Ford Motor Credit Downgraded to "A" From A (High)

Press Release: Ford Motor Credit Company 			Aug 20,
2001
Downgrades to A

Kam Hon, David Schroeder / (416) 593-5577 ext.243, ext.232 / e-mail:
khon@dbrs.com
Rating		Trend		Rating Action		Debt Rated
"A"		Stable		Downgraded		Corporate Rating

The above rating of Ford Motor Credit Company ("FMCC") is downgraded to
"A" from A (high) and the trend is changed to Stable from Negative. The
action is in line with the accompanying rating action on Ford Motor
Company ("Ford" or "the Company"). Ford owns 100% of FMCC, provides
support through a profit maintenance agreement and produces the products
that are by far the major source of FMCC's financing activities. With
additional consideration for the strategic importance of the financing
arm to Ford, DBRS believes that the credit strength of FMCC should be
consistent with the credit strength of Ford.

The rating action reflects the Company's deterioration in market share
and profitability and a slightly weakened balance sheet. With price
competition intensifying and increasing risk of a sharper decline in the
North American automobile market, the Company is not likely to stage a
meaningful recovery in the medium term.

Ford's market share and profitability in its core North American market
has been declining. Growing competition, particularly in the highly
profitable light trucks and SUV, the "Firestone tire recalls' and, more
recently, production and quality issues have weighed on earnings despite
a still favourable North American automobile market. Profitability is
expected to remain under pressure in the near term. Negative factors
include: (1) Pricing competition has intensified. (2) Ford has also
suffered a decline in productivity characterised by recent higher than
usual production and quality problems. Despite successes in the past,
benefits from cost reduction could not be counted on to offset price
erosion as evidenced by the recent decline in earnings. (3) Although the
tire replacement actions will likely help preserve the reputation of the
Ford brand in the long run, uncertainty related to the negative
publicity on the demand of the popular 'Explorer' model remains a
concern. (4) The demand for automobiles has been surprisingly healthy
despite slowing economic activities in North America. The risk of a
larger decline is rising. (5) Although the European operation is making
good progress in its recovery, conditions in South America has
deteriorated sharply. Weak overseas performance is expected to continue
to weigh on Ford's overall results. 

The rating also reflects Ford's competition position as the second
largest automobile manufacturer in the world, a leading share in the
light truck and SUV segment and geographical diversification. The
balance sheet, although weakened by heavy cash usage recently on
acquisitions, share repurchases and dividends, remains favourable and
liquidity remains above average. At the end of June 30, 2001, the
Automotive Group still has $6.8 billion in net cash including VEBA.
Furthermore, Ford's modest debt maturities schedule, averaging 28.5
years, further increases its financial flexibility. 

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in 1976. Privately owned and operated without affiliation to any
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evaluations of corporate and government issues, spanning North America,
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provider of comprehensive, in-depth credit analysis.

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