RESULTS OF OPERATIONS

TOTAL COMPANY

Our net income attributable to Ford Motor Company was $1.4 billion or $0.35 per share of Common and Class B Stock in the first quarter of 2012, a decrease of $1.2 billion from net income attributable to Ford Motor Company of $2.6 billion or $0.61 per share of Common and Class B Stock in the first quarter of 2011. First quarter 2012 net income was affected by the impact of higher tax expense compared to a year ago, resulting from the release of the tax valuation allowance in the fourth quarter of 2011. The increase in non-cash tax expense explains about half of the decrease in net income, with the balance reflecting lower operating results and increased unfavorable special items, as discussed below.

Total Company results are shown below:

                                                                      First Quarter
                                                                             Better/(Worse)
                                                                 2012             2011
                                                               (Mils.)          (Mils.)
Income/(Loss)
Pre-tax results (excl. special items)                        $    2,293     $         (544 )
Special items                                                      (255 )             (194 )
Pre-tax results (incl. special items)                             2,038               (738 )
(Provision for)/Benefit from income taxes                          (640 )             (420 )
Net income/(loss)                                                 1,398             (1,158 )
Less: Income/(Loss) attributable to noncontrolling interests          2                 (3 )
Net income/(loss) attributable to Ford                       $    1,396     $       (1,155 )

Income/(Loss) before income taxes includes certain items ("special items") that we have grouped into "Personnel and Dealer-Related Items" and "Other Items" to provide useful information to investors about the nature of the special items. The first category includes items related to our efforts to match production capacity and cost structure to market demand and changing model mix and therefore helps investors track amounts related to those activities. The second category includes items that we do not generally consider to be indicative of our ongoing operating activities, and therefore allows investors analyzing our pre-tax results to identify certain infrequent significant items that they may wish to exclude when considering the trend of ongoing operating results.

As detailed in Note 17 of the Notes to the Financial Statements, we allocate all Automotive sector and Financial Services sector special items to a separate reconciling item, as opposed to allocating them among the operating segments and Other Automotive, reflecting the fact that management excludes these items from its review of operating segment results for purposes of measuring segment profitability and allocating resources among the segments.

The following table details Automotive sector special items in each category:

                                                              First Quarter
                                                            2012         2011
                                                           (Mils.)     (Mils.)
Personnel and Dealer-Related Items
Personnel-reduction actions                               $  (239 )   $    (22 )
Mercury discontinuation/Other dealer actions                  (16 )         (1 )
Job Security Benefits/Other                                     6           (1 )
Total Personnel and Dealer-Related Items                     (249 )        (24 )
Other Items
Debt reduction actions                                          -          (60 )
Other (including foreign currency translation adjustment)      (6 )         23
Total Other Items                                              (6 )        (37 )
Total Special Items                                       $  (255 )   $    (61 )

Discussion of Automotive sector, Financial Services sector, and total Company results of operations below is on a pre-tax basis and excludes special items unless otherwise specifically noted.

The chart below details first quarter 2012 pre-tax operating results by sector:

[[Image Removed]] Total Company first quarter 2012 pre-tax profit of $2.3 billion reflects strong performance in Ford North America and Ford Credit. Compared with the first quarter of 2011, total Company pre-tax operating profit declined, with both sectors contributing to the decline.

AUTOMOTIVE SECTOR

In general, we measure year-over-year change in Automotive pre-tax operating profit for our total Automotive sector (excluding special items) and reportable segments using the causal factors listed below, with revenue and cost variances calculated at present-year volume and mix and exchange:

• Market Factors:

? Volume and Mix - Primarily measures profit variance from changes in wholesale volumes (at prior-year average margin per unit) driven by changes in industry volume, market share, and dealer stocks, as well as the profit variance resulting from changes in product mix, including mix among vehicle lines and mix of trim levels and options within a vehicle line.

? Net Pricing - Primarily measures profit variance driven by changes in wholesale prices to dealers and marketing incentive programs such as rebate programs, low-rate financing offers, and special lease offers.

• Contribution Costs - Primarily measures profit variance driven by per-unit changes in cost categories that typically vary with volume, such as material costs (including commodity and component costs), warranty expense, and freight and duty costs.

