Thursday, February 5th, 2009

Matthew Clemson, Gavin McDowell, Stephanie Ramsay, David Spencer,

Lindsey White

FORD – ANALYST REPORT

1Group 10

Financial Performance (5-10 Year Outlook)

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Revenue growth has severely lagged cost growth leading to slimmer margins, decreased cash flow, and ultimately, a steep decline in stock price.

2008 2007 2006 2005 2004 2003 2002 2001 2000 1999Revenue 146,300 172,455 160,065 176,835 172,316 166,095 162,258 160,504 169,091 160,703 COGS 153,514 157,649 153,337 144,226 139,451 132,495 137,788 135,128 126,709

Gross Profit 18,941 2,416 23,498 28,090 26,644 29,763 22,716 33,963 33,994 Profit Margin 11.0% 1.5% 13.3% 16.3% 16.0% 18.3% 14.2% 20.1% 21.2%

SG&A 24,237 19,389 25,071 25,224 26,701 18,095 18,572 16,640 14,992 Operating Income (5,296) (16,973) (1,573) 2,866 (57) 1,514 (5,952) 8,264 9,748

Operating Margin -3.1% -10.6% -0.9% 1.7% 0.0% 0.9% -3.7% 4.9% 6.1%Net Income (14,571) (2,723) (12,613) 1,440 3,038 239 (980) (5,453) 3,467 7,237

Ford’s Struggling Financial Performance

IndustryKey Numbers Ford Chrysler GM Toyota MedianAnnual Sales ($ mil.) 172,455 59,700 181,122 262,394Employees 246,000 66,409 266,000 316,121Market Cap ($ mil.) 4,493 -- 1,941 --Gross Profit Margin 14.10% -- 2.00% 18.10% 20.80%Net Profit Margin -7.10% -- -13.30% 6.50% 3.30%Return on Assets -4.40% -- -16.90% 5.70% 2.90%Return on Invested Capital 0.00% -- -33.10% 7.00% 6.10%Price/Sales Ratio 0.03 -- 0.01 0.78 0.34Price/Cash Flow Ratio 0.64 -- -- 6.89 4.74Days of Sales Outstanding 245.8 -- 20.9 103.1 58.0Inventory Turnover 11.1 -- 7.7 12.8 5.5Leverage Ratio 0.60 -- 0.41 0.38 0.25Revenue Per Share 69.54 -- 271.08 83.32 25.04Long-Term Debt Per Share 67.64 -- 62.16 18.96 3.5436-Month Revenue Growth -8.30% -- -14.40% 51.90% 21.20%

Ford’s Struggling Financial Performance

Stock Recommendations

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ASSUMPTIONS2008 2009 2010 2011 2012

Revenue Dn 10% Up 5% Up 5% Up 5% Up 5%EBIT = 2006 Up 1.5% Avg '04, '05, '07 Up 0.8% Up 0.5%Depreciation = 2007 Dn 0.6% = 2009 Up 0.5% = 2011CapEx = 2007 Dn 0.2% = 2009 = 2010 = 2011Working Capital Avg 2004 - 2007

With Ford levered to the hilt and cash flow projected to be very low, we forecast a negative equity value of $44 billion. Investors have a big hole to crawl out of before even reaching the current $1.80 per share.

2001 2007 2008 2009 2010 2011 2012

Gross Cash Flow 11,208 11,141 1,686 1,989 10,095 12,092 13,200 - Gross Investment 21,548 (4,402) (980) 7,551 7,929 8,325

= Free Cash Flow (FCF) (10,407) 6,089 2,969 2,544 4,163 4,875

Cost of Capital 8.5%

Continuation Value 3.5% 100,904

PV of FCF 16,372 PV of Continuation Val 72,809 Enterprise Value 89,181 - Total Debt 168,530 + Cash 35,283 Equity Value (44,066)

ProjectedHistorical

We Do Not Recommend Ford Stock

Marketing Landscape

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Competitive Landscape

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Low Price/High Quality

Low Price/Lo

w Quality

High Price/Lo

w Quality

High Price/High Quality

Re-Branding Amidst a Financial Crisis?

