Fitch: Visteon Agreement Does Not Affect Ford's Credit Ratings

CHICAGO--May 2, 20055, 2005--The pending agreement between Ford and Visteon, if completed as outlined, does not have implications for Fitch's ratings for Ford Motor Company or its affiliates. The significant financial burden associated with the restructuring will fall on Ford, as previously expected, with the costs of the restructuring to be spread out over a number of years. Extensive cash holdings at Ford, potentially supplemented by proceeds from the sale of Hertz, provide Ford with more than sufficient liquidity to absorb the costs related to these outflows. The driving factor behind any rating actions for Ford during this period will remain the operating performance of its North American operations.

Since the spinoff of Visteon in 2000, Ford has on several occasions been forced to step in and provide significant financial support. Ford's support has been necessitated by the fact that wages and benefits for approximately 17,500 workers at Visteon remain the responsibility of Ford. Large portions of Visteon's assets remain uncompetitive due to high and inflexible cost structure, and have been a material drag on the cost position of Ford's North American supply chain. The ability of Ford to accelerate the restructuring of Visteon should, over time, to lead to improvement in this portion of Ford's cost position. This will occur through a combination of closing uncompetitive businesses, improving the cost position of the assets remaining at Visteon, and through providing Ford with the opportunity to source away business that cannot be restored to a competitive position.

Importantly, the agreement could result in a true arms-length relationship, providing long-term flexibility to Ford, although at a meaningful cost. The restructuring of the assets to be held by Ford will only be accomplished through labor attrition, facility closures and, potentially, assisted sales, which are likely to occur over a period of several years. The near-term buyout of 5,000 workers provides a step toward those ends.