Ford Credit Managed Leverage (Most Comparable GAAP Measure: Financial Statement Leverage) – Ford Credit’s debt-to-equity ratio adjusted (i) to exclude cash, cash equivalents, and marketable securities (other than amounts related to insurance activities), and (ii) for derivative accounting. The measure is useful to investors because it reflects the way Ford Credit manages its business. Cash, cash equivalents, and marketable securities are deducted because they generally correspond to excess debt beyond the amount required to support operations and on-balance sheet securitization transactions. Derivative accounting adjustments are made to asset, debt, and equity positions to reflect the impact of ~~restructuring on deferred tax balances.~~

~~The following table details our earnings per share on a diluted basis:~~

First Quarter 2016 Memo: Full Year 2015
Net Income Attributable to Ford After-Tax Operating Results Excluding Special Items Net Income Attributable to Ford After-Tax Operating Results Excluding Special Items

After-Tax Results (Mils.)
Diluted after-tax results $ 2,452
$ 2,704
$ 7,373
$ 7,716
Basic and Diluted Shares (Mils.)
Basic shares (averages shares outstanding) 3,970
3,970
3,969
3,969
Net dilutive options and contingently issuable shares 26
26
33
33
Diluted shares 3,996
3,996
4,002
4,002

Diluted Earnings Per Share $ 0.61
$ 0.68
$ 1.84
$ 1.93

~~References to Automotive records for operating-related cash flow, operating margin,~~interest rate instruments used with Ford Credit’s term-debt issuances and ~~business units~~securitization transactions. Ford Credit generally repays its debt obligations as they mature, so the interim effects of changes in market interest rates are ~~since at least 2000.~~

~~Item 2. Management’s Discussion and Analysis~~excluded in the calculation of ~~Financial Condition and Results of Operations (Continued)~~managed leverage.

~~Results by Segment.~~ ~~The chart below shows our first quarter 2016 Company pre-tax results by Automotive business unit, along with Other Automotive which is mainly net interest expense, and our~~See “GAAP Reconciliations to Non-GAAP Financial ~~Services sector.~~

~~Automotive results were driven by North America’s quarterly record of $3.1 billion~~Measures” section in pre-tax profit, as well as Europe’s best quarterly profit since 2008, and continued strong performance in Asia Pacific. In total, our automotive operations outside of North America delivered a profit of almost $400 million, which was more than $400 million higher than a year ago.

~~Financial Services pre-tax profit of $499 million reflects continued strong performance at Ford Credit.~~

~~Compared with the first quarter of 2015, the Company’s pre-tax profit in the first quarter of 2016 improved by 116%, driven by sharply higher automotive results.~~this Item 2.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

RESULTS OF OPERATIONS

Total Company

Net income attributable to Ford. The chart below shows our third quarter 2016 net income attributable to Ford.

Net income attributable to Ford in the third quarter of 2016 was $957 million or $0.24 earnings per share of Common and Class B Stock, a decrease of $1.2 billion or $0.31 per share from the third quarter of 2015. Third quarter 2016 pre-tax results of our Automotive segment, Financial Services segment, All Other, Special Items, and Taxes are discussed in the following sections in “Results of Operations.”

Revenue. Company revenue in the third quarter of 2016 was $35.9 billion, $2.2 billion lower than a year ago.

Equity. At September 30, 2016, total equity attributable to Ford was $31.5 billion, an increase of $2.9 billion compared with December 31, 2015. The detail for this change is shown below (in billions):



	Higher/(Lower)
Net income	$	5.4
Dividends	(2.8		)
Other comprehensive income	0.2
Compensation-related equity issuances	0.2
Treasury stock share repurchases	(0.1		)
Total	$	2.9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

The chart below shows our third quarter 2016 total Company adjusted pre-tax results and pre-tax results of our Automotive segment by regional business unit, our Financial Services segment, and All Other, which is mainly net interest expense.

