the Financial Services Sector had $6.2 billion of contractually committed credit facilities with financial
institutions, of which $5.1 billion were available for use. Of the lines available for use, 36% are committed through June 30, 2010.
Of the $6.2 billion, $3.8 billion are Ford Credit facilities ($3.2 billion global and approximately $600 million non-global) and
$2.4 billion are FCE facilities ($2.3 billion global and approximately $100 million non-global). The global credit facilities may be
used, at Ford Credit's or FCE's option, by any of their direct or indirect majority-owned subsidiaries. Ford Credit or FCE, as the
case may be, will guarantee any such borrowings. All of the global credit facilities have substantially identical contract terms
(other than commitment amounts) and are free of material adverse change clauses and restrictive financial covenants (for example,
debt-to-equity limitations, minimum net worth requirements and credit rating triggers) that would limit our ability to borrow.

Additionally, at December 31, 2005, banks provided $18.7 billion of contractually committed liquidity facilities exclusively to
support Ford Credit's two on-balance sheet, asset-backed commercial paper programs; $18.2 billion supported Ford Credit's retail

Ford Motor Company Annual Report 2005 79

Notes to the Financial Statements

NOTE 16. DEBT AND COMMITMENTS (Continued)

securitization program ("FCAR") and $500 million supported the wholesale securitization program ("Motown Notes"). The FCAR
and Motown Notes program must be supported by liquidity facilities equal to at least 100% and 5%, respectively, of their
face amount. At December 31, 2005, about $17.7 billion of FCAR's bank credit facilities were available to support FCAR's asset-
backed commercial paper or subordinated debt. The remaining $500 million of available credit lines could be accessed for
additional funding if FCAR issued additional subordinated debt. Utilization of these facilities is subject to conditions specific to
each program and Ford Credit having a sufficient amount of securitizable assets. At December 31, 2005, the outstanding balances
were approximately $15.3 billion for the FCAR program and $6.5 billion for the Motown Notes program.
__________
* Credit facilities of our VIEs are excluded as we do not control their use.

NOTE 17. VARIABLE INTEREST ENTITIES

We consolidate VIEs of which we are the primary beneficiary. The liabilities recognized as a result of consolidating these
VIEs do not represent additional claims on our general assets; rather, they represent claims against the specific assets of the
consolidated VIEs. Conversely, assets recognized as a result of consolidating these VIEs do not represent additional assets that
could be used to satisfy claims against our general assets. Reflected in our December 31, 2005 balance sheet are $5.5 billion of
VIE assets related to VIEs that were consolidated.

During 2003, as a result of consolidating VIEs of which we are the primary beneficiary, we recognized a non-cash charge of
$264 million in Cumulative effects of changes in accounting principles. The charge represented the difference between the fair
value of the assets, liabilities and minority interests recorded upon consolidation and the carrying value of the investments.
Recorded assets exclude goodwill.

Automotive Sector

VIEs of which we are the primary beneficiary:

The activities with the joint ventures described below include purchasing substantially all of the joint ventures' output under a
cost plus margin arrangement and/or volume dependent pricing. Described below are the most significant of the VIEs that were
consolidated.

AutoAlliance International, Inc. ("AAI") is a 50/50 joint venture with Mazda in North America. AAI is engaged in the
manufacture of automobiles on behalf of Ford and Mazda, primarily for sale in North America. As a result of changes in the
contractual arrangements between Ford, Mazda and AAI in the third quarter of 2005, we consolidated AAI.

Ford Otosan ("Otosan") is a joint venture in Turkey with the Koc Group of Turkey (41% partner) and public investors (18%).
Otosan is the single assembly supplier of the Ford Transit Connect and an assembly supplier of the Ford Transit van.

Getrag Ford Transmissions GmbH ("GFT") is a 50/50 joint venture with Getrag Deutsche Venture GmbH & Co. KG, a
German company, to which we transferred our European manual transmission operations in Halewood, England; Cologne,
Germany and Bordeaux, France. GFT is the primary supplier of manual transmissions for use in our European vehicles.

Tekfor Cologne GmbH ("Tekfor") is a 50/50 joint venture with Neumayer Tekfor GmbH, a German company to which we
transferred our Cologne forging operations. Tekfor produces transmission and chassis components for use in our vehicles.

We hold interests in certain Ford and/or Lincoln Mercury dealerships. At December 31, 2005, we consolidated a portfolio of
approximately 135 dealerships that are part of the Dealer Development program. The program's purpose is to facilitate the
establishment of independent franchised dealers by allowing a participating dealership to become the sole owner of a Ford and/or
Lincoln Mercury dealership corporation by purchasing equity from us using the operator's share of dealership net profits. We
supply and finance the majority of vehicles and parts to these dealerships and the operators have a contract to buy our equity
interest over a period of time.

Ford Motor Company Annual Report 2005 80

Notes to the Financial Statements

NOTE 17. VARIABLE INTEREST ENTITIES (Continued)

VIEs of which we are not the primary beneficiary:

During the third quarter of 2005, as part of the Hertz transaction, Ford provided cash-collateralized letters of credit to support
the payment obligations of Hertz Vehicle Financing, a VIE which is wholly owned by Hertz of which we are not the primary
beneficiary. The fair value of our obligation related to these letters of credit, which will expire no later than December 21, 2011, is
approximately $27 million. For additional discussion of these letters of credit, see Note 27.

The risks and rewards associated with our interests in joint ventures which are VIEs of which we are not the primary
beneficiary are based primarily on ownership percentages. Our maximum exposure (approximately $158 million at
December 31, 2005) to any potential losses, should they occur, associated with these VIEs is limited to equity investments.

Financial Services Sector

VIEs of which we are the primary beneficiary:

Ford Credit uses SPEs in a variety of on-balance sheet and off-balance sheet securitization transactions. On-balance sheet
SPEs discussed in Note 11 are considered VIEs of which Ford Credit is the primary beneficiary and have been consolidated.

VIEs of which we are not the primary beneficiary:

Ford Credit has investments in certain joint ventures deemed to be VIEs of which it is not the primary beneficiary. The risks
and rewards associated with Ford Creditʼs interests in these entities are based primarily on ownership percentages. Ford Creditʼs
maximum exposure (approximately $182 million at December 31, 2005) to any potential losses, should they occur, associated with
these VIEs is limited to its equity investments and, where applicable, receivables due from the VIEs.

Ford Credit also sells, under contractually-committed agreements, finance receivables to bank-sponsored asset-backed
commercial paper issuers that are SPEs of the sponsor bank; these SPEs are not consolidated by us. In addition, certain of these
SPEs hold notes issued by Ford Credit that are backed by interests in operating leases and the related vehicles, which reduce the
commitment of these SPEs to purchase finance receivables. At December 31, 2005, approximately $5.6 billion of finance
receivables and notes were held by these SPEs.

NOTE 18. CAPITAL STOCK AND AMOUNTS PER SHARE

All general voting power is vested in the holders of Common Stock and Class B Stock. Holders of Common Stock have 60%
of the general voting power and holders of Class B Stock are entitled to such number of votes per share as would give them the
remaining 40%. Shares of Common Stock and Class B Stock share equally in dividends, with stock dividends payable in shares of
stock of the class held. If liquidated, each share of Common Stock will be entitled to the first $0.50 available for distribution to
holders of Common Stock and Class B Stock, each share of Class B Stock will be entitled to the next $1.00 so available, each
share of Common Stock will be entitled to the next $0.50 so available and each share of Common and Class B Stock will be
entitled to an equal amount thereafter.

As discussed in Note 16, Trust II Preferred Securities with an aggregate liquidation preference of $5 billion are outstanding. At
the option of the holder, each Preferred Security is convertible, at any time on or before January 15, 2032, into shares of our
Common Stock at a rate of 2.8249 shares for each Preferred Security (equivalent to a conversion price of $17.70 per share).
Conversion of all shares of such securities would result in the issuance of 282 million shares of our Common Stock.

Ford Motor Company Annual Report 2005 81

Notes to the Financial Statements

NOTE 18. CAPITAL STOCK AND AMOUNTS PER SHARE (Continued)

Amounts Per Share of Common and Class B Stock

The calculation of diluted income per share of Common Stock and Class B Stock takes into account the effect of obligations,
such as stock options and convertible securities, considered to be potentially dilutive. Basic and diluted income/(loss) per share
were calculated using the following number of shares (in millions):
2005 2004 2003
Basic and Diluted Income/(Loss)
Basic income/(loss) from continuing operations attributable to Common Stock and Class B Stock...................................... $ 2,228 $ 3,633 $ 902
Effect of dilutive convertible preferred securities .................................................................................................................... 213 199 —
Diluted income/(loss) from continuing operations attributable to Common Stock and Class B Stock ................................ $ 2,441 $ 3,832 $ 902
Diluted Shares
Average shares outstanding ...................................................................................................................................................... 1,846 1,830 1,832
Restricted and uncommitted-ESOP shares ............................................................................................................................... (3) (4) (2)
Basic shares............................................................................................................................................................................. 1,843 1,826 1,830
Net dilutive options and restricted and uncommitted ESOP shares ......................................................................................... 10 18 13
Dilutive convertible preferred securities *................................................................................................................................ 282 282 —
Diluted shares.......................................................................................................................................................................... 2,135 2,126 1,843
__________
* In 2003, not included in calculation of diluted earnings per share due to their antidilutive effect are 282 million shares and the related income effect for
convertible preferred securities.

NOTE 19. SHARE-BASED COMPENSATION

We have been recording employee compensation expense in net income since January 1, 2003 under the provisions of SFAS
123, Accounting for Stock-Based Compensation. Effective December 31, 2005, we adopted the provisions of SFAS 123R, Share-
Based Payment under the modified prospective method. This statement will be applied to new awards in 2006 and to any awards
that are modified, repurchased, or cancelled after the date of adoption.

We continue to measure the fair value of our stock-based compensation using the Black-Scholes option-pricing model, using
historical volatility and the simplified method of calculating the expected term. Our expected term is calculated by averaging the
vesting term (3 years) and the contractual term of the option (10 years). Historical data is also used to estimate option exercise
behaviors and employee termination experience within the valuation model. Based on our assessment of employee groupings and
observable behaviors, we determined that a single grouping is appropriate. We expense compensation cost for stock options using
a three year cliff vesting methodology. Shares needed for stock based compensation are issued from treasury stock. We expect to
repurchase 26 million shares for treasury stock during 2006.

At December 31, 2005, Ford has outstanding a variety of stock-based compensation to employees (including Officers and
members of the Board of Directors). All stock-based compensation plans are approved by the shareholders.

Description of Stock Option Plans

We have stock options outstanding under two Long-term Incentive Plans ("LTIP"), the 1990 LTIP and the 1998 LTIP. No
further grants may be made under the 1990 LTIP and all outstanding options under this plan are exercisable. All outstanding
options under the 1990 LTIP continue to be governed by the terms and conditions of the existing option agreements for those
grants. Grants may continue to be made under the 1998 LTIP through April 2008. Under the 1998 LTIP, 33% of the options are
generally exercisable after the first anniversary of the date of grant, 66% after the second anniversary, and 100% after the third
anniversary. Stock options expire ten years from the grant date.

