Fitch: Visteon Agreement Shows Commitment to Improve Cash Flows

CHICAGO--March 11, 2005--The agreement reached today between Ford Motor Company and Visteon demonstrates that both companies see the need to address the significant cash drains occurring at Visteon. The agreement also acknowledges, as expected, that Visteon remains a significant financial burden on Ford. Fitch has previously incorporated into the ratings of Ford the probability of further financial assistance to Visteon due to the fact that Ford has effectively retained responsibility for the vast majority of the work force at Visteon since the spin-off. Ford currently has the financial strength and liquidity to absorb this impact. The ratings of Ford and Visteon are not affected by this agreement.

Ford and Visteon announced that they have reached an agreement to provide several forms of financial assistance to Visteon while the terms of a final agreement are being negotiated. This agreement, if in effect through 2005, could be in the range of $500 million in reduced payments and other forms of cash flow assistance, which would roughly approach Visteon's expected 2005 negative free cash flow. The agreement covers three major areas of assistance from Ford to Visteon: shortened payment terms; funding of capital equipment purchases; and lower labor reimbursement payments to Ford from Visteon.

The longer term issue remains the continuing cost-uncompetitiveness of large segments of Visteon's operation and the competitive disadvantage that this represents to Ford's cost structure. Fitch believes that the ultimate agreement will not produce a quick fix for either party. Reduced wages and benefits, labor attrition, plant closures, and consolidations, etc. will be required and are likely to be accomplished only on a gradual basis under any final agreement that is reached. Execution will, in large part, depend on successful negotiations between Ford, Visteon, and their labor unions rather than between Ford and Visteon. Fitch expects that the bulk of this transition process will ultimately fall on Ford but could also lead to a more competitive supply base over the intermediate term if Ford is able to accelerate restructuring activities. For Visteon, further financial support from Ford will be required to position itself as a viable, independent supplier. It remains uncertain as to Visteon's ultimate operating and financial profile that will emerge from the final agreement.