Thank you, Carl [Eikoff].

And good morning to all of you.

I wouldn't be here today if the Detroit Lions had made it to the Super Bowl, because my supervisor would expect me to be on my way to the game.

But, as you know, we didn't quite make it this year—so, instead of sending our team, we're sending our money for commercials!

You may have heard that Ford Motor Company ended 2003 with $25.9 billion in cash—not a bad outcome.

We considered bringing it here to see if we could improve our rate of return.

But, after a careful risk assessment, we found that the only winners in Vegas are the casino owners.

And when we look at their real estate here— remember, our losses paid for it!

I see so many segments of our industry represented here today.

I know you'll agree that we're all in this business because we think we are doing important work.

Whether we make the cars, sell the cars, or make it possible for people to buy the cars, together we provide personal mobility.

And we also, I hope, make, sell, and finance vehicles that customers are passionate about owning and driving.

I'll talk more about that later.

The other thing we have in common is that each of us wants to be a winner.

So, first, I'd like to share my thoughts on what it takes to succeed in this industry today.

Some of you may know I had a full career at Ford—and was enjoying a full retirement—before I rejoined the Company in 2002.

I did so at the request of Bill Ford, who was working to get the Company back on track after an unplanned trip to the ditch.

Some days, I wonder if retiring from my retirement was such a smart thing!

On most days, though, I'm glad I returned to Ford during a time that is full of so many challenges and opportunities.

I've been back for about 20 months now, and I've finally found the ideal position in this industry.

It isn't executive (whatever one of those is), or UAW member, or dealer, or financial institution, or whatever.

It is customer.

When have you seen such a variety of products, at prices so low and with quality so good?

If customers want big bruisers...or sexy sports cars...mid-sized sedans...or crossovers...or hybrids...this industry will provide it.

And we're stumbling all over each other to provide it at the best possible price and interest rate.

Ford and Ford Credit are right in there, ready to get our unfair share! And so is every one of you.

In this business climate, there is only one certain route to success, to be a winner.

And it is this: Those who will come out on top are those who take care of the customer.

The customer always comes first.

This may seem like a simple idea, but it's a concept that many of us in this industry have forgotten all too often in the past.

And whenever we've lost our focus on the customer, our businesses have suffered.

Likewise, when we take care of the customer, good business follows.

And, as we all know, the first thing the customer looks for is product.

Cars and trucks are—or should be—exciting to look at, to drive, to purchase, to own.

Our role as automakers is to give our customers the products that meet their emotional and their more rational needs and interests.

At Ford we call it dependable, desirable, affordable, driving enjoyment.

And, of course, we have an acronym for it: D-squared-ADE.

Every element is essential—and we must make sure that each of these elements is present in every one of our products.

To quote Bill Ford from a recent meeting with the investor community: "The best product wins."

And remember that it is the customers who define "best product."

I was both pleased and amused, during the Detroit Auto Show earlier this month, to walk by the Porsche stand and hear the Porsche spokesperson talk about value.

Value from Porsche? Yes—for its customers and how they want to spend their money.

As some of you may know, I have a dealership in Vermont.

I can tell you that our customers want value, and for them it is summarized by price—what they get for their money—and they evaluate and weigh everything from appearance to fuel economy and performance, to interiors, to quality, to ride, to resale value, and many other factors.

And, just as in D-squared-ADE, every piece counts, although each customer weighs the pieces to fit his or her preferences and pocketbook.

We can't forget, though, that service also makes a big difference in how customers view our Company and our products.

Financial services are an important part of the total customer satisfaction picture for the customer, and for us as manufacturers.

If you think about it, the work of most of us at Ford Motor Company and at the other automakers is done as soon as we wholesale our product to the dealer.

After that point, a much smaller percentage of us remains involved with the customer.

These people provide the services that enhance the customers' experiences with our products.

Our dealers, and our colleagues in customer service activities and in financing, have the lion's share of the responsibility to create a continuing connection to our customers.

A connection that we hope will extend beyond the ownership of an individual car or truck.

Bob Rubin, the former U.S. Treasury secretary, a leader of Citigroup, and a Ford director, writes in his new book that one of Citigroup's challenges is to treat the customer as though Citigroup were a small company.

A small company means personal service and attention and care.

Isn't that the perspective each of us should have every time we take an action?

And it's certainly the type of personal touch that our dealers and our finance companies—as our interface with the customer—can and should be providing.

It is what our customers want.

They want good services, with a personal touch.

This, as I said, in addition to great products at a great price.

So as automakers, dealers, and finance companies, we need to achieve all of these things, together, as part of one seamless value chain—to build and maintain the very foundation of our businesses and our industry.

I am reminded of a discussion I had recently with a key financial person in the Warren Buffett organization.

He said, "You must pay the most attention to those who can close your business."

