George Sharp – Executive Director, IR Mark Fields – President and CEO Bob Shanks – EVP and CFO Neil Schloss – VP and Treasurer.

Colin Langan – UBS Daniel Galves – Credit Suisse John Murphy – Bank of America Merrill Lynch Brian Johnston – Barclays Rod Lache – Deutsche Bank Patrick Archambault – Goldman Sachs Adam Jonas – Morgan Stanley Joseph Spak – RBC Capital Markets Ryan Brinkman – JPMorgan George Galliers – ISI Group Mike Ramsey – The Wall Street Journal.

Good day ladies and gentlemen, and welcome to the Ford Third Quarter Earnings Conference Call. My name is Glenn and I will be your event manager for today. At this time all participants are in listen-only mode, and later we will facilitate a question-and-answer session.

(Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. George Sharp, Executive Director of Investor Relations. Please proceed, Mr. Sharp..

Thank you, Glenn, and good morning. Welcome to everyone joining us today either by phone or by webcast. On behalf of the entire Ford management team, I’d like to thank you for taking the time [Technical Difficulty] third quarter 2014 financial results. Now presenting today are Mark Fields, our President and CEO; and Bob Shanks, Chief Financial Officer.

Also participating are Stuart Rowley, our Corporate Controller; Neil Schloss, Corporate Treasurer; Paul Andonian, Director of Accounting; and Mike Seneski, Ford Credit CFO. Now copies of this morning’s press release and presentation slides are available on our Investor and Media websites.

The financial results discussed today are preliminary and include references to non-GAAP financial measures. Now any non-GAAP measure is reconciled to the U.S. GAAP equivalent in the appendix of the slide deck, and final data will be included in our Form 10-Q.

Finally, today’s presentation includes some forward-looking statements about our expectations for Ford’s future performance, of course, actual results could be different. The most significant factors that could affect our future results are summarized at the end of the presentation and detailed in our SEC filings.

With that, I would now like to turn the presentation over to Mark..

Thanks, George. Today we will review our third quarter financial results, the details behind them, and our outlook ahead. So let’s get right into the first slide. Our results this quarter are underpinned, once again by our ONE Ford plan which remains unchanged.

We are continuing to focus on all four elements of our plan; they served us well and will continue to be our focus going forward. We also plan to build on our success by accelerating the pace of progress throughout our business.

In many ways we are just starting to see the full benefits and strength of ONE Ford and we intend to maximize these opportunities going forward. At the same time, we are passionate about product excellence and leading in innovation.

We are committed to building on the product strength today, with even more new products and innovations that will deliver growth for our stakeholders and define our company going forward. So now let’s turn to Slide 2 for a look at the third quarter.

The third quarter was our 21st consecutive profitable quarter and we ended the period with strong liquidity. Automotive operating related cash flow however was negative due to unfavorable changes in the working capital, including product launch effects. Third quarter wholesale volume and revenue declined year-over-year by 3% and 2% respectively.

Market share however was higher in Europe and our third quarter record in Asia Pacific, where we once again delivered a record share in China. North America and Asia Pacific were profitable where pre-tax results were lower than a year ago for all of our automotive business units, except Middle East and Africa.

Ford Credit delivered strong results that were better than a year ago. Company’s pre-tax profit was in line with our expectation and consistent with the guidance we provided at the September Investor Day of company full year pre-tax profit of about $6 billion which we are reconfirming today. It was however, lower than a year ago.

This is more than explained by three factors; lower volume, higher warranty costs, and adverse balance sheet exchange effects. The lower volume was in North America, reflecting product launch effects and part shortages due to supplier issues, and in South America where industry sales declined due to the deteriorating external conditions.

The higher warranty costs were mainly in North America, and were primarily due to recalls. And finally the adverse balance sheet exchange effects were largely in South America and accounted for about one-third of the regions lower profit.

Looking ahead, 12 of our 23 global product launches are now complete and the balance are continuing to progress, including the all new F-150. And these launches along with the 16 planned for 2015 are expected to result next year in higher revenue, improved operating margin, and a company pre-tax profit of $8.5 billion to $9.5 billion.

So let’s turn to Slide 3 to recap some of the quarter’s other achievements. Other third quarter highlights include the start of production of several products, including the all-new 2015 Mustang, and the Lincoln MKZ, and MKC for China. We also announced the new C-MAX, brand C-MAX and S-MAX in Europe.

We also announced that we’re bringing 25 new vehicles to Middle East and Africa by 2016. Seven Ford vehicles finished in the Top Three of their segment in the J.D. Power and Fuel Study with F-150 and super duty F-250 and F-350 ranking highest in their segments.

We hosted the industry’s first App Developer Conference, and we were active in job creating including new jobs in Kansas City, Louisville, and Asia Pacific to support our growth initiatives. Finally, we completed our previously announced share repurchase program that reduced our diluted shares by about 3%.

So now I’ll turn it over to Bob who will take us through our financial results.

Bob?.

Thanks, Mark, and good morning everyone. Let’s start at the top on Slide 4, third quarter wholesale volume was 1.5 million units, down 52,000 units from a year ago; and revenue was $34.9 billion, down $900 million. Pre-tax profit was $1.2 billion, excluding special items; $1.4 billion lower than a year ago.

After-tax earnings per share at $0.24 were $0.21 lower. Net income attributable to Ford, including pre-tax special item charges was $835 million, [Technical Difficulty] year ago. Earnings were $0.21 a share, down $0.10.

Pre-tax special item charges were $160 million in the quarter reflecting separation related actions largely in Europe to support our transformation plan. Automotive operating related cash flow was negative $700 million, and automotive gross cash was $22.8 billion, exceeding debt by $7.9 billion.

Our third quarter operating effective tax rate, which isn’t shown was 31%, which is lower than our prior guidance. We continue to expect our full year operating effective tax rate to be about 35%, assuming retroactive extension of U.S. Research Credit Legislation in the fourth quarter.

In the first nine months period vehicle wholesales were up slightly from a year ago, while the company revenue decreased by 1%. First nine months pre-tax operating profit excluding special items was $5.2 billion, a decline of $2.1 billion, and net income was $3.1 billion, $1 billion lower than a year ago.

As shown on Slide 5, both our Automotive and Financial Services sectors contributed to the company’s third quarter pre-tax profit. As shown in the memo, company’s third quarter pre-tax profit declined compared to the prior year and prior quarter, both more than explained by automotive.