Under the 1998 LTIP, 2% of our issued Common Stock as of December 31 becomes available for granting plan awards in the
succeeding calendar year. Any unused portion is available for later years. The limit may be increased up to 3%
in any year, with a corresponding reduction in shares available for grants in future years. At December 31, 2005, the number of
unused shares carried forward aggregated to 79.6 million shares.

Ford Motor Company Annual Report 2005 82

Notes to the Financial Statements

NOTE 19. SHARE-BASED COMPENSATION (Continued)

Stock option activity was as follows:

2005 2004 2003
Weighted- Weighted- Weighted-
Average Average Average
Shares Exercise Shares Exercise Shares Exercise
Stock Option Activity (millions) Price (millions) Price (millions) Price
Outstanding, beginning of year................................................................................. 245.4 $ 19.13 234.7 $ 19.34 212.9 $ 20.88
Granted ...................................................................................................................... 27.6 12.46 26.7 13.46 31.3 7.93
Exercised* ................................................................................................................. (3.7) 9.14 (11.7) 10.60 (4.2) 11.06
Forfeited (including expirations) .............................................................................. (24.1) 17.13 (4.3) 18.68 (5.3) 19.90
Outstanding, end of year ........................................................................................... 245.2 18.72 245.4 19.13 234.7 19.34
Exercisable, end of year ............................................................................................ 191.9 20.61 183.0 21.41 161.7 21.44
__________
* Exercised at option prices ranging from $7.40 to $12.53 during 2005, $7.55 to $12.53 during 2004, and $10.99 to $13.54 during 2003.

The total fair value of shares vested during the years ended December 31, 2005, 2004, and 2003, was $145 million,
$184 million, and $206 million, respectively. We have 191.9 million fully vested stock options with a weighted-average exercise
price of $20.61 and remaining term of 4.4 years. We expect 52.3 million stock options (after forfeitures) with a weighted-average
exercise price of $11.95 and remaining term of 8.5 years to vest in the future. The aggregate intrinsic value of these options is
$2.8 million and $1.7 million, respectively.

We received $33.2 million from the exercise of stock options in 2005. The tax benefit realized was $3.1 million.
An equivalent of $42.2 million in treasury shares were used to settle exercised options. For options exercised during the years
ended December 31, 2005, 2004 and 2003, the difference between the fair value of the common shares issued and their respective
exercise price was $9.0 million, $47.7 million, and $3.5 million, respectively. Compensation cost for 2005, 2004, and 2003 was
$92.7 million, $77.4 million, and $112.1 million net of tax of $23.3 million, $41.6 million, and $60.4 million, respectively.

As of December 31, 2005, there is $50.9 million in unrealized compensation cost related to non-vested stock options. This
expense will be recognized over a weighted-average period of 1.3 years. A summary of the status of our non-vested shares and
changes during the year follows:
Weighted-Average
Shares Grant-date
(millions) Fair Value
Nonvested beginning of year ............................................................................................................................................................. 62.4 $4.16
Granted ............................................................................................................................................................................................... 27.6 4.44
Vested................................................................................................................................................................................................. (32.8) 4.43
Forfeited ............................................................................................................................................................................................. (3.9) 4.73
Nonvested end of year........................................................................................................................................................................ 53.3 4.09

The estimated fair value of stock options at the time of grant using the Black-Scholes option-pricing model was as follows:

2005 2004 2003

Fair value per option ............................................................................................................................................................. $ 4.44 $ 4.71 $ 2.07
Assumptions:
Annualized dividend yield .................................................................................................................................................. 3.2% 3.0% 5.1%
Expected volatility .............................................................................................................................................................. 41.9% 42.2% 39.3%
Risk-free interest rate.......................................................................................................................................................... 4.4% 3.4% 3.7%
Expected option term (in years).......................................................................................................................................... 7 7 7

Ford Motor Company Annual Report 2005 83

Notes to the Financial Statements

NOTE 19. SHARE-BASED COMPENSATION (Continued)

Details on various stock option exercise price ranges are as follows:

Outstanding Options Exercisable Options
Weighted- Weighted- Weighted-
Shares Average Life Average Shares Average
Range of Exercise Prices (millions) (years) Exercise Price (millions) Exercise Price
$ 7.40 - $10.58 .................................................................................................... 26.4 7.2 $ 7.97 16.5 $ 7.99
10.62 - 15.81 .................................................................................................... 80.2 6.0 12.81 37.9 12.86
15.91 - 23.88 .................................................................................................... 85.7 4.6 19.99 84.6 20.04
23.97 - 35.79 .................................................................................................... 52.3 4.3 30.85 52.3 30.85
41.03 - 42.52 .................................................................................................... 0.6 2.3 41.42 0.6 41.42
Total options................................................................................................... 245.2 191.9

Other Share-Based Compensation

Under the 1998 LTIP we also grant other share-based awards to select executives and other key employees, in addition to the
stock options above. These awards include Restricted Stock, Restricted Stock Equivalents, Performance Stock Rights,
Performance-based Restricted Stock Equivalents, and Stock Appreciation Rights. These awards have various vesting criteria
including service requirements, individual performance targets, and company-wide performance targets.

Other share-based compensation expense was $29.8 million for 2005, $7.6 million for 2004, and $46.2 million for 2003.

NOTE 20. DERIVATIVE FINANCIAL INSTRUMENTS

All derivative instruments, including embedded derivatives, are recorded at fair value on our balance sheet.

Our operations are exposed to global market risks, including the effect of changes in foreign currency exchange rates, certain
commodity prices and interest rates. The objective of our risk management program is to manage the financial and operational
exposure arising from these risks by offsetting gains and losses on the underlying exposures with gains and losses on derivatives
used to hedge them. We have hedge documentation that defines the hedging objectives, practices, procedures, and accounting
treatment. Our hedging program and our derivative positions and strategy are reviewed on a regular basis by our management.

We have elected to apply hedge accounting to a portion of our derivatives. Hedges that receive designated hedge accounting
treatment are evaluated for effectiveness at the time they are designated as well as throughout the hedge period. Some derivatives
do not qualify for hedge accounting; for others, we elect not to apply hedge accounting treatment. For both of these, the mark to
fair value is reported currently through earnings.

The use of derivatives to manage market risk results in counterparty risk, or the risk of a counterparty defaulting on a derivative
contract. We enter into master netting agreements with counterparties that usually allow for netting of certain exposures. We
establish exposure limits for each counterparty to minimize risk and provide counterparty diversification. Substantially all our
counterparty exposures are with counterparties that have long-term debt ratings of single-A or better.

Automotive Sector

Cash Flow Hedges. We use forward contracts and options, which qualify as cash flow hedges, to manage our exposure to
foreign currency exchange and commodity price risks. The effective portion of changes in the fair value of cash flow hedges is
deferred in Accumulated other comprehensive income/(loss) ("OCI") and is recognized in Cost of sales when the hedged item
affects earnings.

Derivatives used to manage financial exposures for foreign exchange and commodity price risks generally mature within three
years or less, with a maximum maturity of five years. Cash flow hedges are discontinued when it is probable that the original
forecasted transaction will not occur. The impact to earnings associated with hedge ineffectiveness from cash flow hedges was
recorded in Cost of sales as a loss of $1 million in 2005, a gain of $1 million in 2004 and a gain of $36 million in 2003.

Ford Motor Company Annual Report 2005 84

Notes to the Financial Statements

NOTE 20. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

Net Investment Hedges. We use foreign currency contracts to hedge the net assets of certain foreign entities to offset the
translation and economic exposures related to our investment in these entities. The change in the value of these derivatives is
recorded in OCI as a foreign currency translation adjustment. The ineffectiveness related to net investment hedges is recorded in
Cost of sales. Gains of $20 million, losses of $2 million, and gains of $95 million were recorded in 2005, 2004, and 2003,
respectively.

Other Derivative Instruments. As previously stated, some derivatives do not qualify for hedge accounting treatment or we
elect not to apply hedge accounting. In such cases, both the gains and losses are reported in Cost of sales or Interest income and
other non-operating income/(expense), net. The earnings impact primarily relates to the revaluation of foreign currency
derivatives, which are substantially offset by the revaluation on foreign denominated debt, and warrants.

Financial Services Sector

Ford Credit’s overall risk management objective is to maximize financing income while limiting the effect of changes in
foreign currencies and interest rates. Ford Credit faces exposure to currency exchange rates if a mismatch exists between the
currency of its receivables and the currency of the debt funding those receivables. Ford Credit executes cross-currency swaps and
foreign currency forwards to convert substantially all of the foreign currency debt obligations to the local currency of the
receivables. Interest rate swaps are used to manage exposure to re-pricing risk, which arises when assets and the debt funding
those assets have different re-pricing periods that consequently respond differently to interest rate changes. Regardless of hedge
accounting treatment, derivative positions are used only to manage identified exposures.

Cash Flow Hedges. Ford Credit designates certain interest rate swaps as cash flow hedges to manage the cash flow fluctuations
of floating-rate debt due to the changes in market interest rates. The impact to earnings associated with hedge ineffectiveness was
recognized in Revenues as a loss of $43 million and a gain of $12 million and $3 million in 2005, 2004 and 2003, respectively. In
assessing hedge effectiveness for cash flow hedges related to interest rates, Ford Credit uses the variability of cash flows method
and excludes accrued interest. Net interest settlements and accruals excluded from the assessment of hedge effectiveness were
expenses of $71 million, $354 million and $482 million in 2005, 2004, and 2003, respectively, and recorded in Interest expense.
While net interest settlements and accruals are excluded from hedge effectiveness testing, they are included in evaluating the
overall risk management objective.

Fair Value Hedges. Ford Credit designates certain interest rate swaps and cross currency swaps as fair value hedges to manage
the fair value fluctuations of fixed-rate debt due to the changes in market interest rates. Unrealized gains and losses related to
derivatives in fair value hedges, along with changes in the fair value of the underlying hedged exposure are recognized and
recorded in Revenues. The impact to earnings from hedge ineffectiveness was a loss of $1 million and a gain of $10 million and
$255 million in 2005, 2004 and 2003, respectively. In assessing hedge effectiveness, Ford Credit excludes accrued interest on the
receive and pay legs of the swaps. Net interest settlements and accrual income of $1.1 billion, $2.1 billion and $1.8 billion in
2005, 2004 and 2003, respectively, were recorded as a reduction in Interest expense. Ford Credit also excludes from the
assessment of hedge effectiveness foreign exchange adjustments, representing the portion of the derivative’s fair value attributable
to the change in foreign currency exchange rates for the reporting period, which were unfavorable adjustments totaling
$365 million in 2005 and favorable adjustments totaling $384 million and $1.3 billion in 2004 and 2003, respectively. While net
settlements and foreign currency adjustments are excluded from Ford Credit’s hedge effectiveness testing, they are included in
evaluating the overall risk management objective. The adjustments related to the foreign currency derivatives reported above were
offset by revaluation impacts on debt denominated in a currency other than the location’s functional currency, which was also
recorded in Revenues.