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Refreshed Brand Image and New

Positioning

Competitive Landscape

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Low Price/High

Quality

Low Price/Lo

w Quality

High Price/High Quality

High Price/Low

Quality

“Green Vehicles” Changes Ford’s Competitive Landscape

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•Toyota Prius•Chevy Volt•Honda Insight•Kia Sonata•Honda Insight•Smart Car•Cooper Mini

•Tahoe and Suburban•Escalade• Chevrolet Trucks•Toyota Trucks/SUVs

•Tahoe and Suburban•Escalade• Chevrolet Trucks•Toyota Trucks/SUVs

Brand Positioning Crossroad?

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Competitive Advantage

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Competitive Advantage

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Used Vehicles

Affordability of New

Cars

Sustainable Competitive Advantage

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VALUE RARE INIMITABLE ORGANIZED

Brand Equity

Customer Loyalty

Investment in Hybrid R&D

Manufacturing Flexibility

Green Awareness

Complementary Business Units

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Complimentary Business Units

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Vehicle Warranty

Certified Pre-OwnedCertified Pre-Owned

Vehicle Repair

Service

Vehicle Repair

Service

Ford Motor Credit

•Established Program •Quality

Reputation

• Little Revenue• Consistent Customers

•50% Claim Reduction

Key Acquisitions and Alliances

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Acquisitions & Alliances

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After acquiring a partial or whole interest in several different car companies throughout the 80’s and 90’s, Ford is in the midst of divesting all these interests in an attempt to raise capital.

Raised 9.34 Billion through “sell-offs”.

Acquisitions & Alliances (cont)

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Ford has been shopping Volvo in China. Why? Sales increased throughout the early 2000’s.

Sales have dropped recently but the perception has not. Include this brand in your Hybrid rollout.

Volvo holds a 71% stake in Brand Perception for safety. Ford can use this to carry over into other Ford products.

Acquisitions & Alliances (cont)

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Ford should continue to look to partner with foreign automakers in emerging markets.

Lowers original capital commitment and overall exposure.

Example: Alliance with Russian automaker GAZ.

Product Plans

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Announced or Apparent Product Plans

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Ford has invested heavily in hybrid, flex fuel, and plug in-vehicles.

Ford is in the best position out of all US automakers to take advantage of new energy efficient cars.

Ford plans to have a full family of hybrid vehicles by 2011-2012.

Announced or Apparent Product Plans

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2007 partnership with Southern California Edison (SCE).

At this time, not a good use of funds.Estimated 5000 – 10,000 plug-in vehicles sold

in 2011.Needed infrastructure is still well off into the

future.

Announced or Apparent Product Plans

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Flex fuel cars have not been performing. Consumer backlash, cars not starting, and

other issues.Ford should focus more on Hybrid technology.

Announced or Apparent Product Plans

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Ford has been listening to its consumers. Redesigning such models as the Shelby

GT500 and the almighty workhorse……the Taurus.

Productivity Measurements

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Improving Productivity: Not a Competitive Advantage

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• Industry becoming leaner, slackers coming closer• Gap in 2003 was 10.51 hrs• Gap in 2008 was 3.50 hrs

• Top 6 industry producers converge on productivity• Range narrows to 3.50 hrs from top to bottom

producer• Toyota and Chrysler lead in vehicle labor hours• 30.37 hrs per vehicle

• Ford improves productivity by 3.7%• 33.88 hrs per vehicle

New Domestics Lead Plant Utilization Metrics

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Production Strategy

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Fords Global Footprint

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110 manufacturing plants in 23 countries

Ford Changes Production Mix

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Temporary closures to reduce supply

Ford is in the process of retooling production facilities to meet current market trends

Conversion from SUV to small car plantsDearborn, MichiganMexico City, MexicoLouisville, Kentucky

Strategic Recommendations

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Company vs Analyst Comparison

Questions

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