The key market factors and financial metrics for our automotive business in the third quarter are shown on Slide 6. As you can see on the far left, wholesale volume and revenue decreased by 3% compared with a year ago.

The lower volume is more than explained by an unfavorable change in dealer stocks related to product launch effects and supplier part shortages as well as declining industry volume in South America. Higher industry volumes in other regions were a partial offset. Global industry SAAR is estimated at 86.7 million units, up 3% from a year ago.

And Ford’s global market share is estimated at 7.4%, unchanged from a year ago. Operating margin was 2.5%, down 4.5 percentage points from a year ago, and automotive pre-tax profit was $686 million, down $1.5 billion. As shown in the memo below the chart, first nine months volume was up slightly from a year ago, while automotive revenue was down 2%.

Operating margin at 4.2% was down two percentage points. Total automotive pre-tax profit at $3.8 billion was down $2.2 billion. The lower results were driven by North and South America, all other business units included. Slide 7 shows the factors that contributed to the $1.5 billion decline in third quarter automotive pre-tax profit.

The lower profit is largely explained by higher warranty cost including recalls, mainly in North America, and lower volume in North and South America, as well as $166 million for the adverse balance sheet exchange effects, mainly in South America. All other factors largely offset each other.

As shown in the memo, pre-tax profit was $1.5 billion lower than second quarter, largely explained by lower volume, mainly in North America and Europe, as well as higher warranty cost in North America. Slide 8 shows third quarter pre-tax results for each of our automotive operations, as well as Other Automotive.

North America and Asia Pacific were profitable but the other business units reported losses. Other Automotive reflects net interest expense which we continue to expect to be about $700 million for the full year. Now we’ll look at each of our regions within the automotive sector, starting on Slide 9 with North America.

North America’s continue to benefit from robust industry sales, our strong product line-up, continued discipline in matching production to demand, and a lean cost structure, but our third quarter results were affected adversely by higher warranty cost and lower volume.

North America third quarter wholesale volume and revenue declined 8% and 6%, respectively. This decrease was explained primarily by product launch effects, including five weeks of downtime in the quarter at the Dearborn Truck Plant for the F-150 launch and supplier part shortages. U.S.

third quarter industry SAAR was 17.2 million units, 1.1 million units higher than a year ago. Our U.S. market share deteriorated eight-tenth of a percentage point to 14.1%, reflecting a planned reduction in daily rental sales, and lower F-150 share as we prepare for the new vehicle by continuing to balance share, transaction prices, and stocks.

As shown in appendix seven, our U.S. retail market share of the retail industry was 13%, down two-tenth of a percentage point from a year ago. North America’s decline in revenue is more than explained by the lower wholesale volume.

North America operating margin was 7.1%, down 3.8 percentage points from last year, and pre-tax profit was a $1.4 billion, down $886 million. Excluding the higher warranty costs which were entirely associated with recalls, North Americas operating margin would have been 10.2%.

As shown in the memo below the chart, all first nine month metrics declined from the year ago with lower warranty – our lower volume and higher warranty costs including recalls more than explaining the lower operating margin and pre-tax profit. On Slide 10 we show the factors contributing to North America’s lower third quarter pre-tax profit.

The decline is more than explained by higher warranty cost and lower [Technical Difficulty] like the recent restraint control module recall announced last month, as well as reserve changes related to the other field service actions. As mentioned previously, product launch effects and supplier part shortages drove the lower volume.

As shown in the memo, pre-tax profit was lower than second quarter, more than explained by unfavorable volume mix and higher warranty costs. Turning to full year guidance for North America, we continue to expect pre-tax profit to be lower than 2013, and operating margin to be at the low end of the 8% to 9% range.

Alright, now let’s turn to Slide 11 and review South America, where we’re continuing to execute our strategy of expanding our product line-up, and have replaced legacy products with global ONE Ford offerings.

We’re also working to manage the effects of slowing GDP growth, declining industry volumes in our larger markets, weaker currencies, high inflation, as well as policy uncertainty in some countries. In the third quarter wholesale volume and revenue decreased from the year ago by 21% and 17% respectively.

The lower volume was explained primarily by a 700,000 unit decline from last year’s SAAR of 5.7 million units. This reflects the impact of the weakening economy in Brazil, import restrictions in Argentina, and lower production in Venezuela, resulting from limited availability of U.S. dollars.

Also contributing is a non-repeat of last year’s stock build. South America market share at 8.8% was down four-tenths of a percentage point, more than explained by the phase-out of Fiesta Classic. The revenue decline is more than explained by the lower volume and weaker currencies, higher pricing was a partial offset.

Operating margin was negative 7.3%, down significantly from a year ago and pre-tax loss was $170 million, a deterioration of $330 million. As shown in the memo below the chart, all first nine months metrics deteriorated from a year ago driven by the adverse change in external factors.

The first nine month loss includes $426 million of adverse balance sheet exchange effects. On Slide 12 we show the factors contributing to the decline in South America’s third quarter pre-tax results. The lower results were driven primarily by lower volume and adverse balance sheet exchange effects.

As shown in the memo, pre-tax results improved compared with second quarter, more than explained by higher pricing and other effects associated with introduction of the new car in Brazil. Constant well received by media and initial reaction from customers is very encouraging.

For the full year we continue to expect South America to incur a loss of about $1 billion. Let’s turn now to Europe, beginning on Slide 13, where we continue to implement our transformation plan focused on product, brand and cost. Europe’s wholesale volume and revenue improved from a year ago by 6% and 7% respectively.

The higher volume reflects a 700,000 unit increase in Europe 20 SAAR to 14.5 million units, higher market share and lower dealer stock reductions than a year ago. Lower volumes in Russia and Turkey were partial offset. The focus on our transformation plan on improved product and brand led to great progress in the third quarter.

Our Europe 20 market share improved four-tenths of a percentage point to 8.4%, this reflects two factors; a 0.5 percentage point improvement in our regional passenger share of the five major European markets to 8.8%, including the effect of our expanded SUV line-up.

And secondly, a two percentage point improvement in our commercial vehicles share to 13%, reflecting the success of our full line of new Transit vehicles and continued strong performance of the Ranger compact pickup. The increase in Europe’s revenue is explained by the higher volume in the Europe 20 markets.

