Ford Mtr Co del · NYSE:F
Ford Mtr Co del — Ford Motor Company — Investor Day (June 2011)
96 slides from Ford Mtr Co del's investor day presentation, Jun 7, 2011
Slide 1: Investor Day
INVESTOR DAY June 7, 2011
Slide 2: Introduction
INTRODUCTION K. R. Kent Executive Director Investor Relations
Slide 3: Investor Day Agenda
INVESTOR DAY AGENDA • Introduction K. R. Kent • Profitable Growth for All Alan Mulally • Product and Marketing Derrick Kuzak / Jim Farley Strategy / Q&A • Ford Credit Strategy / Mike Bannister / Lewis Booth Financial Strategy / Q&A • Mid-Decade Outlook Alan Mulally • Question & Answer All June 20th
Slide 4: Profitable Growth for All
PROFITABLE GROWTH FOR ALL Alan Mulally President and CEO
Slide 5: Opportunity Ahead
OPPORTUNITY AHEAD The Opportunity Ahead We Fixed The Is To Deliver Business Fundamentals Profitable Growth Delivering Profitable Growth SLIDE 5
Slide 6: The Plan
THE PLAN We Fixed The The Opportunity Ahead Is To Deliver Business Fundamentals Profitable Growth Expected Behaviors oster Functional and Technical Excellence • Know and have a passion for our business and our customers People working together as a lean, global enterprise for • Demonstrate and build
Slide 7: Delivering the Plan
DELIVERING THE PLAN We Fixed The The Opportunity Ahead Is To Deliver Business Fundamentals Profitable Growth Aston Martin Jaguar Auto Land Rover Improve Focus and Credit Volvo Divestitures Simplify Operations Mercury Revenue ACH BRIC Countries Low-Cost Vehicles Growth & Finance The Plan Reduce Debt
Slide 8: Historical Trend of Ford Pre-Tax Profits
HISTORICAL TREND OF FORD PRE-TAX PROFITS* Pre-Tax U.S. Profit Industry (Bils.) 17.1 Volumes 16.5 (Mils.) $8.3 13.5 11.8 10.6 $- $(0.4) $(3.6) $(7.3) 2006 2007 2008 2009 2010 * Excluding special items SLIDE 8
Slide 9: Opportunity Ahead
OPPORTUNITY AHEAD The Opportunity Ahead We Fixed The Is To Deliver Business Fundamentals Profitable Growth Delivering Profitable Growth SLIDE 9
Slide 10: Opportunity Ahead
OPPORTUNITY AHEAD Grow Volume Improve And Net Pricing Scale The Opportunity Ahead Is To Deliver Profitable Growth Improve Productivity We Have Two Primary Opportunities To Deliver Profitable Growth -- Grow Volume And Net Pricing And Improve Productivity SLIDE 10
Slide 11: The Plan
THE PLAN We Fixed The The Opportunity Ahead Is To Deliver Business Fundamentals Profitable Growth Expected Behaviors oster Functional and Technical Excellence • Know and have a passion for our business and our customers People working together as a lean, global enterprise for • Demonstrate and build
Slide 12: Growing Volume
GROWING VOLUME Global Industry Mix 2000 2010 2020 39% Americas 25% Asia Pacific 26% 45% 21% 42% Europe, 40% M. East, & Africa 32% 30% Industry Volume (Mils.) Global 58 74 112 China 2 (4%) 18 (25%) 32 (28%) Our Business Is A Growth Industry Source: IHS Global Insight SLIDE 12
Slide 13: Global Industry Segmentation Shifting
GLOBAL INDUSTRY SEGMENTATION SHIFTING 2000 2010 2020 17% Large 25% 18% 26% 47% Medium 19% 20% Small 28% 62% 64% 27% Industry Volume (Mils.) Global 58 74 112 Smaller Vehicles Are Growing As A Percent Of Total -- Large Vehicles Including Trucks Still An Important Segment Source: IHS Global Insight SLI
Slide 14: The Plan
THE PLAN • Great Products…Strong Business…Better World • Serve all major markets • Expand in BRIC markets • Focus on the Ford and Lincoln brands • Full line-up of vehicles – Small, Medium and Large…Cars, Utilities and Trucks – Electrification strategy -- “Power of Choice” – Commitment to product exc
