Expanding Our Presence in Rapidly Growing Markets

The fastest-growing markets for automobiles are in rapidly developing countries like China and India. We are expanding our production capacity in China, India and the rest of Asia, as well as launching new products in these and other markets to meet consumer needs and remain competitive.

In 2007, our Ford, Lincoln, Volvo, Jaguar and Land Rover sales in China rose 30 percent to 215,400 units. Our joint venture, Changan Ford Mazda Automobile Corporation, Ltd. (CFMA), located in Chongqing, began producing Ford vehicles in 2003. In 2007, CFMA posted a record year, with wholesale deliveries rising more than 60 percent to 217,100 vehicles. CFMA builds Ford, Volvo and Mazda models. In 2007, we also began building and selling the S-MAX multi-purpose vehicle in China, and we introduced the Ford Mondeo. Volvo started producing the S40 in China in 2006 and more than doubled production in 2007.

We are significantly increasing our presence in China, with more investment in manufacturing capacity, the introduction of new products and the expansion of distribution channels. CFMA's Chongqing plant has production capacity of about 250,000 units per year. We opened a second assembly plant and a new engine plant in Nanjing in 2007, with initial capacity of about 160,000 units annually, boosting our total annual passenger car production capacity in China to more than 410,000 vehicles. In addition, our Jiangling Motors Corporation, Ltd., joint venture, which has operations in Nanchang, assembles light commercial vehicles for distribution in China.

In India, we continue to expand production capacity and new vehicle introductions. In early 2008, we announced that we will invest $500 million in India to double production. A significant part of this investment will go to developing new products, including a new small car, and to an engine manufacturing facility to be completed by 2010. We aim to manufacture 50,000 engines within two years and ultimately scale up production to 250,000 engines. We also plan to double capacity at our existing Chennai plant to 200,000 cars over the next three years to accommodate production of the small car.

Similarly, in Thailand we announced plans to invest more than $500 million in a new, highly flexible, small passenger car plant at AutoAlliance Thailand – a joint venture between Ford and Mazda Motor Corporation. This facility will begin producing small cars in 2009.

In the Philippines, we have extended our commitment to biofuels by launching the production of Flexifuel engines at our Santa Rosa facility.

In South America, our sales were up 19 percent at the end of 2007. Ford's 2007 market share was 10.7 percent in South America, making us South America's fourth-largest automaker. We continue to launch new products to meet the needs of our South American customers. For example, we recently launched the Ford Edge crossover vehicle in Colombia. In Brazil, with the addition of new products in the near future, including the new Ford Ka, we will offer the widest product range in our history. In addition, we continue to invest in our South American facilities to improve capacity and efficiency. We recently announced plans to invest $1 billion in our Brazil operations in the next five years and another $160 million in our Argentina operations.

Ford's share of the Turkish market decreased by 0.4 percentage points to 16.7 percent; nonetheless, it was the sixth year in a row that the Ford brand led the market in sales in Turkey. We also are experiencing strong sales in Russia, where sales of Ford-brand vehicles increased approximately 50 percent to about 175,800 units in 2007. Our wholesales in Asia Pacific and Africa were up 3 percent in 2007, with the majority of the growth occurring in China.

This sales growth in rapidly growing markets represents a significant achievement for the Company. At the same time, we know that our long-term success in these developing and revitalizing economies will depend on our offering new types of mobility solutions that are increasingly sustainable and tailored to the unique needs of these markets. Our sustainable mobility strategy is aimed at ensuring we do just that.