Annual Report 2011 - Ford Motor Company

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Management’s Discussion and Analysis of Financial Condition and Results of Operations The hubs are supported by regional engineering centers - spokes - which also help deliver products tuned to local market customer preferences while maintaining global design DNA. Typical delivery metrics for global programs include 80% part commonality, 75% pre-sourcing to global suppliers, and 100% common manufacturing and assembly process. Developments underway that underscore the progress of our One Ford global product development system implementation include, by mid-decade: • B-segment platform (Fiesta, B-MAX, EcoSport, etc.) providing an annual platform volume of greater than 2 million units with common design and manufacturing across applicable markets • C-segment platform (Focus, C-MAX, Escape, Kuga, etc.) leveraging greater than 2 million units annually with our widest range of regionally-tuned "top hats" across all global markets • Recently announced global CD-segment platform achieving ongoing annual volume of 1 million units, including Fusion and Mondeo, along with additional vehicles to be introduced over time • Compact truck (global Ranger pick-up) annual platform volume exceeding 275,000, and commercial van platform (E-Series and Transit) with annual volume exceeding 470,000 The efficiency and flexibility gains enabled by our One Ford plan will allow us to increase our overall volume across all platforms threefold between 2010 and 2016. By 2013, more than 85% of our global volume will be on nine core platforms. Also by 2013, we will have common small- and medium-sized Ford vehicles in North America, South America, Europe, and Asia Pacific Africa. Accelerate Development of New Products Our Customers Want and Value We are committed to introducing new products that consumers want and value, and we are receiving very positive reactions from consumers, media, and independent evaluators in response to the products we have introduced in recent years. We will continue to build on this strength in 2012 - beginning with the favorable reactions to our 2013 model year Ford Escape, introduced at the Los Angeles Auto Show in November 2011, followed by the 2013 model year Ford Fusion introduced at the 2012 North American International Auto Show ("NAIAS"), which won Autoweek magazine's best in show award. Our global product strategy is to serve our key geographic markets with a complete family of small, medium, and large, cars, utilities, and trucks that have best-in-class design and quality, are environmentally responsible, and contain high-value feature content. The result of this strategy is a full-line of vehicles that: • Have bold, emotive exterior designs • Are great to drive • Are great to sit in (with the comfort and convenience of a second home on wheels and exceptional quietness) • Provide fuel economy as a reason to buy • Are unmistakably a Ford or Lincoln in look, sound and feel • Provide exceptional value We plan to continue leadership in delivering the freshest showrooms in all regions, achieving a global refresh rate of 1.7 times (ranging from 1.5 in Ford North America and Ford Europe to 2.2 in Ford South America) between 2011 and 2016 - all with benchmark product development efficiency. Additionally, we have renewed our commitment to the Lincoln brand. We know that transitioning Lincoln to a worldclass luxury brand requires a transformational shift in product execution and ownership experience. As evident in the Lincoln MKZ Concept revealed at the 2012 NAIAS, our Lincoln product strategy will deliver: • Uniquely Lincoln vehicles, inside and out - built on our core platforms leveraging global scale and efficiencies • Design excellence that is stunning and understated, with premium amenities offered on every nameplate • Product excellence that is enabled by class-leading technologies • The "right" balance of customer-relevant features in a unique experience that is guided by Lincoln DNA Starting this year, we will have seven new or significantly refreshed Lincoln products by 2015. Developing products our customers want and value for Ford and Lincoln demands consistent focus on the four pillars of our global product strategy - Drive Quality, Drive Green, Drive Safe, and Drive Smart. 30 Ford Motor Company | 2011 Annual Report
Management’s Discussion and Analysis of Financial Condition and Results of Operations Drive Quality. We have made significant strides in recent years to achieve world class levels of quality and desirability. This has been accomplished by following an established, global set of disciplined, standardized processes that are aimed at making us the world's leader in automotive quality. Via our common global management team, we are leveraging our assets by eliminating duplication, implementing best practices, and utilizing a systematic approach to quality. This integrated approach is apparent in the recently-launched Ford Fiesta and Focus, which truly are global products earning high customer satisfaction levels. External inputs are confirming our internal assessment, with the Fiesta labeled the most appealing sub-compact car in the JD Power and Associates APEAL study in 2011. The Ford F-150 won in its segment as well. The F-150 shines again with the best initial quality in its segment, while the Taurus also received an award in the JD Power and Associates Initial Quality Study. For overall dependability, JD Power and Associates ranked the Fusion and Mustang, and the Lincoln MKZ and Navigator, as the most dependable vehicles in their respective segments. The Lincoln brand led all brands as the most dependable sold in the United States. The cumulative effect of our disciplined global quality standards has been improved