Lillian Etzkorn - Director, Investor Relations Alan Mulally - President and Chief Executive Officer Don Leclair - Executive Vice President and Chief Financial Officer Mark Fields - Executive Vice President and President, The Americas

John Murphy - Merrill Lynch Rod Lache - Deutsche Bank Brian Johnson - Lehman Brothers Himanshu Patel - JP Morgan Chris Ceraso - Credit Suisse Mark Warnsman - Calyon Patrick Archambault - Goldman Sachs Itay Michaeli - Citi Rod Lache - Deutsche Bank Securities Bryce Hartman - Detroit News Jeff Bennett - Dow Jones Newswires Amy Wilson - Automotive News Jerri Downs - Louisville Courier Journal Byron Pope - Ward’s Auto Rick Poffley - Chicago Tribune Deanna Durban - Associated Press

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Thank you Katina and good morning ladies and gentlemen. Welcome to all of you who are joining us either by phone or web cast. On behalf of the entire Ford management team, I would like to thank you for spending time with us this morning. With me this morning are Alan Mulally, President and CEO, and Don Leclair, Chief Financial Officer and Mark Fields Executive Vice President and President, The America. Also in the room are Peter Daniel, Senior Vice President and Controller, Neil Schloss, Vice President and Treasurer, and Mark Hoffman, Director of Accounting and K.R. Kent, Ford Credit, CFO. Before we begin, I would like to review a couple of quick items. Copies of this morning’s earnings release and the slides that we will be using today have been posted on Ford’s Investors relations and media web site and financial results discussed herein are presented on a preliminary basis. Final data will be included in our Form 10-Q for the second 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 their GAAP equivalent as part of the appendix to this live cast. 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 here. Additional information about the factors that could affect future results, are summarized at the end of this presentation. This risk factors are also detailed in our SEC Fillings, including our annual, quarterly and current reports to the SEC’s. With that, I would like to turn the presentation over to Alan Mulally, Ford’s President and CEO.

Thanks Lillian and good morning. As we all know, the last quarter has certainly been a challenging one for the entire automobile industry. Because of deteriorating economic conditions, demand has declined substantially particularly in North America. At the same time, fuel and commodity prices have increased substantially. As a result, there has been a significant shift away from large pickup trucks and traditional SUVs in North America. The progress we had made of working together to create One Ford global enterprise during the last two years, however gives us opportunities in today’s environment. We were the stronger business in Denver to leverage Ford’s global assets and continue to address the pressure facing us in North America. We also are building on the past few years of progress, in substantially improving our quality and our entire cost structure introducing strong new products. I will start off this presentation briefly by providing you with an overview of last quarter’s results and accomplishments. Don will take us through the details and provide an outlook on the rest of 2008. Mark Fields also is here today with us. And he will provide you with a summary of significant actions we are taking to accelerate the transformation of our business in North America to respond to this rapidly changing environment. I’ll then come back and summarize how continuing execution of our plan will allow us to adapt to this challenges and will position us as a lean global enterprise as profitable and growing. As I am sure you have noticed, we have two press releases this morning. One for our financial results and one for our plans in North America. I will begin by reviewing the key financial results for the second quarter on the slide three. During the second quarter we completed sales of Jaguar and Land Rover. As discussed in April, we have excluded its results from continuing operations in 2008. As shown on the top of the slide, vehicle whole sales last quarter were about 1.6 million units. Down 212,000 from the same period in 2007. This reduction includes 78,000 Jaguars and Land Rovers and Aston Martin units . Ongoing company revenue was $38.6 billion, excluding Jaguar and Land Rover from the 2007 data, revenue was down slightly with lower volume adverse product mix and lower net pricing, partly off set by favorable exchange. Pre tax results from continuing operation were a loss of 1 billion, $1.5 billion lower than a year ago. This reduction included about one billion in automotive at about 500,000,000 in financial services. Our second quarter net loss was 8.7 billion including about 8 billion of pre-tax special charges primarily related to a non-cash excessive impairment charges. This impairment primarily reflects the impact of both the automotive and credit companies up with the tremendous shift in demand in the US market away from large tracks and SUVs. We ended the quarter with 26.6 billion of cash down 10.8 billion from a year ago. This reduction in part reflects implementation of the initial part of our retiree health care agreement with UAW as well as our planned payment of subvention payments upfront to Ford Credit. Turning to slide four. Ford North America incurred an operating loss of 1.3 billion during the second quarter. This loss is about one billion worse than 2007 more than explained by the lower volume in changing model mix. We saw a strong performance from our operations outside of North America with Ford of Europe at a pre-tax profit of 582 million in Ford South America making 388 million. In other regions Ford A specific Africa and Mazda were both profitable and improved compared with 2007. Volvo incurred a loss as expected. These results were improved from the first quarter of this year. Ford Credit incurred a 294 million pre-tax operating loss. We reduced our cost by one billion with over 600 million of that coming from North America, which keeps us on our track up five billion cost reduction goal for this year. And Ford’s quality continues to improve. Initial quality of the ford brand in the US improved at a faster rate than the industry average according to the latest JD power survey. As you can see on slide five, we launched three all new vehicles during the last quarter. The all-new Ford Kuga was recently unveiled by Ford Europe. The stylish compact cross wall vehicle has the best fuel economy as any all wheel drive vehicle in its segment. In North America, we have launched two entirely new products. 2009 Ford Flex a crossover vehicle with fuel economy that is equal to a better than any of its seven passenger competitors. And a 2009 Lincoln MKS luxury sedan with a distinctive new signature left for Lincoln. Both have received very favorable reviews. Starting next year, the MKS and the Flex will be the first vehicle to receive Ford’s new EcoBoost engine technology. EcoBoost will deliver up to 30% better fuel economy as well as a superior driving performance. We also completed the sale of Jaguar and Land Rover the top time motors on June 2nd and during the second quarter we have reduced our hourly personnel in North America by about 4000 primarily through enterprise wide buy outs. We also began our 15% reduction of salary personnel cost during this quarter, most of that being accomplished this month. At this point, I will turn over to Don to go to the second quarter results in even more detail, Don?

