福特汽車 (F) 2009 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Ford Motor Company third-quarter earnings conference call.

My name is Katina and I will be your coordinator for today.

At this time, all participants are in a listen-only mode.

We will conduct a question-and-answer session towards the end of this presentation.

(Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call, Mr.

Brian Harris, Director of Investor Relations.

Please proceed.

Thank you, Katina, and good morning, ladies and gentlemen.

Welcome to all of you who are joining us today either by phone or webcast.

On behalf of the entire Ford management team, I would like to thank you are spending time with us this morning.

With me here today are Alan Mulally, President and CEO of Ford Motor Company, and Lewis Booth, Chief Financial Officer.

Also in attendance are Bob Shanks, Vice President and Controller; Neil Schloss, Vice President and Treasurer; Mark Kosman, Director of Accounting; and K.R.

Kent, Ford Credit CFO.

Before we begin I would like to cover a few items.

Copies of this morning's press release and presentation slides that we will be using today have been posted on Ford's investor and media website for your reference.

The financial results discussed herein are presented on a preliminary basis.

Final data will be included in our form 10-Q for the third quarter.

Additionally, the financial results presented here are on a GAAP basis and in some cases on a non-GAAP basis.

The non-GAAP financial measures discussed in this call are reconciled to our GAAP equivalents as part of the appendix to the slide deck.

Finally, today's presentation includes some forward-looking statements about our expectations for Ford's future performance.

Actual results could differ materially from those suggested by our comments made here.

Additional information about the factors that could affect future results is summarized at the end of this presentation.

These risk factors are also detailed in our SEC filings including our annual, quarterly, and current reports.

With that come I would now like to turn the presentation over to Ford's President and CEO, Mr.

Alan Mulally.

Thank you, Brian, and good morning, everyone.

We are very pleased to be able to share today our third-quarter financial results, which clearly showed that Ford is making tremendous progress despite the prolonged economic slump.

While we still face a challenging road ahead, our transformation is working and our underlying business continues to grow stronger.

In the third quarter, we made progress on all four areas of our plan, aggressively restructuring to operate profitably at the current demand and the changing model mix, accelerating the development of new products our customers want in value, financing our plan and strengthening the balance sheet, and working together effectively as one global team.

In the third quarter, Ford recorded net income of $1 billion, an improvement of $1.2 billion from a year ago.

Ford posted a pretax operating profit of about $1.1 billion for the quarter, an improvement of $3.9 billion from a year ago.

This marks our first pretax operating profit since the first quarter of 2008.

Notably, our North America operation achieved a pretax operating profit of $357 million, marking the first profitable quarter for North America since the first quarter of 2005.

In addition, we achieved positive Automotive operating related cash flow of $1.3 billion in the third quarter, a $2.3 billion improvement over the second quarter of 2009.

Our continuing efforts to reduce Automotive structural cost resulted in another $1 billion of savings in the third quarter.

We have reduced Automotive's structural cost during the first nine months now by $4.6 billion, which places us well over our full-year 2009 target of $4 billion.

We're putting the same intense focus on creating strong new products such as the Ford Fiesta, Fusion, F-150, Taurus, and the Transit Connect.

These new products helped drive our third-quarter market share gains as we also continue to improve our transaction prices and our margins.

Looking ahead, based on our recent performance and our present planning assumptions, we are changing our guidance for full-year 2011 from bring breakeven or better to being solidly profitable for both the total Company and North American Automotive, on a pretax basis excluding special items, with positive Automotive operating related cash flow overall.

As announced last week, we have confirmed Geely as the preferred bidder on the ongoing discussions concerning the possible sale of Volvo Cars.

And as a further note, we have not yet received final results on the UAW ratification vote on the proposed amendments to our US labor agreement.

We will withhold comment until after the Union announces the results.

We have, however, received final results on the CAW ratification vote; and we appreciate that the CAW membership ratified its agreement, which ensures that Ford's Canadian operations will be competitive going forward.

I will start off by providing you with an overview of our third-quarter financial results and business, sales and product highlights.

Then our CFO, Lewis Booth, will walk us through the third-quarter financial results in even greater detail.

Finally, I will summarize our outlook for the rest of the year and our plan going forward.

Turning to slide 3, please, I'll begin by reviewing the key financial results.

As shown at the top of the slide, vehicle wholesales in the third quarter were 1.2 million units, up 57,000 units from a year ago.

Our third-quarter revenue was $30.9 billion, an $800 million decrease from a year ago.

This includes an Automotive revenue increase of $100 million, more than explain by favorable net pricing and higher volumes, primarily in North America, offset by unfavorable exchange translation.

Excluding the impact of the exchange translation, Automotive revenue would have increased by about 8%.

Ford Credit's revenue decreased by more than $900 million, reflecting a decline in their receivables.

Our third-quarter pretax operating profit, excluding special items, was about $1.1 billion, a $3.9 billion improvement from a year ago.

Automotive results improved by over $3.3 billion and Financial Services improved by $502 million.

Our third-quarter net income attributable to Ford was $1 billion, including favorable pretax special items of $108 million.

We ended the third quarter with $23.8 billion of Automotive gross cash.

This will be discussed in more detail later.

Turning to slide 4, please.

In addition to total Company pretax operating results improving by $3.9 billion compared with the year ago, results improved in all of our operations by a total of $1.5 billion compared with the second quarter of 2009.

We reduced our Automotive structural costs by $1 billion compared with the same period last year and with $500 million of that improvement occurring in North America.

Ford North America had an operating profit of $357 million, a $2.9 billion improvement from a year ago.

Ford South America had an operating profit of $247 million, a $233 million decrease from a year ago.

Ford Europe had an operating profit of $193 million, a $124 million increase from a year ago.

Ford Asia Pacific and Africa had an operating profit of $27 million, a $23 million increase from a year ago.

Volvo had an operating loss of $135 million, a $323 million improvement from a year ago.

Volvo continues to be reported as an ongoing operation.

The effects of held-for-sale accounting-related adjustments are reported as special items.

Finally, Financial Services had an operating profit of $661 million, a $502 million increase from a year ago.

Slide 5 details some of our key business highlights since our last earnings release.

In September we began production of the Ford Transit Connect small commercial van at our new manufacturing plant in Craiova, Romania.

We announced an investment of $500 million at Ford India's Channai assembly plant to build a new Ford Figo, a smaller car targeted at the heart of the Indian market, debuting in 2010.

Chennai will become an important distribution hub for Ford going forward.

In China, we announced a new $490 million assembly plant in Chongqing, which will be completed by 2012 and will produce the Ford Focus for the Chinese market.

Ford, Lincoln, and Mercury brand vehicles in the US had the fewest number of "things gone wrong" among all automakers according to the third-quarter GQRS study of new vehicle quality.

Ford has now received $886 million in loans from the US Department of Energy for development of more fuel-efficient vehicles.

Ford has been approved for up to $5.9 billion in loans in support of projected expenditures through mid 2012.

We also raised $565 million in new equity as we completed our previously announced plan to issue up to $1 billion of new equity.

In addition, Ford Credit completed $10 billion in funding for the third quarter, including $2.8 billion unsecured, and now has essentially completed its full-year funding plan.

Turning to slide 6, please, we will look at Ford's third-quarter sales highlights.

Ford increased its year-over-year market share in North America, South America, and Europe while we continue making improvements in our transaction prices and margins.