Europe’s operating margin was negative 6.4%, down 3.6 percentage points from a year ago and pre-tax loss was $439 million, a $257 million decline. As shown in the memo below the chart, all first nine month metrics improved from a year ago. Slide 14 shows the factors that contributed to the decline in Europe’s third quarter pre-tax results.

The decline is more than explained by Russia, balance sheet exchange effects and other factors including lower component pricing and non-recurrence of prior year gains. As shown in the memo below the chart, pre-tax results were lower than second quarter.

This is more than explained by lower volume due to Europe’s seasonal plant shutdowns for summer holidays, unfavorable exchange, and higher cost including non-recurrence of a restructuring related reserve released last quarter. For the full year, we continue to expect a loss of $1.2 billion, an improvement compared with 2013.

Let’s now turn to Slide 15 and review Middle East and Africa which is now its own geographic segment in order to facilitate better customer service, and further expand for its presence in this fast growing region. Middle East and Africa’s wholesale volume and revenue improved from the year ago by 9% and 5% respectively.

Operating margin was negative 1.4%, one percentage point better than year ago, and pre-tax loss was $15 million, $10 million better. As shown in the memo below the chart, first nine months wholesale volume and revenue deteriorated slightly compared with year ago, while operating margin and profit both improved.

For the full year, we continue to expect Middle East and Africa results to be about [Technical Difficulty]. Right, let’s now review Asia Pacific on Slide 16. Our strategy in Asia Pacific continues to be to invest for growth through both, new and expanded plants, new products, and the introduction of Lincoln in China.

As shown on the left, third quarter wholesale volume was up 5% compared with a year ago, and net revenue which excludes our China joint ventures grew 3%. Our China wholesale volume, not shown, was up 10% in the quarter. The higher volume in the region is more than explained by higher market share and industry volume.

We estimate third quarter SAAR for the region at 38.9 million units, up 1.8 million units from a year ago, explained primarily by China. Our market share at 3.6% was a record for the third quarter, and was two-tenths of a percentage point higher than a year ago.

This was driven by China where our market share improved four-tenths of a percentage point to a record 4.7% reflecting continued strong sales across our vehicle line-up. Asia Pacific’s higher revenue is more than explained by favorable mix.

Operating margin was 1.7%, down 2.9 percentage points from a year ago, and pre-tax profit was $44 million, down $72 million. As shown in the memo below the chart, all first nine month metrics improved from a year ago. Slide 17 shows the decline in Asia Pacific’s third quarter pre-tax profit.

It’s more than explained by higher structural cost and unfavorable exchange with favorable market factors being a partial offset. The higher structural cost reflects our continued investment in products and growth including five new plants that will come online over the next nine months, as well as the launch of Lincoln.

As shown in the memo, Asia Pacific pre-tax results declined from second quarter, with most factors unfavorable. For the full year we continue to expect Asia Pacific to earn a pre-tax profit of about $700 million, which is higher than a year ago.

Let’s turn now on Slide 18 to Ford Credit, which is an integral part of our global growth and value creation strategy. Ford Credit provides world class dealer and customer financial services, supported by a strong balance sheet, providing solid profits and distributions to Ford.

Ford Credit’s higher pre-tax profit this quarter compared with the year ago is more than explained by a higher volume, this reflects increases in nearly all financing products including non-consumer and consumer finance receivables globally, as well as leasing in North America.

As shown in the memo, pre-tax profit was higher than second quarter, explained primarily by a lower level of insurance losses in North America which is included in other. For the full year we continue to expect Ford Credit profits to be $1.8 billion to $1.9 billion.

Our guidance for Ford Credit year end managed receivables and managed leverage also is unchanged. We now expect Ford Credits distributions to its parent to be about $400 million, up from our prior guidance of about $250 million. This increase is driven by higher net income at Ford Credit.

Next on Slide 19 is our automotive gross cash and operating related cash flow. Automotive gross cash at the end of the quarter was $22.8 billion, decreases of $3 billion from the end of the second quarter. Automotive operating related cash flow was negative $700 million.

This is more than explained by unfavorable changes in working capital including the effects of the five weeks of downtime in the quarter at the Dearborn Truck Plant as we transition to the new F-150 as well as supplied part shortages. In the fourth quarter we expect working capital changes to be positive.

During the quarter debt repayments and pension contributions totaled $600 million. And dividends paid were about $500 million while other items include about $1.1 billion related to the stock buyback program that we completed in the quarter.

Slide 20 shows that automotive debt at the end of the quarter was $14.9 billion, $500 million lower than second quarter. We ended the quarter with net cash at $7.9 billion and automotive liquidity of $33.6 billion. Earlier this week, we gave notice the holders of our 2016 convertible notes, determine a conversion rights and redeem outstanding notes.

This action will reduce automotive debt by about $800 million in the fourth quarter with no significant impact on cash flow. So this concludes our review of the financial details of our third quarter earnings.

So now I’d like to turn it back to Mark, who will take us through our outlook for the business environment, as well as our 2014 planning assumptions and key metrics.

Mark?.

Thanks, Bob. Slide 21 summarizes our view of the business environment for 2014. We project global economic growth to be in the 2.5% range, with conditions in Europe and South America particular concern. Global industry sales are expected to be about 87 million units. U.S.

economic indicators and industry sales have remained steady through the third quarter, consistent with economic growth in the 3% range. In South America, Brazil is in recession with election related policy uncertainty. Negative growth also is expected in Argentina and Venezuela with ongoing policy and exchange risk.

In Europe, incoming data has weakened, with Euro area GDP growth projected to be less than 1% this year. Conditions in the U.K. however are more favorable with growth projected in the 3% range. Although not shown, the outlook for Russia is challenging and fluid, with very slow GDP growth, inflationary pressures and a weaker currency.

In Asia Pacific, China’s economic growth [Technical Difficulty] range with the ongoing property market weakness reflected in our outlook for 2014. Consumer sentiment supports continued growth in vehicle sales but at a more modest pace in the second half. With initial signs of improvement, growth in India is now projected to be in the 5% to 5.5% range.

Challenges remain however with high inflation and interest rates as elements [ph] to stronger growth. Overall, despite challenges in some key markets, we expect the global economy to grow in 2014 and be supportive of a projection for higher global industry volume this year.