Thanks, Alan. Let us move on to slide seven, provides more information on our second quarter. And starting at the lower left, our net loss for the second quarter was 8.7 billion and this included 444,000,000 of tax benefits more than explained by an adjustment for accounting standard number 109 related to our differed tax asset evaluation allowance. Our net income included a net tax credit as well as minority interest in profitable affiliates. Adjusting for these items lease a second quarter of pre-tax loss of about nine billion. That included pre-tax charges for special items of over 8 billion to a cover on the next several slides and excluding these special items, we ended up with a second quarter pre-tax operating loss of $1 billion. Now on slide eight. This covers our special items in the second quarter. This page covers the 426 million of pre-tax charges excluding the impairments. We recorded a charge of 274,000,000 associated with personnel separation programs in North America largely related to the hourly programs in the U.S. In addition, there was a gain of 100 million for OPEB related to the North American hourly separation programs and we recognize the charge of 303 million primarily associated with the sale of our ACH glass operation during the second quarter. The 75 million for Jaguar Land Rover reflects an operating profit through the closing date of June 2nd partly offset by a loss on sale. Slide nine provides details on the Aston impairments, which in total represent a non-cash pre-tax charge of 7.6 billion. And these charges have no impact on our credit lines and our access to our credit lines or overall liquidity. The pronounced shift in consumer preferences away from full size pickup trucks and traditional SUVs toward more smaller, more fuel efficient vehicles has caused us to review the fair value of our long lived assets in North Americas. And we have determined that the future discounted cash flows generated by those assets was lower than their carrying value. And as a result, we recorded a pretext non-cash charge of 5.3 billion. The consumer shifts mentioned above coupled with reduced overall demand for vehicles in North America has caused a significant reduction in second auction values for full size pickups and traditional SUVs in particular. Ford Credit reviewed its U.S. and Canadian operating lease portfolio and determined that a lease and residual values would be significantly lower than previously expected. And that resulted in an impairment. That impairment is essentially recognition that for certain vehicle lines the carrying value of Ford Credit's net investment in our leases at the end of the second quarter was higher than the expected discounted future cash flows related to those assets. And as a result Ford Credit recorded a pretext charge of 2.1 billion. Our second quarter results also included a charge of 214 million that represents the impact on Ford of a good well impairment related to Mazda's company-owned dealerships in Japan. Slide 10 shows our pre-tax results by sector and the second quarter results were a loss of one billion including a loss of 670 million on the auto side and a loss of 334 on financial services. Now we will turn to the auto sector. Slide eleven shows a change in second quarter results compared with a year ago, a deterioration of 1.1 billion. Compared with 2007 volume in mix was $1.3 billion unfavorable. Primarily due to unfavorable volume in mix in North America and lower volume at Volvo and that was partly offset by improvements in Europe. Net pricing was 200 million unfavorable, more than explained by declines in North America and Volvo partly offset by improvements in South America and Europe. Costs were one billion favorable and we will cover that later. Exchange was 200 million unfavorable more than explained by the impact of the weakening of the British Pound compared with the Euro and the U.S. dollar compared with European currencies. Net interest and related fair market value adjustments were 200 million unfavorable. And finally, the non-recurrence of 2007 profits for Jaguar and Land Rover and Aston Martin also adversely affected the year-over-year comparison by about $200 million. Now onto slide 12, which explains our cost performance which was 2.7 billion in the first half and one billion in the second quarter. Net product cost was $600 million lower in the first half largely reflecting favorable material cost reductions, partly offset by added product content and commodity cost increases in excess of favorable mark to market adjustments on commodity hedges. Second quarter net product cost were about flat with higher commodity cost increases and added product content offset by material cost reductions. Warranty expense was about 200 million lower this was mainly due to favorable first quarter adjustments to forward Europe warranty reserves. Manufacturing and engineering costs were about 500 million lower, more than explained by the continued benefits of our restructuring actions in North America. Reductions in manufacturing costs were partly offset by higher engineering expenses. Spending related cost improved by 600 million mainly the non-recurrence of accelerated depreciation in amortization for facilities that we recently closed. Pension and retiree health care expenses were 300 million primarily reflecting health care efficiencies. Overhead costs were about 300 million lower than a year ago and that is mainly due to our restructuring actions. And advertising and sales promotions were about 200 million lower than a year ago. Now on to slide 13, this shows the pretax results for each of our automotive operating segments and other automotive. In the second quarter, other automotive was a loss of 336 million primarily net interest expense of 339 million. The second quarter net interest expense was somewhat higher than our guidance primarily due to losses on the temporary asset account that we established based on our agreement with the UAW last year for retiree health care agreement. Going forward we still expect net interest expense to be in the range of 250 million to 300 million per quarter. Net, however, will continue to be subject to market volatility in part because of temporally asset account is heavily invested in equities. For the next section of slides, we will cover each of the automotive operations starting with North America on slide 14. The second quarter wholesale was 679,000 units down 137,000 compared with the same period in 2007. Net primarily reflects the decline in the industry selling rate from the 16.4 rate last year to 14.6 this year. And a decline in our U.S. market share from 15.6% to 14.4%. Revenue for second quarter was 14.2 billion that is that is down 4.8 billion from a year ago consistent with lower volumes, in the adverse products mix, and lower net pricing. The second quarter pre-tax results were a loss of 1.3 billion. Slide 15 provides an explanation of the change from a year ago in North America. Volume in mix was 1.5 billion unfavorable primarily reflecting the decline on the U.S. industry volumes in adverse mix away from full size pickups and traditional SUVs. Net pricing was unfavorable by 300 million primarily reflecting higher retail in incentives. In total, cost improved by about 600 million. The improvement reflects a lower structural costs. Mainly lower spending related manufacturing in pension and OP-ED cost. Net product cost were about flat with higher commodity costs and added product futures largely off set by favorable material cost reductions. In exchange in other each were about 100 million favorable. We expect losses to increase in the second half in North America primarily during the lower volume in mix consistent with the deterioration in the economic environment. Slide 16 provides and explanation of the deterioration in North America for the second quarter compared with the first quarter. Volume in mix is 200 million unfavorable, primarily reflecting the non-repeat of dealer stock increases during a first quarter as well as unfavorable mix resulting from the continuing industry shift to smaller cars and trucks. Net vehicle pricing was unfavorable by 300 million, primarily reflecting higher retailer incentives. Cost changes were 600 million unfavorable. This primarily reflected higher commodity cost, primarily due to the non-repeat of favorable mark to market hedging gains in the first quarter and increases during the second quarter in commodity costs. The non-recurrence of favorable warranty reserves adjustments also taken in first quarter. So that caused warranty costs quarter-to-quarter to be higher. In total, structural costs were about unchanged. The on going savings from personnel reductions were roughly offset by launch expenses for our new flex and MKS, as well as by the non-repeat of favorable small one time factors in the first quarter. In exchange in parts, profits each were 100 million unfavorable. Slide 17 shows US market share for Ford and Lincoln and Mercury. The second quarter market share was 14.4% including 9.2% for retail and 5.2% for fleet. Retail share decline by about one point from last year more than explained by segmentation shifts away from full size pickups and traditional SUVs. Fleet share also declined by two-tenths of a point mainly due to lower daily rental sales. Slide 18 provides a summary of actual and projected cost reductions in North America. In the second quarter, net product cost in total were unchanged with about 300 million of material cost reductions offset by increases in commodity costs and product ads. Structural costs were reduced by about 600 million in the second quarter compared with a year ago. In total personnel in North America were reduced by 4,000 during the second quarter. We remain on track to deliver the five billion cost reduction target and that is before taking into consideration any reduced appreciation in the second half from the fixed assets impairment taken this quarter. Now on the slide 19, in the South America, sales were 118,000 units and that is up 8,000 from a year ago. Revenue was 2.4 billion, 600 million higher than last year. Primarily reflecting a stronger Brazilian currency favorable net pricing in the higher volumes. South America earned a profit of 388 million in the second quarter this is 133 million better than a year ago. Primarily reflecting higher net pricing in favorable volume and mix. Partly offset by unfavorable changes in exchange rates. We expect continued good results in the second half in South America about equal to a year ago. Slide 20 covers Ford of Europe and the second quarter wholesalers were 532,000 units, 23,000 higher than a year ago. second quarter market share was 8.5% in the 19 markets we tracked, that is two-tenth of a point higher than last year. Revenue was 11 ½ billion, 2.3 billion higher than last year primarily due to favorable currency translation in favorable volume and mix. Second quarter profits were 582,000,000 320 higher than a year ago. Slide 21 provides an explanation of that improvement in Ford of Europe. Volume in mix was 300 million favorable compared with the same period in 2007 reflecting volume increases in most markets and favorable mix. In total, costs were reduced by about 100 million. This reflected primarily lower overhead, pension, and advertising and sales promotion costs. Those were offset partly by higher manufacturing and engineering costs. Exchange was 100 million unfavorable mainly due to the weakening of the British pound compared with the Euro. And we expect Europe’s results in the second half to continue to be good, but down some from last year. Slide 22 covers Volvo. The second quarter wholesales were 107,000 down 18,000 from last year and that is largely explained by lower industry volumes and lower share. Market share in the US was five-tenths of a percent and share in Europe was 1.3%. Both were down one-tenth of a point. Revenue was 4.3 billion down 100,000,000 from a year ago primarily reflecting lower whole sales and unfavorable net prices that was partly offset by favorable currency translation. Second quarter results were loss of a 120 million, 29 worse than the same period last year. In the second quarter, results reflected an improvement from the first quarter of 2008 as we indicated in April. Slide 23 provides an explanation that the 29 million decline in Volvo's second quarter. Volume and mix was 120 million unfavorable primarily explained by lower retail volumes in the U.S. and Europe and the discontinuation of our distribution agreement with rental. Net pricing was down 90 million compared with 2007 with higher retail marketing centers in Europe, partly offset by higher pricing at selected markets. In total, costs were reduced by 260 million. This is largely explained by an improvement in structural cost and warranty. And net product cost reductions were largely offset by higher commodity costs. Exchange is about 60 million unfavorable primarily reflecting in the weakening of the US dollar relative to European currencies. And last month Volvo announced additional restructuring plans to be implemented throughout the balance of the year including a reduction of 2,000 people. We expect that Volvo’s second half results will improve compared with the first half. Now slide 24 covers Asia Pacific. And overall, we entered 153 million including 103 from our investment in Mazda, which is 31 million better than a year ago. Slide 25 covers Asia Pacific and Africa and during the second quarter, wholesales were 125,000 units. A decrease of 10,000 units compared with 2007 primarily reflecting industry weakness in Taiwan and South Africa and the non-repeat of a start build up in 2007. Revenue in the second quarter was 1.7 billion unchanged from 2007. A stronger Australian dollar and higher pricing in South Africa offset lower volumes. Asia Pacific reported a profit of 50 million in the second quarter. 24 million better than a year ago and the improvement largely reflected favorable net pricing and cost performance. Slide 26 shows automotive cash and cash flow. And we ended the second quarter with 26.6 billion in gross cash. Our operating related cash flow was 3.1 billion negative in the second quarter reflecting the following; an automotive pre-tax loss of 700 million, capital spending during the quarter about 100 million higher than depreciation and amortization. Changes in working capital and other items of 1.5 billion negative. That is more than explained by working capital changes that we expect to be temporary in nature. Payments of 800 million to Ford Credit reflecting a change to up front payment of subvention. Excluding the up fronts, subvention payments are operating cash flows 2.3 billion negative. Separation program resulted in an out flow of 200 million for the quarter and we contributed 200 million to a non U.S. pension plan. Ford Credit did not pay a dividend to Ford during the second quarter. In net of pension contributions we received 1.7 billion from the sale of Jaguar and Land Rover. The total decline in cash during the second quarter was 2.1 billion. Slide 27 summarizes our net liquidity; total liquidity including available credit lines was 38.2 billion, as we mentioned earlier the asset impairments did not affect the access to our secure credit facility. Automotive debt was 26.5 billion at the end of June. And upon implementation of the independent VEBA that will increase by about 6.3 billion. And we have less than three billion of maturities in the next three years. Now on to slide 28 and financial services where the second quarter loss was 334 million. That is 439 million worth in the same period a year ago. Other financial services reported a loss of 40 million in the second quarter. That is 33 million worth in the same period last year. The decline reflected primarily the non-recurrence of gains related to real estate transactions as well market evaluation adjustments from derivatives. Slide 29 explains the change in Ford Credit's pretax results for the second quarter compared with a year ago. Ford Credit's loss was 294 million and its about 400 million worth in 2007. The decrease in earnings primarily reflected higher depreciation expense for lease vehicles and higher provisions for credit losses. The higher depreciation on leased vehicles reflects our second quarter losses at auction including accumulated supplemental depreciation. The increase in credit losses reflects the higher severities related to lower auction prices as well an increase in delinquencies and repossessions. These factors were offset partly by the non-recurrence of net losses related to market valuation adjustments from derivatives, higher financing margins again related to the sale of approximately half of our ownership interest in Ford Credit's Nordic operations, and lower operating cost. We expect Ford Credit to lose money in the second half of this year about the same or better than the 262 million first half loss. As shown in the memo in the lower left of the slide, Ford Credit's managed assets declined from 149 billion a year ago to 140 billion at the end of the second quarter. This reflects lower vehicle sales in North America as well as our divestitures in alternative financing arrangements. Slide 30 covers the liquidity in funding outlook for Ford Credit and the left part shows Ford Credits committed liquidity programs and cash in utilization of its liquidities sources at the end of the second quarter. And Ford Credits liquidity exceeded its utilization by 23 billion. Our funding strategy includes maintaining liquidity to meet near term funding needs by having substantial cash balances and committed funding capacity. And Ford Credit will continue to diversify its global asset back funding capabilities in renewed committed asset back funding capacity including outside of the U.S. And as we have done in the past Ford Credit continues to consider and implement an alternative business arrangement to improve funding capability where it makes sense. For example, Ford Credit the sale of half of its ownership interest in its Nordic operations in the second quarter and this contributed to the reduction in the balance sheet that I mentioned. At the end of the second quarter, Ford Credit's managed leverage was ten to one nets below were a target of 11 and a half to one. And Ford Credits equity was over $12 billion. In summary, we believe we have a funding plan that will provide sufficient funding for Ford Credit through the period of the economic slow down. Now on to slide 31 which shows where we are in our planning assumptions in operational on metrics for 2008. Total industry during the first half was equal to a SAR of 15.1 million units in the U.S. and 17.5 million units in Europe. And based on continued decline in economic conditions in the U.S., we now expect that the industry will be lower than the outlook that we had communicated previously. And we are now projecting the total industry, including medium and heavy trucks, to be in the range of 14 to 14 and a half million units for the full year. We are also seeing some softness in several European countries and are now projecting that industry volumes will be between 17.2 to 17.4 million units for the full year. On our operational metrics, our current model quality continues to improve. And as Alan mentioned earlier the initial quality of the Ford brand in the U.S. improved at a faster rate and the industry air was based on most recent JD Power Survey. Automotive costs have improved by 2.7 billion through the first half and that is a little better than our plan. U.S. market share for the first half was 14.7% that is down seven-tenths of the point from the same period a year ago. We presently project that our share will decline further than the second half due to continued vehicle segmentation shift away from areas where share have been high. Absolute operating cash flow during the first half was 4.6 billion negative. This was higher than planned and we expect to full year net outflow to be worse than we previously projected. In capital expenditures through the first half amounted to 2.9 billion. That is in line with our plan and our full year outlook. And overall, as we communicated previously, we now expect 2008 operating and overall results to be worse than comparable 2007 levels. Slide 32 covers our production plans for the second half. In North America, third quarter production schedules 440,000, that is down 197,000 from 2007 and 35,000 lower than our prior guidance. Fourth quarter volumes are projected to be 500,000 units . That is down about 70,000 through the mid point of our prior guidance. For Ford Europe we expect third quarter productions to be at 400,000 units down 16,000 from a year ago. And fourth quarter production to be 490,000 units about equal to a year ago. And for Volvo we expect third quarter production of 80,000 units down 13,000 units from a year ago and fourth quarter production at 110,000 down 7,000 from a year ago. And now I would like to turn it over to Mark to summarize our plans for North America.