Slide 15: The Plan (Cont'd)
THE PLAN (CONT’D) • Improve time to market • Freshest showroom • Enhance customer experience • Deliver the brand promise • Fully competitive revenue • Global platforms and scale • Flexible and efficient production • Fully competitive costs • Return to and maintain investment grade • Skilled and moti
Slide 16: One Team organization
Customers ONE TEAM Business Units Asia Pacific Americas Europe and Africa Credit Alan Mulally Product Development Mark Fields Stephen Odell Joe Hinrichs Mike Bannister Derrick Kuzak Manufacturing and Labor John Fleming Purchasing Quality Tony Brown Sustainability e t h er og for Bennie Fowler g T Fu
Slide 17: Product Strategy
PRODUCT STRATEGY Derrick Kuzak Group Vice President, Global Product Development
Slide 18: Profitable Growth for All
PROFITABLE GROWTH FOR ALL GROWING IMPROVING REVENUE PRODUCTIVITY Product Excellence -- Industry-Leading Refresh Passion for and Delivery of Rates Speed and Breadth of New Value-Enabled Global World-Class Product Feature / Technology Vehicles Development Efficiency Offerings Attractive, High-Content
Slide 19: Delivering the Global Product Plan
DELIVERING THE GLOBAL PRODUCT PLAN Global Product Strategy • Bold, emotive exterior designs • Great to drive • Great to sit in (second home comfort, convenience, exceptional quietness) • Fuel economy as a reason to buy • Unmistakably a Ford or Lincoln in look, sound, feel • All with exceptional valu
Slide 20: Accelerating Global Products
ACCELERATING GLOBAL PRODUCTS Ford is Committed to: Delivering A Balanced Global Portfolio With: Industry Leading Product Refresh Rates Benchmark Efficiency World-Class Team Our Product Plan Delivers A Full Line-up Of Vehicles -- Small, Medium, Large…Cars, Utilities, And Trucks That Is Among The Fres
Slide 21: 2012 Ford Focus 5-Door and 4-Door
2012 FORD FOCUS 5-DOOR AND 4-DOOR Focus Exterior Design Conveys It Is A Driver’s Car With Fit And Finish Matching That Of An Audi A3 And The Focus Is Quieter And Has More Smart Technology SLIDE 21
Slide 22: New Ford Focus
NEW FORD FOCUS “The Focus is clearly the Focus beats best driving Golf and car in this Guilietta class.” -Autocar –WhatCar? “Focus is “Fun Focus once more a leaves the Golf great car to trailing.” drive.” –WhatCar? -Autocar “Focus delivers “This latest snappy Ford Focus is acceleration, the best sma
Slide 23: Coming Ranger Multi-Market Acceptance
COMING RANGER MULTI-MARKET ACCEPTANCE Ford Ranger Final First-Choice Market Preference Australia 48 South Africa 57 Competitor A Thailand 58 Competitor B United Kingdom 50 Brazil 54 Argentina 64 In 6 Global Markets, Ranger Market Research Data Leads All Competitors On Key Performance Ratings; Exampl
Slide 24: EcoBoost Product Range
ECOBOOST PRODUCT RANGE EcoBoost Horsepower Annual Volume by Displacement Range 2013CY 3.5L V6 355 -365 250K 2.0L I4 200 - 250 560K 1.6L I4 150 - 180 500K 1.0L I3 100 - 120 260K In Line With Our Strategy To Provide High Volume Solutions, A Full Range Of Ecoboost Powertrains Will Service All Regions W
Slide 25: Fuel Economy Leadership -- US Market
FUEL ECONOMY LEADERSHIP -- US MARKET • Ford is now first in customer satisfaction for both fuel economy and performance based on 2011 Wave 1 GQRS* Data • Ford offers 12 vehicles that lead their sales segments in fuel economy • Four of Ford’s segment-leading vehicles offer EPA-certified 40 mpg or hig
Slide 26: Fuel Economy Leadership