Slide 22 recaps the guidance disclosed earlier for our business unit, as well as for automotive net interest expense. Full year guidance is unchanged for all business units and consistent with their Investor Day outlook. Our company guidance for 2014 is detailed on Slide 23.

We now expect full year industry volume of about 16.8 million units in the U.S., about 14.5 million units in the Europe 20 markets, and about 23.8 million units in China. In terms of our financial performance, we continue to expect automotive revenue to be about equal to 2013, automotive operating margin to be lower than 2013.

Automotive operating related cash flow to be lower than 2013, including capital spending of about $7.5 billion. Ford Credit pre-tax profit of $1.8 billion to $1.9 billion and company pre-tax profit of about $6 billion.

2014 is a critical next step in implementing our ONE Ford plan to deliver profitable growth for all, including strong growth and much improved financial results in 2015 and beyond. As we communicated at our Investor Day event, we expect 2015 company pre-tax profit to be in the $8.5 billion to $9.5 billion range.

In closing, our ONE Ford plan is built on compelling vision, comprehensive strategy, and relentless implementation, all leading to profitable growth around the world. We are confident in the continued success of our ONE Ford plan, and in fact are accelerating our pace of progress.

The third quarter was challenging but we remain absolutely focused on implementing our plan as we work towards the end of the year, and this includes continued strength from North America, although down from recent years as we launched three times the number of products as last year; a loss in South America, as we respond to a changed environment and continued risk in the region; continued execution of our transformation plan for Europe, even as we work through challenges, primarily in Russia; establishing our Middle East and Africa business unit; continued strong growth and profitability in Asia Pacific; consistent solid performance from our Ford Credit operations, and positive automotive operating related cash flow.

So now let’s open it up to your questions.

So, George you want to lead us through that?.

Thanks, Mark. Now we’ll open the lines for about a 45 minute Q&A session. We’ll begin with questions from the investment community and then we’ll take questions from the media. Now as always, in order to allow for as many participants as possible within this timeframe, please keep your questions brief and please avoid asking more than two.

Glenn, can we have the first question..

(Operator Instructions) And your first question comes from the line of Colin Langan with UBS. Please proceed..

Thanks for taking my question. One of the big concerns coming out of Investor Day was the profitability of the new F-150. And I was just wondering how we should be thinking about that because you seemed reluctant to be very committed about how profitable it will be but you also said it has [indiscernible] to customers yet.

I mean should we be concerned about the content of being added or is the uncertainty really reflecting that it hasn’t been delivered to customers so you don’t have a good gauge of what the eventual pricing on the product is going to be?.

Hey Colin, thank you very much for the question, obviously an area that continues to be on the mind of investors. We’re not going to get into specific margins of profitability any particular vehicle line but everyone knows how profitable the F-150 is to the company and for the company, and we expect that to continue going forward.

When we think about next year and the guidance that we gave for North America, the 8% to 9% [ph] and that triggered a lot of the questions. We need to remind ourselves that we don’t get the both plants, Dearborn and Kansas City up and running until we get into the second quarter.

So clearly, that impact has an effect on what we’re seeing for the margins of the whole business unit. If I go back and look at the present generation of the F-150, we saw margins improve over the course of that product cycle life.

Must wait and see what happens with the new one, but we’ve got lots of things planned on F-150 once you’re going to see when we come out, I think that will be very exciting, consumers are going to respond positively to that. And we expect it to be a huge success for us and to contribute very significantly to the bottom line.

So it’s all I want to say on that. It’s a great product and it’s going to be very good for the business and we think even better as we go through the business planning period..

Okay. And I guess my second question, there was an article in the journal earlier this week talking about some potential issues that some of the [Technical Difficulty].

Can you give an update on how the launch is progressing if there is any sort of headwinds that are arising?.

Thanks, Colin. This is Mark. As you know, launches are a complex thing but we are absolutely on plan with the launch and it’s progressing well. As you know, we’ve had eight weeks of downtime for the changeover at our Dearborn Truck Plant that was completed. We now have started mass production and we are exactly where we expected to be at this point.

The plant is up and running and I was actually down at the plant earlier this week, our employees, they are all trained, they are excited, they are energized.

And we’re confident that all of the preparations that have positioned us for a quality launch, and positioned just to had vehicles and dealerships with initial sales by the end of this year as we planned..

Okay, that sounds good. Thank you very much..

Thanks..

Your next question comes from the line of Daniel Galves with Credit Suisse. Please proceed..

Good morning. In the U.S.

it looks to us like pricing on pickup trucks continues to be very strong and pricing on the car side or the super segments is a little bit weaker, is that your read of the situation as well, and is there any way you can give us some broad strokes on what drove the positive year-over-year pricing in North America by segment?.

I’ll take that first part of that Daniel. Yes, I would characterize it as you mentioned, when you look at the truck and SUV side of the business, the pricing has been good.

In our own case, even with the – lets choose F-150 as an example, our outgoing F-150, our transaction prices are up, our incentives levels are below and well below some of our competitors.

When you look at the car side, if you look at what’s happened with the segment shift, consumer preferences, they are moving more towards utility, and that is putting pressure on the car side of the business and I think you’re seeing a number of competitors who have capacity there, getting more aggressive in the marketplace.

And in our case, we’re going to be balanced as we look at the marketplace in terms of the value and the incentives that we provide to our customers. I would characterize it as you mentioned it.

Bob, you want to answer the second part?.

Yes, when you look at – and I’m on Slide 10 Daniel, but when you look at North America’s pricing and just the pricing element, that’s really near $40 million.

The majority of that was actually on carryover vehicles, we did have some good news on some of the products we launched in the first half, it was mostly on carryover and it’s a line-up with Mark – with Mark said, that was more than explained by positive pricing on trucks and utilities, we actually had negative pricing on cars.

So I conclude consistent with the scenario that we outlined..

Okay, got it.

And then just a follow up, do you expect those trends to continue, how does the pricing on trucks kind of manifest as the present F-150 and the new F-150 start to kind of be at dealer at the same time? And then on the daily rental side, can you tell us what part of the market share decline was due to daily rental and why are you deciding to decrease daily rental sales at this time?.

In the first part of your question, yes, we expect the trends as we see the pricing this year, to flow into next year, and that’s part of the reason as we’ve guided to North America as 8% to 9% margins next year and we – our view is we’re going to continue to see a lot of competitiveness on the car side of the business, particularly with some of our competitors having some artificial advantages around currency and things of that nature.