Thanks Don. If you go to slide 34 as Don and Alan already mentioned, external conditions in North America have changed dramatically in a very short period of time. And while this presents a significant challenge, we also believe that we are uniquely positioned to respond to the new environment in which we expect to operate in the years ahead. In combination with the business improvements achieved over the past two and a half years, we expect the One Ford product development vision and process to enable us to deliver a range of highly acclaimed smaller vehicles in what we call global segment. That is the B, C, CD and commercial van segments beginning in the middle of next year. At 2010 over 40% of our entries in North America in these segments will be shared with Ford of Europe and that is platform and top hats. With 100% of the line up in those segments shared with Ford of Europe by 2013. This compares with nothing in common today. And every new product we introduce, not only those in the global segment, but also those will regional offers only will provide fuel economy that will be the best or among the best against facing competitors. And this will be supported by the most extensive power train upgrade ever for the company with nearly all of Ford's North America engines upgraded or replaced by the end of 2010. Plus nearly all of Ford’s North American lineup will offer fuel saving 6V automatic transmissions within two years. Our new product will be assembled in plants featuring lean manufacturing techniques and in nearly all facilities flexible body shops will make them competitive with the best in business in North America. And many of our power trains will go in plants that can actually flex among I4, V6, V8, or diesel engines. Importantly we expect to have our vehicle assembly capacity matched to demand. As we make these changes, we intend to continue fixing the fundamentals of the business as we have over the past two and a half years including a significant reduction in structural cost next year and broadening the ongoing consolidation of the U.S. dealer network. We turn to slide 35, before going into more details; I would like to share with you some of our current planning assumptions. First we do not expect the U.S. economy to begin to recover until early 2010. As the economy recovers, we expect U.S. industry sales will do the same and ultimately returning to tradable of around 17 million total units a year. We believe the product mix changes we have seen since gas passed the $3.50 per gallon level, are permanent in nature. But we do expect the full size pickup share of the industry to recover somewhat from today’s current level by 2010 and beyond. However, we do not expect full size pickups to return to the level of the industry shares that they enjoyed in recent years. We expect oil prices will continue to be volatile and will remain in an elevated level. And as a result, we expect the pump price of gas and diesel to remain at current levels or higher. Commodity prices are expected to remain high as well, so we are not assuming any near term relief from current conditions. In terms of our own share performance, we expect to see a total share remain at about 14% of the total market. With some years, somewhere higher and others somewhat lower depending on the product introduction gains. And now let us move on to talk about some of more planned action in detail. On slide 36, we talk about product and as we know that is what it is all about in providing consumers with the kind of vehicles they want in a very different environment than we have faced in the past. It is critical to our plans to return the business to health. We are now backing off our investments plans. But we are going to redirect a considerable portion towards smaller vehicles and fuel efficient power trains in both the near and longer term. The Ford, Lincoln, and Mercury line up will be almost completely upgraded in the next two years compared with 2006 models. When two-thirds of our North American spending will be on cars and crossovers compared with about one half today. In addition to bringing six of the company’s highly acclaimed European small vehicles to North America. We are accelerating the introduction of fuel efficient EcoBoost in four cylinder engines. And we are planning to double of hybrid electric vehicles next year with four entries compared with the two that we offer today. Now with every new product, Ford expects to be the best or among the best for fuel economy thanks to the most extensive power train upgrades ever for Ford. In addition to EcoBoost which as Alan mentioned earlier results in a 20% improvement in fuel economy over our naturally aspirated engine. This will include power shift twin clutch transmissions, start stop engines, electric power assisted steering and direct injection, as well as twin independent variable CAM timing engines. And while the majority of our investment will be focused on smaller vehicles and power trains, we intend to maintain our leadership in tracks and expand our cross over options. On slide 37, we detailed our product actions through 2009. And these include the 2009 Ford F-150, which will go o sale later this year with the most capability, choice and smart features of any full size pickup and with more than a 7% fuel economy improvement. The 2010 Ford Fusion, Mercury Milan, and Lincoln MKZ mid size sedan on sale on early 2009 and with fusion in Malone four cylinder fuel economy we expect to top Honda Accord and Toyota Camry. The 2010 Ford Fusion hybrid and Mercury Milan hybrid beginning production late this year and on sale in early 2009 with fuel economy expected to top the Toyota Camry hybrid. The new Ford Mustang, a coupe, convertible, and glass roof models in early 2009. Our new Ford Taurus Sedan with the EcoBoost engine and far more advanced safety and convenient technologies in mid 2009. Our new European Transit Connect small multi purpose van in mid 2009. And finally, a new Lincoln 7 passenger crossover with the EcoBoost engine in mid 2009. On slide 38 we talk about our 2010 product offensive. And that includes our new European Ford Fiesta in both four and five door versions in early 2010. The new European Ford Focus in both four and five door versions in 2010. A new Mercury small car in 2010. A new European small vehicle that will what we call white space entry in North America in 2010. And the next generation explore with unit body construction, EcoBoost engine, six speed transmission, weight savings, and improved aerodynamics for up to 25% better fuel economy available in 2010. On slide 39, talking about fuel economy we expect to be the best or among the best for fuel economy with every new product we introduce. By the end of 2010, nearly all of Ford’s North American engines will have been upgraded or replaced. In addition, within two years, nearly all of Ford’s North American line up will offer fuel saving, six V automatic transmissions. These improvements build on several Ford fuel leaders today in our showrooms, such as the 2009 Ford Flex the most fuel-efficient standard seven-passenger vehicle on the market topping the 2009 Honda Pilot. The 2009 Ford Focus with high life fuel economy of up to 35 miles per gallon, better than the smaller 2008 Honda Fit and the 2009 Nissan Versa SL and a key reason Focus retail sales are up 50%. The 2009 Ford Escape, which we are introducing just now, with a new 2.5 liter four cylinder engine and six speed transmission delivering best in class fuel economy of up to 28 miles per gallon ahead of the Toyota Rav4 and the Honda CRV. And the 2009 Ford Escape hybrid delivering 34 miles per gallon in the city and 31 on the highway. Our power train offensive will also feature a wide range of new technologies which I mentioned earlier. And also as I mentioned, will offer four full hybrid vehicles next year including the Ford Escape now in its fifth year of production. This will make Ford the largest domestic producer of full hybrid vehicles in North America, second only to Toyota in sales volume. On slide 40 moving to our manufacturing to support this product portfolio we will convert three truck or SUV plants to small car production with the first changeover starting this December. The transformation of our manufacturing system will be extensive, with nearly all vehicle assembly plans receiving flexible body shops ensuring we can respond very quickly in the future to changing consumer demands. We plan to extend flexibility to our power train plants with nearly half of our engine plants being able to flex depending upon the plant among I4, V6, V8, or diesel engines. We are also increasing four Cylinder capacity and expanding capacity for EcoBoost engines and 6B transmissions. And importantly, we expect the capacity of our vehicle assembly system to match demands. And parallel with these realignments we also plan to continue to offer hourly buy outs at select US plants and facilitates working collaborate with the UAW to ensure that we have competitive employment levels in our facilities. On slide 41 more specifically our manufacturing realignments include the following actions. A Michigan truck plant in Wayne Michigan, which currently build the Ford Expedition in Lincoln Navigator full size SUVs will be converted beginning in December to production of small cars from Fords new global C-car platform in 2010. Production of the Ford Expedition and Lincoln Navigator will be moved to the Kentucky truck plant in Louisville, Kentucky early next year. The Cuautitlán assembly facility in Mexico which currently produces F-Series pickups will be converted to begin production of the new Fiesta small car for North America in early 2010. Our Louisville, Kentucky plant which build the Ford explorer mid size SUV will be converted to produce small vehicles based on Fords global C-car platform beginning in 2011. Our Twin Cities in Minnesota assembly plan which was scheduled to close in 2009 will continue production of the Ford ranger through 2011 to meet consumer demand for the compact pickup. And finally as previously announced our Kansas City assembly plant will add a third crew this year for the Ford Escape, Escape Hybrid, Mercury Mariner and Mariner hybrid. Moving to slide 42, Ford's North American business has been undergoing substantial transformation over the last two and a half years. Our efforts have resulted in significant improvements across the business , improvements that be coming evident even to external observers before the external environment change so dramatically. Improvements that we must and we will continue to make. One area of focus has been our brands. And we are confirming today that we will continue to reshape our business around the Ford, Lincoln, and Mercury brands with Ford being the centerpiece. Defining the Ford brand is well under way not only across our nameplates in North America but on a global basis as well. And I am happy to report to you to that customers reviewing the Ford brand much favorably today compared with three year ago. While we intend to maintain our brands, we are making huge improvements in simplifying order complexity. With the 2000 models we are now launching, we achieved a 90% reduction in order complexity. For the 2010 model year, we will achieve further reductions of over 50%, which will create major benefits not only for the company but also making the order and stock process far easier for our dealers and our customers. Quality closely tied to our brand perception continues to improve with Ford Lincoln and Mercury now ranking among the best for initial quality in the US. We are unsatisfied, of course, and however we are going to continue to drive for improvements year after year after year. Despite the headwinds we are facing externally we expect to achieve five billion of accumulated operating savings this year compared with 2005 including 7.3 billion in structural and other savings. And we are targeting further savings next year and beyond. And this is absolutely critical to ensuring our costs are lean and supportive of a viable business going forward. We continue to make good progress to in consolidating our dealer network in the U.S. an initiative we intend to broaden. And we also are progressing with the disposition of our ACH facilities. So moving to slide 43. In summary, we made great progress in fixing the fundamental issues that faced Ford in North America two and a half years ago. And now we are going to build on that progress as we respond to the new environment around us. But we also now have the added advantage through One Ford of bringing global resources to bear on opportunities before us in the North American market something that was just not feasible three years ago. With One Ford we intend to quickly implement an aggressive product plan, aligned with Ford of Europe and global segments that will deliver a balanced portfolio of products to North American customers. Highly acclaimed, fuel-efficient vehicles from small cars to exciting crossovers, such as the Edge, Flex and next generation Explorer, to new vans and the best full size pickups in North America. And they will feature new technologies that will provide consumers with fuel economy that will be among the best if not the best in each segment in which we compete. Supporting this will be a revamp manufacturing system with built-in flexibility. And these actions were developed, ground-up by the North American team and we firmly believe they give us the right throughput with flexibility to respond to changing consumer preferences to thrive in the new environment in which we expect to operate going forward. Now I will turn it back over to Alan.