FUEL ECONOMY LEADERSHIP U.S. Light-Duty Fleet Fuel Economy Percent Improvement Further Improvement United States 26% 15% Base 2005 2009 2012 2015 EU Fleet Fuel Economy Percent Improvement Further Improvement Europe 21% Base 7% 2005 2009 2012 2015 Delivering The Best With Every New Vehicle And Improv
Slide 27: Power of Choice electrified vehicles
NEW C-PLATFORM ELECTRIFIED VEHICLES THE POWER OF CHOICE Ford’s Strategy Is To Electrify Global Platforms With All 3 Electric Solutions; To Drive Choice Of Top Hats, Scale And Affordability SLIDE 27
Slide 28: Electric Lifestyle -- Supported by Ford
ELECTRIC LIFESTYLE -- SUPPORTED BY FORD Smartphone Access with MyFord In‐Car Info with MyFord TouchTM At Home Charging Mobile • Range, destinations and charge • 3‐4 hour charge on 240v home • Stay connected, monitor / control points outlet vehicle via Smartphone • Brake Coach displays regenerative •
Slide 29: Technology Strategy Pillars
TECHNOLOGY STRATEGY PILLARS Technology Strategy Anticipate – Innovate – Incorporate Sustainability Safety Design “GREEN” “SAFE” “SMART” • Improve fuel economy; • Achieve public domain • Design leadership on reduce CO2 emissions to targets and 3rd Party each new program leadership levels Recommended
Slide 30: Brand-Signature Technology Migration
BRAND-SIGNATURE TECHNOLOGY MIGRATION North America Europe Brand-Signature Content Features: 85 86 88 88 77 5th Year Target 5th Year Target 69 62 47 50 39 9 SYNC 9 MyKey 1st Year 2nd Year 3rd Year 4th Year 5th Year 1st Year 2nd Year 3rd Year 4th Year 5th Year 9 Easy Fuel 9 Ambient Lighting South Amer
Slide 31: Focus Global Technology Leveraging
FOCUS GLOBAL TECHNOLOGY LEVERAGING ACTIVE SAFETY FEATURE COMPARISON Features Ford Focus Audi A3 Adaptive Cruise Control 9 Auto High Beam 9 9 Advanced Front Light 9 Active Park Assist 9 9 Speed Limiter 9 Front-Rear Park Aid 9 9 Hill Launch Assist 9 9 Lane Keeping Aid 9 Traffic Sign Recognition 9 Blin
Slide 32: Premium High Series Models
PREMIUM HIGH SERIES MODELS Series Example Content Take Rate • Signature black and chrome front-end treatments • High-end 17" sport alloy wheels • Exclusive sport seats 10 - 40% • Myford touch with 8“ touchscreen, multimedia input, wi-fi, and Depending SYNC on Region • Sony premium audio, 10 speakers
Slide 33: Cumulative Percent Refreshed
CUMULATIVE PERCENT REFRESHED PERCENT OF PORTFOLIO 2010-2014 WITH NEW OR MAJOR FRESHENING GLOBAL EUROPE 168% 180% 180% 145% 160% 160% 140% 140% 120% 120% 104% 88% 100% 77% 100% 80% 80% 55% 60% 60% 40% 40% 20% 20% 0% 0% FORD A2 B FORD 1 B2 C 3 1 3 NORTH AMERICA ASIA PACIFIC 180% 180% 162% 160% 132% 16
Slide 34: Revenue Triangle -- Value-Enabled
REVENUE TRIANGLE -- VALUE-ENABLED CHINA INDIA 2010 SHARE FUTURE 2010 SHARE FUTURE 6% 30% 2% $14,500 $8,500 NET REVENUE NET REVENUE 1% 3% 70% IMPROVED SHARE AND VOLUMES THROUGH VALUE-ENABLED VALUE- VALUE-ENABLED VALUE-ENABLED STRATEGY STRATEGY STRATEGY A Value Price Point Is Essential To Compete In R
Slide 35: Value-Enabled Strategy
VALUE-ENABLED STRATEGY VALUE-ENABLED VEHICLE Improve Material Cost Through • Specifications aligned to market • Attributes aligned to market, but still deliver Ford DNA and product strategy • Increase localization • All “plug and play” with global vehicle • Reduce cost by $1000 - $2000 depending on
Slide 36: India -- China -- South America Growth
INDIA -- CHINA -- SOUTH AMERICA GROWTH SEGMENT INDIA CHINA SOUTH AMERICA CURRENT FUTURE CURRENT FUTURE CURRENT FUTURE DESCRIPTION OFFERINGS SHOWROOM OFFERINGS SHOWROOM OFFERINGS SHOWROOM B-Car / SUV / MAV C-Car / SUV 3 8 5 15 15 16 60% 90% 80% 95% 100% 100% CD / D Legacy Global Legacy Global Legacy