When you look at – even with regards to that, our whole strategy around investing in product excellence, we have a number of very strong products coming out on the car side as we get into next year, particular focus, the best-selling car in the world, our new one is coming, it will be in showrooms in the first part of next year.

On daily rental, as you’ve seen a part of – when you look at the eight-tenths of market share deterioration in the quarter, half of that was due to – or four-tenths was due to the fact that we have throttled back on our sales to daily rental.

And part of it is because it’s important that we’re in that market so consumers get experience with our products, but the margins are lower and you know our whole strategy of managing or maximizing our operating margins and profitability but we’ll continue to take a very balanced approach as we look at daily rental.

In the quarter, our daily rental sales were down about 32%, they only represented about 5% of our total sales, and that’s down from about 7.5% the year earlier. So that’s the balanced approach we’re taking on this..

Okay, thanks very much..

Thank you..

And your next question comes from the line of John Murphy with Bank of America Merrill Lynch. Please proceed..

Good morning, guys..

Good morning, John..

Just a first question on appendix, Slide 12 where you have your 2015 guidance reiterated.

As we think about that there is a long way to go to get through 2015, are you considering any major actions or what are the levers that you can pull to potentially influence this to the upside, to put up maybe better numbers than when you’re looking at here?.

John I think we’ve been a little ahead of ourselves here. We’re still sitting very comfortably at the $8.5 billion to $9.5 billion, we still have a lot of work to do to put that plan together for 2015, and we will be talking to you about that in more detail in January but I wouldn’t go beyond that at this point.

I will just focus today on [Technical Difficulty]..

Okay. And then, second question, you highlighted supplier part shortages in North America as a pressure on volume.

I’m just wondering is that something that’s occurring in a short term or do you think there are some real capacity constraints in the supply base that might hamper volumes going forward?.

While we’ve seen, we viewed it as short term in nature and obviously in some of the instances what we did to accommodate some of the suppliers that had some issues, we actually pulled forward some down weeks to allow couple of those suppliers to actually catch up. So we feel we’ll be able to make up some of that production in the fourth quarter.

As we go forward, we’re going to continue to stay close with our supplier partners, it is a fact that the supplier community is running at or near full capacity, and that’s why we’re going to continue to work together with our purchasing team and our suppliers to make sure that we keep the plants running.

But for this quarter we thought there were some unique issues that we’ve dealt with and have now resolved..

Great. Thank you very much..

Thanks, John..

Your next question comes from the line of Brian Johnston with Barclays. Please proceed..

Thank you.

I have some questions Mark about the planning assumption that you probably have that – you got instruct [ph] which is where do you expect the price of gas to be say next year and then over the long term? What kind of assumptions around gas prices have gone so far into your product planning? And you mentioned this vis-à-vis Europe but I’m wondering supplies to North America, with gas prices where they are, are you going to be able to recover some of the regulatory café content costs?.

Thanks, Brian. Our view on gas prices, obviously what we’re seeing is that the supply fundamental, or the supply growth fundamentals have outpaced the demand growth and we’re seeing obviously the price of a barrel of oil actually go down.

Our view continues to be that overtime the price of fuel will continue to rise, probably less so than we did in last year’s business plan but nonetheless, still it’s a non-renewable source and that’s going to play a factor in there.

Plus we also have to keep in mind that where we are in terms of the global economic situation right now and a number of the markets around the world, it’s going to through some troubles right now and that’s waning on the growth for the demand for oil.

Our view is it will continue to go up, and that’s why we’re going to continue to stay focused on our product strategy; we’re offering the very best fuel economy for our customers.

And then when you think about the – your comment around the regulatory requirements about improved fuel economy, clearly in Europe we have seen some instances where you can price for that regulation that goes in, here in the U.S.

our experience has been it’s very tough to do that and that’s why we’re going to stay very focused on what I would call the physical requirements of delivering those regulations at the most competitive cost..

Okay. Would it be – do you think your ability to price if we were at $5, $6 a gallon, in the U.S.

would be better and is that and they are all aware you’re in on your 8% to 10% margin range?.

Yes, if you’re dealing with $5 to $6 a gallon of oil, yes, I think the dynamics change very greatly in what you comprise..

Okay, thanks..

Thanks, Brian..

Your next question comes from the line of Rod Lache with Deutsche Bank. Please proceed..

Good morning, everybody..

Good morning, Rod..

Couple of things, one is in the past you’ve given us some data on material X commodities for North America, so hoping you can just provide that again. Our commodities such as aluminum kind of locked in on a longer term basis..

Actually the biggest issue that we had in terms of high prices in the quarter was in South America because that’s priced in dollars and with the weakening currencies that’s been the biggest issue.

In the quarter in North America we had about $115 million of higher cost associated with commodity prices and for the total company it was actually about $190 million to $200 million but again a lot of that in South America as well.

So in terms of what we’ve got locked in, I think it will probably now be the contracts or hedges, about 85% of our full year commitments are locked in..

Okay. And then in South America extra balance sheet adjustments, you did like $60 million loss in the quarter, I know you guided to – in your Analyst Day a substantial loss but improved. For 2015 doesn’t sound like you’re looking for a lot of improvement versus the run rate right now. I was hoping you can elaborate on that.

And also another clarification on your comment in the Analyst Day, there was a pie chart in your deck where you talked about calls on capital from 2014 to 2020. Debt and pensions was part of that, and if you look at your maturity schedule, pension contributions it looks like there is maybe $13 billion associated with that in 2020.

And then next to that there was a sliver of the pie chart, looked like it was roughly two times the debt and pension which was shareholder actions.

Is that a right way to kind of size that up, like roughly $13 billion for debt and pension and maybe $26 billion for shareholder actions as part of your plan?.

[Technical Difficulty]. As we look at the run rate in fourth quarter, clearly as part of our plan is to introduce our ONE Ford product so we do expect some top line growth particularly around the new Ka or car that we’re introducing it to the marketplace.

This segment is the biggest segment in Brazil, the product is off to a great start, we just launched it last month. We do expect to get some price recovery from inflation, we actually saw more of that in third quarter, in places like Brazil than we saw previously. We’re going to continue to work on our structural cost as we go forward.

So as we stand back and we look at South America for next year, we do accept some level of economic and industry growth but also the launch of the global products tailored to that market will help..