Very good. Thank you very much Mark. Turning to slide 45, summarizes the key aspects of our plan, we remain committed to the plan and continue to make progress despite a very difficult eternal environment, particularly in North America. We continue taking decisive action response to the rapidly changing business environment. We are pleased that we went to the capital markets at the right time to obtain liquidity to finance our plans. And I am especially pleased with how the team is working together to create One Ford and leverage our global resources. Despite the present dislocations in the industry in North America, I believer that Ford is uniquely positioned to take advantage of our scale and global product strengths to bring to the North America market more smaller fuel efficient products that people increasingly want and value and to bring them here quickly. With a balanced portfolio of vehicles and a sharp focus on the Ford blue oval brand across the globe we can effectively operate through the current downturn and begin the grow profitably as a global economy rebounds. Looking ahead, on slide 46, we are accelerating our product and production transformation in response to the significant changes and opportunities in our business environment. We have made progress by working together to create a One Ford global enterprise during the past two years. That enables us to leverage Ford’s global product line to address the pressures and the opportunities we have in North America. And in turn, the add volume from the North American market will add greater sale to our already profitable operations overseas. We are building upon our One Ford product lineup, by economizing products and sharing vehicle platforms across the globe. Within the next five years, we will build more than one million vehicles a year worldwide, offer our global B vehicle platform. And nearly two million units worldwide offer global C vehicles platform. Many of this will be new to our present North American lineup. As we introduce new products, we will continue to improve upon our product execution and provide future content that customers want and value. Overall, we expect that these product actions will help to continue to improve our customer’s perceptions of our brands. Slide 47 shows a few of our present products and I will describe how they relate to our plan for One Ford product lineup. At the top, the European focus and North American focus, while these vehicles share the same name and are both excellent products they are totally different designs, requiring separate engineering, and many unique components. At the bottom of the slide, of the North American Fusion, and the European Mondeo. These are obviously totally different vehicles that compete in the same mid size or CD segment. There is also obvious the commonizing theses mid size vehicles and making one global vehicle will yield substantial efficiencies throughout the entire supply chain. In the center of the slide is a new Fiesta to be introduced later this year in Europe and China. By 2010 this vehicle will also be made in North America and many other areas of the world. Lastly the Transit Connect, shown on the right of the Fiesta is a commercial van made in Europe that we are now introducing in select markets around the world, including North America next year. Moving to Slide 48. While much attention have been placed on North America recently, we have also continued to focus on the growth of the Ford brand internationally where we are investing in a new products and expanding our manufacturing capabilities. These operations have been solidly profitable overall bringing over four billion during the past 18 months. Ford Europe continues to strengthen its product portfolio with a new focus and a new Kuga crossover. And we will launch the important new Fiesta small car and Ka small car later this year. We are gaining market share in traditionally, European markets and are investing in growth markets such are Russia and Turkey. In Asia Pacific, we are preparing to launch the new global Fiesta later this year. In addition, we are making major investments in our manufacturing operations in India, Thailand, and South Africa to support our presence in fast growing regions. In South America, we are investing in expanding our capacity in Brazil and Argentina and preparing to launch several new vehicles. Now on to slide 49, we have taken many steps in response to the rapidly changing environment. We sold Aston Martin and Jaguar and Land Rover to focus our global resources and talent on polishing the Blue Oval around the world and to raise capital. We have taken steps to operate Volvo on a more stand-alone basis in the absence of our Premium Automotive Group and we are in actions to improve its business. We took the necessary steps in the late 2006 to obtain more than 23 billion in financing to execute our plan. And we continued to assess alternatives to improving our balance sheet. We are continuing to implement out hourly VEBA agreement with UAW which will help to significantly lower our cost and increase our competitiveness going forward. Clearly the present business climate posses a significant challenge. But we are prepared to meet that test by accelerating the flow of new products that the customers want and value. We remain encouraged by the sustained strong performance in Europe and South America. These businesses were restructured several years ago and their success foreshadows what we can accomplish in North America as we transform our business with more fuel efficient, smaller and mid size cars, crossovers and utilities. In the second half of this year, our product pipeline will be full. We recently launched in North America two all new vehicles. The Ford Flex crossover and the Lincoln MKS luxury sedan. And soon we will have the F-150 Ford Mustang, Lincoln MKZ and fresh and gas new hybrid versions of both the Ford Fusion and the Mercury Milan. The new Ford Kuga is off to a great start in Europe and later this year, as just mentioned, the Ford Fiesta will enhance our line-ups in Europe and in China. Our actions today make it clear that we are keenly aware of the external challenges and will continue to act swiftly and decisively in taking actions to keep us on course with our plans. In summary, we believe that we are uniquely positioned through our focus on the Ford brand to leverage our global assets to quickly bring more small efficient vehicles to North America and the rest of the world. We have the scale, the expertise, and the financing to execute our plan. And transform Ford into a lean global enterprise that will deliver profitable growth for us all. Now we would like to take your questions.