Slide 37: Global Segment Consolidation
GLOBAL SEGMENT CONSOLIDATION Ongoing Annual Segment Sample Vehicle Platform Volume B Fiesta >2 Million C Focus >2 Million CD Fusion / Mondeo >1 Million Compact Ranger >275K Pickup Commercial E-Series / Transit >470K Van Global Platform Consolidation With Common Global Tophats Initiated On Fiesta And
Slide 38: Hub and Spoke Strategy
HUB AND SPOKE STRATEGY SMALL CAR MID-LARGE-FSPU COMPACT PU COMMERCIAL VAN VEHICLE GERMANY US AUSTRALIA UK SEGMENT HUB TOP HAT SPOKE BRAZIL CHINA MEXICO CHINA TURKEY Typical Delivery Metrics Of A Global Program • Europe / NA part number commonality: 80% • Pre-sourcing to global suppliers: 75% • APA /
Slide 39: Product Development Efficiency
PRODUCT DEVELOPMENT EFFICIENCY North America Typical Top Hat Cost ($Mils.) 2 / 3 Reduction 2006 - 2012 CY 2006 2008 2010 2012 Efficiency Enablers Of ONE Ford, Simplification, Reduced Time To Market And Operational Excellence Result In Continuous Improvement In Engineering Cost Per Program SLIDE 39
Slide 40: Product Development Efficiency
PRODUCT DEVELOPMENT EFFICIENCY Methodology PD Efficiency (% Refresh per $Bil.) Input Output 2009 Global Ford Brand Global PD Factory Engineering Cumulative Cost Freshening Output PD Efficiency = 2X Input Cumulative Freshening (’10 – ’14) PD Efficiency = Engineering Cost (’09 CY) Ford A B Our Aggress
Slide 41: Marketing Strategy
MARKETING STRATEGY Jim Farley Group Vice President, Global Marketing Sales & Service
Slide 42: Profitable Growth for All
PROFITABLE GROWTH FOR ALL GROWING IMPROVING REVENUE PRODUCTIVITY Global Marketing Team Mature Market Dealer Net Pricing Rationalization Building the Brand Volume Growth BRIC Market Dealer Growth Improving Favorable Opinion Improving Residuals Supply = Demand Improved Mix Management Global Media Cost
Slide 43: Global Marketing, Sales, and Service
GLOBAL MARKETING, SALES, AND SERVICE ONE TEAM Customers Business Units Asia Pacific Ford LATAM E&G Europe and Africa Lincoln U.S. Operations Operations Jim Farley Global MS&S Operations Global Product Mktg Plns & Strategy Global WPP e t h er Global FCSD g T og for o r k i n rp r i s e Skill Teams Fu
Slide 44: Building the Brand Globally
BUILDING THE BRAND GLOBALLY • Quality, Green, Safe, & Smart brand pillars • Brand health through favorable opinion • Corporate reputation • Dealer health and throughput • Resale value • Demand forecasting and production programming • Marketing efficiencies / best practices SLIDE 44
Slide 45: Customer Focused Brand Pillars
CUSTOMER FOCUSED BRAND PILLARS Drive Drive Drive Drive quality. green. safe. smart. Quality Fuel Economy Safety Infotainment Leadership Leadership Leadership Leadership Best Value SLIDE 45
Slide 46: Product and Go-to-Market Strategy Is Working
Purchase Funnel Summary PRODUCT AND GO TO MARKET STRATEGY IS WORKING U.S. Purchase Funnel Summary Purchase Funnel Pct. Light Vehicle Market 2011 1Q Improvement Familiarity (% 1-5) -% Favorable Opinion (% 8-10) 45% Consideration (% Def. / Prob.) 47% Shopped (% of Shoppers) 54% Intention (%) 50% Sourc
Slide 47: Transforming Ford's Brand Power -- Process
Purchase Funnel Summary TRANFORMING FORD’S BRAND POWER -- PROCESS • Monetize purchase funnel • Invest in brand campaigns around the world • Involve everyone -- employees / dealers / media • Lead in new media -- digital / social / experiential • Flawless execution thru global marketing launch process