Yes, and in terms of your question on the pie chart – Rod, what we did say at the event is that in terms of pensions for 2015 and 2016 we’re expecting contributions of about $1.5 billion here to our funded plans and that would get us to the plant where we believe, any aggregate might be different plan-by-plan but we would be fully funded.

And then thereafter about $0.5 billion or so just for ongoing service cost and so forth.

In terms of the debt, automotive debt, we said that by 2018 we’ll be down to about $10 billion and that assumption assumes actually that we continue to pay that down a bit as things mature, I’m not sure that’s where we’ll end up, Neil is actually looking at what’s the appropriate size of debt for the size of the company that we expect to be at that point in time but that is less than those numbers.

And then the balance as you rightly said is much greater amount of capital allocated to shareholder distributions and what we’ve said in the previous five years. I wouldn’t put a number against that because it is further out and things can change, plus or minus, but based on our present assumptions that is certainly what we have in mind..

Okay, thank you..

And your next question comes from the line of Pat Archambault with Goldman Sachs. Please proceed..

The response went [ph] same time the Latin America question I think that Rod had asked. One follow up is, I just wanted a better understanding of what that balance sheet item was that was I think $109 million.

Is that just kind of ongoing currency re-measurement or was that sort of a discrete item, similar to what happened in Venezuela in the first quarter just because that seems fairly lumpy and large..

Yes, it’s actually very similar to what we saw in the first quarter except it wasn’t of the same magnitude, and in fact, the thing it’s interesting and you’re seeing that, and many earnings reports in this period is the effect of the stronger dollar on a lot of various companies and surely that’s what we saw.

But just to give you a feel for what happened, we had a 62% devaluation and – I’m sorry, 48% devaluation in the bolivar, 32% devaluation in the peso, about 8% in the Brazilian real. And it will threaten net assets, the value of those assets now in dollars given that the change in the currencies gave us the $109 million effect that we talked about.

That is – as Mark said in his comments that’s part of what we expect to see happening next year, currencies continuing to weaken, and then it will be one of the challenges that we face in South America as we – you will have the positive effects you talked about but you will continue to have high inflation, there is no sign that’s going to go away, and you will have these depreciating currencies..

And then, I guess your guidance for South America that you gave at the Analyst Day for next year, that did kind of contemplate like a further, sort of onetime sizeable re-measurement impact for the bolivar, that’s correct, right?.

It reflected – I guess I’d say differently, it didn’t assume some massive deval [ph], and clearly that’s something I think we all have to keep an eye on because with what’s happening to the U.S.

dollar and the impact – I’m sorry, the oil rather, and what that could mean to the Venezuelan economy and their ability to differ what seems inevitable in terms of massive deval, that’s something we have to watch.

We have not assumed that for next year, perhaps we’ve assumed just the continued weakening of currencies but if there were a significant onetime deval by the government that would certainly chang the equation in terms of what the impact would be..

Okay, understood. And then my second question just on Asia, you guys did for one pretty clearly that the cadence in the first half would be lower than the second half, would not be carried forward because lot of those cost items.

As a little bit sort of – those items were larger than I think some of us had modelled and just wanted to better get a sense of what the timeframe was for some of those – you have the launch of Lincoln, you have all these plants that are launching concurrently as you’re adding capacity to end of the year.

How should we think about the timeframe on which that elevated expense plays out?.

I guess a general comment and maybe more specific on the quarter, in general if you go back to Investor Day and I think Dave Shak [ph] had a slide that showed capacity over the next five years and I think we’ve got [Technical Difficulty] and then we show one bar that had greater than 2.7 that was undefined because we – as long as we continue to grow and we expect to do that we’ll have to put in place capacity above in the arm that’s even coming in right now.

So I hope that happens, I hope we have to continue to invest in growth in the business because that would just be good for the business.

What we’ve thought going on the quarter that we’ve got the five facilities that are under construction, I think all of them either have a full complement of the hourly workers for example in place, or at least nearly in the process of being trained.

So we’re carrying that cost, we’ve begun some depreciation and amortization as everything is being capitalized but some of it has the building to have progressed.

And then in addition to those, we’re adding a shift, we just added a shift at our plant in Thailand, there is another shift it’s coming on this month in Chennai [ph], and because our capacity increase that we’re planning at the end of this nine month period, actually one of our engine plants in China, so not all new facilities that certainly continue spending for capacity increases, and that’s a play here as well.

You mentioned Lincoln but that we’ve been incurring those cost now for some quarters and continue to do so this quarter. And to put it on the context, if you take the $173 million that you can see there which almost all of it is structural cost.

So 40% of that relates to what I just described, the Lincoln cost, as well as the cost associated with these plan..

And just to add to put a perspective, the context of growth, we got a few questions on our September sales which were down two-tenths of percentage point in China and we have some questions around that.

Just to put it into perspective, the September sales were – they were strong, they were steady, after a very strong comparison with 2013 and as Bob mentioned earlier, we had a record share in China in the quarter of 4.7%, and year-to-date our sales are up 26% versus an industry that’s up somewhere around 8%.

So as you look at the remainder of this year we expect to be a bit down in the month of October but you will start seeing it grow again. I would think of it as it’s not a pause in our sales growth, it’s more of a pit stop as we position ourselves for growth based on the points that Bob mentioned that are going to be coming online next year..

Okay, understood. I mean it’s a high class problem to have those kinds of growth opportunity.

But I guess it does sound like fixed cost is at least for the balance next year, I mean you guys have given some color already but it sounds like it will continue at this pace of addition, at least for the next five quarters or so?.

Yes, and that’s the only other thing I would add and I’ve said it before, I would expect it to be lumpy, it’s not going to be linear. At some quarter it will have more impact than others..

Okay, great. Thanks a lot for the color guys..

You bet..

Your next question comes from the line of Adam Jonas with Morgan Stanley. Please proceed..

Thanks, everybody, just two questions, first for Bob. Bob, General Motors showed a chart on their Investor Day saying that they are breakeven in the U.S. and a fixed market share was around 10 million or 11 million units.

I’m wondering if you made a similar calculation and whether you kind of confirm a similar order magnitude breakeven SAAR?.

Yes, same order magnitude..

Okay.

Now in that analysis can I ask what you’ve assumed for price down or is that fixed too?.

I don’t understand the question..