Net Investment Hedges. Ford Credit uses foreign currency forward exchange contracts and options to hedge the net assets of
certain foreign entities to offset the translation and economic exposures related to its investment in foreign entities. Changes in the
value of these derivatives are recorded in OCI as a foreign currency translation adjustment. Ineffectiveness, which is recognized in
Revenues, were losses of $13 million, $29 million and $17 million in 2005, 2004, and 2003, respectively.

Other Derivative Instruments. As previously stated, some derivatives do not qualify for hedge accounting treatment or Ford
Credit elects not to apply hedge accounting. In such cases, both the gains and losses are recorded in Revenues. The earnings

Ford Motor Company Annual Report 2005 85

Notes to the Financial Statements

NOTE 20. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)

impact primarily relates to interest rate swaps, which are included in evaluating Ford Credit's overall risk management objective,
and the revaluation of foreign currency derivatives, which are substantially offset by the revaluation on foreign denominated debt.

Total Company

Summary of OCI Activity. The following table summarizes activity in OCI excluding foreign currency translation adjustments
on net investment hedges for both the Automotive and Financial Services sectors during the years ended December 31
(in millions):
2005 2004 2003
Beginning of year: net unrealized gain/(loss) on derivative financial instruments ........................................................... $ 1,240 $ 1,302 $ 313
Increase/(decrease) in fair value of derivatives .................................................................................................................. (661) 961 1,072
(Gains)/losses reclassified from OCI.................................................................................................................................. (553) (1,023) (83)
End of year: net unrealized gain/(loss) on derivative financial instruments...................................................................... $ 26 $ 1,240 $ 1,302

We expect to reclassify for Automotive and Financial Services sectors existing net gains of $71 million from OCI to net
income during the next twelve months as the underlying exposures are realized.

Fair Value of Derivative Instruments. The fair value of derivatives reflects the price that a third party would be willing to pay
or receive in armʼs length transactions and includes mark-to-market adjustments to reflect the effects of changes in the related
index. The following tables summarize the estimated fair value of our derivative financial instruments, taking into consideration
the effects of legally enforceable netting agreements, at December 31:
2005 2004
Fair Value Fair Value Fair Value Fair Value
Notional Assets Liabilities Notional Assets Liabilities
(in billions) (in millions) (in millions) (in billions) (in millions) (in millions)
Automotive Sector
Total derivative financial instruments .................................. $ 62 $ 1,578 $ 1,207 $ 71 $ 3,128 $ 911
Financial Services Sector
Foreign currency swaps, forwards and options .................... $ 24 $ 1,126 $ 789 $ 31 $ 4,201 $ 1,076
Interest rate swaps ................................................................. 125 1,657 96 135 3,074 180
Impact of netting agreements................................................ — (205) (205) — (345) (345)
Total derivative financial instruments ................................ $ 149 $ 2,578 $ 680 $ 166 $ 6,930 $ 911

NOTE 21. OPERATING CASH FLOWS

The reconciliation of Net income/(loss) to cash flows from operating activities is as follows (in millions):

Revised-See Note 1
2005 2004 2003
Financial Financial Financial
Automotive Services Automotive Services Automotive Services
Net income/(loss) ............................................................................................ $ (1,889) $ 3,913 $ 262 $ 3,225 $ (1,465) $ 1,960
(Income)/loss of discontinued operations...................................................... (6) (41) 227 (81) 141 2
Cumulative effects of changes in accounting principles............................... 251 — — — 264 —
Depreciation and special tools amortization.................................................. 8,133 5,854 6,397 6,618 5,458 8,771
Amortization of intangibles ........................................................................... 49 6 26 10 24 11
Net losses/(earnings) from equity investments in excess of dividends
received ........................................................................................................ (135) — 3 — (2) —
Provision for credit/insurance losses ............................................................. — 483 — 1,212 — 2,248
Foreign currency adjustments........................................................................ 36 — 1 — 160 —
(Gain)/loss on sale of business ...................................................................... — (1,099) 16 (66) — (53)
Stock option expense ..................................................................................... 103 13 105 14 154 19
Cash changes in operating assets and liabilities was as follows: ..................
Provision for deferred income taxes............................................................ (976) 1,763 2,469 1,502 732 1,274
Decrease/(increase) in accounts receivable and other assets ...................... (2,060) 1,002 (1,649) 4,279 (1,804) 1,229
Decrease/(increase) in inventory ................................................................. (76) — (112) — (505) —
Increase/(decrease) in accounts payable and accrued and other
liabilities....................................................................................................... 2,234 (2,581) (7,052) (928) (1,970) 1,078
Net sales/(purchases) of trading securities .................................................. (579) (50) 5,600 92 1,630 524
Other............................................................................................................... 351 121 676 (285) 106 (576)
Cash flows from operating activities of continuing operations....................... $ 5,436 $ 9,384 $ 6,969 $ 15,592 $ 2,923 $ 16,487

Ford Motor Company Annual Report 2005 86

Notes to the Financial Statements

NOTE 21. OPERATING CASH FLOWS (Continued)

The reconciliation between total sector and consolidated cash flows from continuing operations is as follows (in millions):

Revised-See Note 1
2005 2004 2003
Sum of sector cash flows of continuing operations from operating activities .... $ 14,820 $22,561 $19,410
Reclassification of wholesale receivable cash flows from investing to
operating for consolidated presentation............................................................. 7,290 2,001 (2,154)
Reclassification relating to sale of vehicles to Hertz and related auction
proceeds for consolidated presentation.............................................................. (436) — —
Consolidated cash flows of continuing operations from operating activities ..... $ 21,674 $24,562 $17,256

Cash paid/(received) for interest and income taxes for continuing operations was as follows (in millions):
2005 2004 2003
Interest .............................................................................................................................................................................. $ 7,825 $ 7,355 $ 7,543
Income taxes..................................................................................................................................................................... 382 211 (1,046)

NOTE 22. EXIT AND DISPOSAL ACTIVITIES AND OTHER ACTIONS

Automotive Sector

Exit and disposal activities. In 2004, we announced the PAG Improvement Plan including hourly and salaried employee
separation programs and the planned closure of assembly operations at our Browns Lane facility. Associated with these actions,
we recognized a pre-tax charge (excluding pension costs) of $64 million in 2004 and approximately $35 million at
December 31, 2005, of which $5 million was incurred in the fourth quarter 2005. The plan is expected to be completed in 2006.

In 2003, we initiated planned shift pattern changes at our Genk vehicle assembly plant and manufacturing, engineering and
staff efficiency actions in Cologne and various United Kingdom locations. Associated with these actions, we recognized pre-tax
charge of $486 million in 2003 and $92 million in 2004. These actions are expected to be completed in several years.

The charges for employee separation actions were recognized in Cost of sales. The table below summarizes the pre-tax
charges incurred in 2005 for the employee separation actions described above, the related liability at December 31, 2005 and the
estimated total charges related to these actions (in millions):

Liability at Liability at
December 31, Accrued in Paid in December 31, Estimated
Segment 2004 2005 2005 Other* 2005 Total Costs
Ford Europe and PAG........................................................................... $ 139 $ 35 $ (122) $ (40) $ 12 $ 774
__________
* Includes foreign currency translation adjustments and reductions to accrued amounts resulting from revisions to estimated liabilities.

Other Employee Separation Actions. In the second quarter of 2005, we announced our plans to reduce salaried positions in our
Ford North America business unit. We have incurred approximately $148 million of pre-tax charges related to these actions
through December 31, 2005, of which approximately $65 million was incurred in the fourth quarter of 2005. In addition,
approximately $88 million of pre-tax charges were incurred in the fourth quarter for hourly separations of which approximately
$62 million was related to ACH.

During the third quarter of 2005, our Ford Europe and PAG segment initiated hourly and salaried employee separation actions
resulting in pre-tax charges of approximately $360 million, of which approximately $334 million was incurred in the fourth
quarter.

During the fourth quarter of 2005, our Ford Asia Pacific and Africa business unit initiated hourly and salaried employee
separation actions resulting in pre-tax charges of approximately $32 million.

See Note 23 for employee separation costs related to pension, postretirement health care and life insurance benefits.

Ford Motor Company Annual Report 2005 87

Notes to the Financial Statements

NOTE 22. EXIT AND DISPOSAL ACTIVITIES AND OTHER ACTIONS (Continued)

Financial Services Sector

Exit and disposal activities. In 2004, we announced a plan to create an integrated sales platform in the United States and
Canada over the next two years that would support sales activities for Ford Credit and our other business operating units. The plan
included the consolidation of regional sales offices and an integration of branch locations. We recognized pre-tax charges related
to the plan of $41 million in 2005 and $11 million in 2004 in Operating expenses. The integration will be completed in 2006.

The table below summarizes the pre-tax charges incurred, the related liability at December 31 and the estimated total costs for
the sales branch integration:
Liability at Liability at
December 31, Accrued in Paid in December 31, Estimated
Segment 2004 2005 2005 Other 2005 Total Costs
Ford Credit ............................................................................................ $ 10 $ 41 $ (36) $ — $ 15 $ 61

Other Employee Separation Actions. In 2005, we completed various separation programs for Ford Credit salaried employees in
connection with reorganization and efficiency actions. We recognized pre-tax charges of $36 million in 2005 as a result of these
actions (excluding costs for retirement plan and postretirement health care and life insurance benefits).

NOTE 23. RETIREMENT BENEFITS

Employee Retirement and Savings Plans

We have two principal qualified defined benefit retirement plans in the United States. The Ford-UAW Retirement Plan covers
hourly employees represented by the UAW, and the General Retirement Plan covers substantially all other Ford employees in the
United States hired on or before December 31, 2003. The hourly plan provides noncontributory benefits related to employee
service. The salaried plan provides similar noncontributory benefits and contributory benefits related to pay and service. Other
U.S. and non-U.S. subsidiaries have separate plans that generally provide similar types of benefits for their employees. We
established, effective January 1, 2004, a defined contribution plan generally covering new salaried U.S. employees hired on or
after that date. Ford-UAW Retirement Plan expense accruals for UAW-represented Ford employees previously assigned to
Visteon Corporation ("Visteon Hourly Employees") were charged to Visteon Corporation ("Visteon"). Pursuant to definitive
agreements with Visteon signed on September 12, 2005, these charges were discontinued effective October 1, 2005.

For our plans that provide benefits based on salary, we project employee future salary growth for such salary-related benefits.
Certain of our defined benefit pension plans provide benefits that are not based on salary (e.g., U.S. Ford-UAW Retirement Plan,
noncontributory portion of the U.S. General Retirement Plan, and Canada Ford-UAW Retirement Plan). The salary growth
assumption is not applicable to these benefits.

Plan obligations and costs are based on existing retirement plan provisions. No assumption is made regarding any potential
future changes to benefit provisions beyond those to which we are presently committed (e.g., in existing labor contracts).

