Ford Motor Company is a global industry leader that manufactures and distributes automobiles on six continents. Based in Dearborn, Michigan, with approximately 246,000 employees and 95 plants worldwide, its core and affiliated automotive brands include Ford, Lincoln, Mercury, Volvo and Mazda. Its automotive financing business is Ford Motor Credit Company.

The company operates as a globally integrated worldwide team with four key priorities: aggressively restructuring to operate profitably at the current demand and changing mix, accelerating development of new products customers want and value, financing its plan and improving its balance sheet, and working together effectively as a global team.

PROGRESS:

Small cars are making big news these days as their sales outpace overall industry growth worldwide. Globally, small cars have reached nearly 45 percent of total industry sales, a level never before achieved. In the U.S., sales of small cars likely will grow by 25 percent to a record 3.4 million units by 2012. Ford Motor Company is positioning itself to take advantage of this trend with stylish, innovative and fuel-efficient smaller cars.

The 2008 Ford Fusion (top left) stands apart in the highly competitive midsize car segment in North America with a distinctive design and segmentleading quality, safety and affordability. With a new look and refined interior, the 2008 Ford Focus (top right) plays an important role in the company’s resurging car portfolio in North America, continuing the momentum built by the successful Fusion.

The Verve (center) is a concept car that makes clear the bold vision Ford has for the new small car it will introduce around the world as the Ford Fiesta. Designed and developed in Europe for sale in Europe, Asia, South Africa, Australia and the Americas between 2008 and 2010, the Fiesta is the first major product of Ford’s new global product development process.

PRIORITIES:

Ford plans to grow profitably by improving its cost structure, introducing exciting new products, strengthening its balance sheet and operating as a single global team. Progress toward these priorities in 2007 included:

1. Ford was the only company in the J.D. Power and Associates 2007 Initial Quality Survey with five segment winners, including the Ford Mustang.

2. The award-winning Ford SYNC™ system – developed with Microsoft – connects people with a variety of portable communication devices in their vehicle and is on track to reach one million sales by early 2009.

3. Alan Mulally congratulates Kansas City Assembly Plant employee Patricia France at the launch of the 2008 Ford Escape and Mercury Mariner.

4. UAW Vice President Bob King (left) and Ford Vice President Marty Mulloy shake hands at the start of the 2007 negotiations. Mutual respect and teamwork resulted in a landmark national contract that will significantly improve the company’s competitiveness and enable it to invest in new products and facilities.

Download Ford Motor Company 2007 Annual Report

PDF format, 6.2MB, 130Pages.

On the Cover

The Ford Blue Oval, seen here on the grille of the Ford Edge with HySeries Drive, is one of the most familiar brand symbols in the world. The company is building on the strength of the oval around the globe to achieve profitable worldwide growth.

Environmental stewardship is a key element of that effort. The Ford Edge with HySeries Drive is the world’s first drivable fuel cell hybrid electric vehicle with plug-in capability.

A research demonstration vehicle, it is part of Ford’s broader blueprint for sustainability that includes a wide range of actions for the near, mid and long term.

Visit Ford Motor Company Website

A Message from the Executive Chairman:

Progress and Priorities

The year 2007 marked a major turning point for Ford Motor Company.

We made significant progress toward our plan to return to profitability in North America and in our total Automotive operations in 2009. At the same time, we laid the foundation for future growth. Our efforts centered on improving our cost structure, introducing exciting new products, improving our balance sheet, and operating as a single global team.

The results were very encouraging.

With the exception of North America, all of our Automotive operations were profitable, excluding special items, and all achieved significant improvements. In North America, we made substantial progress on our plan to aggressively restructure in order to operate profitably. We continued to align capacity to demand, and reached an agreement with the United Auto Workers which significantly improves our competitiveness going forward.

Around the world, our new vehicles are being acclaimed for their styling, quality and safety. Environmental stewardship also is a key element of our revitalized product plans. In the near term, we are introducing EcoBoost, an affordable engine technology that will give our customers substantial fuel economy improvements at a competitive price. Longer term, we are investing in a variety of alternative fuel technologies to meet the energy and environmental challenges of the future.