• Other Costs - Primarily measures profit variance driven by absolute change in cost categories that typically do not have a directly proportionate relationship to production volume. These include mainly structural costs, described below, as well as all other costs, which include items such as litigation costs and costs related to our after-market parts, accessories and service business. Structural costs include the following cost categories:

? Manufacturing and Engineering - consists primarily of costs for hourly and salaried manufacturing- and engineering-related personnel, plant overhead (such as utilities and taxes), new product launch expense, prototype materials, and outside engineering services.

? Spending-Related - consists primarily of depreciation and amortization of our manufacturing and engineering assets, but also includes asset retirements and operating leases.

? Advertising and Sales Promotions - includes costs for advertising, marketing programs, brand promotions, customer mailings and promotional events, and auto shows.

? Administrative and Selling - includes primarily costs for salaried personnel and purchased services related to our staff activities and selling functions, as well as associated information technology costs.

? Pension and OPEB - consists primarily of past service pension cost and other post-retirement employee benefit costs.

• Exchange - Primarily measures profit variance driven by one or more of the following: (i) impact of gains or losses arising from transactions denominated in currencies other than the functional currency of the locations, (ii) effect of remeasuring income, assets, and liabilities of foreign subsidiaries using U.S. dollars as the functional currency, or (iii) results of our foreign currency hedging activities.

• Net Interest and Other - Primarily measures profit variance driven by changes in our Automotive sector's centrally-managed net interest (primarily interest expense, interest income, and other adjustments) and related fair value market adjustments in our investment portfolio and marketable securities as well as other items not included in the causal factors defined above.

Total Automotive. The charts below detail first quarter key metrics and the change in first quarter 2012 pre-tax operating results compared with first quarter 2011 by causal factor. Automotive operating margin is defined as Automotive pre-tax operating results, excluding special items and Other Automotive, divided by Automotive revenue.

Total Automotive pre-tax operating profit was $1.8 billion, a decline of about $300 million from a year ago. The decrease in earnings reflects higher costs across the regions and unfavorable exchange, offset partially by higher net pricing and lower interest expense net of interest income ("net interest expense").

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)

Total costs and expenses for our Automotive sector for first quarter 2012 and
2011 was $29 billion and $28.9 billion, respectively, a difference of about $100
million. An explanation of the change as reconciled to our statement of
operations is shown below (in billions):
                                               2012
                                          Better/(Worse)
                                               2011
                                          First Quarter
Explanation of change:
Volume and mix, exchange, and other      $          0.7
Contribution costs (a)
Commodity costs (incl. hedging)                    (0.2 )
Material costs excluding commodity costs              -
Warranty/Freight                                      -
Other costs (a)
Structural costs                                   (0.3 )
Other                                              (0.1 )
Special items                                      (0.2 )
Total                                    $         (0.1 )


_________

Results by Automotive Segment. Details by segment of Income/(Loss) before income taxes are shown below for the first quarter of 2012.

[[Image Removed]] Total Automotive pre-tax operating profit of $1.8 billion was led by Ford North America. Ford South America was also profitable, but Ford Europe and Ford Asia Pacific Africa incurred losses. The loss in Other Automotive mainly reflects net interest expense. It is $143 million favorable compared to a year ago, reflecting lower interest expense attributable to our 2011 debt reduction actions and the non-recurrence of market valuation losses associated with our investment in Mazda.

We expect full-year 2012 net interest expense to be slightly higher than last year, primarily reflecting lower interest income.

Ford North America Segment. The charts below detail key first quarter metrics and the change in first quarter 2012 pre-tax operating profit compared with the first quarter of 2011 by causal factor.

Ford North America reported a pre-tax operating profit of $2.1 billion for the first quarter of 2012, compared with a profit of $1.8 billion a year ago. The increase in earnings is explained by favorable volume and mix -- more than explained by higher U.S. industry volume, higher net pricing, lower contribution costs, and lower compensation (reflected in the category "Other"). A partial offset is the "Other Costs" category, reflecting mainly higher structural costs.

Pre-tax operating profit was the highest since at least 2000, when we first started reflecting Ford North America as a separate business unit. The last time we achieved a similar quarterly profit was in the first quarter of 2004, when our wholesale volume was over 1 million units, more than 50% higher than in the current quarter. In addition, our volume at that time had a significantly higher mix of trucks and traditional sport utility vehicles.