In general, our plans are funded, with the main exceptions of certain plans in Germany and U.S. defined benefit plans for
senior management. In such cases, an unfunded liability is recorded.

The expense for our worldwide defined contribution plans was $83 million in 2005, $80 million in 2004 and $37 million in
2003. This includes the expense for company matching contributions to our primary savings plans (United States and Canada) of
$44 million in 2005, $40 million in 2004 and $0 million in 2003. The 2004 increase in savings plan expense was due to
reinstatement of company matching contribution on salaried employee contributions in the United States and Canada. The
company match was suspended again in July 2005.

Ford Motor Company Annual Report 2005 88

Notes to the Financial Statements

NOTE 23. RETIREMENT BENEFITS (Continued)

Postretirement Health Care and Life Insurance Benefits

We, and certain of our subsidiaries, sponsor plans to provide selected health care and life insurance benefits for retired
employees. The Ford UAW Hospital-Surgical-Medical-Drug-Dental-Vision Program covers hourly employees represented by the
UAW, and the Ford Salary Health Care Plan covers substantially all other Ford employees in the United States hired before
June 1, 2001. We also offer company-paid postretirement life insurance benefits to U.S. salary employees hired before
January 1, 2004 and all U.S. hourly employees. Our employees generally may become eligible for benefits when they retire;
however, benefits and eligibility rules may be modified from time to time.

In December 2003, we announced a new postretirement health care plan for U.S. salary employees hired on or after
June 1, 2001. The plan provides for annual company allocations to employee-specific notional accounts to be used to fund
postretirement health care benefits.

Effective January 1, 2007 for U.S. salaried employees hired before June 1, 2001 we established a company contribution limit
set at 2006 levels for retiree health care benefits. U.S. salaried employees hired on or after June 1, 2001 participate in a defined
contribution retiree health care plan. In addition, for U.S. salaried employees hired before January 1, 2004 who retire on or after
June 1, 2006, company-paid retiree life insurance benefits are limited to $50,000 (employees hired on or after January 1, 2004 do
not receive company-paid life insurance benefits). These benefit changes resulted in a decrease in the year-end 2005 other
postretirement employee benefit ("OPEB") obligation of about $3 billion.

In December 2005, we reached an agreement with the UAW that would increase retiree health care cost sharing. As part of the
agreement, an independent defined contribution Voluntary Employee Benefit Association trust would be established for the
purpose of mitigating the financial impact of increased cost sharing to retirees. This trust would be funded primarily through (i)
wage diversions from active hourly employees, (ii) specified cash contributions aggregating $108 million to be made by us over
several years, and (iii) potential cash contributions to be made by us based on any price appreciation above $8.145 per share of a
notional amount of 8,750,000 shares of Ford Common Stock. The agreement is subject to court approval of a proposed settlement
of a purported class action challenging our decision to modify the retiree health care plan; additional retirees have expressed their
objection to the agreement by moving to intervene in the pending lawsuit and filing a follow-on suit of their own.

In 2003, we agreed to relieve Visteon of its responsibility for the OPEB liability related to service prior to our spinoff of
Visteon at June 30, 2000 for the Visteon Hourly Employees. This resulted in a one-time charge to expense in 2003 of $1.6 billion,
and the forgiveness of associated Visteon promissory notes previously included in plan assets. Pursuant to this agreement, the
expense associated with service after June 30, 2000 for Visteon Hourly Employees was charged to Visteon. OPEB expense for
former salaried Ford employees who transferred to Visteon and met certain age and service conditions at June 30, 2000 was also
charged to Visteon.

In 2005, an agreement was reached with Visteon which included forgiving a receivable related to Visteon's remaining UAW
OPEB obligation and a portion of Visteon's salary obligation for former Ford employees and retirees. The total receivable
forgiven was about $800 million, of which $600 million was recorded in 2004 as an allowance for doubtful receivables. At
December 31, 2005, we had a long-term receivable of $140 million representing Visteonʼs remaining responsibility for the benefits
of the Visteon salaried employees. For additional discussion of this agreement, see Note 4.

On December 8, 2003, the President signed into law the Medicare Prescription Drug Improvement and Modernization Act of
2003. The law provides for a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit at least
actuarially equivalent to the benefit established by the law. We provide retiree drug benefits that exceed the value of the benefits
that will be provided by Medicare Part D, and our retireesʼ out-of-pocket costs are less than they would be under Medicare Part D.
Therefore, we have concluded that our plan is at least "actuarially equivalent" to the Medicare Part D plan and that we will be
eligible for the subsidy. We have reflected the impact of the subsidy by reducing our 2005 and 2004 expense by $290 million and
$250 million, respectively.

Ford Motor Company Annual Report 2005 89

Notes to the Financial Statements

NOTE 23. RETIREMENT BENEFITS (Continued)

The measurement date for substantially all of our worldwide postretirement benefit plans is December 31. Our expense for
defined benefit pension, postretirement health care and life insurance benefits was as follows (in millions):
Pension Benefits
Health Care and
U.S. Plans Non-U.S. Plans Life Insurance
2005 2004 2003 2005 2004 2003 2005 2004 2003
Service cost ............................................................. $ 734 $ 636 $ 600 $ 630 $ 554 $ 492 $ 710 $ 542 $ 521
Interest cost ............................................................. 2,398 2,445 2,442 1,408 1,332 1,170 2,188 1,964 2,004
Expected return on assets ........................................ (3,363) (3,219) (3,202) (1,633) (1,651) (1,382) (500) (289) (37)
Amortization of:
Prior service costs .................................................. 500 502 472 156 106 135 (245) (220) (179)
(Gains)/losses and other ....................................... 88 23 33 352 204 148 893 610 532
Separation programs................................................ 179 1 — 422 78 128 1 — —
Visteon pre-spin liability......................................... — — — — — — — — 1,646
Allocated costs to Visteon....................................... (84) (107) (88) — — — (246) (228) (314)
Net expense/(income) .......................................... $ 452 $ 281 $ 257 $ 1,335 $ 623 $ 691 $ 2,801 $ 2,379 $ 4,173

Ford Motor Company Annual Report 2005 90

Notes to the Financial Statements

NOTE 23. RETIREMENT BENEFITS (Continued)

The year-end status of these plans was as follows (dollar amounts in millions):

Pension Benefits Health Care and

U.S. Plans Non-U.S. Plans Life Insurance
2005 2004 2005 2004 2005 2004
Change in Benefit Obligation
Benefit obligation at January 1 ................................................................ $ 43,077 $ 40,463 $ 29,452 $ 24,790 $ 39,115 $ 32,362
Service cost............................................................................................ 734 636 630 554 710 542
Interest cost............................................................................................ 2,398 2,445 1,408 1,332 2,188 1,965
Amendments .......................................................................................... — — 218 118 (3,155) 2
Separation programs .............................................................................. 179 74 422 78 1 —
Plan participant contributions................................................................ 41 42 146 144 33 31
Benefits paid .......................................................................................... (2,856) (2,832) (1,355) (1,160) (1,576) (1,540)
Foreign exchange translation................................................................. — — (2,936) 1,944 110 86
Divestiture.............................................................................................. (400) — (163) — (20) —
Actuarial (gain)/loss .............................................................................. 722 2,249 2,878 1,652 1,868 5,667
Benefit obligation at December 31 .......................................................... $ 43,895 $ 43,077 $ 30,700 $ 29,452 $ 39,274 $ 39,115
Change in Plan Assets
Fair value of plan assets at January 1 ...................................................... $ 39,628 $ 37,016 $ 20,595 $ 16,548 $ 6,762 $ 3,565
Actual return on plan assets................................................................... 3,922 4,568 3,239 1,936 621 397
Company contributions ......................................................................... 1,432 872 1,355 1,775 200 2,800
Plan participant contributions................................................................ 41 42 150 144 — —
Benefits paid .......................................................................................... (2,856) (2,832) (1,355) (1,160) (1,111) —
Foreign exchange translation................................................................. — — (1,924) 1,321 — —
Divestiture.............................................................................................. (309) — (95) — — —
Other ...................................................................................................... (1) (38) (38) 31 25 —
Fair value of plan assets at December 31 ................................................ $ 41,857 $ 39,628 $ 21,927 $ 20,595 $ 6,497 $ 6,762
Funded status ........................................................................................... $ (2,038) $ (3,449) $ (8,773) $ (8,857) $ (32,777) $ (32,353)
Unamortized prior service costs .............................................................. 2,635 3,146 912 853 (4,054) (1,128)
Unamortized net (gains)/losses and other................................................ 4,864 4,838 8,609 8,794 17,009 16,054
Net amount recognized.......................................................................... $ 5,461 $ 4,535 $ 748 $ 790 $ (19,822) $ (17,427)
Amounts Recognized on the Balance Sheet Consisting of
Assets/(Liabilities)
Prepaid assets ........................................................................................... $ 2,398 $ 2,460 $ 1,710 $ 1,566 $ — $ —
Accrued liabilities .................................................................................... (1,568) (2,643) (6,009) (5,364) (19,822) (17,427)
Intangible assets ....................................................................................... 2,133 2,517 657 526 — —
Accumulated other comprehensive income............................................. 2,498 2,201 4,390 4,062 — —
Net amount recognized.......................................................................... $ 5,461 $ 4,535 $ 748 $ 790 $ (19,822) $ (17,427)
Pension Plans in Which Accumulated Benefit Obligation
Exceeds Plan Assets at December 31
Accumulated benefit obligation............................................................... $ 24,344 $ 23,583 $ 17,217 $ 18,580
Fair value of plan assets........................................................................... 22,807 20,940 11,454 13,145

Accumulated Benefit Obligation at December 31 ................................ $ 42,280 $ 41,096 $ 26,060 $ 25,866

Weighted Average Assumptions at December 31

Discount rate ............................................................................................ 5.61% 5.75% 4.58% 5.18% 5.73% 5.75%
Expected return on assets......................................................................... 8.50% 8.75% 7.78% 7.76% 8.28% 7.93%
Average rate of increase in compensation............................................... 4.00% 4.50% 3.44% 4.00% 4.00% 4.50%
Initial health care cost trend rate.............................................................. — — — — 7% 9%
Ultimate health care cost trend rate ......................................................... — — — — 5% 5%
Year ultimate trend rate is reached .......................................................... — — — — 2011 2011
Assumptions Used to Determine Net Benefit Cost for the Year
Ending December 31
Discount rate ............................................................................................ 5.75% 6.25% 5.18% 5.61% 5.75% 6.25%
Expected return on assets......................................................................... 8.75% 8.75% 7.76% 8.38% 7.93% 6.20%
Average rate of increase in compensation............................................... 4.50% 4.50% 4.00% 3.98% 4.50% 4.50%
Weighted Average Asset Allocation at December 31*
Equity securities....................................................................................... 72.8% 72.7% 65.3% 62.4% 66.2% 54.3%
Debt securities.......................................................................................... 26.7% 26.7% 33.7% 36.4% 33.8% 45.7%
Real estate ............................................................................................... . 0.0% 0.0% 0.7% 0.9% 0.0% 0.0%
Other assets .............................................................................................. 0.5% 0.6% 0.3% 0.3% 0.0% 0.0%

__________
* Weighted average asset allocation based on major non-U.S. plans including U.K., Canada, Germany, Sweden, Netherlands, Belgium and Australia.

