MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Details of Automotive sector market share for selected markets for 2004 and 2003 are shown below: 2004 Costs*  Better/(Worse)  than 2003 Quality-related $ (0.1) Manufacturing and engineering 1.2 Overhead 0.3 Pension and health care 0.1 Net product costs 0.0 Depreciation and amortization (0.6)  Total $  0.9 The table below details our achievement of our 2004 cost performance milestone (in billions): The improvement in  Income/(loss) before income taxes  primarily reflected the change in charges related to Visteon Corporation  (“Visteon”), Ford’s largest supplier (see “Ford North America” discussion below), higher net pricing, favorable cost performance  and the favorable effect of tax-related interest on refunds and settlements of prior-year federal and state audits, offset partially by  lower vehicle unit sales and unfavorable changes in currency exchange rates. Overall Automotive Sector 2004  Over/(Under)  2003 2004 2003 Market Americas - Ford North America 18.0% 19.2% (1.2) pts. U.S. a/ - Ford South America 11.8 11.5 0.3 Brazil a/ Ford Europe and PAG b/ - Ford Europe 8.7 8.6 0.1 Europe a/ - PAG  1.3/2.3 1.3/2.1 0/0.2 U.S./Europe  Ford Asia Pacific and Africa 14.2 13.9 0.3 Australia a/ a/ Excludes market share of our PAG brand vehicles (i.e., Volvo, Jaguar, Land Rover and Aston Martin). b/ European market share for Ford Europe and PAG are based, in part, on estimated 2004 vehicle registrations for our 19 major markets. Explanation of Cost Performance - Non-recurrence of 2003 reserve adjustments, offset partially  by 2004 improvements. - Primarily reductions in hourly and salaried personnel as a  result of the Ford Europe Improvement Plan, North American  plant closings, and engineering efficiency actions, offset  partially by higher costs to launch new vehicles in 2004. - Primarily administrative cost savings (largely personnel  related), reduced parts distribution costs, and lower litigation  expenses, offset partially by higher fixed marketing costs. - Primarily the effect of new Medicare drug legislation and  higher VEBA contributions, partially offset by the effect of a  lower discount rate. - New product and commodities-related cost increases, offset  by design cost reductions on existing products and pricing  efficiencies at our suppliers. - Related to investments for new vehicles. * At constant volume, mix and exchange and excluding special items and discontinued operations. The Americas Segment Ford North America. The improvement in earnings primarily reflected the non-recurrence of $1.6 billion of charges in 2003  related to Visteon, offset by a charge of $600 million to establish an allowance against a receivable from Visteon in 2004. The  receivable relates to costs for postretirement health care and life insurance benefits provided to Ford hourly employees assigned  to Visteon and other select Visteon employees who are former employees of Ford. The charges in 2003 related to agreements  with Visteon, which primarily addressed postretirement health care costs for service prior to 2000 for Ford hourly employees  assigned to Visteon, as well as pricing, sourcing and other arrangements. 2 7