We maintained our market share in the Asia-Pacific region; and Volvo gained market share.

In the US, third-quarter market share increased 2.2 percentage points compared to last year as the Ford, Lincoln, and Mercury brands all posted sales gains.

Ford Europe's market share was 9.2% for the quarter, up 6/10 of a point from last year and the highest third-quarter market share in the last 10 years.

Market share was 10.1% in September; that is Europe's highest monthly share in eight years.

Record growth in China continued as Ford third-quarter sales jumped 63%.

At the end of the third quarter, worldwide sales of the new Ford Fiesta reached 470,000 units since its launch last fall.

The number two best-selling car in Europe posted its highest September sales since 1994.

In September, Fiesta also had its best sales month ever in China.

Fiesta arrives in the US market in 2010.

We began selling the all-new Ford Taurus and the Transit Connect in North America.

Taurus got off to a very strong start with September sales up nearly 60% from a year ago.

The Ford Focus and the Ford Escape were among the top new vehicles purchased in the US government's Cash for Clunkers program.

And Ford's US hybrid sales have risen 73% this year compared to a 14% decline in US hybrid industry sales overall.

More than 60% of Ford Fusion Hybrid sales have come from non-Ford owners.

On slide 7, please, I'll cover our many worldwide product highlights.

Both the all-new Ford Taurus and the Lincoln MKT earned a Top Safety Pick from the Insurance Institute of Highway Safety.

Ford Motor Company continues to have more Top Safety Pick ratings than any other automaker.

We made several announcements at the Frankfurt Motor Show in September.

We unveiled the all-new C-MAX.

The C-MAX and the Grand C-MAX will debut in Europe in 2010, and the Grand C-MAX debuts in the United States in 2011.

The new global C platform will underpin up to 10 models and more than 2 million units annually by 2012.

We announced that Ford's 1.6-liter and 2.0-liter four-engine EcoBoost engines will make their debut in 2010 across Europe, North America, and Australia.

In India, we unveiled the new Ford Figo to compete in India's small car segment market in 2010.

Small cars account for more than 70% of India's new vehicle market.

We launched the new Ford Fiesta in Taiwan and continued the successful rollout of Ford Everest SUV in additional Asian markets.

We revealed the new 2011 Ford F-Series Super Duty down in Texas.

The work truck will be powered by two new powertrains developed by Ford, a 6.7-liter V8 diesel engine and a 6.2-liter V8 gasoline engine.

And we began selling the 2010 Ford F-150 SVT Raptor, an off-road performance truck which captured the 2009 Pickup Truck of Texas award from the Texas Auto Writers.

The Ford F-150 won the overall Truck of Texas award, the seventh straight year a Ford truck has earned the honor.

Now I'd like to turn it over to Lewis to provide more details on our third-quarter financial results.

Lewis?

Thanks, Alan.

Let's move on to slide 9, which provides more information on our financial results.

Our third-quarter pretax operating profit, excluding special items, was about $1.1 billion, a $3.9 billion improvement from a year ago.

Most of the remaining slides will focus on these pretax operating results.

Our pretax operating profit excludes favorable special items of $108 million, which we will cover on the next slide.

We recognized $139 million of tax expense; and $79 million of our income was related to noncontrolling interests.

Beginning in 2010, new accounting standards on consolidation will require us to deconsolidate certain joint ventures.

Although this will negatively impact our total 2010 pretax operating results and segment results, this will have no effect on net income attributable to Ford.

We are presently analyzing the impact of this change on the income statement, balance sheet, and cash flow statement.

Bottom line, third-quarter net income attributable to Ford was $1 billion, an improvement of $1.2 billion from a year ago.

Turning to slide 10, it covers special items, which was a favorable pretax amount of $108 million in the third quarter.

This is more than explained by $163 million of held-for-sale accounting-related adjustments for Volvo, reflecting the elimination of depreciation and related costs.

In addition, we incurred net charges related primarily to global personnel reduction actions and the UAW Retiree Health Care VEBA agreement.

Now on to slide 11, which shows our pretax operating results by sector.

Our third-quarter pretax operating results were a profit of about $1.1 billion.

These results included profit of $446 million for the Automotive sector and a profit of $661 million for Financial Services.

As Alan mentioned and as shown in the memo below the chart, total Company pretax operating results have improved by $3.9 billion compared to the year ago and $1.5 billion compared with the second-quarter 2009.

Let's move to slide 12, which shows pretax operating results for each of our Automotive segments and Other Automotive.

As shown in the memo below the chart, almost all of our segments have pretax operating results that showed significant improvement compared with both year-ago and the second-quarter 2009.

We will focus here on Other Automotive and then cover the Automotive segments in detail on the next slides.

In the third quarter, Other Automotive was a loss of $243 million, reflecting primarily net interest expense of $214 million, which is comprised of over $300 million of interest expense offset partially by net gains associated with our investment portfolio and interest income.

As shown in the memo below the chart, Other Automotive declined by $107 million compared to the second-quarter 2009 more than explained by the non-recurrence of favorable fair market value adjustments.

Slide 13 shows the change in third-quarter Automotive pretax operating results compared with 2008 by causal factor.

Volume and mix was $300 million favorable, explained primarily by market share improvements and dealer stocks, offset partially by declines in industry volumes.

While dealer stocks were reduced this quarter, the amount of the reduction was less than for the same period of last year.

Market share improvements reflected primarily a 2.2 percentage point improvement in the US and a 6/10 of a point gain in Europe.

Net pricing was $1.9 billion favorably, explained primarily by higher US net pricing, reflecting the success of our new products, our continued disciplined approach on incentives, and selective top-line pricing.

Cost changes were $1.7 billion favorable, more than explained by structural cost reductions and lower material costs, which included a nonrecurrence of about $500 million of unfavorable marked to market adjustments on commodity hedges.

On the next slide we will focus on our structural cost changes.

Exchange was $800 million unfavorable, explained primarily by North America, South America, and Europe, reflecting in part the nonrecurrence of favorable balance sheet valuation adjustments.

Net interest and fair market value adjustments were $200 million favorable, explained primarily by improved portfolio performance.

Now on slide 14, which explains our Automotive structural cost reductions, these were $4.6 billion in the first nine months and, as shown in the memo, $1 billion in the third quarter.

Manufacturing and engineering costs were $2.4 billion lower in the first nine months, largely reflecting the continued benefits of improved productivity, personnel reduction actions -- primarily in North America and Europe -- and progress on the implementation of common global platforms and product development processes.

Spending-related costs improved by $400 million, reflecting primarily lower depreciation and amortization expense.

Pension and retiree health care expenses were $800 million lower, reflecting primarily the effect of the UAW Retiree Health Care VEBA agreement.

And overhead costs were $400 million lower, which includes salary personnel reductions and other restructuring actions.

Finally, advertising and sales promotions were $600 million lower than a year ago.

Going forward, we expect structural cost to be relatively stable now that we've largely completed significant restructuring actions within our manufacturing facilities and personnel reduction actions.

These reductions, along with our UAW Retiree Health Care VEBA agreement, which became effective during the third quarter of last year, have lowered our overall cost structure.

For the next section of slides, we will cover each of the Automotive segments starting with North America on slide 15.

In the third quarter, wholesales were 516,000 units, up 54,000 units from a year ago, reflecting primarily market share improvements.

Third-quarter US total market share for Ford, Lincoln, and Mercury was 14.6%, up 2.2 points from a year ago, reflecting primarily higher retail share.