Ford Motor Company Annual Report 2005 91

Notes to the Financial Statements

NOTE 23. RETIREMENT BENEFITS (Continued)

A one percentage point increase/(decrease) in the assumed health care cost trend rates would increase/(decrease) the
postretirement health care benefit obligation by approximately $4.9 billion/$(3.9) billion and the service and interest component of
health care expense by $490 million/$(380) million. The actual retiree health care cost trend for 2005 was 2%, primarily reflecting
lower than expected drug costs and continued administrative efficiencies (e.g., competitive sourcing and pricing). The actual
retiree health care cost trend for 2004 was 9%.

Plan Contributions

Our policy for funded plans is to contribute annually, at a minimum, amounts required by applicable laws, regulations, and
union agreements. We do from time to time make contributions beyond those legally required.

Pension. In 2005, we made $2.5 billion of cash contributions to our funded pension plans. During 2006, we expect to
contribute $1.5 billion to our worldwide pension plans, including about $300 million of benefit payments paid directly by us for
unfunded plans. Based on current assumptions and regulations, we do not expect to have a legal requirement to fund our major
U.S. pension plans in 2006.

Health Care and Life Insurance. In 2005, we contributed $200 million to our previously established VEBA for U.S. hourly
retiree health care and life insurance benefits. During 2006, we do not expect to contribute to the VEBA.

Estimated Future Benefit Payments

The following table presents estimated future gross benefit payments and subsidy receipts related to the Medicare Prescription
Drug Improvement and Modernization Act of 2003 (in millions):
Pension Benefits
U.S. Plans Non-U.S. Plans Health Care and Life Insurance
Benefit Payments Benefit Payments Benefit Payments Subsidy Receipts
2006 ............................................................................................................ $ 2,870 $ 1,370 $ 1,750 $ (80)
2007 ............................................................................................................ 2,940 1,230 1,850 (90)
2008 ............................................................................................................ 3,010 1,250 1,950 (100)
2009 ............................................................................................................ 3,050 1,290 2,040 (110)
2010 ............................................................................................................ 3,070 1,330 2,120 (110)
2011 - 2015................................................................................................. 15,410 7,340 11,630 (680)

Plan Asset Information

Pension. Our investment strategy for pension assets has a long-term horizon and is tolerant of return volatility, in keeping with
the long-term nature of the liabilities. The target asset allocation for our major plans worldwide generally is 70% equities, 30%
fixed income. The present allocation to alternative investments (e.g., private equity) is below 1%. All assets are externally
managed and most investment managers have discretion to invest globally within their respective mandates. A diverse array of
investment processes within asset classes reduces volatility. Most assets are actively managed; manager skill and broad mandates
have generally produced long-term returns in excess of common market indices. Ford securities comprised less than five percent
of the total market value of our assets in major worldwide plans (including U.S., U.K., Canada, Germany, Sweden, Netherlands,
Belgium, and Australia) during 2005 and 2004.

Investment managers are permitted to use derivatives as efficient substitutes for traditional securities and to manage exposure
to foreign exchange and interest rate risks. Interest rate and foreign currency derivative instruments are used for the purpose of
hedging changes in the fair value of assets that result from interest rate changes and currency fluctuations. Derivatives may not be
used to leverage or to alter the economic exposure to an asset class outside the scope of the mandate to which an investment
manager has been appointed.

The equity allocation shown at year-end 2005 and 2004 includes public equity securities, private equity investments, and
REITS. Direct real estate investments shown separately reflect a liquidation strategy that has been in place for several years.
Other assets include cash held for near-term benefit funding; cash held by investment managers for liquidity purposes is included
in the appropriate asset class balance.

Ford Motor Company Annual Report 2005 92

Notes to the Financial Statements

NOTE 23. RETIREMENT BENEFITS (Continued)

The long-term return assumption at year-end 2005 is 8.50% for U.S. plans, 8.00% for U.K. plans and averages 7.78% for non-
U.S. plans. A generally consistent approach is used worldwide to develop this assumption. This approach considers various
inputs, including a review of historical plan returns and long-run inputs from a range of internal and external advisors for capital
market returns, inflation, bond yields and other variables, adjusted for specific aspects of our investment strategy. We also
consider peer data in setting the external return on asset assumption.

At December 31, 2005, our actual 10-year annual rate of return on pension plan assets was 9.79% and 8.33% for U.S. and the
U.K. plans, respectively. At December 31, 2004, our actual 10-year annual rate of return on pension plan assets was 11.20% and
8.41% for U.S. and the U.K. plans, respectively.

Health Care and Life Insurance. VEBA assets totaling $6.5 billion at December 31, 2005 include $6.0 billion of long-term
investments, which are managed in a strategy similar to the pension investment strategy described previously. The remaining
VEBA assets are invested in short-term fixed income securities, a portion of which is managed internally, with the remainder
managed externally. Ford securities comprised less than five percent of the market value of the total retiree VEBA assets during
2005 and 2004.

Investment managers are permitted to use derivatives as efficient substitutes for traditional securities and to manage exposure
to foreign exchange and interest rate risks. Interest rate and foreign currency derivative instruments are used for the purpose of
hedging changes in the fair value of assets that result from interest rate changes and currency fluctuations. Derivatives may not be
used to leverage or to alter the economic exposure to an asset class outside the scope of the mandate to which an investment
manager has been appointed.

The equity allocation shown at year-end 2005 includes public equity securities and REITS. There were no investments in
private equity or direct real estate investments at year-end 2005. Cash held by investment managers for liquidity purposes is
included in the appropriate asset class balance.

The expected return assumption applicable to the total retiree VEBA is 8.28%, reflecting the weighted average of the expected
returns on the long-term and short-term portions of the portfolio. Since the assets in the long-term portion of the portfolio are
managed in a strategy similar to the U.S. pension plan, the expected return on this portion of the portfolio is identical to that used
for the U.S. pension plan. The expected return assumption for the short-term portion of the portfolio reflects the three month
LIBOR rate consistent with our plan to draw down the short-term VEBA by the second quarter in 2006.

NOTE 24. SEGMENT INFORMATION

Our operating activity consists of two operating sectors, Automotive and Financial Services. Segment selection is based on the
organizational structure we use to evaluate performance and make decisions on resource allocation, as well as availability and
materiality of separate financial results consistent with that structure.

The Americas segment includes primarily the sale of Ford, Lincoln and Mercury brand vehicles and related service parts in
North America (U.S., Canada and Mexico) and Ford-brand vehicles and related service parts in South America; in each case,
together with the associated costs to design, develop, manufacture and service these vehicles and parts.

The Ford Europe and PAG segment includes primarily the sale of Ford-brand vehicles and related service parts in Europe and
Turkey and the sale of PAG-brand vehicles (i.e., Volvo, Jaguar, Land Rover and Aston Martin) and related service parts
throughout the world (including North America and South America); in each case, together with the associated costs to design,
develop, manufacture and service these vehicles and parts.

Ford Motor Company Annual Report 2005 93

Notes to the Financial Statements

NOTE 24. SEGMENT INFORMATION (Continued)

The Asia Pacific and Africa/Mazda segment includes primarily the sale of Ford-brand vehicles and related service parts in the
Asia Pacific region and South Africa, together with the associated costs to design, develop, manufacture and service these vehicles
and parts, and also includes our share of the results of Mazda and certain of our Mazda-related investments.

The Other Automotive component of the Automotive sector consists primarily of certain centrally managed net interest
expense, which is not managed individually by the three segments.

Transactions among Automotive segments are presented on an absolute cost basis, eliminating the effect of legal entity transfer
prices within the Automotive sector for vehicles, components and product engineering.

The Financial Services sector included two segments, Ford Credit and Hertz (sold December 2005). Ford Credit provides
vehicle-related financing, leasing, and insurance.
Automotive Sector
Ford Asia
Ford Pacific &
The Europe Africa/
Americas and PAG Mazda Other Total
(in millions)
2005
Revenues
External customer............................................................................................................... $ 85,000 $ 60,258 $ 8,245 $ — $ 153,503
Intersegment ....................................................................................................................... 3,398 2,154 131 — 5,683
Income
Income/(loss) before income taxes ..................................................................................... (2,111) (2,026) 297 (55) (3,895)
Other disclosures
Depreciation and amortization............................................................................................ 3,833 4,054 295 — 8,182
Automotive interest income................................................................................................ 46 — — 1,141 1,187
Interest expense .................................................................................................................. — — — 1,220 1,220
Cash outflow for capital expenditures ................................................................................ 3,867 2,730 221 305 7,123
Unconsolidated affiliates
Equity in net income/(loss)............................................................................................... 92 — 193 — 285
Total assets at year end....................................................................................................... 113,829
2004
Revenues
External customer............................................................................................................... $ 86,009 $ 54,163 $ 6,956 $ — $ 147,128
Intersegment ....................................................................................................................... 3,588 2,630 113 — 6,331
Income
Income/(loss) before income taxes ..................................................................................... 824 (785) 82 (276) (155)
Other disclosures
Depreciation and amortization............................................................................................ 3,568 2,634 221 — 6,423
Automotive interest income................................................................................................ 132 — — 981 1,113
Interest expense .................................................................................................................. — — — 1,221 1,221
Cash outflow for capital expenditures ................................................................................ 3,396 2,803 293 (212) 6,280
Unconsolidated affiliates
Equity in net income/(loss)............................................................................................... 75 6 174 — 255
Total assets at year end....................................................................................................... 113,051
2003
Revenues
External customer............................................................................................................... $ 85,467 $ 46,947 $ 5,839 $ — $ 138,253
Intersegment ....................................................................................................................... 3,628 1,568 120 — 5,316
Income
Income/(loss) before income taxes ..................................................................................... 67 (1,449) 46 (572) (1,908)
Other disclosures
Depreciation and amortization............................................................................................ 3,344 1,924 214 — 5,482
Automotive interest income................................................................................................ 119 — — 751 870
Interest expense .................................................................................................................. — — — 1,323 1,323
Cash outflow for capital expenditures ................................................................................ 4,191 2,980 176 — 7,347
Unconsolidated affiliates
Equity in net income/(loss)............................................................................................... (73) 17 130 — 74
Total assets at year end....................................................................................................... 111,230

Ford Motor Company Annual Report 2005 94

Notes to the Financial Statements

NOTE 24. SEGMENT INFORMATION (Continued)

