We will achieve this by:

• Striving to create value for our shareholders that is sustainable over the long term
• Seeking enhanced stakeholder loyalty as a route to competitive advantage and long-term growth

Progress Since Our Last Report

During 2006, we continued to implement our Way Forward plan for North America to restore Ford to profitability. Actions in 2006 included idling two assembly plants, offering separation packages to our UAW-represented hourly workers (substantially all of our U.S. hourly workers) and beginning the process of reducing our salaried workforce-related costs by about one-third. These painful but necessary actions have a range of impacts on our employees, business partners and the communities in which we operate. We strive to manage these impacts responsibly. For more information, see Sustaining Ford.

The factors that are reshaping markets globally – including increased competition, market segmentation, high health care costs and rising costs for manufacturing inputs – continue to affect our core business. In addition, fuel prices rose sharply during the first half of 2006, encouraging a further market shift toward smaller vehicles and away from other, more profitable vehicles such as trucks and sport utility vehicles.

We are accelerating implementation of the Way Forward plan, aimed at returning Ford to profitability in 2009. Our priorities include:

• Restructuring the Company to be profitable at lower volumes and with a changed vehicle mix
• Accelerating product development and reducing manufacturing complexity
• Obtaining and maintaining adequate liquidity to fund the first two priorities
• Working together through teamwork and accountability

Our sustainability agenda is an integral part of our overall strategy for responding to changes in global markets with products that offer great design, safety and environmental features (see Products and Customers section).

We engage regularly with the investment community about our current performance and future plans. We have received favorable rankings in socially responsible investment indices and continue to benefit from constructive feedback from the rating organizations on our performance and our approach to sustainability.