Fitch Lowers Ford, Ford Credit, Hertz & Related Entities

    NEW YORK--Sept. 26, 2001--Fitch has downgraded the senior debt ratings of Ford Motor Company (Ford), Ford Motor Credit Company (Ford Credit), Hertz Corporation and their respective subsidiaries to `A-' from `A+' and commercial paper to `F2' from `F1'. A complete list of affected ratings is listed at the end of this press release. The Rating Outlook for all entities is Negative.
    The rating actions are based on the deterioration in the operating performance and liquidity position of Ford Motor Co. as it faces intensifying competition in its core North American auto operations. Specifically, Ford brand and quality-related issues, continued share erosion and high marketing expenses in the form of incentives have resulted in a significant reduction in operating liquidity, a trend that may persist and further impact the company's cash position.
    During the mid-to-late 1990's, Ford capitalized on shifting consumer trends toward light trucks in its various forms and derivatives. In particular, the Ford Explorer has been the product leader in its category since its introduction. Throughout an unprecedented growth period for light trucks, Ford was able to maintain a commanding share of the light truck market.
    Over the last several years, however, Japanese and European brands have stepped up their efforts in this lucrative segment where Ford has been deriving much of its profit contribution. These developments have contributed to Ford's continuing share losses in the U.S. light vehicle market where from July 2000 to July 2001 Ford experienced a 1.6% market share loss. This has taken place despite heavy incentive spending that has recently accelerated.
    In particular, Ford's large/luxury SUV market, a major source of recent profitability has been impacted by a growing competitive field. Foreign brand lines and GM's revamped line-up have taken share away from Ford's Expedition, Navigator, and Excursion lines. In addition, competitive conditions have resulted in an escalation of incentives, meaningfully eroding profitability in the segment.
    Recently the Ford brand has been impacted by a number of quality-related issues, including the high-profile Firestone tire recall, potentially contributing to share losses. The company has also encountered difficulties in several product launches as well as other quality-related issues. Including the estimated $2.1 billion cost associated with the Firestone tire recall, total quality- related items will likely exceed $3 billion in 2001.
    Production over-capacity in the North American auto market has resulted in a long-term upward trend in incentives, which has accelerated during the recent decline in economic conditions. The events of Sept. 11 have resulted in even further deterioration in pricing through the offering of 0% financing programs. Fitch projects that in light of these events, Ford will have difficulty achieving profitability in its North American automotive operations during the balance of 2001. Additionally, consolidated profitability has been impacted by Ford's difficulties in restoring its European operations to profitability, and an inability to stem losses in its Latin American and Asian operations.
    After a very high cash position of $25 billion at June 30, 2000, Ford worked much of it down in the ensuing year through special shareholder dividends, repurchases, and acquisitions so that by June 30, 2001 cash amounted to $16 billion. Net liquidity at June 30, 2001 stood at around $7 billion (gross cash of $16 billion plus VEBA of $2.7 billion minus $12 billion of debt). For the remainder of 2001, operating losses, cash expenses for quality issues and earlier announced restructuring charges (offset to some extent by Ford's ongoing working capital improvements) will continue to impact Ford's cash position. Fitch expects that any further decline in industry volumes resulting from a further deterioration in economic conditions will push Ford into a net debt position during 2002.
    Over the longer term, however, Fitch expects that Ford's strong pipeline of new product programs, significant research and development spending, and capital investment capacity will support its ability to remain a pre-eminent competitor in the global automotive market.
    Ford Credit continues to remain an integral part of Ford Motor Co. through its well-managed and disciplined operations. Ford Credit has proactively managed its funding and liquidity profile to reduce reliance on commercial paper and other short term debt outstanding and has ramped up its securitization activity by adding capacity to its FCAR asset backed commercial paper program and other conduit capacity. Furthermore, Ford Credit maintains committed credit facilities to further support its funding profile. Capital levels remain appropriate for the current rating category. Fitch would expect that asset quality measures in the retail and wholesale loan portfolios will likely come under pressure with the onset of a more challenging economic environment.
    Ratings affected are as follows:

                                    To       From
Ford Motor Company
--Senior notes and debentures      `A-'      `A+'
--Preferred stock                 `BBB+'     `A'

Ford Motor Co. of Australia
--Unsecured notes                  `A-`      `A+'

Ford Motor Co. S.A. de C.V. (Mexico)
--Commercial paper                 `F2'      `F1'
--Unsecured notes                  `A-'      `A+'

Ford Motor Capital Trust I
--Preferred securities            `BBB+'     `A'

Ford Capital B.V. (The Netherlands)
--Senior notes and debentures      `A-`      `A+'

Ford Motor Credit Co.
--Commercial paper                 `F2'      `F1'
--Senior notes and debentures      `A-'      `A+'
--Subordinated notes              `BBB+'     `A'

FCE Bank Plc
--Certificates of deposit          `F2'      `F1'
--Commercial paper                 `F2'      `F1'
--Senior notes and debentures      `A-'      `A+'

Ford Credit Canada Ltd.
--Commercial paper                 `F2'      `F1'

Ford Credit Australia Ltd.
--Commercial paper                 `F2'      `F1'

Ford Motor Credit Co. of Puerto Rico, Inc.
--Commercial paper                 `F2'      `F1'

Ford Motor Credit Co. of New Zealand
--Commercial paper                 `F2'      `F1'
--Unsecured notes                  `A-'      `A+'

PRIMUS Financial Services (Japan)
--Commercial paper                 `F2'      `F1'
--Medium-term notes                `A-'      `A+'

The Hertz Corporation
--Commercial paper                 `F2'      `F1'
--Senior notes and debentures      `A-'      `A+'

Hertz Canada Ltd.
--Commercial paper                 `F2'      `F1'

Hertz Australia Pty. Ltd.
--Commercial paper                 `F2'      `F1'

Hertz Finance Centre Plc.
--Commercial paper                 `F2'      `F1'

Ford Motor Co. Equipment Trust 1991-F
--Guaranteed notes                 `A-'      `A+'

Ford Motor Co. Equipment Trust 1991-H
--Guaranteed notes                 `A-'      `A+'

Ford Holdings Inc.
--Senior Notes and debentures      `A-'      `A+'