Financial Services Sector (a) Total Company

Ford
Credit Hertz Other Elims Total Elims (b) Total
(in millions)
2005
Revenues
External customer........................................................................ $ 16,047 $ 7,403 $ 136 $ — $ 23,586 $ — $ 177,089
Intersegment ................................................................................ 597 20 55 (47) 625 (6,308) —
Income
Income/(loss) before income taxes .............................................. 3,861 1,980 50 — 5,891 — 1,996
Other disclosures
Depreciation and amortization..................................................... 4,507 1,316 37 — 5,860 — 14,042
Automotive interest income......................................................... 1,187
Interest expense ........................................................................... 5,842 511 70 — 6,423 — 7,643
Cash outflow for capital expenditures ......................................... 48 335 11 — 394 — 7,517
Unconsolidated affiliates
Equity in net income/(loss)........................................................ 11 — — — 11 — 296
Total assets at year end................................................................ 162,155 — 39 — 162,194 (83) 275,940
2004
Revenues
External customer........................................................................ $ 17,404 $ 6,681 $ 433 $ — $ 24,518 $ — $ 171,646
Intersegment ................................................................................ 478 19 13 (13) 497 (6,828) —
Income
Income/(loss) before income taxes .............................................. 4,431 493 84 — 5,008 — 4,853
Other disclosures
Depreciation and amortization..................................................... 4,981 1,612 35 — 6,628 — 13,051
Automotive interest income......................................................... 1,113
Interest expense ........................................................................... 5,333 408 109 — 5,850 — 7,071
Cash outflow for capital expenditures ......................................... 62 325 71 — 458 — 6,738
Unconsolidated affiliates
Equity in net income/(loss)........................................................ (2) — — — (2) — 253
Total assets at year end................................................................ 172,621 14,417 2,062 — 189,100 (2,753) 299,398
2003
Revenues
External customer........................................................................ $ 19,774 $ 5,926 $ 378 $ — $ 26,078 $ — $ 164,331
Intersegment ................................................................................ 316 26 48 (51) 339 (5,655) —
Income
Income/(loss) before income taxes .............................................. 2,956 228 63 — 3,247 — 1,339
Other disclosures
Depreciation and amortization..................................................... 7,076 1,658 48 — 8,782 — 14,264
Automotive interest income......................................................... 870
Interest expense ........................................................................... 5,831 373 116 — 6,320 — 7,643
Cash outflow for capital expenditures ......................................... 30 254 95 — 379 — 7,726
Unconsolidated affiliates
Equity in net income/(loss)........................................................ 12 — (3) — 9 — 83
Total assets at year end................................................................ 179,135 12,920 3,427 — 195,482 (3,356) 303,356
__________
(a) Financial Services sector’s interest income is recorded as Revenues.
(b) Includes intersector transactions occurring in the ordinary course of business.

Ford Motor Company Annual Report 2005 95

Notes to the Financial Statements

NOTE 25. GEOGRAPHIC INFORMATION (in millions)

2005 2004 2003

Net Sales Long Net Sales Long Net Sales Long

and Lived and Lived and Lived
Revenues Assets Revenues Assets Revenues Assets
North America
United States ............................................................................................... $ 96,764 $ 37,830 $ 100,208 $ 35,354 $ 103,482 $ 38,017
Canada.......................................................................................................... 7,945 8,062 7,093 6,900 6,833 5,711
Mexico ......................................................................................................... 3,399 1,073 2,913 807 2,707 719
Total North America.................................................................................. 108,108 46,965 110,214 43,061 113,022 44,447

Europe
Germany....................................................................................................... 7,701 4,518 7,380 6,187 6,212 6,312
Sweden ......................................................................................................... 4,412 3,399 4,059 3,715 3,360 3,326
United Kingdom........................................................................................... 15,287 6,537 14,189 9,075 12,312 7,858
Other............................................................................................................. 23,221 3,172 20,473 3,715 17,426 3,798
Total Europe .............................................................................................. 50,621 17,626 46,101 22,692 39,310 21,294

All Other ...................................................................................................... 18,360 3,215 15,331 3,124 11,999 2,816

Total ........................................................................................................... $ 177,089 $ 67,806 $ 171,646 $ 68,877 $ 164,331 $ 68,557

NOTE 26. SUMMARY QUARTERLY FINANCIAL DATA (unaudited)

2005 2004
First Second Third Fourth First Second Third Fourth
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
(In millions, except per share amounts)
Automotive Sector
Sales ........................................................................................... $ 39,332 $ 38,685 $ 34,675 $ 40,811 $ 38,800 $ 36,661 $ 32,797 $ 38,870
Operating income/(loss) ............................................................ 665 (1,104) (1,668) (2,102) 2,004 205 (716) (1,670)
Financial Services Sector
Revenues.................................................................................... 5,804 5,863 6,181 5,738 5,923 6,212 6,324 6,059
Income/(loss) before income taxes............................................ 1,076 1,297 1,222 2,296 1,043 1,528 1,391 1,046
Total Company
Income/(loss) before cumulative effects of changes in
accounting principles .................................................................. 1,212 946 (284) 401 1,952 1,165 266 104
Net income/(loss)....................................................................... 1,212 946 (284) 150 1,952 1,165 266 104
Common and Class B per share from income/(loss) before
cumulative effects of changes in accounting principles
Basic........................................................................................... $ 0.66 $ 0.51 $ (0.15) $ 0.21 $ 1.07 $ 0.64 $ 0.15 $ 0.06
Diluted ....................................................................................... 0.60 0.47 (0.15) 0.21 0.94 0.57 0.15 0.06

Certain amounts for prior periods were reclassified to conform with current period presentation. Reclassifications include the
presentation of discontinued operations.

NOTE 27. COMMITMENTS AND CONTINGENCIES

Lease Commitments

We lease land, buildings and equipment under agreements that expire in various years. Minimum rental commitments under
non-cancelable operating leases were as follows (in millions):
2006 2007 2008 2009 2010 Thereafter Total
Automotive Sector .............................................................................................................. $ 483 $ 411 $ 257 $ 202 $ 127 $ 278 $ 1,758
Financial Services Sector .................................................................................................... 113 98 86 63 50 106 516

Rental expense was $1.5 billion in 2005, $1.5 billion in 2004 and $1.4 billion in 2003.

Ford Motor Company Annual Report 2005 96

Notes to the Financial Statements

NOTE 27. COMMITMENTS AND CONTINGENCIES (Continued)

Guarantees

The fair values of guarantees and indemnifications during 2005 and 2004 are recorded in the financial statements. At
December 31, 2005 and 2004, the following guarantees and indemnifications were issued and outstanding:

Guarantees related to affiliates and third parties. We guarantee debt and lease obligations of certain joint ventures as well as
certain financial obligations of outside third parties to support business and economic growth. Expiration dates vary, and
guarantees will terminate on payment and/or cancellation of the obligation. A payment would be triggered by failure of the
guaranteed party to fulfill its obligation covered by the guarantee. In some circumstances, we are entitled to recover from the third
party amounts paid by us under the guarantee. However, our ability to enforce these rights is sometimes stayed until the
guaranteed party is paid in full. The maximum potential payments under these guarantees total approximately $113 million for
2005 and were $471 million for 2004, the majority of which relates to the Automotive sector.

On December 21, 2005, we completed the sale of Hertz. As part of the transaction, we provided cash-collateralized letters of
credit in an aggregate amount of $200 million to support the asset-backed portion of the buyer's financing for the transaction. Our
commitment to provide the letters of credit expires no later than December 21, 2011 and supports the payment obligations of Hertz
Vehicle Finance LLC under one or more series of asset-backed notes ("asset-backed notes"). The letters of credit can be drawn
upon on any date funds allocated to pay interest on the asset-backed notes are insufficient to pay scheduled interest payments,
principal amounts due on the legal final maturity date, or when the balance of assets supporting the asset-backed notes is less than
the outstanding balance of the asset-backed notes. During the fourth quarter of 2005, we recognized a liability of $27 million
which represents the estimated fair value of our obligation under the letters of credit.

In 1996, we issued $500 million of 7.25% Notes due October 1, 2008. In 1999, we defeased our obligation as primary obligor
with respect to the principal of these notes. As part of this transaction, we placed certain financial assets into an escrow trust for
the benefit of the noteholders, and the trust became the primary obligor with respect to the principal (we became secondarily liable
for the entire principal amount).

We also have guarantees outstanding associated with a subsidiary trust, Trust II. For further discussion of Trust II, see Notes
16 and 18.

Indemnifications. In the ordinary course of business, we execute contracts involving indemnifications standard in the industry
and indemnifications specific to a transaction, such as the sale of a business. These indemnifications might include claims against
any of the following: environmental, tax, and shareholder matters; intellectual property rights; power generation contracts;
governmental regulations and employment-related matters; dealer, supplier, and other commercial contractual relationships; and
financial matters, such as securitizations. Performance under these indemnities would generally be triggered by a breach of terms
of the contract or by a third-party claim. We regularly evaluate the probability of having to incur costs associated with these
indemnifications and have accrued for expected losses that are probable. We are party to numerous indemnifications and many of
these indemnities do not limit potential payment; therefore, we are unable to estimate a maximum amount of potential future
payments that could result from claims made under these indemnities.

Product Performance

Warranty. Estimated warranty costs and additional service actions are accrued for at the time the vehicle is sold to a dealer.
Included in the warranty cost accruals are costs for basic warranty coverages on vehicles sold. Additional service actions such as
product recalls and other customer service actions are not included in the warranty reconciliation below, but are also accrued for at

Ford Motor Company Annual Report 2005 97

Notes to the Financial Statements

NOTE 27. COMMITMENTS AND CONTINGENCIES (Continued)

the time of sale. Estimates for warranty costs are made based primarily on historical warranty claim experience. The following is
a tabular reconciliation of the product warranty accrual (in millions):

2005 2004
Beginning balance................................................................................................................................................................................... $ 5,751 $ 5,443
Payments made during the year............................................................................................................................................................ (3,986) (3,694)
Changes in accrual related to warranties issued during the year ......................................................................................................... 3,949 3,611
Changes in accrual related to pre-existing warranties.......................................................................................................................... 593 161
Foreign currency translation and other................................................................................................................................................. (149) 230
Ending balance ........................................................................................................................................................................................ $ 6,158 $ 5,751

Extended Service Plans. Fees or premiums for the issuance of extended service plans are recognized in income over the
contract period in proportion to the costs expected to be incurred in performing services under the contract.

Litigation and Claims

Various legal actions, governmental investigations and proceedings and claims are pending or may be instituted or asserted in
the future against us, including those arising out of alleged defects in our products; governmental regulations relating to safety,
emissions and fuel economy; financial services; employment-related matters; dealer, supplier and other contractual relationships;
intellectual property rights; product warranties; environmental matters; shareholder or investor matters; and financial reporting
matters. Certain of the pending legal actions are, or purport to be, class actions. Some of the foregoing matters involve or may
involve compensatory, punitive, or antitrust or other treble damage claims in very large amounts, or demands for recall campaigns,
environmental remediation programs, sanctions, or other relief, which, if granted, would require very large expenditures.

