Ford 2008 Annual Report Download - page 15

Management’s Discussion and Analysis of Financial Condition and Results of Operations
Ford Motor Company | 2008 Annual Report 13
Suppliers. We continue to work to strengthen our supply base in the United States, which represent 80% of our North
American purchases. As part of this process, we have been reducing the total number of production suppliers eligible for
major U.S. sourcing from 3,300 in 2004 to approximately 1,600 suppliers today, with a further reduction to 750 suppliers
planned. We believe that our efforts at consolidation will result in more business for our major suppliers, which is
increasingly important as industry sales volume declines. In addition, our move to global vehicle platforms should
increase our ability to source to common suppliers for the total global volume of vehicle components, so that a smaller
number of suppliers will receive a greater volume of the purchases we make to support our global vehicle platforms.
Dealers. Our dealers are a source of strength in North America and around the world, especially in rural areas and
small towns where they represent the face of Ford. At our current and expected future market share, however, we have
too many dealers, particularly in U.S. metropolitan areas, which makes it increasingly difficult to sustain a healthy and
profitable dealer base. To address this overcapacity, we are working with our dealers in efforts to downsize, consolidate
and restructure our Ford, Lincoln, and Mercury network in our largest 130 metropolitan market areas in the United States to
provide targeted average-year sales for Ford dealers of more than 1,500 units and for Lincoln Mercury dealers of more
than 600 units. This should result in sustainable dealer profits. As part of these efforts, the number of dealers in our Ford,
Lincoln and Mercury network in the United States has been reduced from about 4,400 at the end of 2005 to about 3,800 at
the end of 2008. These efforts, which include funding dealer consolidations to enhance our representation in the
marketplace, will continue in the future to reduce further our dealer network to match our sales and dealer sales objectives.
Ford Credit. Ford Credit also is further restructuring its operations and improving its cost structure to reflect lower
financing volumes resulting from lower automotive industry sales volumes, lower financing volumes resulting from the sale
of Jaguar Land Rover operations, and its agreement with Mazda to discontinue providing financial services. These
actions include forming new strategic alliances and partnerships, and reducing capital needs in international markets while
continuing to streamline its operations globally. In the United States, Ford Credit continues to restructure its operations
and reduce personnel, including current plans described in its Current Report on Form 8-K filed January 29, 2009.
Accelerate Development of New Products
We are committed to introducing new products that consumers want and value, and we are receiving very positive
reactions from consumers, media, and independent evaluators in response to the products we introduced in 2008, which
we plan to build on in 2009.
Ford North America. Ford, Lincoln and Mercury collectively increased U.S. overall and retail market share in October,
November, and December 2008 – the first time the brands have posted three consecutive months of market share
improvements in 12 years. Our new 2009 Ford F-150 introduced in the fourth quarter was named Motor Trend
magazine’s Truck of the Year and awarded the title of North American Truck of the Year at the North American
International Auto Show in January 2009; the F-Series pickup has been the best-selling truck in the United States for
32 straight years. The F-150 also was named “Top Safety Pick” by the U.S. Insurance Institute for Highway Safety
("IIHS"), and we now have the highest number of vehicles with the IIHS “Top Safety Picks” in the industry. Ford also has
more U.S.-government five-star safety-rated vehicles than any other brand. In the fourth quarter of 2008, we also began
production of the 2010 Ford Fusion, Mercury Milan and Lincoln MKZ sedans, as well as Fusion and Milan hybrids; the
Fusion and Milan gasoline and hybrid versions offer best-in-class fuel economy. The 2010 Ford Mustang debuted with a
new exterior and interior, and will arrive in dealerships in spring 2009.
Ford Europe. In Europe, 2009 will mark the first full sales year for the Fiesta, which was named “Car of the Year” by
What Car? magazine, Britain’s leading source of new car advice. Fiesta was the United Kingdom's best-selling model in
November and December of 2008 and again in January 2009, and is already the second best-selling Ford model in Europe.
The new Ford Ka reached full production in Europe and is off to a strong sales start. Ford Galaxy and Ford S-MAX were
named No. 1 for reliability among Multi-Activity Vehicles by DEKRA, the German vehicle testing agency. In addition, the
Ford Kuga crossover will be available for the first time with a 2.5-litre 5-cylinder Duratec Turbo gas engine and Durashift
5-tronic automatic transmission. Based on the strength of its product portfolio, Ford Europe improved its fourth quarter and
full-year 2008 market share in the 19 markets we track, and Ford became the No. 2 selling brand in Europe.
Ford South America. In South America, 2009 will demonstrate the growing strength of our “One Ford” plan. We are
bringing the new European-based Ford Focus to Brazil, Argentina, and Venezuela. Also in Brazil, the North American-
based Ford Edge will arrive in dealerships, along with the European-based Transit, building on Ford South America’s
business and product success. Six additional product actions also are planned for introduction in the region in 2009.