Although not shown, Canadian market share was 15.9%, up 4.1 points from a year ago.

During the third quarter we reduced US dealer stocks by 31,000 units.

In comparison, during the third quarter of 2008 we decreased dealer stocks by 81,000 units.

The market demand for our vehicles in the third-quarter 2009 resulted in the lowest level of dealer stock in over 10 years.

And as we've announced, we've increased production in the fourth quarter to return to planned dealer stock levels.

Third-quarter revenue was $13.7 billion, a $2.9 billion or 27% increase from a year ago, more than explained by favorable net pricing, higher volumes, and favorable product mix.

For the third quarter, Ford North America reported a pretax operating profit of $357 million, almost a $3 billion improvement from a year ago, which we will cover in more detail on the next slide.

Slide 16 provides an explanation of the change in North American results compared with 2008 by causal factor.

Volume and mix were $700 million favorable, reflecting primarily favorable series mix for the new F-Series and Taurus, market share improvements, and a smaller decrease in dealer stocks, offset partially by a decline in US industry volumes.

Net pricing was $1.4 billion favorable, reflecting primarily the success of our new products including F-150, Fusion, and Taurus, our continued disciplined approach on incentives, and selected top-line pricing.

Cost decreased by $1.1 billion, reflecting primarily lower raw material costs and the nonrecurrence of unfavorable marked to market adjustments on commodity hedges.

Structural costs also improved, reflecting primarily lower manufacturing and engineering and OPEB costs.

Exchange was $300 million unfavorable, reflecting primarily the balance sheet impact of a weaker US dollar relative to the Canadian dollar.

Although not shown, pretax operating results improved by $1.2 billion compared to the second quarter of 2009.

This improvement is explained by favorable results across all elements of the business, including favorable net pricing related primarily to lower incentives, higher industry volumes driven in part by the US government Cash for Clunkers programs, and cost reductions.

Slide 17 shows US market share for Ford, Lincoln, and Mercury.

In the third quarter, our US total market share was 14.6%, up 2.2 points from a year ago and down 1.8 points from the second quarter of 2009.

Compared with 2008 our market share improvement reflects primarily higher retail share resulting from the demand of our fuel-efficient product lines, Ford Fusion and Fusion Hybrid, the Escape and Escape Hybrid, and the Ford Focus.

In total, our market share for cars, crossovers, and small utilities was up 1.9 points from a year ago, which highlights the strength of our portfolio of vehicles.

Additionally, our retail share of the retail industry was an estimated 13.1% in the third quarter, up 2.1 points from a year ago, reflecting balanced performance across most segments.

Relative to the second-quarter 2009, our US total market share declined, reflecting primarily a seasonal decrease in fleet mix.

Now on to South America on slide 18.

In the third quarter, wholesales were 108,000 units, down 18,000 units from a year ago, reflecting a decrease in dealer stocks and declines in industry volume, offset partially by market share improvements.

Third-quarter revenue was $2.1 billion, a $600 million decrease from a year ago, more than explained by unfavorable exchange translation and lower volume.

For the third quarter, Ford South America had a pretax operating profit of $247 million, a $233 million decrease from a year ago.

The decrease is more than explained by unfavorable exchange primarily in Brazil and Argentina.

Although not shown, pretax operating profits improved compared to the second quarter of 2009.

Slide 19 covers Europe.

In the third quarter, wholesales were 393,000 units, down 17,000 units from a year ago.

This reduction is more than explained by lower industry volumes in Russia, offset partially by market share improvements in the 19 markets that we track.

Third-quarter industry SAAR for the 19 markets that we track was 16.2 million units, down slightly from a year ago.

Although not shown, Russian industry SAAR was 1.4 million units, down 1.8 million units or 56% from a year ago.

Third-quarter market share was 9.2%, up 6/10 of a point from last year -- the highest third-quarter level in 10 years, reflecting the continued strength of our product portfolio and a shift in segmentation towards our strong small cars.

Production will increase in the fourth quarter to return dealer inventories to planned levels following our strong market share performance.

Third-quarter revenue was $7.6 billion, a $2.1 billion decrease from a year ago, explained primarily by unfavorable exchange translation, unfavorable product mix, and lower volumes.

For the third quarter, Ford Europe reports a pretax operating profit of $193 million, a $124 million increase from a year ago, which we will cover in more detail on the next slide.

Slide 20 provides an explanation of the change in Europe results compared with 2008 by causal factor.

Volume and mix was $400 million unfavorable, reflecting primarily higher mix of small vehicles driven by government scrappage incentives, a decline in commercial vehicle volume, and lower industry volume in Russia.

Market share improvement provided a partial offset.

Net pricing was $200 million favorable compared to a year ago.

This reflects primarily pricing in Britain and Russia to offset unfavorable currency effects.

Cost decreased by $500 million, more than explained by structural cost reductions, lower raw material costs, and nonrecurrence of an unfavorable mark to market adjustment on commodity hedges.

Exchange was $200 million unfavorable, due primarily to the weakening of the British pound and the Russian ruble compared with the euro.

Slide 21 covers Asia Pacific and Africa.

In the third quarter, wholesales were 139,000 units, up 28,000 units from a year ago, more than explained by strong performance in China, which was up 32,000 units.

Third-quarter industry SAAR was 25.9 million units, up 5.9 million units from a year ago, more than explained by a 65% increase in the Chinese industry.

Third-quarter market share was 2%, equal to the prior year.

Notably, share was maintained despite significant segmentation challenges.

Recently announced investment plans for India and China, including the introduction of the new Figo, should position the Ford brand for growth in the small car segment.

Third-quarter revenue, which excludes sales at our unconsolidated Chinese joint ventures, was $1.5 billion, a $200 million decrease from a year ago.

This decline is more than explained by unfavorable exchange translation and lower volumes outside of China.

For the third quarter, Asia Pacific and Africa reported a pretax operating profit of $27 million, a $23 million increase from a year ago.

This increase is explained primarily by favorable net pricing, China joint venture profits, and cost reductions, offset partially by unfavorable exchange.

Slide 22 covers Volvo.

As Alan mentioned, Volvo continues to be reported as an ongoing operation.

The effects of held-for-sale accounting-related adjustments, primarily the elimination of depreciation, are reported as special items.

In the third quarter, wholesales were 76,000 units, up 10,000 units from a year ago.

This increase is explained primarily by market share improvements and a smaller decrease in dealer stocks, offset partially by a decline in industry volumes.

Third-quarter market share in the US was 6/10 of one percent and share in Europe was 1.2%.

US market share improved by 2/10 of a point from last year, reflecting the continued success of the all-new XC60 and the comprehensive "Safe and Sound" customer coverage plan.

Third-quarter revenue was $3 billion, a $100 million increase from a year ago, explained primarily by higher volumes, offset partially by unfavorable exchange translation.

For the third quarter, Volvo reported a pretax operating loss of $135 million, a $323 million improvement from a year ago.

The improvement is more than explained by continued progress on cost reductions, favorable exchange, and higher volume and mix.

Volvo's restructuring actions have resulted in $750 million of total cost reductions for the first nine months compared with a year ago, including $600 million of structural cost reductions.

As Alan mentioned, we are engaged in ongoing discussions with the preferred bidder concerning the possible sale of Volvo Cars.

We're glad to come to slide 23, which shows Automotive gross cash and operating related cash flow.