Thank you, Alan. Ladies and gentlemen, you are going to start the Q&A session now. We have about 50 minutes for questions. 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 many questions as possible within our time frame, I ask that you keep your questions brief so that we do not have to move caller along after a couple of minutes. So with that Katina, can we please have the first question?

(Operator Instructions). Our first question comes from the line of Himanshu Patel representing J.P. Morgan. Please proceed. Himanshu Patel - J.P. Morgan: Hi. A couple of questions. On the lease residual write down, how did the accounting rules behind that work? Are you allowed to account for a future residual value reductions that you may anticipate or does this write down simply reflect the deterioration we have seen on used prices to date?

We did the impairment on the Ford Credit lease portfolio pretty much the same way we did the impairment on the fixed assets in North America. We looked at the cash flows that we think those assets will generate. So what we did is we made a forecast of auction values going forward and it is largely based on what we have seen to date. And we just took that and discounted it back and discounted it back and compared it to the book value of those assets. Himanshu Patel - J.P. Morgan: So if there is any further deterioration in pickup truck and SUV residuals from today’s starting point, would that mean there is additional write-downs coming?

There would have to be a large further deterioration for us to have any changes to that. And just for clarity, we did that impairment by vehicle line in the US and Canada and about 85% of that total change of 2.1 billion was on full size pickups and traditional SUVs. Himanshu Patel - J.P. Morgan: Okay. And then number two, Don you mentioned there was a temporary timing issue with the $1.5 billion of cash out flow from working capital, can you elaborate on that?

Yes. Of that 1.5 about 1.2 billion of it is inventory. And what really has happened is the world is changing rapidly as we have talked about the last couple of times we have gotten together. And we have been trying very hard to stay up to date and as the production schedules have changed quickly we actually had to carry a little bit more extra company inventory at the end of the second quarter. And so all of that inventory in fact by now has been shipped to dealers. And that is what I meant its temporary in nature. The results of a small affect on accounts payable just because of the down time that we had in some of our plants in North America at the end of the second quarter that contributed to that and we think that also will be temporary in nature. Himanshu Patel - J.P. Morgan: Okay, two last questions the three plants that are being converted from trucks to cars, anywhere you could give us some rough sense of the incremental cost of doing that?

Well let me start off on and then Mark can add. But the cost of converting a plant is mainly in the area of the body shop. And I would say about a quarter of a billion dollars is about what it takes to completely redo a body shop with a fully flexible system. And a part of that is incremental. Now it would not be fully incremental if we were going to take a truck plant that was not flexible and make it flexible. We would have to spend a large part of that anyway, so it depends what you are comparing it to but suffice as to say that it is all in our plan and it is contained in our cash flows and profits going forward. Himanshu Patel - J.P. Morgan: Okay, and then one last question on the full commodity cost issue relative to the last period of steel inflation that we saw a few years ago. What are your thoughts on helping suppliers during this inflationary cycle? Would you just directionally without giving any numbers, do you think more of the cost burden is going to be shared by the suppliers or with the -OEs or do you think some of this actually is going to end up with the consumer?

Well I think that that really remains to be seen. I mean thus far I think the manufactures and the suppliers have bore most of that. You have seen in the pricing that we discussed and just how long that can go and as I said remains to be seen. We are very cognizant of the health of our supply base and we work with our suppliers and try to do what we think is the right thing. And that is probably as much as we should go into now if that is okay. Himanshu Patel - J.P. Morgan: Fine, thank you.

You bet.

Our next question comes from the line of Chris Ceraso representing Credit Suisse, please proceed. Chris Ceraso - Credit Suisse: Thanks good morning, I guess two items. First on the capacity changes and in particular the power trains such an accelerated change and concentrated change in power train seems like it would be very expensive. Can you just outline for us your expected CapEx budget of ’08 ’09 and ’10?

Let me try on that one and just at a very high level. I think that our capital expenditures will be, corporately, will be at or maybe a little higher than $6 billion range going forward. And that contains the power train investments that Mark mentioned, the flexibility in the body shops that Mark mentioned as well as the new products. So what you are seeing is a couple of things is a kind of a bubble that we are going to go through because of the change over of the truck to the car plants and the body shop flexibility and the power trains and the flexibility there. But early on through that we are going to see cost savings because of the economies of scale that we are getting as we develop more and more vehicle types of a fewer and fewer platforms. Chris Ceraso - Credit Suisse: Okay second question, maybe you can help us boil down the change in North American production capacity if we use let us say 2007 as a starting point. What do you think is the incremental or the sort of a net change in car capacity and truck capacity by 2010?

Well I do not think we are going to go into that right now. I think the best way to think about that is that our plan in the near term is to get our managed capacity equal to our current dealer demand. And we have taken a lot of action, we outlined some today. And Mark and Alan outlined some earlier on our call in May and our press release in June. And we are going work very quickly to get our capacity--manned capacity down and then overtime realign our capacity on a more permanent basis. Chris Ceraso - Credit Suisse: Okay any updates to the cash burn target? I think of as May it was 14 to 16 billion? :

Yes, that is right. In May we said it was 14 to 16. And then June we said it would be more than 16 and given the volatility in the market place right now, we are not going to provide any more detail other than that. Chris Ceraso - Credit Suisse: Okay. Thank you very much.

The next question will come the line of John Murphy representing Merrill Lynch, please proceed.

Good morning. In this product shift which makes a tremendous amount of sense, I think it is a very good action to be taking here. If we think about the profitability of this small vehicles verses the vehicles that they are replacing, larger SUVs and trucks, I was wondering if you help us with the profitability in general, including there is differentials there. But also the fact that you are going to be leveraging global platforms in the economic skill. How much of an offset is there in our standard thinking of the negative mix shift, but also the very positive impact of leveraging in the global platforms?

Good morning. In this product shift which makes a tremendous amount of sense, I think it is a very good action to be taking here. If we think about the profitability of this small vehicles verses the vehicles that they are replacing, larger SUVs and trucks, I was wondering if you help us with the profitability in general, including there is differentials there. But also the fact that you are going to be leveraging global platforms in the economic skill. How much of an offset is there in our standard thinking of the negative mix shift, but also the very positive impact of leveraging in the global platforms?

You bet John. I think you really, you summarized it very well. We are very encouraged by our experience with the smaller and medium size vehicles around the world especially Europe. Because clearly with the fuel prices been higher than the United States, we have had some great experience restructuring that business, and restructuring the product line to make the vehicles that people really do want and value. And so a piece of that, like you said is that with the smaller vehicles, of more capable vehicles, of more features that people want and especially economy, they do value those neat vehicles. So there is a revenue side piece of that, but then as you clearly understand, as we move to the global platforms because requirements now are on the fuel efficiency side, on the safety side, and what people want is those requirements come together around the world and we can really accelerate this movement to our global platforms. And those numbers are have units to go in the B platforms, and the C and the CD are just staggering when you move up to a million units on the a model and two million units on a model. And of course, at the same time we are aligning our supply base with our aligned business framework and the parts starts to come together in the commonization on the details all the way up to the platforms. I think it is not only going to drive continued improvement in quality, but tremendous improvement are in productivity in a reduction cost. So you add both of those together and I think it is a different business model. And with the UAW transformational agreement that we have now in United States that significant improves our competitiveness, we believe that we can make a very reasonable return on all of our vehicles starting the ones in the Untied States. Mark, anything else you want to add?