Slide 48: Improving Transaction Price
IMPROVING TRANSACTION PRICE 2007 – 2010 MY Average Transaction Price 2007 – 2010 MY ATP • 2012 ATP vs. 2010 2012 ATP vs.2010 ATP Gap • 2010 ATP Gap • Favorable Opinion Favorable • Opinion Improvement Improvement Source: BEAT / JD Power PIN 86% 86% OfofPricing PricingPower Poer Can Can Be Be Explaine
Slide 49: Quality, Green, Safe and Smart Improvement
QUALITY, GREEN, SAFE AND SMART IMPROVEMENT Improved Customer Perception Safety Quality Green Smart Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Source: BEAT Media Investment + Product Evidence = Favorable Opinion Transformation SLIDE 49
Slide 50: U.S. Corporate Reputation: 2006-2010
U.S. CORPORATE REPUTATION: 2006 - 2010 2006 2007 2008 2009 2010 Source: DYG Reputation Survey GreatProducts…Strong Products…StrongBusiness…Better Business…BetterWorld World Great SLIDE 50
Slide 51: Improving Dealer Throughput and Profitability
IMPROVING DEALER THROUGHPUT AND PROFITABILITY • Reduced portfolio from 7 brands to 2 (Ford and Lincoln) • Consolidated more than 1,000 Ford / Lincoln Dealers in U.S. since 2005, improving competitive strength and profitability – Average dealer profits increased 78% (2005 - 2010) – Dealer throughput
Slide 52: Dealer Network -- BRIC Expansion
DEALER NETWORK -- BRIC EXPANSION • Nearly tripling dealer network to 340 in India by 2016 • Doubling dealer network in China by 2016 (100 this year) • Significant dealer network expansion in Russia by 2016 • Meaningful expansion in ASEAN SLIDE 52
Slide 53: Matching Supply to Demand
MATCHING SUPPLY TO DEMAND Days Supply Greater Than Toyota 40 30 20 10 0 '2005 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Supply = Demand Critical To Improving Pricing Power, Brand Strength And Cash Flow SLIDE 53
Slide 54: Net Revenue Per Unit Is Increasing
NET REVENUE PER UNIT IS INCREASING - - AS WE REDUCE OUR DISCOUNT TO COMPETITION Ford Lincoln Brand Discount To Key Competitors (Pct.) Average Net Revenue Per Unit 2009 2010 2008 2009 2010 B / (W) Prior Year $2,800 $1,300 Cum.: $4,100 SLIDE 54
Slide 55: New Product Net Revenue Improvement
NEW PRODUCT NET REVENUE IMPROVEMENT 2012 MY Focus 2011 MY Explorer Net Revenue B/(W) 2011MY Net Revenue B/(W) 2010MY Revenue (p/u) Revenue (p/u) Net Revenue Variable Marketing Top Line Mix & Rates Net Revenue Variable Marketing Top Line Mix & Rates New Product Revenues Improved In Variable Marketing
Slide 56: Competitive Transaction Prices
COMPETITIVE TRANSACTION PRICES Fiesta Fusion $21,031 $20,924 $20,676 $19,900 $16,363 $16,099 $14,299 $14,486 Fiesta Fit Versa Yaris Fusion Malibu Accord Camry Source: JD Power PIN - MARCH 2011 Recently Launched Products Maintained Transaction Price Leadership SLIDE 56
Slide 57: Resale Values Improving
PRODUCT AND MARKETING STRATEGY IS WORKING -- RESALE VALUES IMPROVING Used Vehicle Auction Value $16,000 Ford Chevrolet Nissan Industry $14,000 Toyota & Honda Chrysler $12,000 Hyundai $10,000 2006 2007 2008 2009 2010 Data Source: NADA AuctionNet, Mileage and Mix Controlled, Luxury Brands Excluded. Da
Slide 58: U.S. Ford Share Growth
U.S. FORD SHARE GROWTH 20% 15% 10% 2006 2007 2008 2009 2010 May YTD Ford Share Continues To Recover, Up 2.2 Percentage Points Since 2008 Low SLIDE 58
Slide 59: Industry Growth Will Be Primarily in BRIC Markets
INDUSTRY GROWTH WILL BE PRIMARILY IN BRIC MARKETS Growth In Global Industry Volume From 2010 To 2020 (Mils.) Up 37.1 21.5 Brazil Russia 15.6 India 4.5 All Other 6.5 Western Europe China 13.2 North America 6.3 Rest Of World BRIC Markets Source: IHS Global Insight From 2010 To 2020, Industry Volume Is