So who has the most control over the automotive business? Is it the regulators, ...Wall Street...the media?

I'd say it's our customers.

Like I mentioned before, it's a simple rule.

Yet it didn't seem so obvious to any of us in the 1990s, when profits and spirits were high throughout our industry—or in other business cycles when we thought diversification would help us grow.

What we should have been doing, all along, was making great products for our customers, and serving them well.

Because in the end, doing what you do best—each and every day—is the only strategy for success.

Legend has it that Alfred Bloomingdale, the great retailer, decided he wanted to try his hand at producing a Broadway play.

One play after another flopped, and finally one of his friends said: "Al, close the play and keep your store open at night."

Bloomingdale's became one of America's best-known stores because its founder stayed with what he did best.

He went back to his core business, with a new and sharper focus.

Two years ago, we took a similar step at Ford when we pledged to get back to the business of building great cars and trucks.

In the process, we have eliminated the enterprises, processes, and products that do not support our core business.

We have cut our costs, we've improved quality and fine-tuned the services we offer.

Now, our total business is much stronger, after two years of solid progress.

Ford Credit has played a big role in this.

For our part as manufacturers, we've filled our product pipeline to the brim.

We have a strong family of global brands that meet a wide range of customer needs—and each of them has contributed to our improvement.

In fact, did you know that Ford has the largest share of the luxury vehicle market in the U.S.?

That's right—Ford Motor Company, with our Premier Automotive Group brands—Jaguar, Aston Martin, Land Rover, and Volvo—and our Lincoln brand, sells more luxury vehicles in the U.S. than any other company.

Within the next five years, we will introduce 35 new products from our Premier Automotive Group alone.

And that's only part of what we have dubbed "the year of the car" at Ford.

We're launching an unprecedented 40 vehicles worldwide this year.

These include the Ford Five Hundred sedan and the crossover Ford Freestyle—and that great Mustang.

The Shelby Cobra Mustang was a big hit at the show, and our new Ford GT has dealers vying for inventory and customers writing and e-mailing to find out more.

So we're focusing on our products and services to maximize our position in a competitive industry.

However, no matter how good our products and services are, they aren't alone sufficient for a winner.

The second ingredient of winning is the right business model—running an effective and efficient business.

We still have to make money.

As I was daydreaming about the business recently on one cold Michigan day, I came upon the first rule of finance, and it applies to automakers and financial services companies, as well as the corner store:

Revenues should be higher than costs.

We've already tried the alternative...and I know we don't want to go back there.

But this is the toughest revenue game I can remember. And the toughest cost game.

Yes, the economy is continuing to show signs of improvement. We are forecasting 17 million in U.S. industry sales this year—up slightly from last year.

The global economy is strengthening, and I do believe that we are in a recovery that is gathering steam, with overall economic growth accelerating to 4% this year.

But the past few years have been very hard, and this continues to be a difficult business environment, especially in the manufacturing sector.

So many of the old rules of our business have changed.

Mass production used to mean, implicitly, high-volume sales.

But the customers have decided that they want products that are specialized or tailored to their own specific needs—not the mass needs.

This is why architecture, commonality, reusability, and flexible manufacturing are so important.

Add to this the challenges of doing business in a tough global market, with intense competition and industry-wide overcapacity.

These challenges have had a trickle-down impact that has affected everyone in this business—dealers, suppliers, and, of course, financial services.

One of the major cost issues, of course, is health care.

Health care affects every company, not just automakers.

It affects every one in this room—as business people, as taxpayers, as individuals.

Health care costs for U.S. businesses—large and small—are rising at a rate of more than 10% per year.

This is of particular concern to domestic auto companies, because Japanese and European competitors with plants in this country aren't saddled with these same costs.

That's because, on average, their employees are younger—and they have far fewer retirees.

Because of these high and rising costs, Ford spends more each year on health care for employees and retirees than we spend on steel!

Health care adds more than $700 to the cost of each Ford car or truck sold in the U.S.

In 2003, our total U.S. health care bill was $3.2 billion for all of our employees, retirees, and their dependents.

I know that the other domestics have a similar story to tell.

This is one of the top societal issues of the decade.

It has created a competitive gap that is driving investment decisions away from the U.S.

If we cannot get our arms around this issue as a nation, our manufacturing base and many of our other businesses are in danger.

We're looking for answers out into the future—many years out—not just a quick fix in the present.

I do know that significant reform is necessary.

We have our own tasks to control costs. But, right now, the country is on an unsustainable track, and it won't get better unless we begin—business, labor, and government in partnership, together—to make a pact for reform.

Another major issue we all face is corporate governance.

In the last 10 or 12 years, I've been on the board of seven public companies.

And we have all seen a much higher level of interest and scrutiny in corporate governance, particularly since the Enron debacle of a couple of years ago.