No.

Just on due to the rationalization that you alluded to that is coming in more earnest next year. What should we expect there? Is there going to be fewer rooftops in the same number of franchisers how have more Ford Lincoln Mercury dealers. If you can just help us out with that, a little bit in what might be the incremental cost of that rationalization?

Just on due to the rationalization that you alluded to that is coming in more earnest next year. What should we expect there? Is there going to be fewer rooftops in the same number of franchisers how have more Ford Lincoln Mercury dealers. If you can just help us out with that, a little bit in what might be the incremental cost of that rationalization?

Sure. Our plan has been to improve the throughput and the profitability over our distribution network. And as we all know we have a tremendous distribution network and set of dealers. Clearly, with what has happened over the last few years we have over capacity and we have talked about it, and we work it together regularly. And we have been making great progress consolidating our dealer network. And now you will see all forms of that. That is one reason that Ford Lincoln Mercury going forward as a centerpiece of our product line is so important because it includes everybody. But also enables us to consolidate together. So we are going to continue that and we are going to broaden it. We are going to really focus on the areas where we have the over capacity and from a financial point of view, we try to work it dealer by dealer together where it makes economic sense to them and us. But clearly, our plan is to improve their throughput in their profitability.

Thank you.

Thank you.

The next question comes from the line of Brian Johnson representing Lehman and Brothers. Please proceed. Brian Johnson -: Good morning. A few questions around the product initiatives. First, the Fiesta I will assuming that that is the platform we saw at the Auto show and it is going on sale in Europe I believe next year. Is that correct? The focus, is that the current focus line up in Europe or is that going to be new generation in both continents?

Good morning. A few questions around the product initiatives. First, the Fiesta I will assuming that that is the platform we saw at the Auto show and it is going on sale in Europe I believe next year. Is that correct? The focus, is that the current focus line up in Europe or is that going to be new generation in both continents?

Yes. One clarification on your comment about the Fiesta, we introduced that in Europe and then into China this year, and then it come in the United States in 2007, 2010. And that is exactly the one that everybody saw, which everybody is really gratified about that we kept with that spectacular design and capability in fuel efficiency. On the Focus size, was it Focus size? Going forward, those clearly will come together on a new global platform. But for right now both of them are doing very well so that is something that will come together in the future. Brian Johnson -: So is the coming together the 2010 version that we are marketing here or is the 2007 version.

So is the coming together the 2010 version that we are marketing here or is the 2007 version.

Absolutely, absolutely. Brian Johnson -: Okay. Second, what are the bottlenecks or what are the hindering factors to not having either these cars on the market next spring or summer in North America? Given the Fiestas going on sale this year in Europe, given the Focus is 2010, could either of those cars be accelerated into North America in 2009 and if not what is the bottleneck?

Okay. Second, what are the bottlenecks or what are the hindering factors to not having either these cars on the market next spring or summer in North America? Given the Fiestas going on sale this year in Europe, given the Focus is 2010, could either of those cars be accelerated into North America in 2009 and if not what is the bottleneck?

I understand. Just taking Fiesta for example, the critical path on bringing the Fiesta to North America is to change the design for the special kind of unique emissions and safety requirements in the United States. And so that sets the timing for bringing it in to the United States because we just had not included that, those design features in the original design. But the rest of the vehicle is supportive of all the rest of the worlds markets. On the first part of your question is that our first move is going to be to increase the production on the current Focus that we are making here to get the maximum amount of vehicles that we can to the market as quickly as we can. And as Mark pointed out, that is the key element of the first change over from the track to automobile production is to get our Focus, which is selling very, very well to get that production off as quickly as we can. Then we will augment that with the new smaller vehicles out of Europe. Brian Johnson -: And does that Michigan truck could be producing current Focus in ’09?

And does that Michigan truck could be producing current Focus in ’09?

Oh no. It will switch over when we switch over. Brian Johnson -: Okay. And the final question which is more of a strategic organization one is what is this implied for the role of the US or white-collar salaried organization? And you know the extreme if you are saying why would the US head count outside of manufacturing be much greater in the car area than for example for a Volkswagen which is largely imported and soon to be built here? Or a Nissan or a Toyota US?

Okay. And the final question which is more of a strategic organization one is what is this implied for the role of the US or white-collar salaried organization? And you know the extreme if you are saying why would the US head count outside of manufacturing be much greater in the car area than for example for a Volkswagen which is largely imported and soon to be built here? Or a Nissan or a Toyota US?

I think from that standpoint what Derrick Kusak has done with the engineering team is as we have talked about in the past is really a divvy up engineering responsibilities around the world. And as we have taken our last reduction of about 15%, that positions us very well from an engineering stand point to support different products around the world. Clearly here in the U.S. for example, some of the regional products like our trucks and crossover utilities, a lot of engineering support. So we think after we go through these adoptions, we are appropriately sized to support all our engineering requirements not only here in the U.S. but around the world.

The next question comes from the line of Rod Lache representing Deutsche Bank. Please proceed. Rod Lache - Deutsche Bank Securities: Good morning everyone. Alan you made a statement about restructuring to be profitable at current demand and changing model mix. I was hoping you can elaborate on that. Are you saying profitable by certain dates and what are the underlying assumptions behind that is it a 14 million unit market in a 14% share? And may be also what you car truck mix would be expected to be?

You bet. Clearly, with the speed in which the market is changing we had to move off of our goal to be profitable in 2009. But I think with the actions we have in place on the product and the restructuring on the manufacturing that we will be almost perfectly time just when the market starts to come back. Our assumption on that in the U.S. was that the U.S. economy would start to recover not in ’09 but in early ’10 so it sis somewhere in that time period. Rod Lache - Deutsche Bank Securities: Okay. So north of 14 million but still 14% market share, is that right?

Yes. We assume it will start to come back and also another point that Mark made that clearly the big trucks have come the full size pickups have come down dramatically. But we also are assuming that that is going to rebound. It is not going to get back to the levels that we have had in the past but that it will come back a little bit also. Rod Lache - Deutsche Bank Securities: Okay and the car truck mix in that time frame how different?

Substantially more cars and utilities. Rod Lache - Deutsche Bank Securities: Is there a number that you can give us on what kind of incremental savings you need to achieve beyond the five billion in order to get to that profitability in that time frame?

No, but as we have talked about it in the past our plan is to continue our improvement in productivity and reducing our cost with all of these actions year-over-year forever. Rod Lache - Deutsche Bank Securities: Okay and just the lastly, when I do the math on average transaction prices it looks like North America is down a few thousand dollars on year-over-year basis. It is now well below where Europe is on an average transaction price basis. Is the average transaction price a big factor behind the better profitability in Europe? And if that is right then would you have to charge more for your new products to get the average transaction prices up in order to get the same kind of results that you are getting in Europe?

I think you are right, our average transaction prices during the quarter were down I do not recall that they were actually lower than Ford of Europe’s given we still have a mix of trucks in crossovers. But in terms of transaction prices going forward as it relates to the profitability of the smaller vehicles, we are actually starting to prove today we can actually move the transaction price up. Our current focus that actually gained about a little bit two points a segment share in the last quarter. And we were actually able to improve our transaction our net revenue by about a little over $1000 a unit. So as we go forward in addition to the things that Alan mentioned, is really work on fully competitive revenues and we have experienced that as Alan mentioned with our products in Europe, the benefits from the cost, the benefits from the quality, the dealer consolidation. So we are starting to prove that we can do it today but clearly as we shift to the global products it really helps turbo charge our ability to make money on those products and realize higher transaction prices. Rod Lache - Deutsche Bank Securities: So your assumption is transaction prices improve with the new products coming in?

Yes. Rod Lache - Deutsche Bank Securities: Great. Thank you.

The next question will come from the line of Patrick Archambault representing Goldman Sachs, please proceed. Patrick Archambault - Goldman Sachs: Hi, yes good morning?

Good morning. Patrick Archambault - Goldman Sachs: On slide 40, I might have missed this, but there three trucks assembly plants that you are converting in December. Are those going to be able to add to production largely for the 2009 model year or is that just kind of a more gradual transition?

You are speaking about our Michigan truck and Kentucky truck? Patrick Archambault - Goldman Sachs: That is correct. Yes which you are converting over I guess beginning December.

Yes, we will begin, as we mentioned in the comments, to convert Michigan truck over. We will have the opportunity if market conditions exist that will be able, for example, to provide some additional Focus production by utilizing the body shop that we have over at Michigan truck. But right now, we will have to take a look at what happens in 2009 and the market place. And if we see the opportunity we will go after that. Same thing applies for down in Kentucky truck as we move our Explorer and our Navigator. We will have to see how marketing conditions go and we will be able to flex accordingly. Patrick Archambault - Goldman Sachs: Okay thanks. And were there in general I guess moving to commodities, I guess two things. Number one, were there any kind of hedging gains that were part of the results for this quarter?