Slide 60: BRIC Market Growth Plans
BRIC MARKET GROWTH PLANS Brazil • Investing $2.6 billion from 2011 to 2015 • Market coverage increases from 67% to 82% by 2015 • Legacy products replaced with global by 2015 • Introduced new Cargo heavy truck in 2011 Accelerating Growth In BRIC Markets SLIDE 60
Slide 61: BRIC Market Growth Plans
BRIC MARKET GROWTH PLANS Brazil • Investing $2.6Russia billion from 2011 to 2015 • Formed joint venture with Sollers to provide better • Market coverage increases scale and business from 67% to 82% by 2015 opportunities • Legacy products replaced • 6 new models to be with global by 2015 produced - s
Slide 62: BRIC Market Growth Plans
BRIC MARKET GROWTH PLANS Brazil • Investing $2.6Russia billion from 2011 to 2015 • Formed jointIndia venture with Sollers to provide better • Market coverage increases scale • New Figo off to fast start and business from 67% to 82% by 2015 • Introducing 8 new opportunities products by middle of • Le
Slide 63: BRIC Market Growth Plans
BRIC MARKET GROWTH PLANS Brazil • Investing $2.6Russia billion from 2011 to 2015 • Formed jointIndia venture with Sollers to provide better • Market coverage increases scale • New Figo offChina and business to fast start from 67% to 82% by 2015 • Introducing 8 new opportunities • Introducing 15 new
Slide 64: Profitable Growth for All
PROFITABLE GROWTH FOR ALL Large PROFITABLE GROWTH Asia Pacific Americas Asia Pacific Americas FOR ALL && Africa Africa Profits & Medium Medium Small Small Cash Europe + + = SLIDE 64
Slide 65: Ford Credit Strategy
FORD CREDIT STRATEGY Mike Bannister Executive Vice President Ford Credit Chairman and CEO
Slide 66: Ford Credit Focused on Ford
FORD CREDIT FOCUSED ON FORD • Profitably support Ford, dealers and customers through all economic cycles • Strategic value delivered through: – Over 50 years of automotive financing experience – Consistent vehicle inventory financing, supporting automotive production plans and dealer inventory requi
Slide 67: A Virtuous Circle: Integration Creates a Strategic Advantage
A VIRTUOUS CIRCLE: INTEGRATION CREATES A STRATEGIC ADVANTAGE • Trusted Brand • Access to Dealer Channel • Automotive Specialist with Vested Interest in Ford Dealer Success More • Training & Consulting Products, • Consistent Market Presence Faster • Fast, Flexible, Quality Service • Full Array of Pro
Slide 68: Synergies Deliver Strategic Value
SYNERGIES DELIVER STRATEGIC VALUE • Consistent wholesale financing support – Finance 80% of U.S. dealers, 99% in Europe – Dealers who wholesale with Ford Credit, on average, have: ۔Higher share of industry ۔Higher Extended Service business, Certified Pre-Owned ۔Higher customer satisfaction
Slide 69: Ford Credit's Origination and Servicing Strategy
FORD CREDIT’S ORIGINATION AND SERVICING STRATEGY • Collect it Effectively • Buy it Right • Operate Efficiently Originate Service Fund • Fund it Efficiently • Manage Balance Sheet Risk SLIDE 69
Slide 70: Ford Credit's Balance Sheet Will Grow with Ford
FORD CREDIT’S BALANCE SHEET WILL GROW WITH FORD Managed Receivables (Bils.) $118 $110 - $120 $83 $82 - $87 2008 2010 2011 Mid-Decade SLIDE 70
Slide 71: Ford Credit Mid-Decade Key Financial Metrics
FORD CREDIT MID-DECADE KEY FINANCIAL METRICS ABS Debt as % of Mgd Receivables (~ 35%) Liquidity (Months of Protection) Mid- Mid- Decade Decade Target Target 2010 2011 Mid-Decade 2010 2011 Mid-Decade Managed Leverage (10-11 to 1) Return on Equity (Low Double Digits) Mid- Mid- Decade Decade Target Tar