Meaning when you won a simulation of going to 11 million U.S.

SAAR, do you keep pricing at today’s levels or do you cross pricing?.

We change a number of factors, the pricing is not one of them..

Okay..

In that case one of the things that was interesting I think when we saw the downturn and 8 or 9 months [ph] we saw the pricing go up..

Right. Okay, Mark, next question for you. If you wanted – and this is a question about competitors product and I’m sure – and we know that you guys have tested and torn apart and I would imagine you guys have all driven the Tesla Model S.

I’m just curious in your opinion, high level, if you wanted to Tesla Model S, in your opinion this Ford Motor Company have the engineering, resources, take and talent, particularly software talent to do that?.

To your question, yes, we have. We have driven the Model S, we have torn it down, we’ve put it back together, we drove it again, we’re very familiar with that product. And I think our product development team is very familiar with the approach they have taken.

When we think about our products going forward, we have obviously a lot of experience as you know from a number of our electrified power trains and electrified vehicles that we have in the marketplace. And the answer is yes, I do believe with talent we have to continue to add and compliment that talent, absolutely.

And part of that is the growth we’re going to see in our Silicon Valley operations which is going to be growing significantly so that we can attract that talent to our company and compliment the already strong talent we have in those areas..

So then just as you are not there, you can’t do it but you – is it intentioned to do something like that or is that just so niche that you want to focus on the more mainstream stuff for now and that kind of go forward strategy?.

I think it’s very consistent with our product strategy, you know one of our fillers in our product strategy is from a technology standard, to have some more technology in our vehicles and you guys have seen them in a lot of the technology we have, we’re going to build on that, we’re going to make sure we have the talent to deliver it..

Definitely, thanks gentlemen..

Thanks, Adam..

And your next question comes from the line of Joseph Spak with RBC Capital Markets. Please proceed..

Thanks for taking my question.

Just a follow up, a little bit on some of – I guess the question in the topic, one that Patrick brought up earlier with Asia Pacific, and then I guess specifically in the fourth quarter when you’re sticking to about 700 for the year, you’ve done about 500 this year, and it sounds like given the commentary you organized some more plans and you would expect there would be some continued headwinds.

So I ask could you just give a little bit of color so what the offset is there that still would show a meaningful year-over-year gain..

Yes, we expect to have payable volume mix in the quarter..

And that’s from new product?.

Actually it’s a new product but it’s also – as we’ve said in the text [ph] that we’re going to earlier, we’re just continue to see strength across the entire line-up. So we expect that to continue in the quarter Joseph..

Okay.

And then, sorry if I have missed this, but the working capital drag in the third quarter was that mostly timing related? Should we expect that to reverse in fourth quarter?.

Yes, we expect to have positive cash flow in the fourth – positive cash flow but positive working capital in the quarter and we do expect this to reverse. This is really the impact of the launch effects as well as the supplier shortage that Mark talked about earlier. So we expect that to reverse out in the first quarter..

Completely or….

Largely..

Largely, okay. Thanks a lot..

Your next question comes from the line of Ryan Brinkman with JPMorgan. Please proceed..

Thanks for taking my question. Maybe one for Neil, I know that you provide some sensitivity in your 10-K impact of discount rates on the funded status of the pension plans on the PBO and the asset side.

I was curious you’ve given the recent decline in rates, whether you’ve made any preliminary estimates of potential impact on yearend status, whether that’s if you could share with us today? And then a related one [ph] maybe for Bob, could you comment on whether changes in interest rates are actuarial assumptions would be material enough to have any impact on your capital allocation strategy which I think calls for cycling pass pension contributions to make more room for return of capital to shareholders?.

Thanks, Ryan. I think from the standpoint of our de-risking strategy, the reduction in rates has been almost completely offset by returns. And so we’re about 1 percentage point change in funding status since our year end position, so that’s about $1 billion worse than we were at the end of 2013..

Yes, the only thing I would add to that Ryan is to me firstly the analysis that you did was actually very good and it was consistent with what we provided and the sensitivity that’s we have seen better performance in terms of assets and so forth, and of course our contributions.

But to me the thing that’s really encouraging about what we’re seeing with the big change of interest rates and particularly given the fact that in Germany where that’s our most underfunded funding plan, we’ve seen an incredibly big change in the discount rates that were still about $1 billion or so [ph] where we were at the end of last year.

It just shows that the strategy is working and I just wonder if we’re getting the full recognition of that from investors because the volatility that we would have had if you go back four five years ago compared to what we are today is much, much improved which was the whole plan of the strategy in the first place..

Great, thanks, very helpful update. And then, just – my last question. I think the 2Q call you’re looking forward to, the EPA release that’s mileage rating for the F-150 potentially within weeks. And would you have expected it by now particularly given that the vehicle will be gone on sale pretty soon.

What might be holding that up? I know you’ve said it will be the most efficient truck but is there anything more you’re able to share with us today about just a magnitude of expected improvement? Thanks..

We expect and we’ve always expected the EPA labels to come probably sometime in the latter half of November. So there is no surprise for us there and we should have that then..

Okay, looking forward to it. Thanks..

Thanks..

Your next question comes from the line of George Galliers with ISI Group. Please proceed..

Good morning, and thank you for taking my questions. I had two questions. Firstly, as you highlighted the next [ph] margin, X warranty was still at a very high level despite the model changeover is going on and other cost running negative $170 million during the quarter.

I was wondering if you could give some guidance on the cost cadence in terms of later stage engineering launch, any associative with the F-150 overcoming quarters, and to what extent you can quantify that? Then also just on China, you said that you expected sales to maybe be flat to down over coming months due to capacity constraints.

At what point based on your planning assumptions for Chinese end market and your gains, do you see yourselves being able to supply to actually match demand or exceed demand in China? Under what point is that prices middle part of next year or is it later than that?.

Okay, why don’t we take that first part of the question – as we mentioned we’ll probably see our sales a bit down in the month of October, I think you will start seeing some small growth in November and I think you will start seeing some decent growth as we introduce [Technical Difficulty] next year.

As we get into the latter half of next year I think we’ll – as we bring on these plants with even more new products you will see an accelerated pace..

Okay.

And then in terms of – George, your question about structural cost, and I think that was on North America, is that correct?.

Yes, exactly..