No, there was very little in the second quarter because most of that is mark to market, so we reflected the gains in the first quarter. Patrick Archambault - Goldman Sachs: Okay and then you are clearly expecting commodities to ramp up in terms of their head wind in the back half. Can you give us a little bit of a sense or remind us of when those contracts get reprised, is it at the end of December? And if many of the materials that buy track where they are tracking would we expect to see kind of a step change in that number upwards again for 2009?

Well we have contracts. And I think the main thing to think about is steel. And the contracts that end mainly at the middle the year at the end of the year and it varies by operation. And we will see a step-up in the second half of this year. And we will see a step up gain next year. And again the second half of next year, unless prices come down. Our forecast is steel prices in particular will remain high for a while. That is just based on the current outlook and projections. Patrick Archambault - Goldman Sachs: Any chance you could give us a sense of what the incremental increase has been for the one year contract that you renewed towards the middle of the year?

Well, I think if you look on slide 18, you can get a sense from looking at our projections. Look at the first half for commodities, compare that to the second half. There is a step change there and there will be a similar change in January of next year. Patrick Archambault - Goldman Sachs: Okay, that is helpful. And I guess just lastly on the gain on sale of your Nordic operations for FMCC that was included in the results, can you just give us a sense of how much that was?

It was about 85 million. Patrick Archambault - Goldman Sachs: Okay. And then I guess the last one is just a housekeeping. The 14 million to 14 ½ million saw expectation for this year. I heard you correctly that includes heavy so, in a light basis that would be something like 13.7 or 14.2.

Exactly Patrick Archambault - Goldman Sachs: Okay. Great, thanks a lot.

The next question comes from the line Itay Michaeli representing Citi, please proceed. Itay Michaeli – Citi: Great. Good morning. Just some follow up balance sheet cash flow questions. Don you mentioned that the charges did not impact the availability in your credit facilities. But can you refresh us on where the other borrowing base calculation was at the end of the quarter? I believe it was about $22 billion at the end of the year, just trying to assess the cushion there.

Yes, it is about the same as it was at the end of the year actually. Itay Michaeli – Citi: Okay great. Alan, just a kind a long-term question, sounds like a lot of good things are happening in 2010, from product perspective and perspective economic recovery. What prevents you from targeting profitability officially for 2010, is it fixed course commodity pricing or some combination. How would you rank some of the challenges between those three that we mentioned or potentially, something I have not mentioned?

Just the uncertainty and it’s just so volatile right now that we thought the best thing that we can do is really focus on what we are doing on the product side, what we are doing on the production side, which will clearly position us for long term profitable growth. Itay Michaeli – Citi: Great. And then just final question. Were there any payments from Ford to FMCC for profit maintenance in the quarter and would you expect through the balance of the year?

No, there were not any and we would expect to have none through the balance of the year. Itay Michaeli – Citi: Great thanks a lot.

The next question comes from the line of Mark Warnsman representing Calyon. Please proceed. Mark Warnsman - Calyon: I wonder if we could return to slide 46 and specifically talk about holidays in a global platforms and the single platform. My question is what constitutes a common platform? And as you commonize, how do you strike that balance so that you do not end up with a vehicle that sells well in the middle of Atlantic but not neither the U.S. or Europe?

Hi Mark, this is Mark. Very simply a common platform we are defining is just the underpinnings of the vehicles are all the same. Obviously, it includes the chassis, the suspension, the hard points. And clearly as we go forward from a global standpoint we want to make sure those are consistent because then we have the benefits around the scale, material cost but also the flexibility to save investments on touring around the world. Mark Warnsman - Calyon: So, should we anticipate European right in handling here in the U.S.? It seems like chassis, those chassis components in particular are areas where there has been different the markets. Is the company reconciled now or around the common standards globally.

Mark, you bet. And I think that the thing that is really enabling this to happen is that the fundamental requirements for the vehicle design are coalescing around the world from a fuel efficiency point of view, what the customers want, from a safety point of view, from a regulatory point of view. That is allowing us to have fundamentally common designs on the most fundamental parts of the vehicles. And then we tailor those top halfs to the unique customer wants and needs. But it is a great opportunity for us because the core lessons of the requirements. Mark Warnsman - Calyon.: Do you anticipate that Ford will be more active in trying to get some of the regulatory differences between markets common type?

Absolutely, because this is good for everybody. It is good for the regulators and it is tremendous for the automobile companies. Mark Warnsman - Calyon.: Okay. Thank you.

You bet.

Ladies and gentlemen we would now like to welcome questions from the media community. Our first question comes from the line of Bryce Hartman representing Detroit News. Please proceed.

Bryce? Are you in your Model T? Bryce Hartman - Detroit News: Can you hear me?

Yes, we can hear you now. Yes. Bryce Hartman - Detroit News: Sorry about that. Does the $200 million last marketing spend reflect lower incentive spending?

No. That really refers to the advertising in the sales promotion. That has been something we have been working on to make more focused and tailored. And that is one thing, the changed incentives we include that in our net pricing calculation. Bryce Hartman - Detroit News: And what has happened with incentives, are they up year-over-year?

Yes they are. Bryce Hartman - Detroit News: Great. Also just another point of clarification, were you saying that the transaction price on the Focus is up about $1000 year-over-year?

Yes. Bryce Hartman - Detroit News: And how much of that is due to synch?

It is a portion of it. Clearly, the customers are recognizing the value and they are willing to pay for it. Bryce Hartman - Detroit News: And final quick question, why is the sale of ECH facility result in a negative?

Well, simply put we had it on the books for more than we were able to sell it for. Bryce Hartman - Detroit News: Got you. Thank you.

The next question comes from the line of Jeff Bennett representing Dow Jones Newswires. Please proceed. Jeff Bennett - Dow Jones Newswires: Morning. Alan and Mark are you looking at perhaps having to even to push the launch of the F-150 back a little bit further given that dealers still have so much inventory on their lap?

At this point as we mentioned the reason we adjusted the launch was to make sure that we had already sold down on the inventory so we can get the inventory down to the level that makes sense to launch the new vehicle while you are not out obviously heavily promoting the old model. So, no we are in really good shape we expect to achieve the inventory levels that we targeted for the end of the year and obviously we will continue to monitor the situation, but July is actually going a bit better that we expected. Jeff Bennett - Dow Jones Newswires: And Don I just wanted to followup with you again given that you are going to have to buy out workers, pay VIVA, convert plans, consolidate dealers and you have debt. Again, why do you think that you do not need any additional liquidity?

We have long been working at making sure we had sufficient liquidity. We sold Hertz, we sold Aston Martin and Jaguar Land Rover. We raised some money all to support having the capital to do this plan and make sure we have sufficient cash and liquidity. At the time that we did the big secured financing at the end of 2006, we did a considerable amount of stress testing that we have talked about. And we really have created for ourselves what we thought was a very difficult situation and to test whether we can get through the plan and a severe down turn and other stresses. And clearly, we are in a difficult situation now. And we are using a portion of that liquidity as we go through this but we do not see any need for anything right now. Jeff Bennett - Dow Jones Newswires: Okay. Thank you.

Your next question comes from the line of Amy Wilson representing Automotive News. Please proceed. Amy Wilson - Automotive News: Thanks. Good morning.

Hi, Amy. Amy Wilson - Automotive News: Hi. I wanted to ask on the notion of returning to profitability, is returning to profitability in 2010, do you even see as a possibility right now? Or is the uncertainty that you spoke of to that address beyond 2010?

I think, Amy, it really goes with the economy both with the United States and worldwide. And that is the volatility that we are primarily looking at but because you know, our fortunes are so tied to that. But as we have talked about the actions we are taking on the product and the actions we are taking on the production system and with the kind of conservative estimate that the US economy is not going to start to recover until early 2010. I think it all kind of comes together around that time period. Amy Wilson - Automotive News: So it is a possibility for 2010 you just do not want to say right now that you are planning?

Well again it goes with the possibility of what the economy does, it really goes with the economy I think. Amy Wilson - Automotive News: Okay, and then I wanted to ask on the two vehicles that you mentioned, the new small car for Mercury and the white space vehicle. Can you say is the Mercury B or C segment and is the white space vehicle B or C segment?

I think there will small cars, Amy, and we will look forward to kind of giving you the details of those products when we come closer to the launch. Amy Wilson - Automotive News: Okay you are not going to break down in define the segment today?

They will be small, they will be B or C car. Amy Wilson - Automotive News: Okay, and then I just also wanted to ask, a lot of the things that you announced today some of them you had already announced and talked about previously. And some of the items had been reported about even before gasoline has $4.00 a gallon. And then certainly not all of it I mean there is a lot of it that is new today. But I was wondering if you could just kind of break it down and talk a little bit about what specific parts of the plan that you announced today really kicked into gear or you really started thinking about anew when gasoline had $4.00 a gallon and you saw the markets shift so rapidly. If you can specifically mention some of the production shifts or did the number of plants that you were going to convert over to that increase beyond what you had previously planned. If you could just talk about and kind of detail for that a little bit for us.