We've ended the third quarter with $23.8 billion in Automotive gross cash, up $2.8 billion from the end of the second quarter of 2009.

Our Automotive operating related cash flow was $1.3 billion positive in the third quarter, reflecting an Automotive pretax operating profit of the over $400 million; capital spending during the quarter that was $200 million lower than depreciation and amortization; changes in working capital and other timing differences that were $1.2 billion positive.

This is explained by $1.3 billion of positive working capital, reflecting primarily payables increases as we return to balances closer to normal and inventory reductions to lower ongoing levels.

A $400 million receipt of a Canadian government tax refund was offset by timing differences related primarily to health care payments.

Payment of $500 million in Ford Credit reflected upfront payments of the subvention.

The Automotive operating related cash flow of $1.3 billion in the third quarter represented a $2.3 billion improvement over the second-quarter 2009.

This reflects primarily improved cash from earnings and the receipt of the Canadian government tax refund.

Other changes in Automotive gross cash included personnel reduction action payments of $200 million and pension contributions of $100 million.

Net receipts from our Financial Services sector of $600 million; this includes a $400 million receipt related to a Ford Credit distribution.

This is part of Ford Credit's revised plan to make $3 billion of cash and non-cash distributions to Ford Motor Company through 2010, up from the previously announced $2 billion.

Through the first nine months of 2009, $1.5 billion of this amount has been remitted.

Equity issuance proceeds of about $600 million related primarily to completion of our previously announced plan to issue up to $1 billion of equity; and receipt of about $900 million in loans from the US Department of Energy for development of more fuel-efficient vehicles, offset partially by net debt payments of about $300 million.

Including these impacts, the total increase in Automotive gross cash during the third quarter was $2.8 billion.

Slide 24 summarizes our Automotive sector cash and debt position.

At the end of the third quarter, Automotive debt was $26.9 billion, of which $1.6 billion matures within the next year.

Our gross cash net of debt as of September 30 was $3.1 billion negative.

As we have previously disclosed, upon implementation of the new VEBA agreement with the UAW, which is still subject to court and other approvals, our debt balances will increase for the notes issued to the new VEBA.

There will be about a $2 billion payment around year-end, a portion of which may be settled in equity.

And subject to final fair market valuation of the notes, it is estimated presently that recognition of these obligations after the year-end payment will increase our debt by $7 billion to $8 billion, and increase 2010 interest expense by about $700 million.

Now let's turn to slide 25 and Financial Services.

For the third quarter, Financial Services sector reports a pretax operating profit of $661 million, a $502 million increase from a year ago.

Other Financial Services reports a pretax operating loss of $16 million in the third quarter, a $14 million decline from a year ago.

We will cover Ford Credit in more detail on the next slide.

Slide 26 covers Ford Credit.

For the third quarter, Ford Credit reports a pretax operating profit of $677 million, a $516 million increase from a year ago.

Volume was $300 million unfavorable, reflecting declining receivables.

As shown in the memo in the lower left of the slide, Ford Credit's September 30, 2009 managed receivables were $94 billion, about $36 billion lower than a year ago.

This decline is explained primarily by lower industry volumes, lower dealer stocks, impact of divestitures and alternative business arrangements, and changes in currency exchange rates.

Financing margins were essentially flat compared to a year ago.

The decline in the provision for credit losses of $300 million reflects primarily lower severity, consistent with improving auction values, offset partially by higher repossessions.

Residual losses declined by $400 million, reflecting primarily the impact of improving auction values, resulting in lower losses on vehicles returned during the quarter.

Other was $100 million favorable, reflecting primarily lower operating costs.

We expect Ford Credit to be profitable in the fourth quarter of 2009 and end the year with managed receivables between $90 billion and $95 billion.

Next year we expect reduced profits, based on lower average receivables and nonrecurrence of favorable 2009 factors.

Slide 27 covers the liquidity and funding outlook for Ford Credit.

The left box shows Ford Credit's committed liquidity programs and cash, and the utilization of its liquidity sources at the end of the third quarter.

Ford Credit's liquidity exceeded utilization by about $24 billion.

While capital markets have been very difficult for much of the last year, we continued to see positive momentum for the second consecutive quarter, evidenced by improved market access and credit spreads.

Year to date, Ford Credit has issued $4 billion in unsecured debt and completed $10 billion of TALF-eligible trades in all of Ford Credit's main US asset classes, including its first floorplan trade in October.

Ford Credit no longer utilizes the CPFF program.

Outside of the United States, Ford Credit has executed its funding plans by completing securitization in both public and private markets.

Ford Credit remains dependent on capital markets access for its funding strategy, and plans to renew committed capacity consistent with the size of its balance sheet.

Ford Credit will continue to explore and execute alternative business and funding arrangements in those locations where it lacks diverse funding capability.

Ford Credit's funding strategy remains focused on maintaining liquidity to meet short-term funding obligations, including holding a substantial cash balance.

At the end of the third quarter, Ford Credit's managed leverage was 7.7 to 1; and Ford Credit's equity was $10.5 billion.

Slide 28 covers our 2009 fourth-quarter production plans.

In North America, the fourth-quarter production schedule is 570,000 units, up 141,000 units from a year ago and unchanged from our guidance provided in August.

For Ford Europe we expect fourth-quarter production of 456,000 units, up 91,000 units from a year ago.

At Volvo we expect fourth-quarter production of 95,000 units, up 27,000 units from a year ago.

Overall, fourth-quarter production is expected to be up compared to a year ago and third-quarter 2009.

This increase is to return to planned dealer stock levels and match production with market demand for our products.

And now I would like to turn it back to Alan to summarize our outlook for the rest of the year and our plan going forward.

Very good.

Thank you very much, Lewis.

On slide 30 I'll provide an overview of the business environment going forward.

We continue to see improvement in the leading indicators for our major markets.

With ongoing policy support, financial markets have continued to normalize.

We are even seeing some financial market indicators returning to pre-crisis conditions.

Consumer confidence and labor market conditions, however, remain a drag on the near-term spending outlook for the US and for the UK.

In addition, our suppliers and dealers have been weakened by the impacts of the global economic downturn.

Upward pressure on the commodity prices has resumed in conjunction with the emergence of an economic recovery.

This trend is likely to continue into next year.

Our business continues to be affected by current volatility.

Recently, the US dollar has weakened substantially against the euro, yen, and the Canadian dollar.

The British pound has also weakened against the euro.

We expect weak volumes this year across most markets, with worldwide sales down around 7% compared to 2008.

This reflects weak conditions in the US market, with more modest declines in Europe owing to substantial scrappage programs.

We expect full-year 2009 industry volumes in Europe and Asia-Pacific to be stronger than our previous estimate.

For 2010, we expect to see a gradual improvement in global industry volumes.

As a result of the very effective 2009 European scrappage programs, however, there is expected to be a substantial payback in 2010, particularly in Germany.

Now on to slide 31, please, which shows the status of our 2009 planning assumptions and operational metrics for the first nine months.

We expect the full-year US industry will be about 10.6 million units, consistent with our previous guidance and present economic outlook.

Europe is now expected to be about 15.7 million units, higher than our previous guidance.

On the operational metrics, as mentioned previously, US Ford, Lincoln, and Mercury brand vehicles had the fewest numbers of "things gone wrong" among all automakers.

International results remained mixed as Europe continues to address issues.

They showed a 9% improvement in "things gone wrong" compared with the second quarter of 2009.