Litigation is subject to many uncertainties, and the outcome of individual litigated matters is not predictable with assurance.
We have established accruals for certain of the matters discussed in the foregoing paragraph where losses are deemed probable and
reasonably estimable. It is reasonably possible, however, that some of the matters discussed in the foregoing paragraph for which
accruals have not been established could be decided unfavorably to us and could require us to pay damages or make other
expenditures in amounts or a range of amounts that cannot be estimated at December 31, 2005. We do not reasonably expect,
based on our analysis, that such matters would have a material effect on future financial statements for a particular year, although
such an outcome is possible.

Conditional Asset Retirement Obligations

In March 2005, the Financial Accounting Standards Boards issued Interpretation No. 47 ("FIN 47"), Accounting for
Conditional Asset Retirement Obligations. Under FIN 47, companies must accrue for costs related to legal obligations to perform
certain activities in connection with the retirement, disposal or abandonment of assets. The obligation to perform the asset
retirement activity is not conditional even though the timing or method may be conditional.

We have identified asbestos abatement and PCB removal as conditional asset retirement obligations. Asbestos abatement was
estimated using site-specific surveys where available and a per/square foot estimate where surveys were unavailable. PCB
removal costs were based on historical removal costs per transformer and applied to transformers identified by a PCB transformer
global survey we conducted. Other conditional asset retirement obligations exist, including regulated substances. These costs,
however, are not estimable until a triggering event occurs (e.g., plant closing) due to the absence of historical cost, range of
potential settlement dates and variability among plants. Presently the company does not have sufficient information to estimate the
fair value of this obligation.

FIN 47 requires that the estimate be recorded as a liability and as an increase to the asset. The capitalized portion is depreciated
over the "remaining useful life of the asset". We believe the most reasonable "remaining useful life" should be consistent with our
depreciation policy. Therefore, the full amount was expensed at December 31, 2005, as an after-tax charge of $251 million shown
as a Cumulative effects of changes in accounting principles.

Ford Motor Company Annual Report 2005 98

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Ford Motor Company:

We have completed integrated audits of Ford Motor Companyʼs 2005 and 2004 consolidated financial statements and of its internal
control over financial reporting as of December 31, 2005, and an audit of its 2003 consolidated financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are
presented below.

Consolidated financial statements

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of stockholdersʼ
equity and of cash flows present fairly, in all material respects, the financial position of Ford Motor Company and its subsidiaries at
December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended
December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial
statements are the responsibility of the Companyʼs management. Our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying
sector balance sheets and the related sector statements of income and of cash flows is presented for purposes of additional analysis and
is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.

As discussed in Note 17 to the financial statements, on July 1, 2003, the Company adopted Financial Accounting Standards Board
Interpretation No. 46, “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.” As discussed in Note 27 to the
financial statements, in the fourth quarter of 2005, the Company adopted Financial Accounting Standards Board Interpretation No. 47,
“Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143.”

Internal control over financial reporting

Also, in our opinion, managementʼs assessment, included in Managementʼs Report on Internal Control Over Financial Reporting in
this Annual Report, that the Company maintained effective internal control over financial reporting as of December 31, 2005 based
on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on
criteria established in Internal Control - Integrated Framework issued by the COSO. The Companyʼs management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting. Our responsibility is to express opinions on managementʼs assessment and on the effectiveness of the
Companyʼs internal control over financial reporting based on our audit. We conducted our audit of internal control over financial
reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an
understanding of internal control over financial reporting, evaluating managementʼs assessment, testing and evaluating the design
and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinions.

A companyʼs internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A companyʼs internal control over financial reporting includes those policies and procedures that (i) pertain to the

Ford Motor Company Annual Report 2005 99

Report of Independent Registered Public Accounting Firm

maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management’s Report on Internal Control Over Financial Reporting in this Annual Report, management has excluded
Automotive Component’s Holdings, LLC (“ACH”) from its assessment of internal control over financial reporting as of
December 31, 2005 because it was acquired by the Company in a purchase business combination during 2005. We have also excluded
ACH from our audit of internal control over financial reporting. ACH is a subsidiary controlled and managed by Ford, whose total
assets and total revenues represent less than 1% of the corresponding consolidated financial statement amounts as of and for the year
ended December 31, 2005.

PricewaterhouseCoopers LLP
Detroit, Michigan
March 1, 2006

Ford Motor Company Annual Report 2005 100

Selected Financial Data

The following table sets forth selected financial data for each of the last five years (dollar amounts in millions, except per share
amounts). Prior-year amounts have been reclassified to conform to current year presentation.
2005 2004 2003 2002 2001
SUMMARY OF OPERATIONS
Total Company
Sales and revenues..................................................................................................................... $ 177,089 $ 171,646 $ 164,331 $ 162,256 $ 160,652
Income/(loss) before income taxes............................................................................................ $ 1,996 $ 4,853 $ 1,339 $ 1,064 $ (7,325)
Provision/(credit) for income taxes ........................................................................................... (512) 938 123 342 (2,064)
Minority interests in net income of subsidiaries ....................................................................... 280 282 314 367 24
Income/(loss) from continuing operations ................................................................................ 2,228 3,633 902 355 (5,285)
Income/(loss) from discontinued operations............................................................................. 47 (146) (143) (333) (168)
Cumulative effects of change in accounting principle.............................................................. (251) — (264) (1,002) —
Net income/(loss) ...................................................................................................................... $ 2,024 $ 3,487 $ 495 $ (980) $ (5,453)
Automotive sector
Sales........................................................................................................................................... $ 153,503 $ 147,128 $ 138,253 $ 134,118 $ 130,599
Operating income/(loss) ............................................................................................................ (4,209) (177) (1,556) (604) (7,471)
Income/(loss) before income taxes............................................................................................ (3,895) (155) (1,908) (1,054) (8,762)
Financial Services sector
Revenues.................................................................................................................................... $ 23,586 $ 24,518 $ 26,078 $ 28,138 $ 30,053
Income/(loss) before income taxes............................................................................................ 5,891 5,008 3,247 2,118 1,437

Total Company Data Per Share of Common and Class B Stock

Basic:
Income/(loss) from continuing operations ................................................................................ $ 1.21 $ 1.99 $ 0.49 $ 0.19 $ (2.93)
Income/(loss) from discontinued operations............................................................................. 0.03 (0.08) (0.08) (0.19) (0.09)
Cumulative effects of change in accounting principle.............................................................. (0.14) — (0.14) (0.55) —
Net income/(loss) ...................................................................................................................... $ 1.10 $ 1.91 $ 0.27 $ (0.55) $ (3.02)
Diluted:
Income/(loss) from continuing operations ................................................................................ $ 1.14 $ 1.80 $ 0.49 $ 0.19 $ (2.93)
Income/(loss) from discontinued/held-for-sale operations ....................................................... 0.02 (0.07) (0.08) (0.18) (0.09)
Cumulative effects of change in accounting principle.............................................................. (0.11) — (0.14) (0.55) —
Net income/(loss) ...................................................................................................................... $ 1.05 $ 1.73 $ 0.27 $ (0.54) $ (3.02)
Cash dividends .......................................................................................................................... $ 0.40 $ 0.40 $ 0.40 $ 0.40 $ 1.05
Common stock price range (NYSE Composite)
High....................................................................................................................................... $ 14.75 $ 17.34 $ 17.33 $ 18.23 $ 31.42
Low ....................................................................................................................................... 7.57 12.61 6.58 6.90 14.70
Average number of shares of Common and Class B stock outstanding (in millions).............. 1,846 1,830 1,832 1,819 1,820

SECTOR BALANCE SHEET DATA AT YEAR END

Assets
Automotive sector ................................................................................................................... $ 113,829 $ 113,051 $ 111,230 $ 100,223 $ 88,150
Financial Services sector......................................................................................................... 162,194 189,100 195,482 187,606 188,345
Intersector elimination ............................................................................................................ (83) (2,753) (3,356) (5,865) (4,650)
Total assets............................................................................................................................ $ 275,940 $ 299,398 $ 303,356 $ 281,964 $ 271,845
Long-term Debt
Automotive sector ................................................................................................................... $ 16,900 $ 17,250 $ 18,758 $ 13,363 $ 13,467
Financial Services sector......................................................................................................... 104,119 113,992 126,336 124,970 124,050
Total long-term debt ............................................................................................................. $ 121,019 $ 131,242 $ 145,094 $ 138,333 $ 137,517
Stockholdersʼ Equity............................................................................................................... $ 12,957 $ 16,045 $ 11,651 $ 5,590 $ 7,786

Employment Data
The approximate number of individuals employed by us and our consolidated entities (including entities we do not control) at
December 31, 2005 and 2004 was as follows (in thousands):
2005 2004*
Business Unit
Automotive Sector
The Americas
Ford North America .................................................................................................................................................................................... 140 126
Ford South America .................................................................................................................................................................................... 13 12
Ford Europe and PAG
Ford Europe ................................................................................................................................................................................................. 66 69
PAG ............................................................................................................................................................................................................. 49 51
Ford Asia Pacific and Africa ......................................................................................................................................................................... 18 18
Financial Services Sectro
Ford Motor Credit Company......................................................................................................................................................................... 14 18
The Hertz Corporation ................................................................................................................................................................................... - 31
Total .......................................................................................................................................................................................................... 300 325

* Employment figures for 2004 have been adjusted to conform to 2005 business unit presentation.

As shown in the employment data above, from December 31, 2004 to December 31, 2005, the number of people we employed
decreased approximately eight percent. This decrease primarily reflects the sale of Hertz, partially offset by the formation of ACH
which employs approximately 17,700 Ford hourly workers who were previously assigned to Visteon and approximately 2,500 former
Visteon employees. Not included in these employment data are approximately 5,000 Visteon salaried workers leased to ACH. See
Management's Discussion and Analysis of Financial Condition and Results of Operations – Overview and Notes 4 and 23 of the Notes
to the Financial Statements for additional discussion relating to the Visteon transaction and ACH.

Ford Motor Company Annual Report 2005 101

Employment Data

The approximate number of individuals employed by us and our consolidated entities (including entities we do not control) at
December 31, 2005 and 2004 was as follows (in thousands):

2005 2004*
Business Unit
Automotive Sector
The Americas
Ford North America ...................................................................................................................................................................... 140 126
Ford South America ...................................................................................................................................................................... 13 12
Ford Europe and PAG
Ford Europe .................................................................................................................................................................................. 66 69
PAG ............................................................................................................................................................................................. 49 51
Ford Asia Pacific and Africa............................................................................................................................................................ 18 18
Financial Services Sector
Ford Motor Credit Company............................................................................................................................................................ 14 18
The Hertz Corporation ..................................................................................................................................................................... — 31
Total .......................................................................................................................................................................................... 300 325

* Employment figures for 2004 have been adjusted to conform to 2005 business unit presentation.