Sure, you know Amy I really think that we really started this a couple of years ago and that we knew that we were clearly focused on larger trucks and SUVs in United States. But we are also clearly focused on really meet smaller and medium sized cars and utilities around the world. And it was just clear to us to having a balance portfolio in United States to leverage our global assets and bring that to bear with One Ford was clearly going to be the foundation of our transformation of Ford. But as you pointed out as the fuel prices went through that three, $43-50 per gallon and no one knew in that kind of tipping point would be in the consumer’s mind. But when we started to see that rapid movement by the consumers up from the bigger trucks and SUVs over the cars we wanted we decided then what we think about fuel prices going forward and staying up relatively higher that it was time to aggressively accelerate our transformation. But the neat thing is, as you well know, is that we have these assets worldwide and so we have the ability to accelerates it. And today I think you see so much more of the plan, the acceleration of the product plan but also the acceleration of the production system to increase the production of the smaller fuel-efficient cars that we have today. But also the transformation that production system to include all the new vehicles from around the world. And another key part, that we all worked together was the new agreement with the UAW which gives us the opportunity to be able to transform these production facilities and actually make the smaller vehicles in the United States and make them profitably so we can keep investing in the business. So I think it is all three or four of those pieces that have come together that we are announcing today. Amy Wilson - Automotive News: Specifically though is this like extending the Ranger and the plan with Michigan truck and the new small car from Mercury and the new space phase vehicles, I’m just wondering are those all examples of specific things that only came together in the last few weeks as you are reworking your plan in response to $4.00 a gallon.

Well clearly the accelerating factor--sounds like a car term--the accelerating factor was the rapid increase in the fuel prices because we had all of these the only thing we could do. But clearly, we wanted to use all of them, just like the Ranger that you referenced. It is a great small pickup and that is what we use with extending their production. So the real catalyst recently has been the fundamental change in the fuel pricing.

The next question comes from the line of Jerri Downs representing the Louisville Courier Journal. Please proceed. Jerri Downs - Louisville Courier Journal: Morning fellas. I think I could get a trip to Europe out of this call, because I saw that in 2000, you did a major restructuring in Europe. So if you could comment briefly on that. And then talk a little bit more about if the economy improves how you could accelerate that fluidity you talked about, Mr. Fields, in terms of Michigan trucks and down here?

Well, let me start off, we will talk a little bit about Europe because you are absolutely right, in 2000 we did start a restructuring in Europe. And we first off went through and realigned our capacity and then we accelerated the growth of new products. And we have been working at that for a while and we are seen for the last three or four years now, the European results improved, we became profitable and now are earning pretty good returns in the first half of this year in Europe. We think that is a really good thing for us to know we can do that. In fact we did the same thing in South America, in case you are planning a trip to South America. And now, I will turn it back to Mark.

Algeria is part of our cost containment, we will have to take that request on board, but could you just restate your second part of your question? Jerri Downs - Louisville Courier Journal: Absolutely, please talk more about flexing production in 2009 if market condition improves at Kentucky truck and Michigan truck. What could you do exactly, what kind of market uptick would precipitate that kind of acceleration?

Well, clearly what it would require is, we have some initial forecast for the industry next year, clearly we would have to overachieve on that. And I think in terms of the flexibility, clearly in Michigan truck we already do have a flexible body shop. So if the requirement for Focus do increase even more, we have the ability to use the body shop at Michigan truck because the bottom like if you will, at the Wayne assembling plant is the body shop which we are only running at three shifts. We would be able to that. And down in Kentucky truck obviously once we get the Navigator and the Expedition down there, clearly the requirements for next year will have to look at the market of requirements. But between that and obviously the requirements for the super duty we will be able to flex within the plant appropriately to see where the market goes. Jerri Downs - Louisville Courier Journal: What about the Explorer, would that be a C or a CD platform, the new Explorer?

We will talk about that more towards when we are ready to get in to more detail about the product, but clearly what’s going to be more important is provide the functionality in the space that our customers are expecting value. Jerri Downs - Louisville Courier Journal: And finally, we have not talked a lot about things getting much worse. You are assuming $14 million SAR, but it seems like we are going down ward, but not much upper movement yet. What if things get worse?

As Don mentioned earlier, when we laid out the original plan, and then the financing of the plant we stress tested the environment pretty heavily. And so when we went to the markets in we raised our cash, we took into account really stress in the market. I think we have sufficient liquidity going for toward the plan.

I might also add that we did say that in the low 14’s for the first full year, but you the first half was 15 so that gives you some idea what we are looking at for the second half. So you know, that is pretty low, is in our plan for this year.

Our next question comes from the line of Byron Pope, representing Ward’s Auto. Please proceed. Byron Pope - Ward’s Auto: Hello gentlemen. I am just wondering you mentioned that you have flexible plants for North America, that can accommodate multiple platforms but it appears that you are still going to be dedicating plans a single platforms, in this new plant. Can you tell us where that is?

Well, when you look at some of the plants that we will dedicating for example our Dearborn truck facility. It is a still a flexible plant because it clearly, although it is the same model, we are able to flex between the different plant styles. But for the most part by the time we get to the end of the period almost all of our plans will be flexible in nature so clearly we think we have given where the market is going in the fragmentation. We think we have the right formula going forward to respond quickly even though we will still have a plant or two that will be dedicated to a specific product or platform. Byron Pope - Ward’s Auto: Okay. Thank you.

The next question comes from the line of Rick Poffley representing Chicago Tribune. Please proceed. Rick Poffley - Chicago Tribune: Good morning gentlemen. Just want to follow-up on something that Mark just mentioned on the Explorer in providing the size functionality that people expect. Most of your announcements they have to do with B and C segment size vehicles, which Americans traditionally have not embraced in large numbers. Do you see that really changing that they will give up the room that they have now?

I think we are already actually starting to see it. When you look for example pickup truck owners trading in their vehicles, a number of them are trading into small C cars, whether they would be sedans or otherwise. So we are starting to see that to one degree or another. I think the key going forward is making sure that in these products that we bring to marketplace, that the vehicles contain the feature content that consumers are used to in larger, more expensive vehicles. And at the same time through the technology that we are able to employ in the engineering in the development of the product, the interior space which to be quite honest the interior space you can get in a C car today is very different and even five years and that would become even more efficient going forward. So we think that combining the high fuel prices, the feature content, the functionality and the utility of those vehicles, the space in those vehicles that we will see a continued different shift in the market place. Rick Poffley - Chicago Tribune: And just on crossovers, they seem to take a big hit on sales in June. Are you concerned that the vehicle such as the Flex and Edge that those may be kind of pass by because of fuel prices as too big?

I think we are gratified to see that the Edge is the segment leader on crossovers but you are right. We did see a fall off on a year-to-year basis for the crossover segment in the second quarter as opposed to the first quarter it was actually up. And clearly as we look at that I think it is a couple of things. One, it seems to be newer products tend to be doing better so therefore I think our Flex is very well positioned. Also for the fact that it is the highest fuel economy vehicle in its segment. And I think secondly you are seeing more of a preference towards four cylinder engines in that segment and that is where the launch of our new four cylinder Escape bodes well. We are going to have to watch that very closely and part of the production volumes that Don mentioned earlier does reflect a reduction at some of our production up in Oakfield to make sure we keep our inventories in. Rick Poffley - Chicago Tribune: Thank you.

We have time for one more question please.

Our final question will come from Deanna Durban representing the Associated Press. Please proceed. Deanna Durban - Associated Press: Hi gentlemen. I am glad I got the question in. It looks like this is the worst quarterly loss that Ford has ever had from our archives. Is that something you can confirm? And then also you have a lot riding on the European models. And I am wondering the landscape seems to be littered with European models that has come over here and not done so well, the Saturn Aura comes to mind, the Contour, Mercour. Why are you so sure that European models are going to do so well this time around?

You are correct, this is the largest loss that we have made. Deanna Durban - Associated Press: Okay. Thank you.

In respect to your second question and I think it is really important that we talk about because what is really different today than never before is the fact that the fuel prices in the United States are up and the consumers are really going to value smaller vehicles and fuel efficient vehicles. But also, as they move to these vehicles they are going to want the vehicles to be neat, they want the quality to be great, the features that we have, the capability. And so we have seen this and the success of this in Europe and also in around the world, so it gives us a lot of confidence that this is going to be led by the consumers. They are going to appreciate these vehicles and they are going to value them. So I think we have a real opportunity here to leverage our global assets and bring to the U.S. customers what they really want in their cars utilities and as long as it attracts. Deanna Durban - Associated Press: Okay thank you and also Mark how long will the Michigan trucks be closed if you could just clarify?

We have not fully dimensioned that but we will talk about that as we further develop our plans. Deanna Durban - Associated Press: Okay thank you very much.

And with that, that concludes today’s presentation. I want to thank everybody for joining us. Have a nice day.

Ladies and gentlemen thank you for your participation in today’s conference. This concludes your presentation you may now disconnect. Good day.