Looking ahead, we expect Ford North America to achieve significantly higher full-year pre-tax operating profit and operating margin compared with 2011, which will be the key enabler for the Company to achieve about the same level of pre-tax operating profit for 2012 as in 2011.

Ford South America Segment. The charts below detail first quarter key metrics and the change in first quarter 2012 pre-tax operating profit compared with the first quarter of 2011 by causal factor.

Ford South America reported a pre-tax operating profit of $54 million, compared with a profit of $210 million a year ago. The decrease in earnings is more than explained by higher costs, primarily contribution costs, and unfavorable exchange. Although net pricing was favorable, we were not able to offset exchange and economic factors to the same degree we had in the past.

We continue to expect Ford South America to generate solid profitability this year, although lower than in 2011. Three new global products will be launched in South America this year, with the impact positively affecting results primarily in the second half. We also are facing some uncertainty in the region, including a new trade agreement between Brazil and Mexico limiting vehicle imports to Brazil, the details and impact of which we are still reviewing.

Ford Europe Segment. The charts below detail first quarter key metrics and the change in first quarter 2012 pre-tax operating profit compared with the first quarter of 2011 by causal factor.

[[Image Removed]]
[[Image Removed]] As shown above, first quarter 2012 wholesale volume and revenue declined by 14% and 17%, respectively, compared with the prior year, reflecting primarily lower industry sales and production adjustments to maintain dealer stocks at appropriate levels. Operating margin was lower than a year ago.

Ford Europe reported a pre-tax operating loss of $149 million, a decline of $442 million from a year ago. The decline in results is explained primarily by lower industry volumes, lower demand for parts and accessories, and actions to reduce stocks consistent with industry levels. Contribution and pension-related cost increases are offset partially by reductions in other structural costs.

As we look ahead to the full year, we continue to expect Ford Europe to incur a loss ranging from $500 million to $600 million. Our European operations will benefit from the launches of the new B-MAX, Transit, and Kuga products, in addition to completion of our stock reduction actions and continued cost reductions. The impact will positively affect results primarily in the second half.

Ford Asia Pacific Africa Segment. The charts below detail first quarter key metrics and the change in first quarter 2012 pre-tax operating profit compared with the first quarter of 2011 by causal factor.

Ford Asia Pacific Africa reported a pre-tax operating loss of $95 million, a $128 million decline from a year ago. Results were affected adversely by higher costs associated with continued investment for future growth that precede the benefit of new products across the region. This was exacerbated, to some extent, by a slower-than-planned launch for the global Ranger pickup truck from our facilities in Thailand and South Africa.

Despite the first quarter loss, we continue to expect Ford Asia Pacific Africa to be profitable for the full year, with volumes increasing as the Ranger launch progresses, new capacity comes on line in China and Thailand, and other new product launches occur in the balance of the year.

FINANCIAL SERVICES SECTOR

As shown in the total Company discussion above, we present our Financial Services sector results in two segments, Ford Credit and Other Financial Services. Ford Credit, in turn, has two segments, North America and International.

Ford Credit. The chart below details the decrease in pre-tax operating profit by causal factor:

The decline reflects fewer lease terminations, which resulted in fewer vehicles sold at a gain, lower financing margin, and lower credit loss reserve reductions.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Continued)

Ford Credit's receivables, including finance receivables and operating leases at
March 31, 2012 and December 31, 2011 were as follows (in billions):
                                                       March 31,     December 31,
                                                         2012            2011
Receivables
Finance receivables - North America Segment
Consumer
Retail installment and direct financing leases        $    38.3     $      38.4
Non-Consumer
Wholesale                                                  15.7            15.5
Dealer loan and other                                       2.1             2.1
Total North America Segment - finance receivables (a)      56.1            56.0
Finance receivables - International Segment
Consumer
Retail installment and direct financing leases              9.3             9.1
Non-Consumer
Wholesale                                                   8.7             8.5
Dealer loan and other                                       0.5             0.4
Total International Segment - finance receivables (a)      18.5            18.0
Unearned interest supplements                              (1.6 )          (1.6 )
Allowance for credit losses                                (0.4 )          (0.5 )
Finance receivables, net                                   72.6            71.9
Net investment in operating leases (a)                     11.9            11.1
Total receivables (b)                                 $    84.5     $      83.0
Memo:
Total managed receivables (c)                         $    86.1     $      84.6