And we're well aware of the Sarbanes-Oxley Act and all the new rules and regulations we must follow.

There are undoubtedly aspects of these rules and regulations that go too far, or aren't practical, or aren't clear, or whatever—but we in this industry, or in any industry, are not responsible for setting the rules and regulations; we're responsible for meeting them.

Additionally, many of the rules that pertain to internal controls will improve our internal-control systems, our management-information systems, and our decision-making.

They are valuable tools for any well-run company. And meeting them is imperative for any company's public reputation.

So we have all sorts of challenges.

It's a tough business environment.

You know what makes it even tougher?

The fact that our customers don't give a hoot about our problems.

They don't want to listen to our laments.

They just want cars and trucks with the features, options, service, and financing that meet their interests and expectations.

That's our mission in 2004, and beyond.

For automakers like Ford, this is where our captive finance companies are especially critical.

As I have discussed, automakers need every competitive advantage in this economy.

A strong captive financing organization provides that advantage.

They help us sell cars and trucks, and they make a buck while doing so.

Captives serve a role in the marketplace that makes them somewhat different from banks and independent finance companies.

Much of it can be summarized in one word: consistency:

• A consistent presence in the marketplace—over decades.

• Consistent nationwide coverage.

• A consistent purchase policy, which reaches out to lower-credit-quality customers than banks generally purchase.

The captives also are specialists:

• Auto finance is their focus.

  They offer a complete set of finance and insurance products, in addition to traditional retail financing.

  Leasing is another product that generates high loyalty to the automaker.

• Because they are specialists, they often become advisors to dealers on how to improve their businesses.

They also are able to be more flexible in working with dealers, on matters such as wholesale line limits or acquisition credit-lines, because they do understand the business.

This builds strong, long-term relationships.

• Also, a captive's connection to its parent makes possible a seamless coordination of vehicle marketing programs, such as low-rate financing.

Years ago, I predicted that indirect financing would lose ground to the banks and credit unions.

They had lower rates, for one thing.

And they still do.

But my prediction was wrong—because a vast majority of the auto financing still happens at the dealership, rather than at the bank or credit union.

Even when special incentive rates are not involved, consumers continue to choose the dealership—for the convenience and immediacy, if nothing else.

Getting back to one of my original points, car and truck purchases are often about passion and emotion—the customer has to have the vehicle, as soon as possible.

Financing with the dealer can be more expensive, but it is the simpler and more convenient way to go.

For all these reasons, captives are a natural feature of the automotive marketplace, and are destined, I believe, to remain so.

And as I said before, doing what you do best—and doing it well—is necessary for long-term success in any business.

All that is to say that companies can only prosper, or even survive, by continually innovating and evolving.

And one of the things that helps us all remain competitive is working on an industry-wide basis with organizations like AFSA.

Captives are as important to AFSA as they are to their parent companies.

We are large, we provide a lot of support, and we have common interests.

And we can help AFSA improve the marketplace, as well as improve service to our customers.

Most recently, the continuing efforts of AFSA to address the fair lending issues we have all seen raised in the press (and lawsuits) concerning dealer markup are clearly important to everyone—our customers and our dealers.

One example of this was the cooperative effort among AFSA members, led by the captives, to develop the brochure "Understanding Vehicle Financing", in cooperation with NADA.

Because of this industry-wide effort, we were able to get FTC approval of that brochure.

Another type of evolution we have seen in our industry is the movement from debt-funded balance sheets to securitization.

As was discussed yesterday, some of you have used securitization for nearly your entire balance sheets, and all of us have securitized more and more in recent times.

Lately, we've seen more aggressive movement into asset sales.

So AFSA is working with the investment banking community and rating agencies to develop standards for these sales, standards for electronic contracting, and standards for further evolution into a more liquid capital market—moving toward what we see in the mortgage business today.

Another example of an industry-wide initiative by AFSA is the successful revision to the Fair Credit Reporting Act last year, making permanent the provisions related to consumer credit that were about to expire.

This assures continued availability of consumer credit and the ability to evaluate credit on an equitable basis for all our customers.

We all know the world does not owe anybody a successful future.

We each have to earn our way.

I've tossed out a number of ideas this morning—the importance of good products and services, of controlling costs, of corporate governance, and of strong finance company partners. And the importance of groups like AFSA to our industry.

These aren't disconnected thoughts, because each of them is essential to the strength of a well-run automotive company—as well as a successful auto finance company.

That is because, either directly or indirectly, each benefits the customer that we all serve.

Our businesses are intertwined. As I said, we make the cars—and you make it possible for people to buy them. One of us cannot exist without the other.

We're in this together. And our mutual success depends upon our ability to treat the customer as king or queen.

Thank you. I'll be happy to take your questions.