We have also appointed the industry’s first senior executive for sustainability and formed a Transformation Advisory Council to help us shape our thinking about future technologies and global trends. This group includes nationally known thought leaders from outside Ford who will come together several times a year with our own experts with the goal of making us the leader in sustainability.

The outlook for the automotive industry remains challenging. However, based on the progress we are making and the product portfolio we have coming, I believe we are starting to write an exciting new chapter in Ford history.

Under the outstanding leadership of Ford President and CEO Alan Mulally, our worldwide team continues to press forward urgently to achieve our priorities. We all share the same goal – creating exciting, desirable and responsible vehicles so we can grow our business profitably. By doing that we will create value for our shareholders, our communities and our world.

William Clay Ford, Jr.
Executive Chairman and Chairman of the Board
March 6, 2008

A Message from the President and CEO:

One Team, One Plan, One Goal…

ONE YEAR

Last year in this report I introduced you to the principles, practices and priorities Ford Motor Company began operating under after I joined the team in September 2006. I would like to take this opportunity to update you on the progress we made in our first full year and our plans for the future.

Although a financial statement is just a snapshot in time, the numbers we achieved in 2007 are encouraging. Our overall net loss of $2.7 billion represented an improvement of nearly $10 billion over 2006. Excluding special items, we achieved a pre-tax profit from continuing operations of $126 million. All of our Automotive operations were profitable outside of North America, excluding special items, as was our Financial Services sector, which earned a pre-tax profit of $1.2 billion.

Our worldwide Automotive revenue, excluding special items, was $155.8 billion in 2007, compared with $143.3 billion in 2006. Automotive gross cash (including cash and cash equivalents, net marketable securities, loaned securities and short-term Voluntary Employee Beneficiary Association (VEBA) assets) at December 31, 2007 was $34.6 billion, an increase of $700 million from the previous year-end.

As pleased as I am by these results, I am even more excited about the progress we are making behind the scenes in the key areas that I outlined last year.

ONE FORD

In last year’s report, I described our efforts to fully leverage the tremendous worldwide resources of Ford. We offer a full line of products in a fiercely competitive global industry. To achieve profitable growth we need to take advantage of every potential economy of scale and best practice we can find. That means operating as one team around the world, with one plan and one goal – which is what we did in 2007.

We came together as a global team, working with mutual respect and trust. We looked at the difficult challenges we faced and created a plan that dealt with the reality of our situation. We set a goal that would create value for our extended family of customers, employees, suppliers, dealers and shareholders around the world. And then we got to work.

ONE TEAM

When I arrived at Ford I was extremely impressed by the talent and dedication of its people. Since then, we have worked hard to unleash their full potential by building a real team and creating an atmosphere of trust.

We began with the senior leadership team, streamlining positions and moving several people up to head unified global organizations. For example, all of our product development operations worldwide now report to one person, Group Vice President of Global Product Development Derrick Kuzak.

Our purchasing, manufacturing, quality, communications and several other functions also were given a global structure to make better use of the company’s worldwide assets. We added one of the most talented marketing executives in the industry, Jim Farley, as group vice president of Marketing and Communications. And we created the industry’s first senior executive for sustainability, naming Sue Cischke as our senior vice president of Sustainability, Environment and Safety Engineering.

I meet with our senior leadership team once a week in a half-day session to review progress toward our goals and address any roadblocks. Individuals are held accountable for delivering results, but we work together as a global team to find the best solutions. Even though we are a relatively new team, we are already performing and operating at a high level, and we continue to improve.

The best example of what I mean when I talk about working together to make Ford a vibrant and successful company is our new agreement with the United Auto Workers. In November 2007, we signed a four-year national labor contract with our UAW partners that significantly improves our competitiveness going forward. This landmark agreement will enable us to invest in the new products that are a key element of our global plan.

ONE PLAN

Our worldwide team is focused on four key priorities: aggressively restructuring to operate profitably at the current demand and changing model mix, accelerating the development of new products that our customers want and value, funding our plan and improving our balance sheet, and elevating to a new level of performance our commitment to working together with all of our partners. These are the same priorities I outlined in this report last year, and they will remain our priorities for the foreseeable future.