Slide 72: Ford Credit Outlook
FORD CREDIT OUTLOOK • Business factor expectations – Base rate escalation and tighter spreads – Loss ratios to stabilize, reserves to increase with receivables growth – Used vehicle auction values to remain relatively strong through 2012 – Operating cost ratios to improve • Profit outlook – 2012 is
Slide 73: Building for the Future
BUILDING FOR THE FUTURE • Continue to diversify funding and liquidity sources, broaden investor base and optimize costs – FUEL Notes – Retail Notes • Grow in line with higher industry and higher Ford and Lincoln business • Support Ford’s target growth markets – Brazil, Russia, India, China • Leverag
Slide 74: Financial Strategy
FINANCIAL STRATEGY Lewis Booth Executive Vice President Chief Financial Officer
Slide 75: Delivering the Plan
DELIVERING THE PLAN Aston Martin Jaguar Auto Land Rover Improve Focus and Credit Volvo Divestitures Simplify Operations Mercury Revenue ACH BRIC Countries Low-Cost Vehicles Growth & Finance The Plan Reduce Debt Repair Functional Return to Balance Sheet Excellence Investment Grade Achieve Dividend Pr
Slide 76: Capital Allocation Over Time
CAPITAL ALLOCATION OVER TIME Beyond 2006 2007 2008 2009 2010 2011 2011 Raising Liquidity Maintaining and Expanding Product Programs Protecting / Rebuilding Liquidity Pursuing Growth Initiatives Reducing Debt Dividends to Shareholders SLIDE 76
Slide 77: Automotive Gross Cash, Debt, and Cash Net of Debt
AUTOMOTIVE GROSS CASH, DEBT, AND CASH NET OF DEBT 2011 First Pro 2009 2010 Quarter Forma* (Bils.) (Bils.) (Bils.) (Bils.) Gross Cash** $ 24.9 $ 20.5 $ 21.3 $ 18.7 Term Loan B $ 5.2 $ 4.1 $ 4.1 $ 1.8 VEBA Note A 3.1 - - - VEBA Note B 3.9 - - - Revolver 7.5 0.8 0.8 - Convertible Debt 2.6 0.7 0.7 0.7 T
Slide 78: Plans to Achieve Investment Grade
PLANS TO ACHIEVE INVESTMENT GRADE Completed • Repay drawn Revolver • Demonstrate consistency, predictability, and positive trend of qualitative and quantitative factors In Progress • Sustain profitability and returns • Repay Term Loan B (first lien security) Fall 2011 • Complete UAW negotiations SLI
Slide 79: Capital Strategy
CAPITAL STRATEGY • Maintain adequate liquidity to support and grow the business • Provide protection for downturns and shocks, in part, by maintaining / increasing undrawn revolver capacity • Fund pension plans and continue to reduce associated risks • Achieve and then maintain investment grade rati
Slide 80: Simple Capital Structure by Mid-Decade
SIMPLE CAPITAL STRUCTURE BY MID-DECADE Automotive (Bils.) Revolver Long-Term Unsecured Secured Term Loan B Debt VEBA Note B VEBA Note A DOE / EXIM / EIB Term Loan B Convertible Debt Equity Unsecured Notes / DOE / EXIM / EIB Convertible Other Unsecured Notes / Debt Trust Preferred Other Equity Equity
Slide 81: 2011 Perspective
2011 PERSPECTIVE • Making significant investments in product, capacity, and brand image to achieve future growth • Achieving revenue improvements, but commodity costs continue to increase • Facing near-term production constraints on fuel-efficient products • Continuing housing recession delaying rec
Slide 82: Profitable Growth for All
PROFITABLE GROWTH FOR ALL Large PROFITABLE GROWTH Asia Pacific Americas Asia Pacific Americas FOR ALL && Africa Africa Profits & Medium Medium Small Small Cash Europe + + = SLIDE 82
Slide 83: Safe Harbor
SAFE HARBOR Statements included herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainti
Slide 84: Mid-Decade Outlook
MID-DECADE OUTLOOK Alan Mulally President and CEO
Slide 85: Opportunity Ahead
OPPORTUNITY AHEAD The Opportunity Ahead We Fixed The Is To Deliver Business Fundamentals Profitable Growth Delivering Profitable Growth SLIDE 85
Slide 86: Opportunity Ahead
OPPORTUNITY AHEAD Improve Grow Volume And Net Pricing Scale The Opportunity Ahead Is To Deliver Profitable Growth Improve Productivity We Have Two Primary Opportunities To Deliver Profitable Growth -- Grow Volume And Net Pricing And Improve Productivity SLIDE 86
Slide 87: The Plan
THE PLAN We Fixed The The Opportunity Ahead Is To Deliver Business Fundamentals Profitable Growth Expected Behaviors oster Functional and Technical Excellence • Know and have a passion for our business and our customers People working together as a lean, global enterprise for • Demonstrate and build
Slide 88: The Plan
THE PLAN • Great Products…Strong Business…Better World • Serve all major markets • Expand in BRIC markets • Focus on the Ford and Lincoln brands • Full line-up of vehicles – Small, Medium and Large…Cars, Utilities and Trucks – Electrification strategy -- “Power of Choice” – Commitment to product exc
Slide 89: The Plan (Cont'd)
THE PLAN (CONT’D) • Improve time to market • Freshest showroom • Enhance customer experience • Deliver the brand promise • Fully competitive revenue • Global platforms and scale • Flexible and efficient production • Fully competitive costs • Return to and maintain investment grade • Skilled and moti
Slide 90: Ford's Changing Geographic Mix of Volume
FORD’S CHANGING GEOGRAPHIC MIX OF VOLUME* 2000 2010 2020 72% Americas ~ 43% 55% ~ 32% Asia Pacific Africa Europe 24% 15% 4% 30% ~ 25% * Geographic mix consistent with segment reporting Volumes Grow In All Regions, With Asia Pacific Africa Expected To Exceed Greatly Overall Industry Growth SLIDE 90
Slide 91: Ford's Changing Product Segmentation
FORD’S CHANGING PRODUCT SEGMENTATION 2000 2010 2020 ~ 27% 29% Large 39% 30% 26% Small 48% ~ 55% ~ 18% Medium 32% 22% 27% Our Small Vehicle Mix Will Continue To Grow, While Large Vehicles Including Trucks Remain Important SLIDE 91
Slide 92: Key Planning Assumptions
KEY PLANNING ASSUMPTIONS Mid-Decade Outlook GDP - U.S. 2 - 3% - Global 3 - 4% Trend Industry Volumes (Mils.)* - U.S. 15 - 17 - Europe 19 15 - 17 - Brazil 4-5 - Russia 3-4 - India 5-6 - China 24 - 28 - Global 95 - 100 Fuel Prices / Commodity Costs Generally increasing with stronger economies * Includ
Slide 93: Mid-Decade Operating Margin Drivers
MID-DECADE OPERATING MARGIN DRIVERS Margin Impact Volume and Mix Industry Recovery Share Improvements Product Mix Revenue Brand Image Series Mix and Options Costs Productivity Improvements Improved Scale Commodity Prices Increased Investment Overall Assessment SLIDE 93
Slide 94: Mid-Decade Outlook
MID-DECADE OUTLOOK Mid-Decade Outlook* Wholesale Volumes About 8 million Revenue / Pricing Improving Automotive Operating Margins** - North America 8 - 10% - Global 8 - 9% Ford Credit Return on Equity Low Double Digits Capital Spending About $6 billion Total Automotive Debt About $10 billion Investm
Slide 95: Profitable Growth for All
PROFITABLE GROWTH FOR ALL Large PROFITABLE GROWTH Asia Pacific Americas Asia Pacific Americas FOR ALL && Africa Africa Profits & Medium Medium Small Small Cash Europe + + = SLIDE 95
Slide 96: Safe Harbor
SAFE HARBOR Statements included herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainti