FORD MOTOR COMPANY - Annual report

FORD MOTOR COMPANY

2016 ANNUAL REPORT

As Ford Motor Company continues to expand from an auto company to an auto and a mobility company, the company remains focused on building on its global leadership in trucks, vans, commercial vehicles and performance vehicles, while growing its global strength in utility vehicles.

At the same time, Ford is transforming underperforming parts of its business, including luxury, small vehicles and emerging markets.

In addition, Ford is driving for leadership in three emerging opportunity areas ? electrification, autonomy and mobility.

On the Cover

Pictured on the front cover, clockwise from top left: Ford Super Duty, Chariot (a crowd-sourced ride-sharing service), Ford GT supercar, Ford Fusion Energi plug-in hybrid, Ford Explorer, Lincoln interior, next-generation Ford Fusion Hybrid autonomous development vehicle, Ford Ka+ and Ford Mustang.

Pictured on back cover: A selection of Ford's milestones and exciting announcements from 2016. The back cover features a selection of those announcements that correspond to an image on the front cover.

Visit our Annual Report online for detailed company information and visual content: annualreport.

FINANCIAL HIGHLIGHTS

(in billions, except for percentages)

Automotive Segment Revenue Operating margin Operating cash flow

Ford Credit Pre-tax profit

Total Company Net income attributable to Ford Motor Company Adjusted pre-tax profit (a)

2015

2016

$ 140.6 6.8%

$ 7.3

$ 141.5 6.7%

$ 6.4

$ 2.1

$ 1.9

$ 7.4 $ 10.8

$ 4.6 $ 10.4

(a) See pages 25 and 82 of Ford's 2016 Form 10-K for definition and reconciliation to GAAP.

CREATING VALUE

GROWTH

Revenue growth that drives profit growth

RISK

Optimized risk profile

RETURNS

ROIC > Cost of Capital and Margins 8%+ Core, 20% New

REWARDS

Top quartile shareholder returns

Our financial objectives are focused on the drivers of value

LETTER FROM OUR EXECUTIVE CHAIRMAN

William Clay Ford, Jr.

While our industry is changing faster than it has in the last 100 years, we know that our fundamental mission of making people's lives better remains the same. For us, that means continuing to make great cars, SUVs and trucks, but also embracing emerging opportunities to move people in new ways. In 2016, we made significant progress toward that goal. We delivered a substantial profit and achieved our seventh consecutive year of solid earnings and positive operating-related cash flow. In our core automotive business, we maintained our strong momentum by launching 11 new vehicles in 2016. We also announced that we will be adding 13 new electrified vehicle nameplates globally to our product portfolio in the next five years. As the auto industry enters a new era of connectivity and smart mobility, we also are developing new ways to move people and things. That's because mobility can impact every facet of our lives. For many of us, traffic jams are an inconvenience, but the lack of mobility has a much more profound impact on the most vulnerable members of our society. Take, for instance, the ability to get to work. Not having reliable transportation is what makes a person leave a good job or limits their job search because they cannot get to certain locations. Just imagine the possibilities if we can provide new mobility solutions that could help people get to better jobs and, by extension, create economic opportunity. When you start to lose the ability to move around quickly, easily and safely, it can become a human rights issue. Mobility is as essential to our well-being as is access to things like health care, clean drinking water and food, or a safe place to live.

Mobility solutions include Chariot shuttle service and Ford GoBike

To address this and other challenges, we launched Ford Smart Mobility LLC, a new subsidiary formed to design, build, grow and invest in emerging mobility services. Our crowd-sourced shuttle service, Chariot, also is providing new transportation options in select U.S. cities and will continue to expand.

We also strengthened our leadership in bringing self-driving vehicles to market by announcing our next-generation Fusion Hybrid autonomous development vehicle and expanding our autonomous vehicle test fleet. This year we plan to further expand the fleet and begin testing in Europe.

"As the auto industry enters a new era of connectivity and smart mobility we also are developing new ways to move people and things. That's because mobility can impact every facet of our lives."

We know, however, that meeting these challenges takes more than just launching new products. That is why we established our City Solutions team, the only one of its kind in the auto industry, to work with municipalities to propose, pilot and develop mobility solutions tailored to individual communities.

These, and all our other smart mobility efforts, will help us preserve and promote mobility by solving transportation challenges worldwide for future generations. We view it as both an exciting opportunity and a big responsibility.

Our Board of Directors and entire leadership team continue to focus on delivering business results in the present, while creating value and opportunity for the future. Through our products and services, investments and philanthropy, and the contributions of our employees, we are strengthening communities and improving people's lives around the world.

Thank you for your continued support of our efforts.

William Clay Ford, Jr. Executive Chairman

2018 Ford EcoSport

2017 Ford C-MAX Energi plug-in hybrid

Ford ExxonMobil's Speedpass+

LETTER FROM OUR PRESIDENT AND CEO

Mark Fields

It is a very exciting and transformational time for everyone associated with the Ford Motor Company.

We are continuing to deliver consistently strong results in our core automotive business, and, at the same time, rapidly developing and investing in new mobility platforms that will help make people's lives better while growing our business profitability.

Our plan for creating value going forward is simple and straightforward: continue our expansion from an auto company to an auto and a mobility company.

To do this, we are making choices on where to play, where not to play and how to win, focusing on three sets of strategic priorities, which include:

? Fortifying the strengths in our core business;

? Transforming the traditionally underperforming parts of our core business; and

? Growing in emerging opportunities, including leading in electrification, autonomy and mobility.

Our core business is a strength we are building on, including growing our global leadership in trucks, vans, commercial and performance vehicles, while establishing an even stronger position in SUVs.

"Our plan for creating value going forward is simple and straightforward: continue our expansion from an auto company to an auto and a mobility company."

Globally, we launched 11 new vehicles in 2016 ? like the all-new Super Duty and the new Escape. Our plan is to launch 11 more in 2017 ? including a new F-150, EcoSport, Focus Electric, all-new Fiesta and Expedition, as well as an all-new Lincoln Navigator.

Our vehicle leadership comes because we know our customers and what they want.

At the same time, we understand priorities are changing. The world is moving from just owning vehicles to owning and accessing shared vehicles. This is causing us to think very differently. It's not just about selling vehicles but also providing transportation services at the same time. As we move forward in our business expansion, we are working to use that understanding as we pursue emerging opportunities. In electrification, we are focusing on our strengths ? trucks, commercial vehicles, utilities and performance vehicles ? to give our customers more of what they love about our products today, like greater capability, more productivity and better fuel economy. In the next five years, we will launch 13 new electrified vehicles, including hybrid versions of the F-150 and Mustang, and an all-new fully electric SUV that will deliver an estimated range of at least 300 miles. Plus, we are testing wireless charging technology that charges a car simply by parking over a charging pad. In autonomy, our intent is to have an SAE level 4 fully autonomous vehicle ? with no steering wheel, brake or gas pedal ? in commercial operation in 2021. On the way to achieving that milestone, we recently introduced our next-generation Fusion Hybrid autonomous development vehicle and expanded our autonomous test fleet.

2017 Ford F-Series Super Duty

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