Delivering More Fuel-Efficient Vehicles

Consumer demand for more fuel-efficient and cleaner vehicles continues to grow. Ford is taking a multi-pronged approach to meeting this demand. We have committed to improving the overall fuel economy of our entire fleet. We recently announced that, beginning with the 2010 model year, all of our new vehicles will be best in class or among the best in class for fuel economy in their segment. As of May 2009, all of our 2010 model year vehicles meet this commitment; many of our 2009 vehicles also meet this commitment. For example:1

• The 2010 Ford Fusion and Mercury Milan Hybrid and gas (S-Series I-4 automatic) versions are best in class for midsize sedans,2 surpassing the Toyota Camry and Honda Accord. The Fusion and Milan Hybrids get 41 mpg city/36 mpg highway, and the gasoline S-Series I-4 automatics get 23 mpg city/34 mpg highway.
• The 2009 Ford Escape and Mercury Mariner Hybrids, which get 34 mpg city/31 mpg highway, are the most fuel-efficient SUVs available.3 The 2009 Escape and Mariner manual gas versions, which get 22 mpg city/28 mpg highway, have unsurpassed fuel economy in the compact SUV segment.4
• The 2009 Ranger (2WD, manual five-speed) has best-in-class fuel economy for the small pickup segment5 at 21 mpg city/26 mpg highway.
• The 2009 Ford F-150 gets unsurpassed fuel economy in its class, with 15 mpg city/20 mpg highway in its most popular midsize engine, which beats the Toyota Tundra's 14 city/17 highway with a comparable engine.6
• 2009 Ford Fiesta ECOnetic with 1.6-liter Duratorq TDCi Diesel engine is the most fuel-efficient five-seat family car in the UK at 63.6 mpg.7

To accomplish our fuel-economy goal, we are focused in the near term on implementing the most cost-effective fuel-efficiency technologies across a large volume of our vehicles and on introducing new products that offer improved fuel efficiency without compromising style or performance. In 2009, for example, we began implementing the EcoBoost™ engine, a key technology in our fuel-efficiency strategy that uses gasoline turbocharged direct-injection technology. EcoBoost will deliver up to 20 percent better fuel economy, 15 percent fewer carbon dioxide emissions and superior driving performance compared to larger-displacement engines.8 Because EcoBoost is affordable and can be applied to existing gasoline engines, we can implement it across our vehicle fleet, bringing fuel-efficiency benefits to a wider range of our customers.

The EcoBoost V-6 will be introduced on the 2010 model year Lincoln MKS, Lincoln MKT, Ford Taurus SHO and Ford Flex. Thanks largely to the EcoBoost technology, both the V-6 Ford Flex and the V-6 Lincoln MKT will be among the leaders for fuel economy in their respective segments. By 2013, Ford will have EcoBoost V-6 and I-4 engines in approximately 1.3 million vehicles per year globally. In North America, 90 percent of Ford's nameplates will offer the technology.

We are continuing to develop and introduce advanced technologies that improve fuel efficiency, reduce emissions and reduce dependence on foreign oil. In the mid- to long term, we will implement these advanced technologies as they become cost effective.

We are also responding to the increasing demand for fuel-efficient vehicles by rebalancing our portfolio to include more small and medium-sized vehicles. We are also working to improve the profitability of our small car offerings, so we can expand our small car lineup while continuing to increase our financial viability.

You can read about our other short-, mid- and long-term plans to improve fuel economy in our Sustainable Technologies and Alternative Fuels Plan.

Balancing Our Portfolio

To meet the demand for more fuel-efficient vehicles and increase our financial health, we are balancing the portfolio of vehicles we sell to better represent consumer demand for a variety of vehicle sizes and capabilities. We are leveraging our global product strengths to deliver six new world-class small and medium-sized vehicles to the United States over the next four years. This will enable our car and crossover product segment mix to increase from 48 percent to 60 percent and result in volume and share growth.

We are targeting sales leadership in "people movers" and crossovers by adding new vehicles (such as the Ford Flex) and redefining existing vehicles (such as the Ford Explorer). We will have significantly reduced our truck, van and SUV product mix from 52 percent to 40 percent in the next three years. In order to realize a balanced portfolio, we are increasing our investment allocation in cars and crossovers from 59 percent to 82 percent of our total investment.

Although we believe that the shift to smaller, more fuel-efficient vehicles is permanent, trucks, vans and SUVs will continue to be an important part of our North American market offerings, in order to meet our customers' needs. We intend to maintain our leadership position in these segments by focusing our investment on new fuel-efficient vehicles, such as the new Ford Transit, as well as all-new powertrains with advanced technology.

Small-Car Profitability

As consumer demand for smaller vehicles continues to increase, we need to both provide the vehicles people want and provide them profitably in order to remain a sustainable business. As part of our financial stabilization plan, we will reverse the decades-long trend of losing money on the production of small cars in the United States. To accomplish this, and secure our ability to continue to produce all types of vehicles in the United States, we are taking the following actions:

• Increasing our global platform volume of Focus-sized ("C-sized") vehicles to more than 2 million units per year
• Increasing the volume of Ford Focus cars to more than 1 million units per year
• Improving margins on smaller vehicles by:
  • Improving revenues by making vehicles that are exciting in design, both exterior and interior, with class-leading fuel economy, safety performance, craftsmanship and technology. The improvements across all Ford vehicles are improving customer perception of the Ford brand
  • Improving costs to competitive levels through reduced complexity and global purchasing scale
• Improving fixed costs through increased manufacturing and supply base capacity utilization and the sharing of engineering and tooling costs globally

The new Ford Fiesta is an example of how we are increasing small-car profitability and increasing our small-car offerings, without compromising on quality, safety, style or features. The Fiesta, which went on sale in Europe in 2008 and will be available globally by 2010, is the first major product to come out of our new global product development process. Leveraging and integrating our global operations is one key element in making small cars more profitably.