As shown in the employment data above, from December 31, 2004 to December 31, 2005, the number of people we employed
decreased approximately eight percent. This decrease primarily reflects the sale of Hertz, partially offset by the formation of ACH
which employs approximately 17,700 Ford hourly workers who were previously assigned to Visteon and approximately 2,500 former
Visteon employees. Not included in these employment data are approximately 5,000 Visteon salaried workers leased to ACH. See
Management's Discussion and Analysis of Financial Condition and Results of Operations – Overview and Notes 4 and 23 of the Notes
to the Financial Statements for additional discussion relating to the Visteon transaction and ACH.

Ford Motor Company Annual Report 2005 102

Managementʼs Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Companyʼs internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions or because the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial
Officer, the Company conducted an assessment of the effectiveness of its internal control over financial reporting as of
December 31, 2005. The assessment was based on criteria established in the framework Internal Control – Integrated Framework,
issued by the Committee of Sponsoring Organizations of the Treadway Commission. This assessment excluded our acquisition on
October 1, 2005 of operations of ACH as described in Note 4 of the Notes to the Financial Statements. As noted, ACH is a subsidiary
controlled and managed by Ford, whose total assets and total revenues represent less than 1% of the corresponding consolidated
financial statement amounts as of and for the year ended December 31, 2005. Based on this assessment, management concluded that
our internal control over financial reporting was effective as of December 31, 2005. Managementʼs assessment of the effectiveness of
the Companyʼs internal control over financial reporting as of December 31, 2005 has been audited by PricewaterhouseCoopers LLP,
an independent registered public accounting firm, as stated in their report included herein.

New York Stock Exchange and Pacific Exchange Required Disclosures

On June 13, 2005, Fordʼs Chief Executive Officer certified that he was not aware of any violation by the Company of the New
York Stock Exchangeʼs Corporate Governance listing standards, other than has been notified to the Exchange pursuant to Section
303A.12 (b), of which there was none. In addition, on September 22, 2005, Fordʼs Chief Executive Officer certified that he was not
aware of any violation by the Company of the Pacific Exchangeʼs Corporate Governance listing standards, other than has been
notified to the Exchange pursuant to Rule 5.3 (m), of which there was none.

We have filed with the Securities and Exchange Commission, as exhibits to our Annual Report on Form 10-K for the year ended
December 31, 2005, our Chief Executive Officerʼs and Chief Financial Officerʼs certifications required by Section 302 of the
Sarbanes-Oxley Act of 2002.

Ford Motor Company Annual Report 2005 103

Shareholder Information

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

Computershare Trust Company, N.A. offers the DirectSERVICE™ Investment and Stock Purchase Program. This
shareholder-paid program provides a low-cost alternative to traditional retail brokerage methods of purchasing, holding
and selling Ford Common Stock.

Company Information
The URL to our online Investor Center is www.shareholder.ford.com. Alternatively, individual investors may contact:
Ford Motor Company Telephone:
Shareholder Relations Within the U.S. and Canada: (800) 555-5259
One American Road Outside the U.S. and Canada: (313) 845-8540
Dearborn, Michigan 48126-2798 Fax: (313) 845-6073
E-mail: [email protected]

Security analysts and institutional investors may contact:

Ford Motor Company Telephone: (313) 323-8221 or (313) 390-4563
Investor Relations Fax: (313) 845-6073
One American Road
Dearborn, Michigan 48126-2798 E-mail: [email protected]

To view this report, the Ford Motor Company Fund Annual Report and the Ford Motor Company Sustainability Report, go to
www.ford.com.

Stock Exchanges
Ford Common Stock is listed and traded on the New York and Pacific stock exchanges 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 2006 Annual Meeting of Shareholders will be held in Wilmington, Delaware, on May 11, 2006. Notice of the Annual Meeting,
a Proxy Statement and voting card will be mailed to shareholders in advance of the meeting.

Annual Report Credits

The Ford Motor Company Annual Report is designed, written and produced each year by a cross-functional Ford team.
The 2005 team members are:

Project Manager: Ana Holland Krawec

Creative Director: Jennifer Flake
Editorial Services: Margaret Mellott, Terry Herron, Chuck Snearly, Kim Boscan and Dwight Collins
Art Direction and Design: Guy Marshall, Small Design Ltd., David McWilliams, Tamara Neal,
Vandy Quince and Ford Communication Services
Principal Photography: Tom Wojnowski

Digital imaging technology has been used for retouching and to produce some composite photos in this report. The report was printed by Graphic Press.

This report is printed on recycled and recyclable paper.

Ford Motor Company Annual Report 2005 104

About this report Global Overview
Innovation is Ford Motor Company’s legacy. Innovation is Ford’s future.
We established much of our American innovation design language with Ford Fusion, shown on the
cover, our new midsize sedan with an attitude. With its distinct, authoritative three-bar grille setting the design
tone and driving dynamics that are nothing short of engaging, Fusion embodies the bold, American design Automotive Core and Affiliate Brands
and innovation of our vehicles going forward. And this sedan is poised to help us win customers and market
share in the highly competitive midsize-car segment.
This report is a visual journey highlighting how Ford is unleashing the spirit of innovation. The
company is knocking down the walls of “business as usual” to uncover bold initiatives that are inspiring
technological, safety and design innovations throughout the company.
Dealers and 10,134 dealers 1,422 dealers 1,971 dealers 5,594 dealers 125 dealers 880 dealers 2,400 dealers 1,400 dealers
Markets
105 markets 32 markets 26 markets 141 markets 29 markets 68 markets 100 markets 100 markets
About this company Retail 5,572,143 132,496 203,794 1,224,631* 4,400 89,802 443,963 185,120
Ford Motor Company, a global automotive industry leader based in Dearborn, Michigan, Vehicle Sales
and Sales Mix: Sales Mix: Sales Mix: Sales Mix: Sales Mix: Sales Mix: Sales Mix: Sales Mix:
manufactures and distributes automobiles in 200 markets across six continents. With approximately Sales Mix 55% N. America 99% N. America 97% N. America 45% Asia Pacific 60% Europe 53% Europe 57% Europe 60% Europe
300,000 employees and 108 plants worldwide, the company’s core and affiliated automotive brands include 27% Europe 1% Rest-of- 3% Rest-of- 27% N. America 35% N. America 36% N. America 31% N. America 26% N. America
7% Asia Pacific world world 23% Europe 5% Rest-of- 7% Asia Pacific 7% Asia Pacific 7% Asia Pacific
Ford, Lincoln, Mercury, Mazda, Volvo, Jaguar, Land Rover and Aston Martin. Its automotive financing 6% S. America 3% Rest-of- world 4% Rest-of- 5% Rest-of- 5% Rest-of-
business is Ford Motor Credit Company. 5% Rest-of- world world world world
world 2% S. America 2% S. America

Customer 1.800.392.3673 1.800.521.4140 1.800.392.3673 1.800.222.5500 +44.1908 610620 1.800.452.4827 1.800.458.1552 1.800.637.6837
Assistance
www. www. www. www. www. www. www. www.
fordvehicles.com lincolnvehicles.com mercuryvehicles.com mazdausa.com astonmartin.com jaguar.com volvocars.com landrover.com

Click on “contact us” Click on “contact us” Click on “contact us” customerassistance@ enquiry@ jaguarowner@ customercare@ [email protected]
mazdausa.com astonmartin.com jaguar.com volvocars.com

Financial Services Customer Services

Operations – Operations in 36 countries – A total service experience for Motorcraft Parts Extended Service Business
Contents – Provides automotive financing Ford, Lincoln and Mercury owners – New and remanufactured parts – Providing comprehensive vehicle service
for Ford, Lincoln, Mercury, Aston available only at Ford and Lincoln designed, engineered and contract and maintenance programs
Operating Highlights 1 Martin, Jaguar, Land Rover, Mazda Mercury dealerships — designed recommended by Ford Motor Company
A Message from the Chairman 2 and Volvo dealers and customers to deliver customer satisfaction and available in Ford, Lincoln and Ford Extended Service Plan (ESP)
Technological Innovation 6 – One of the world’s largest and repeat purchase intent Mercury franchised dealerships, Ford – Major customers include Ford,
automotive finance companies. – Parts engineered to Ford Motor authorized distributors and thousands Lincoln and Mercury vehicle dealers,
Safety Innovation 10 If Ford Motor Credit were a bank, it Company specifications of major retail and repair locations commercial customers and fleets
Design Innovation 14 would be the 13th largest in the U.S. – Technicians trained and certified of Ford Motor Company vehicles
– From 1986-2005, provided specifically on Ford, Lincoln Genuine Ford Accessories
Product Innovation 18 39 percent of Ford Motor and Mercury vehicles – Wide variety of customer accessories Automobile Protection Corporation (APCO)
Board of Directors and Executives 19 Company’s pretax profits and designed to personalize Ford, – Major customers include Mazda, Volvo,
$20 billion in dividends Lincoln and Mercury vehicles Jaguar and Land Rover vehicle dealers
Financial Contents 21 – Has been profitable every year
Shareholder Information 104 since its 1959 founding
Global Overview 105
2005 – Recorded net income of – For the second consecutive year, Motorcraft Parts Extended Service Business
Highlights $2.5 billion Lincoln was the “#1 nameplate in – The Motorcraft Web site has been – Industry-leading sales of 1.8 million
– Paid Ford Motor Company Customer Satisfaction with Dealer updated to include cataloging, contracts in North America
dividends totaling $2.75 billion Service” according to the J.D. Power product details, technical resources,
– Managed $150 billion in receivables and Associates 2005 Customer training and information on where ESP
– Placed approximately 2.7 million Service Index Study. Lincoln is consumers can purchase products – Managing more than
vehicle financing contracts the only domestic nameplate 6.9 million active contracts
to win 2 consecutive years Genuine Ford Accessories
– Record service satisfaction – Growing portfolio of products to APCO
performance as measured by enhance Ford Motor Company – Managing more than
Ford Motor Company’s Customer vehicles including: exciting new 20” 1.4 million active contracts
Viewpoint service experience survey wheels, new Sport Liner™ (bedliner
– Daily Parts Advantage continues to product), and chrome packages (grille,
provide Ford, Lincoln and Mercury wheel, running board, bug shield)
dealers with record parts availability
and on-time daily delivery

Customer 1.800.727.7000 Ford/Mercury Motorcraft Parts ESP

Assistance www.fordcredit.com 1.800.392.3673 www.motorcraft.com 1.800.521.4144
www.genuineservice.com
Lincoln Genuine Ford Accessories
1.800.521.4140 www.fordaccessoriesstore.com APCO
www.genuineservice.com www.lincolnaccessories.com 1.800.538.4181
www.ford.com www.mercuryaccessories.com www.easycare.com
Click on “contact us”

* As an unconsolidated subsidiary, all of Mazda sales are not consolidated into Ford Motor Company vehicle unit sales.
Only vehicles built or distributed by Ford for Mazda are included in total Ford unit sales summaries.

Ford Motor Company Annual Report 2005 105

 Ford Motor Company Driving Innovation 2005 Annual Report
Ford.com Ford Motor Company 2005 Annual Report
Driving Innovation Driving Innovation

Ford Motor Company

One American Road, Dearborn, Michigan 48126