As the case, it was actually a pretty light quarter for us in terms of structural cost, I would expect it to be much more of a stature in the fourth quarter and that is in parts we know we always have higher structural cost in the fourth quarter and part of that’s related to what happened later in overhead inventory given the fact that we’ve got production – the plant is down at the end of the year, so the cost – right cost come out of the balance sheet go into the income statement, so that would be a factor.

But also we’ve got all the launches ahead of it that we’ve yet to complete. That usually brings with it higher advertising and sales promotion expenses research and market the products, and of course the depreciation and amortization we talked about.

And then the other thing is that we’re continuing to invest in terms of engineering in particular for products yet to come. We talked about all the launches we have next year, so we’ll include that expense as well. So I would expect to see a much larger number on a year-over-year basis in the quarter and an increase quarter-to-quarter..

Great, thank you..

Your next question comes from the line of David Weston [ph] with Morningstar. Please proceed..

Good morning. Two questions, one on South America, one on Russia.

In South America, I guess I’m just a little surprised if we see that the against [ph] Q4 is roughly breakeven to a small loss, are you expecting the market to bottom up there in fourth quarter? Are you cutting cost to get to that number or is it all a pricing inflation tailwind?.

It’s driven by the effect of the new car that we’ve just introduced, really very partially benefited from that in the third quarter but we are approaching full production of both photo and the client door sales, we think that will be the big driver of the results in the quarter..

In addition to also the new X Series we’ve introduced back into the marketplace after a bit of a high AS, that will help us well..

Okay, thank you.

And then in Russia, obviously with a very weak market there, are you seeing lot of your rational pricing from competitors and is the Sollers JV holding the line on pricing are also buying share?.

Overall we’re seeing some very aggressive pricing, particularly from some of our Japanese competitors as they take advantage of their currency – it’s Russia – their competitiveness. So we are seeing – I wouldn’t say we’re seeing hugely irrational but overall with the market being down, it’s getting very competitive..

Okay, thanks for taking my questions..

Thank you..

Your next question comes from the line of Mike Ramsey with The Wall Street Journal. Please proceed..

Good morning. I wanted to ask an overall question that related to how is the auto market doing globally. Mark, I think you mentioned that the worldwide economies are struggling a little bit but can you kind of give me a look at, maybe in the next year a little bit.

Are we in kind of a soft patch globally or do you – and are you forecasting or getting a little more concerned that we might be heading into a more dangerous period or not?.

Well there is a lot of things going in the world but you’re seeing our – in Investor Day, our view of growth over the business plan period and we expect this to be in our – we expect this to be a growth industry and we’re a growth company in that growth industry.

As we look at some of the various markets, you’ve seen our guidance for next year and the industry here in the U.S. which is up from what our expectations are for this year.

In Europe we expect very moderate growth but a little bit of growth there, same thing in China, and of course down in South America, that’s probably the softest patches we see with a lot of the uncertainties that we’ve talked about before.

But overall standing back, putting in context where we are, it’s a growth industry and we’re a growth business within that industry..

Okay, great. Thanks..

Thank you..

(Operator Instructions) And your next question comes from the line of Phil Udau [ph] with DNDC. Please proceed..

Hey, Mark..

Hey Phil, how are you doing?.

Good.

Quick question for you, the pricing strength that you’re noticing with SUVs and with the F Series, you’ve been in this industry a long time, relative to when you’ve seen pricing power like this in the past, how does this stack up right now in terms of what you’re seeing, in terms of the demand that’s out there for SUVs and your ability to drive pricing?.

I think there are a couple of things.

One is, when you look at just a fundamental demand, you look at the age of the park and it’s – what’s the right term, it’s quite mature by our view back in the 2005 timeframe, probably about high 30s, 40% of the products out there, cars, utilities and trucks were ten year’s older, we think that’s more like about 50% now and probably even skewed even higher on pickup trucks.

So from a demand standpoint I think the replacement demand versus periods in the past is quite [Technical Difficulty] marry that against the production capacity that’s out there in the industry.

Many folks including ourselves are running a very high capacities I think, when you look at those two elements I think it bodes well for pricing in those segments that will remain pretty good and then probably the last piece of it is just the new products that are coming into the marketplace, and in particular are new products.

I think we’re heading into a good pricing environment where our new expedition, our new navigator, our new MKC will allow us to take advantage of a very good situation going forward. And that helps putting to context our guidance for next year..

Fantastic, thank you..

Thank you..

Your next question comes from the line of Brad Reynold [ph] with Automotive News. Please proceed..

Hi, my question is just related to the gross automotive cash figure which I have, $22.8 billion in Q3, that’s quite a steep drop from second quarter.

And maybe you gave some of this but what were the components that drove that drop you could clarify again?.

Yes, Brad we’re happy to help you. $1.1 billion of that was the conclusion of our share buyback program that we announced back in May, so that was the largest single piece.

We had $0.5 billion of dividends, $300 million of pension contributions, our debt came down by $300 million and then of course we have the negative operating cash flow that we talked about earlier in the call which was driven largely by the negative change in working capital. So that’s the $3 billion..

Okay, thanks..

And your next question comes from the line of Oliver [ph] with Detroit Free Press. Please proceed..

Hi, good morning gentlemen.

Mark, you have been very personally involved in all of these launches because you have so many, and I’m just wondering the problem with some of the part shortages, could you give us some contacts as to whether that would have happened either way or has your planning, could it have been a lot worse if you hadn’t had all of this extra planning or – give us a sense of how this fits in with your strategy..

Just to clarify, the production or the part shortages that we have experienced actually were on current products, none on our new launches.

So as I said our new launches are going according to plan and with the existing production, that’s been really some of the issues that we’ve had, we’ve been able to resolve those issues, we’ll be able to make some of that production up as we mentioned earlier in the quarter, not all of it but it’s been on existing models, not the new launches..

Okay.

And then so do you feel that the extra planning you’ve done then has avoided this kind of thing happening as you launch?.

Well we’re staying very close with our supplier partners as we launch all these new products, and we’ll continue to do so to make sure that we have successful launches..

Thank you..

Thanks, Elisa [ph]..

At this time ladies and gentlemen I would now like to turn the call back over to Mr. George Sharp for closing remarks..

Thank you, Glenn and thanks everybody out there. That wraps up today’s presentation. We are really glad you were able to join us..

Ladies and gentlemen, that concludes today’s conference. Thank you for your participation. You may now disconnect and have a great day..