Automotive structural costs were reduced by $4.6 billion during the first nine months.

We now expect full-year structural cost reductions of about $5 billion.

As mentioned earlier, we have achieved significant structural cost reductions over the past four years; and going forward we expect structural costs to be relatively stable.

US total market share was 15%.

Our share of the US retail market was 12.9%.

And Europe market share was 9.2% in the first nine months.

We expect full-year market shares to remain at about these same levels.

Automotive operating related cash flow was $3.4 billion negative during the first nine months, better than our prior expectations and nearly $9 billion better than the same period last year.

We expect Automotive operating related cash flows to be positive in the fourth quarter.

Capital expenditures were $3.4 billion during the first nine months.

We now expect full-year capital spending to be about $5 billion or slightly less.

The higher projected fourth-quarter spending reflects the timing of our product launches as we maintain our product plans.

Overall, we remain on track to achieve or exceed all of our 2009 financial targets and almost all of our operational metrics.

In addition, as I mentioned earlier, based on our recent performance, and our present planning assumptions, we are changing our guidance for full-year 2011 from being breakeven or better to being solidly profitable for both the total Company and North American Automotive, on a pretax basis including special items, with positive Automotive operating related cash flow.

While we continue to have confidence that the global economy will be improving by 2011, the nearer-term growth outlook remains rather uncertain.

There is a high likelihood of a substantial decrease in European industry volumes as scrappage programs are wound down.

This decrease could more than offset US volumes that may improve somewhat from this past quarter's levels.

We expect to know more about the state of the global recovery and its impact on 2010 automotive industry volumes in the next few months.

Following our normal process, we will provide you with the guidance on our 2010 planning assumptions and operational metrics early next year when we release our full-year 2009 results.

Now turning to slide 32, which summarizes the key aspects of our plan.

These have not changed.

To sum up, we are very pleased with the progress we have achieved so far this year.

We have been able to accelerate improvements in our brand reputation, and the trajectory of Automotive profitability is stronger than previously expected.

Based on these strong results, we have increased confidence in our ability to deliver on our plan.

Our transformation, however, is far from complete.

The global business environment remains very difficult and Ford faces significant challenges ahead.

Despite the continuing economic headwinds, we remain confident that we have the right plan and are taking the right actions to transform Ford into a lean Company that delivers profitable growth for all of its stakeholders.

And now, we would be very pleased to take your questions.

Thank you, Alan.

Ladies and gentlemen, we are now going to start the Q&A session.

We have about 45 minutes for the question-and-answer period.

We will begin with questions from the investment community and then take questions from the media who are also on the call.

In order to allow as many questions as possible in our time frame, please keep your questions brief.

Katina, can we have the first question, please?

(Operator Instructions) John Murphy, Bank of America.

Good morning, guys.

Just a question around the common architectures that you're ramping up on.

You gave an interesting metric on the C platform and getting 2 million units off that by 2012.

I was just wondering if you could give us any broader metrics on that progress by 2012, and just give us an idea of where you stand right now in those common architectures.

Oh, you bet.

As you pointed out, we're really making tremendous progress on that.

It really has accelerated with the acceleration of the new vehicles, especially the B and C, the CD platform.

On the B platform a little bit more granularity.

We think that over the next couple years we will be over 1 million units on that platform.

And on the C platform, we think we could be in excess of 2 million units.

Kind of overall, John, what we are looking at now across our entire product line is that nearly 80%, 85% over this next two or three years will be on these common platforms worldwide.

So we're really pleased with the acceleration of that product development.

Of course, along with that as we noted today, we're starting to see tremendous improvement in the engineering and the manufacturing efficiencies as we move to those global platforms.

Okay.

Then second if we just think about structural costs, you said you've gone through $4.6 billion in cuts year-to-date; $5 billion is the target.

What is the base that you are on right now?

And as we step forward and volumes recover in 2010 and 2011 -- I know it's an open question as to how much they actually recover -- but how should we think about operating leverage here?

Maybe simply put, where is your cap-ute rate now and where do you think it gets in the next few years as well?

We're not going to give out specifics of our cost base.

In terms as we go forward, our capacity utilization is going to increase.

It's about something like 70% at the moment -- 75% to 80% depending on the region.

And we will see that going up for a couple of reasons.

One, as demand grows going forward; and secondly, we still have some assembly capacity to take out as some of our models reach the end of their lifetime.

I might just add that in hindsight I think we did the exactly right thing by not trying to get utilization up earlier, because we made economic decisions on each of the models; and we have accelerated the new product development, I think that we will be able to accelerate the utilization.

On your other question on the structural costs I might just also add that clearly we have made tremendous progress on restructuring ourselves to be able to go forward matching the capacity to demand.

But we will, as a business objective, continue to improve not only our quality but also our productivity year after year.

But it's fair to say that $5 billion is a significant chunk of your material structural cost structure, correct?

Certainly is.

Absolutely.

And you look at the cume over the years, it really reflects a move in -- the value of moving aggressively and decisively early.

And what you will see, John, as we go forward is you'll see some modest increases as we get some volume related costs coming back, as hopefully our volumes start going up.

You bet.

Then just on the balance sheet front, real quick.

You mentioned there would be about $7 billion, $8 billion coming on the balance sheet from the UAW notes.

That is not too much news.

But in addition to that, as we think about other big balance sheet swings, we think about NOLs or the ability to offset future tax bills; where do you guys stand on that?

I know you wrote down your tax assets a while back.

What is the size that could be written back up?

Or how should we think about that as a potential benefit going forward to cash flow?

Well, we really have to wait till we've had a period of solid profitability before we could consider writing those valuation allowances back up, John.

And clearly, that is a ways ahead of us yet.

Lewis, what was the size of what was written down or written off at the time that was done?

Hold on.

I'm just looking to see if anyone has got the number.

John, we will get back to you.

It was a big number.

Okay.

Thank you very much.

Himanshu Patel, JPMorgan.

Hi, good morning.

Good morning to you.

On North America on the net pricing number, can you give a little bit of granularity on that?

Sequentially was there any reversal of incentive accruals that may have happened because of the pricing environment that may have existed during Cash for Clunkers?

Sure.

None on retail.

A tiny wee bit on fleet.

I mean, not material, Himanshu.

Okay.

The $565 million equity that was raised in the quarter, Lewis, should we just view this as something that you had planned last year?

Or is this part of your broader balance sheet restructuring steps?

Himanshu, we -- I think in August last year and then reconfirmed in October last year we announced a $1 billion.

We stopped doing it around about the end of the third quarter, early fourth quarter when it was frankly an unfavorable time to do it.

And we stopped at $435 million, so we just completed the $1 billion that we previously announced.

Okay.

Then lastly, working capital has been pretty strong throughout the three quarters.

It looks like production in both regions is sequentially going to rise even more in Q4.

Any directional guidance you can give us on that figure for the fourth quarter?

No, all we're saying, Himanshu, is that overall we expect operating cash flow to be positive in the fourth quarter.

We are not giving any more guidance than that.

Okay, thank you.

Could I just clarify just one statement that may have come over incorrectly?

When we give guidance about being solidly profitable for both the total Company and North American operations on a pretax basis, that excludes special items.

I think it maybe came over wrong.

Thank you.

Rod Lache, Deutsche Bank.

Good morning, everybody.

Congratulations.

Thank you, Rod.

I'm just first of all curious about your comments regarding solid profitability in 2011.