quality and owner satisfaction. For example, our global repair rates at three months in service have decreased by over 56% since 2005. Going forward, we expect our global processes to lead to ongoing continuous improvement. We are committed to providing leading edge technologies customers want and value, including MyFord Touch, which increasingly is playing a pivotal role in defining the future of automotive interiors and enhancing convenience, safety, and overall driving experience across a wide range of vehicles. Since MyFord Touch launched last fall, we have held four customer clinics in which hundreds of owners have spoken directly with Ford engineers about their experiences with the new technology. Owner feedback was clear and consistent, revealing that MyFord Touch was a key purchase factor. Our customers also highlighted that MyFord Touch could be faster and feature simpler graphics that are easier to use. While owners reported that they loved the system, there were distinct areas in which they wanted improvements. Earlier this year, we began delivering on their requests, starting with more detailed instructions and information on how best to utilize the capabilities of the system. Moreover, we have worked on a broad set of performance upgrades to the system for rollout in 2012 which will enhance the ownership experience based on customer feedback. Drive Green. Our commitment to sustainability relies on a balanced approach, both in application of fuel economy technology as well as breadth of offerings. We are focusing on advancing conventional vehicle technology that touches millions of new vehicles each year and provides affordable fuel economy to the masses. At the same time, we are developing next-generation propulsion systems that represent an important part of the long-term future for the industry. We remain committed to our goal to deliver leadership or among the best fuel efficiency in every major new vehicle launch. Nearly one-third of Ford's vehicle lines will feature a model with 40 mpg or more in 2012 - a claim no other fullline automaker can match. Additionally, the 2013 model year Fusion is projected to deliver the best-in-class fuel economy in any of three powertrains -- gas, hybrid, and plug-in hybrid. The implementation of our EcoBoost ® family of gasoline engines is well established and a major part of our sustainability strategy, delivering both exceptional fuel economy and performance. By combining direct fuel-injection and turbo charging, the EcoBoost engine can deliver up to 20% better fuel economy and up to 15% fewer CO2 emissions versus larger-displacement engines, without sacrificing driving performance. The 3.5-liter EcoBoost V6 engine was introduced in 2009 and now is available in the Lincoln MKS and MKT and the Ford Taurus SHO, Flex, F-150, and will be in the two new Police Interceptors. The F-150 V6 line-up has exceeded expectations with EcoBoost - a major reason V6 sales have grown to over 50% of F-150 retail sales. The 2.0-liter I4 EcoBoost was launched in 2010 in Europe with the Ford Mondeo, S-MAX, and Galaxy. In 2011, the 2.0-liter EcoBoost made its North American debut in the Explorer and Edge as well as Falcon in Australia, and is planned for the 2013 model year Focus ST, Escape, Fusion, and Taurus. The 2.0-liter Mondeo also was the first EcoBoost introduced in China, with follow-on introductions on the way. The 1.6-liter I4 EcoBoost launched in Europe in 2010 with the Focus, C-MAX, Grand C-MAX, Mondeo, S-MAX, and Galaxy and is planned for Focus in Australia, as well as Escape and Fusion in North America. Additionally, an all-new, fuel-efficient 1.0-liter I3 EcoBoost engine is planned to debut in the all-new EcoSport for India, and will be available in the B-MAX, C-MAX, and European Focus. In North America, over time we plan to triple the production of EcoBoost-equipped vehicles. By 2013, annual global production of EcoBoost vehicles is expected to reach 1.5 million units. In Asia Pacific Africa, EcoBoost - along with other innovative global technologies such as the advanced 6-speed PowerShift and automatic transmissions - is a major part of our plan to deliver fuel efficiency improvement of up to 20% across our product lineup by the end of 2012 compared with 2008. For example, in Australia we introduced in 2011 an advanced liquid-injection petroleum gas ("LPG") system for the Ford Falcon, providing customers with the most advanced LPG technology on the market. Ford Motor Company | 2011 Annual Report 31
Page 1 and 2: PROFITABLE GROWTH FOR ALL Ford Moto
Page 3 and 4: ON THE COVER The all-new Ford Fusio
Page 5 and 6: A MESSAGE FROM THE PRESIDENT AND CE
Page 7 and 8: Environmental and social goals are
Page 9 and 10: 1 1) Joe Hinrichs, Group Vice Presi
Page 11 and 12: To meet regional needs in Asia Paci
Page 13 and 14: UTILITIES The latest One Ford globa
Page 15 and 16: LINCOLN CUTTING-EDGE PRODUCTS, PERS
Page 17 and 18: GREEN 2 Ford continues to work to f
Page 19 and 20: SMART As technology becomes ever mo
Page 21 and 22: 1) Ford team at the ringing of the
Page 23 and 24: THE POWER OF CHOICE With record sal
Page 25 and 26: PEOPLE HELPING PEOPLE Ford voluntee
Page 27 and 28: FINANCIAL CONTENT * 26 Management
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Quantitative and Qualitative Disclo
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Report of Independent Registered Pu
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Sector Statement of Operations FORD
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Sector Balance Sheet FORD MOTOR COM
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Employment Data The approximate num
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GLOBAL OVERVIEW Automotive Brand Cu
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