The highlights of our efforts in support of our plan in 2007 included:

• A reduction in capacity in North America to better match demand and improve productivity.
• $1.8 billion in cost savings (at constant volume, mix and exchange, excluding special items).
• Quality improvements that put us on par with the best in the business and earned us a number of strong endorsements from third parties such as Consumer Reports and J.D. Power and Associates.
• The launches of the new Ford Taurus, Taurus X, Focus, Mustang Bullitt, Mercury Sable and Ford F-Series Super Duty, which kept us on track to achieve our plan of making 70 percent of our North American lineup new or significantly upgraded by the end of 2008.
• In the U.S., Ford, Lincoln and Mercury crossover utility vehicles led the fastest-growing market segment with a sales gain of 62 percent.
• Ford Mustang convertible was the first sports car and first convertible ever to earn five stars – the highest possible safety rating – in all categories from the National Highway Traffic and Safety Administration. Ford Taurus, Taurus X and Mercury Sable also earned five-star rating crash-test ratings from NHTSA, as well as Top Safety Pick ratings from the Insurance Institute for Highway Safety.
• Ford Europe captured Autocar magazine’s annual “Car Company of the Year” award.
• Ford Mondeo joined three other models – Ford Focus, Galaxy and S-MAX – with a five-star performance on the Euro NCAP Top 10 list, giving Ford Europe the highest number of vehicles in the top 10 for adult occupant protection.
• Ford South America sales were up 19 percent year-over-year.
• Ford China, where sales were up 26 percent, launched operations at our new assembly plant in Nanjing to produce small-car models for both Ford and Mazda.

The progress we made in 2007 validates our plan and encourages us to continue working toward our goal.

ONE GOAL

Our goal has not changed – we want to build products that are immensely desirable so that we can grow profitably. As we work toward that goal, you will see increasing numbers of new product introductions from us around the world.

In North America alone we will have six major launches this year, putting us over the top of our goal to deliver a 70 percent new showroom. This wave of new products includes the Ford Flex crossover, hybrid options for the Ford Fusion and Mercury Milan, the new flagship Lincoln MKS sedan, and the new F-150 will join the F-Series family, which has 31 consecutive years of truck leadership.

Other new product launches in 2008 include the Ford Focus, Kuga crossover and Fiesta in Europe, Ford Mondeo in Asia and Ford Falcon in Australia.

As we go forward, the mix of vehicle models we offer will be much closer to where the market is going. For example, small cars have reached nearly 45 percent of total industry sales worldwide, a level never before achieved. We are positioning ourselves to take advantage of this trend with Ford Fiesta, an exiting new small car we will introduce in Europe, Asia, South Africa, Australia and the Americas between 2008 and 2010.

Importantly, the new vehicles we introduce around the world will offer improved fuel economy and reduced environmental impact. In the short term, we will feature hybrids, clean diesel engines, flexible-fuel ethanol vehicles and a turbocharged directinjection system we call EcoBoost. EcoBoost provides up to 20 percent better fuel economy and 15 percent fewer CO2 emissions, as well as superior performance. It will be available in half a million Ford, Lincoln and Mercury vehicles annually in North America during the next five years.

For the longer term, we are exploring the potential of plug-in hybrids, fuel cells, hydrogen internal combustion engines and other advanced technologies in laboratories and test fleets around the world. These actions are not only the right and responsible thing to do, they also will give our customers the kind of products they want and value.

LOOKING FORWARD:

In many ways 2008 will be like 2007 – a year of transition. Our automotive operations will continue to improve, but will face the ongoing challenges of our highly competitive industry as well as a slowing U.S. economy.

To help us deliver on our commitments in this difficult external environment, we will be taking further cost reduction actions in North America. In addition, we will continue to accelerate the flow of new products and adjust production to the changing business environment.

At the conclusion of my message last year I said that the results of our efforts would be more readily apparent in time. Our early results are now in, and they are promising.

In the months ahead you will see more of the building blocks of the new Ford Motor Company start to emerge. As they do, I hope you will share in the excitement we feel as we work together to create a dynamic global enterprise growing profitably around the world.

One team, one plan, one goal – one Ford.

Alan Mulally
President and Chief Executive Officer
March 6, 2008

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