It sounds like for 2010 you have some concern about Europe, but are there any factors that would lead you to conclude that you can't sustain profitability in North America in this intermediate term?

The reason -- no, I understand completely, Rod.

And the reason we couched it that way is that we're just not sure mainly about the strength of the recovery, just like everybody else is concerned about.

But, clearly, we will continue to make progress on the Automotive.

Ford Credit had a terrific year; they are where they are.

We have the extra interest expense.

So you add all that together and that's why we're saying that for right now we want to just see how this develops and then clarify further guidance for 2010 in the first quarter when we do our year-end results.

But clearly we're on a path to -- and are following a plan -- to solid profitability in 2011.

But that's the cautiously optimistic point of view that we are trying to portray.

Also on North America, the pricing was spectacular.

If I divide the upside that you're talking about by your wholesale shipments, it looks like $2,700 a vehicle, which I don't recall ever seeing anything of that magnitude before.

But I'm wondering whether you are looking at this as a structural improvement.

It sounds like you are not identifying anything anomalous about it in the quarter.

I guess another way to ask the question is, as we look out a year from now and we are comparing against these very strong pricing quarters in Q2 and Q3 -- I know it's hard to predict.

But would you -- can you identify anything that you think might make this a very tough comparison?

Yes, it is hard to project.

The reason we've been able to make progress is both the disciplined approach to production that the North American team has been doing, and I'm sure that's going to continue, and that does help you stay disciplined on incentives.

I think the other thing that's going in our way is that our product program plan is still intact.

A lot of this pricing has to do with our new product programs.

Next year we've got a lot going on.

I mean, round about the middle of the year it's a bit quiet because we have Fiesta in the first half of next year and then we don't have Focus till the back end of next year.

But our continued efforts on new product programs I think are the other important part of that answer.

Okay.

Just lastly, two things.

One is, can you tell us what your provision for credit losses was in the quarter in Ford Credit?

And just regarding this capital raise, you have got I think it's a $1.8 billion VEBA payment that is due by the end of the year.

Should we be reading anything into this?

Is this something that you at this point expect to be settled for stock rather than cash?

Well, of the $1.9 billion VEBA payment, only $600 million do we have a choice of; that is the Note B.

And we are not going to make any guidance on that until we actually get there.

Just checking out, the provision for credit losses was $111 million.

And if I could just follow up with one other question, the answer to John Murphy's question on the valuation allowance.

It was $17.2 billion.

Not all will necessarily come back.

It really does depend on the timing and a return to consistent profitability.

Thank you.

Brian Johnson, Barclays Capital.

Good morning.

Two quick questions, one on Europe and one on equity issuance.

On Europe, do you have an order backlog left over from the German scrappage program?

And if so, is that going to carry into 2010?

We do have an order backlog.

I'm not sure it's going to continue into 2010.

I can double check that and get back to you, Brian.

Second question.

You mentioned -- of course, you disclosed the equity issuance.

Can you maybe walk us from last quarter's average share to quarter-end 3.1 billion shares, to this quarter's average of 3.2 billion?

And also where is the quarter likely to come out?

Was that all contained within that $600 million equity issuance?

I think so, I'm just looking around to the experts, but I think so.

If the answer is anything other than yes, I will get back to you.

Okay.

Thanks.

Chris Ceraso, Credit Suisse.

Thanks.

Good morning.

A question on South America as we walk from the first and second quarter to the third quarter.

There was a significant improvement in pretax profit per unit.

You were running roughly around $700 in Q1 and Q2; and it jumped to $2,300 in Q3.

What changed sequentially there to improve the profit so much?

It was a variety of factors.

We saw some mix; we saw some positive pricing; we saw continued discipline on incentives; and we saw a bit of exchange.

Any of those stand out in particular as making the difference?

Well, good solid progress on pricing, good solid progress -- not solid progress, but good influence of exchange.

Okay.

You mentioned the material cost and you called out in your pretax walk in North America that it was $600 million favorable.

I think in previous quarters you had given a bit of a breakdown within that number, explaining how much was related to product cost and how much came from raw materials.

Can you give us that breakdown as well as how much of that favorable $600 million came from the nonrecurrence of the unfavorable hedge from last year?

Yes.

About $300 million of it was the nonrecurrence of the hedge.

The rest of it I don't have the breakdown in front of me.

Okay.

Then you mentioned that material costs are starting to go up again.

Is that something that we will see in the next few quarters, or do we have about a year lag before you start to feel that?

I think we will start seeing some of it earlier than that.

I expect to see it coming in through the quarters rather than a lag.

Okay.

Then just one other, just so I'm clear with regard to the equity raise of the $1 billion.

You said you've done $565 million already.

Does that mean that you will only sell another $435 million of stock, or --?

No, no, I'm sorry, maybe I didn't explain it well.

We had authorization and we had announced $1 billion.

We had done $435 million before we suspended it around about the early November.

And frankly because the market price was so poor.

We resumed it in the third quarter and completed it in the third quarter, the $565 million.

So the whole $1 billion is done.

Okay.

That doesn't rule out any further equity issuance as it relates to continuing to improving your balance sheet?

We have made no secret that we've got balance sheet actions ahead of us, but we're not announcing anything here.

Okay.

Thank you very much.

Patrick Archambault, Goldman Sachs.

Hi, yes, good morning.

I actually wanted to follow up on Chris's question on commodity costs.

You guys in the past kind of broke it out into three buckets, which was helpful -- commodities, product adds, and then I think sourcing.

It might have had a different label, but it was effectively those three things.

Can you help dimension for us how that is likely to trend on a go-forward basis?

I mean you talked a little bit about commodities, so we understand that that one is subject to increase.

But how much can we expect in terms of a tailwind from sourcing?

And then also I would be curious about just product adds.

Is regulation going to make that a big headwind as well, or is that something you can manage?

I guess that would be my first one.

Well, we're going to continue to see some product cost adds for two reasons.

One, some of the regulations, particularly the fuel economy regulations do add costs.

But the second thing is that we have resolved and you know we have done this to have great products.

And it's really the great products that are supporting the pricing we are getting, so we're going to continue to see that.

We'll continue to see some improvements from material cost-reduction actions in general.

And as we've said, we will start seeing commodity prices play into our data starting probably next quarter and then onwards.

So net we would expect material costs to be up in 2010 compared with 2009.

Okay, thanks.

That's helpful.

I wanted to ask you a little bit about inventories.

Where -- I guess third quarter they were 313,000 in the US.

Where are you targeting those?

I guess it's possible my market share is different.

But it seems that based on the production guidance you have, it seems like inventories would sort of rise from here.

Just wanted to see what you guys have in mind both in terms of absolute levels and maybe a days supply target or something like that.

We are going to get -- we're expecting a higher sales rate in the fourth quarter, so we would expect to see our absolute inventories improve.

And we think we will get to 60 or 60-plus days supply in the end of the quarter.

Great; thank you.

One last one, just on Ford Credit.

Can you just -- in your guidance you said that positive in the fourth quarter, but in '10 likely to be less profitable than in '09.

Can you just help dimension some of the -- obviously you highlight the lower receivables.

That is one thing.

Is there anything else going on in terms of headwinds going from '09 to '10 that we should think about?

Yes, we expect to see some deterioration in margin as our cost of funding goes up a little bit.

Excuse me, why don't I ask K.R.

to give you a more detailed answer?

Sure.

Lewis is right.

There might be a little squeeze on the margin next year.

But the other big one that we had this year -- we had $300 million gain from the unhedged ICL, intercompany loans, that we have now hedged those out now, so that won't repeat.

That $300 million just won't repeat next year.

Okay, just -- I'm sorry, carry on.

Oh, no, no.

I just had one.

What about just lease residuals?

Is that something that you feel with the recovery of the used prices has the potential to continue to be a tailwind next year?

Or is that something that has reversed a lot already?

No, lease residuals in the auction market is really hard for me to call.

We have seen an increase all year long, up through the end of the third quarter.

What we've seen actually in October is it is starting to fall off a little bit.

I think from the end of the third quarter to the last week in October we've seen about a 3% decline in auction prices.

It's so hard for me to give a forecast on auction prices going forward, but since we're at a very high level right now we'll see what happens next year.

Okay, great.

Thanks a lot, guys.

Okay, just to answer the one question about the shares.

The third quarter $565 million of equity issuance was 71 million shares; so you can work out the average price.

And that's the primary factor going from 3.1 billion to 3.2 billion shares.

Itay Michaeli, Citigroup.

Great.

Thanks.

Good morning.

Lewis, just two cash flow questions.

Can you just talk about how we should think about CapEx next year?

You have been able to hold CapEx down very impressively in '09.

How should we think about that into 2010?

And also just if you could update us on the US pension, please.

Yes, let me answer the second one first, because we won't update you on the US pension till fourth quarter, as we usually do.

We don't give updates during the year.

In terms of CapEx for Ford businesses -- so I'm going to exclude Volvo from this -- I think we can expect to see CapEx go up next year.

We have been a bit lighter on CapEx this year than perhaps we expected.

We are getting better at efficiencies of spending.

And we've also been a little bit lucky on calendarization.

But as we've told you in the past, our product programs are intact; it's just that we really worked hard on making sure we minimize what we spend on them.

And we have a lot of launches in the first part of next year, so that is why we will probably see CapEx go up particularly in the first quarter of next year.

Sure.

That's helpful.

Then just a follow-up on -- working capital was strong again in the quarter.

Can you just quantify the Tier Two supplier distressed payments in the quarter and what you are thinking about for Q4?

Yes.

The biggest part of the working capital was particularly seeing payables begin to improve as we get up to a more normal running rate.

In terms of distressed suppliers, as I said to you before, we've been really pleased with the robustness of our supplier base and the way they've managed their way through this.

I don't expect to see any significant changes -- any more significant change in payment terms in the fourth quarter compared to the third quarter.

We'd never say never; but our suppliers have shown themselves robust and are getting through these pretty significant volume increases quite well.

That's great.

Thank you so much.

Colin Langan, UBS.

Good morning.

Actually following up on the working capital question, would it actually have been -- working capital have been better if there was some supplier distress in the issue?

Or was it just that there wasn't actually a big factor for you at all?

It's a pretty minimal second-order effect, not a major effect, Colin.

Okay.

In terms of -- I know you said you wouldn't comment on the UAW agreement.

But can you comment on the timing of when you would expect something?

And possibly could you comment if the agreement is rejected would you be willing to -- or is it possible to go back and try to get another agreement again?

You're right.

We can't comment of course right now, because following the process we want to wait until the UAW announces the results and their perspective on it.

But we have just made such progress, because -- over the last few contracts and in between the contracts -- on improving our fundamental competitiveness.

It's a transformational agreement that allows us to make vehicles in the United States and do it profitably.

And going forward, I think for sure we are absolutely committed with the UAW and our employees to improving our competitiveness to compete with the very best in the world.

Because everybody does know that that is the foundation for us profitably growing the Company.

So as soon as we get through this near-term explanation, then we will go back to work to figure out how to continue to improve our competitiveness together.

Okay, but the voting at the plants actually concludes pretty -- today, I thought.

Is that not correct?

Yes, we just have to process it.

We just need to wait.

It's a UAW managed process.

We need to wait until they make their announcements.

Probably know later today or tomorrow, and then we can move into a discussion of the future.

But clearly the majority of what we have done and the benefit that we have done over this last few contracts -- and so we're committed to -- I know the UAW is and I know our employees are committed to ensuring that we are competitive.

Because that is our foundation for growing.

Okay.

Just one last one.

I think you mentioned structural costs next year you expect to be more flat.

Are there going to be some moving --?

Can you go through some of the moving parts in there?

I know a lot of people are talking about advertising being up.

I imagine you might be increasing that next year.

And when you say structural costs, is that -- if they are flat next year, does that include material costs may be rising because of the commodities and foreign exchange issues, or is that just excluding those factors?

Yes, material will be up a little as I said in one of the previous questions.

We do have a big launch year around the world next year.

Ford of Europe has got a lot of new products as well as Ford North America.

As volume starts coming back, assuming it does, we will see some volume related costs, some shift premiums, and overtime.

So, we -- and of course, the comparisons year-over-year get much, much tougher.

I mean the big significant improvements we started making, we have got -- we started putting home in the fourth quarter of last year.

So that is why we would expect them to flatten off.

Okay.

All right.

Thank you.

Steve Dyer, Craig-Hallum.

Thanks.

Good morning, guys.

Just a question on the Ontario plant, wondering if you can give any additional color there with the transmission parts shortage, and anything more you can say about that.

It sounds like a similar part is used on the Taurus, which is something I would assume you don't want to be down right now.

Anything more you can tell us there?

No, except that we are clearly on top of that issue and we have a good recovery plan in place.

Okay.

Thank you.

Ladies and gentlemen, at this time we will now welcome questions from the media community.

(Operator Instructions) Dee-Ann Durbin, the Associated Press.

I have quite a few questions, but I will try and rein it in a little bit.

But specifically, I'm having trouble describing how North American results relate to the economy.

Is this a sign of an upturn?

Is this not really repeatable because of the Clunkers program?

If you could delve into that a little bit.

And also I'm wondering if you have a cost disadvantage per vehicle because you're not getting the same provisions as GM and Chrysler did in your UAW contract.

Oh, okay.

Sure, Dee-Ann.

With respect to North American operations, I think the key elements of their performance is led, of course, by the industry and the economy, but also the strength of their product line.

So if you look at -- even in this downmarket -- that because of the strength of the products, they have been actually increasing their market share.

In addition to that, they've actually been decreasing their incentives.

Because of the strength of and the quality and fuel efficiency and safety, the consumers are really valuing the North American product line.

So as we noted, we are -- actually be increasing again the production in North America for the fourth quarter, both to support the market, but also the fact that the industry is starting to recover.

So they are in a great place with their products and they are right there for the market recovering.

The Cash for Clunkers, that specifically was a help for everybody.

And of course Ford had tremendous products in there to support what the consumers really want.

But that has kind of come and gone, and what we are seeing now is a fundamental improvement in the industry and an improvement in the competitives of North America going forward.

And I think that is what we ought to expect in the future.

On the -- what was your second one?

It was on -- oh, on disadvantage.

Yes, on the disadvantage, clearly Ford has so many more advantages than the potential to be disadvantaged.

The fact that we have continued to invest in a world-class product line.

When you see the third-party endorsements not only for the breadth of our product line -- small, medium, and large cars, utilities, and trucks -- a commitment to be absolutely best in class in quality and fuel efficiency and safety, and great design and best value on every one of these vehicles that comes out.