(a) At March 31, 2012 and December 31, 2011, includes consumer receivables before allowance for credit losses of $34.7 billion and $36 billion, respectively, and non-consumer receivables before allowance for credit losses of $20.6 billion and $19.8 billion, respectively, that have been sold for legal purposes in securitization transactions but continue to be reported in Ford Credit's consolidated financial statements. In addition, at March 31, 2012 and December 31, 2011, includes net investment in operating leases before allowance for credit losses of $5.7 billion and $6.4 billion, respectively, that have been included in securitization transactions but continue to be reported in Ford Credit's financial statements. The receivables are available only for payment of the debt and other obligations issued or arising in the securitization transactions; they are not available to pay Ford Credit's other obligations or the claims of its other creditors. Ford Credit holds the right to receive the excess cash flows not needed to pay the debt and other obligations issued or arising in each of these securitization transactions.

(b) Includes allowance for credit losses of $479 million and $534 million at March 31, 2012 and December 31, 2011, respectively.

(c) Excludes unearned interest supplements related to finance receivables.

Receivables at March 31, 2012, increased from year-end 2011, primarily due to higher Ford and Lincoln receivables and changes in currency exchange rates, partially offset by the discontinuation of financing for Jaguar, Land Rover, Mazda, Volvo, and Mercury.

Credit Losses. The charts below detail quarterly trends of charge-offs (credit losses, net of recoveries), loss-to-receivables ratios (charge-offs on an annualized basis divided by the average amount of receivables outstanding for the period, excluding the reserve and unearned interest supplements related to finance receivables), credit loss reserve, and Ford Credit's credit loss reserve as a percentage of end-of-period ("EOP") receivables:

Charge-offs in the first quarter were $35 million, down $20 million from the same period a year ago reflecting lower repossessions in the United States. Charge-offs were down $17 million from the fourth quarter of 2011, reflecting the same factor.

The credit loss reserve was $479 million, down $265 million from a year ago and down $55 million from the fourth quarter of 2011, reflecting the decrease in charge-offs.

In purchasing retail finance and lease contracts, Ford Credit uses a proprietary scoring system that classifies contracts using several factors, such as credit bureau information, credit bureau scores (e.g., FICO score), customer characteristics, and contract characteristics. In addition to Ford Credit's proprietary scoring system, it considers other factors, such as employment history, financial stability, and capacity to pay. At March 31, 2012 and December 31, 2011, Ford Credit classified between 5% - 6% of the outstanding U.S. retail finance and lease contracts in its portfolio as high risk at contract inception.

Residual Risk. Ford Credit is exposed to residual risk on operating leases and similar balloon payment products where the customer may return the financed vehicle to Ford Credit. Residual risk is the possibility that the amount Ford Credit obtains from returned vehicles will be less than its estimate of the expected residual value for the vehicle. Ford Credit estimates the expected residual value by evaluating recent auction values, return volumes for its leased vehicles, industry-wide used vehicle prices, marketing incentive plans, and vehicle quality data.

The following chart shows return volumes and auction values at constant first quarter 2012 vehicle mix for vehicles returned in the respective periods. Ford Credit's U.S. Ford and Lincoln operating lease portfolio accounted for about 85% of its total investment in operating leases at March 31, 2012.

In the first quarter, Ford Credit's strong auction values for 36-month vehicles continued, up $75 per unit from the same period last year and up $250 from the fourth quarter.

Ford Credit's worldwide net investment in operating leases was $11.9 billion at the end of the first quarter of 2012, up from $11.1 billion at year end 2011.

LIQUIDITY AND CAPITAL RESOURCES

Automotive Sector

Our Automotive liquidity strategy includes ensuring that we have sufficient liquidity available with a high degree of certainty throughout the business cycle by generating cash from operations and maintaining access to other sources of funding. For a discussion of risks to our liquidity, see "Item 1A. Risk Factors" in our 2011 Form 10-K Report, as well as Note 18 of the Notes to the Financial Statements regarding commitments and contingencies that could impact our liquidity.

Gross Cash. Automotive gross cash includes cash and cash equivalents and marketable securities, net of any securities-in-transit. Gross cash is detailed below as of the dates shown (in billions):

                                         March 31,       December 31,       March 31,       December 31,
                                           2012              2011             2011              2010
. . .