So we are creating a very strong business and we are not taking taxpayer money.

So the advantages clearly outweigh any potential disadvantage.

Now, the reason I say potential is that we have worked very well with the UAW over the years to ensure a transformational agreement that allows us to be competitive with the best in the world.

And going forward -- we can't clearly talk about the results of the last negotiation until the UAW comments on it.

But we are absolutely committed with the UAW to continue to work on every element of Ford's competitiveness going forward.

Because we all know that these are the reasons we are getting this result, and it's the foundation of us competing with the best in the world.

And it's also a foundation of us being able to grow the business.

So we will not be disadvantaged going forward because it's too important for all the stakeholders that we be absolutely competitive with the best in the world.

Thank you.

Tom Walsh, Detroit Free Press.

Morning, guys.

You did not forecast any further increase in market share going forward.

Is that just a conservative approach to avoid irrational exuberance?

Or are there specific concerns that would retard future growth in market share?

Yes, we are not -- the only guidance we gave on that was that we thought that throughout the rest of this year, the last few weeks remaining, that we would be about the same as what we have been running.

Which as you pointed out, we have increased market share very significantly.

And have and will -- we have not given guidance for 2010, and we'll talk about all of 2010 when we do the year-end results, Tom.

Okay, that's great.

One more thing.

On transaction prices which as Rod Lache said were spectacular, how much of an impact were, A, the Ford 150, the F-150 launch in the quarter; and also the take rate on SYNC?

How big factors are those in the transaction price improvements?

They are both two key elements, but I would categorize it more, Tom, as the overall strength of the entire product line.

On the small and medium-sized vehicles as well as the larger ones, because we're seeing that value that the consumer places on Ford across the entire product line.

Okay, thanks.

Bryce Hoffman, the Detroit News.

Good morning.

Congratulations, gentlemen.

I wanted to ask you; I know you can't comment on the UAW agreement because the results haven't been announced.

But one thing that I would like to ask you to comment on, Alan, is one thing that is clear from the comments we are hearing at plants across the country, is that there is a lot of anger on the part of workers at Ford's North American -- or US facilities, rather, who feel that they perceive that there has not been equitable sacrifice at all levels of the Company.

How do you respond to those sentiments?

Well, I think that I feel really positive about the actions that we have taken to support the transformation of Ford, starting with the Board of Directors' compensation which was reduced dramatically.

Starting with -- continuing with Bill Ford and myself, the fact that we also decided to not have bonuses for all of this hard work by everybody.

So I think that up until now, I think people have felt it really has been all of us pulling together.

So all I know is that we're all focused on the right thing by improving Ford's competitiveness and not being disadvantaged going forward; and I don't think we are in that area either.

One follow-up question.

Are you going to be looking in the next few weeks at any of your product sourcing decisions that were made -- this contract called -- these contract changes called for some new products to be sourced in the US.

Are those things that are going to be reevaluated in the weeks ahead?

Bryce, our focus will continue to be to work with the UAW on improving every element of our competitiveness, because that is the foundation.

That is the absolute foundation for us profitably growing the business here in the United States.

Great, thank you.

Keith Naughton, Bloomberg.

Hi, Alan and Lewis.

Morning.

I was wondering if the two of you felt like Ford or Ford Credit now deserves an upgrade from the credit rating agencies?

Well, I think the way we feel is that the most important thing that we continue to do -- and that is what is so neat, clearly, about today for everybody, Keith -- is that the most important thing we do is that we have a plan to profitably grow Ford over the long-term.

And what you're seeing here today is a tremendous proof point, because we put a plan in place three years ago to focus on the Ford brand, to have a robust complete balanced product portfolio, to be absolutely best in class in every vehicle that we put out, to have a financing plan, to fund the transformation and then continually improve our balance sheet, and clearly to use our fabulous Ford resources worldwide.

And I think what you're seeing is absolutely the results of an absolutely focus attention on that plan.

And the people that watch us and rate us and look at us, that is what they are looking for -- is do we have a plan?

Are we performing on the plan?

So it will reveal itself over time, but our focus is on creating not only great products but a really strong business for all of us.

Okay.

Thank you.

Brent Snavely, Detroit Free Press.

I'm looking at slide 14 with the $4.6 billion in structural cost reductions.

I believe you said all of that was over the first nine months of this year.

Especially the manufacturing and engineering, I was wondering if you can elaborate a little bit on how you achieved that.

I mean, the $2.4 billion seems like a pretty impressive number there.

Yes, we've had really record levels of productivity improvement around our facilities in the world.

As you know, we've had some pretty painful personnel reduction actions, and we are also I think beginning to reap the benefits of our global product development actions both in terms of working on the products and also implementing the Ford global product development process.

So there is a variety of things in there, but it's really around getting more efficient in both manufacturing and product development.

Just to be clear, so all of these structural cost improvements occurred this year?

They are not a carryover at all from actions taken in prior years?

Or are they carryover?

Yes, clearly a significant portion of this is the first nine months' effect of actions we've particularly put in place in the fourth quarter of last year.

Okay.

But it's this year.

That's why we're giving guidance that we expect those year-over-year improvements to slow down as we -- as the base reflects the improvements we made.

Okay, thank you.

Jeff Bennett, Dow Jones Newswires.

Good morning, Alan.

I was wondering what strategy you do have, because you do know that European sales will fall off so much.

I mean is that an incentive that you may have to do there?

Also with the UAW, I know that is still in the air, but what kind of costs are you looking at either to save or have to add to the balance sheet if that doesn't go through?

Sure, Jeff.

On the first one, we will continue our fundamental strategy in Europe and around the world of matching the production to the real fundamental demand.

As we've talked about, that has just been our foundation that's allowed us to get the value out of the products as well as match the production to what people really do want.

And we will continue to do that.

The only reason that we said we wanted to get a little bit more data is it's just not quite clear to all of us the strength of the recovery in each area around the world.

But we will assess that and then we will provide everybody updated guidance in January.

On the second question, clearly we don't want to comment now because we went to follow the process of letting the UAW announce our results.

Right.

But clearly we have a long track record of working very effectively with all of our stakeholders, including the UAW, to improve our competitiveness.

And we have made substantial progress on that, and we will continue to work on every element of our competitiveness going forward.

So we will have more later after the results are out.

I was wondering if you could clarify, when you say that you won't be at a disadvantage basically no matter what the outcome with the UAW.

That would seem that you didn't really need the concessions to begin with.

Well, part of the issues are going forward.

And the UAW has clearly indicated that they do not expect Ford to be disadvantaged going forward, and we both -- we're aligned on that and we're going to continue to work on it.

Okay.

Thanks.

Katina, I think we have just time for one more question, please.

Robert Schoenberger, the Plain Dealer.

Good morning.

Looking at the currency situation, especially in Europe with the euro, the dollar's falling strength against the euro, is there going to be more attention paid to possibly sourcing things in North America?

And if so, does that give any weight to Mexico, the United States, or Canada in that equation?

Our underlying philosophy is to build where we sell.

Obviously on the margin you can continue to look at it, but it's a very difficult thing to do, to chase currency in the near term changes in currency with production.

So the underlying assumption is we will build where we sell.

Great.

Thank you very much.

Okay.

Thank you.

That concludes today's presentation.

We thank all of you for joining us today.

Thank you, Brian.

Ladies and gentlemen, thank you for your participation in today's conference.

This concludes your presentation.

You may now disconnect.

Good day.