Our total Company adjusted pre-tax profit was $1.4 billion in the third quarter of 2016, higher than our guidance of about $1 billion. This reflects favorable calendarization of marketing accruals in the United States and cost performance, all of which will be offset in the fourth quarter of 2016. Automotive results were driven by North America, Europe, and a record third quarter pre-tax profit in Asia Pacific.

Financial Services pre-tax profit of $552 million included strong performance at Ford Credit, which earned a pre-tax profit of $567 million.

As shown below the chart, our Automotive segment results were $1.7 billion lower than a year ago while our Financial Services segment improved slightly compared to 2015.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

AUTOMOTIVE ~~SECTOR~~

~~Definitions and calculations used in this report include:~~

~~Wholesales and Revenue~~ – wholesale unit volumes include all Ford and Lincoln badged units (whether produced by Ford or by an unconsolidated affiliate) that are sold to dealerships, units manufactured by Ford that are sold to other manufacturers, units distributed by Ford for other manufacturers, and local brand units produced by our China joint venture, Jiangling Motors Corporation, Ltd. (“JMC”), that are sold to dealerships. Vehicles sold to daily rental car companies that are subject to a guaranteed repurchase option (i.e., rental repurchase), as well as other sales of finished vehicles for which the recognition of revenue is deferred (e.g., consignments), also are included in wholesale unit volumes. Revenue from certain vehicles in wholesale unit volumes (specifically, Ford badged vehicles produced and distributed by our unconsolidated affiliates, as well as JMC brand vehicles) are not included in our revenue

~~Automotive Operating Margin~~ ~~– defined as Automotive pre-tax results, excluding special items and Other Automotive, divided by Automotive revenue~~

~~Industry Volume and Market Share~~ ~~– based, in part, on estimated vehicle registrations; includes medium and heavy duty trucks~~

~~SAAR~~ ~~– seasonally adjusted annual rate~~

A~~utomotive Cash~~ ~~– includes cash, cash equivalents, and marketable securities~~

SEGMENT

In general, we measure year-over-year change in Automotive segment pre-tax ~~operating profit for our total Automotive sector and reportable segments~~results using the causal factors listed below, with net pricing and cost variances calculated at present-year volume and mix and exchange:

Market Factors:


◦	Volume and Mix – primarily measures profit variance from changes in wholesale volumes (at prior-year average contribution margin per unit) driven by changes in industry volume, market share, and dealer stocks, as well as the profit variance resulting from changes in product mix, including mix among vehicle lines and mix of trim levels and options within a vehicle line


◦	Net Pricing -– primarily measures profit variance driven by changes in wholesale prices to dealers and marketing incentive programs such as rebate programs, low-rate financing offers, ~~and~~ special lease offers, and stock adjustments on dealer inventory

Contribution Costs – primarily measures profit variance driven by per-unit changes in cost categories that typically vary with volume, such as material costs (including commodity and component costs), warranty expense, and freight and duty costs

Structural Costs – primarily measures profit variance driven by absolute change in cost categories that typically do not have a directly proportionate relationship to production volume. Structural costs include the following cost categories:


◦	Manufacturing, Including Volume Related – consists primarily of costs for hourly and salaried manufacturing personnel, plant overhead (such as utilities and taxes), and new product launch expense. These costs could be affected by volume for operating pattern actions such as overtime, line-speed, and shift schedules


◦	Engineering – consists primarily of costs for engineering personnel, prototype materials, testing, and outside engineering services


◦	Spending-Related – consists primarily of depreciation and amortization of our manufacturing and engineering assets, but also includes asset retirements and operating leases


◦	Advertising and Sales Promotions – includes costs for advertising, marketing programs, brand promotions, customer mailings and promotional events, and auto shows


◦	Administrative and Selling – includes primarily costs for salaried personnel and purchased services related to our staff activities and selling functions, as well as associated information technology costs


◦	Pension and OPEB – consists primarily of past service pension costs and other postretirement employee benefit costs

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

Exchange – primarily measures profit variance driven by one or more of the following: (i) transactions denominated in currencies other than the functional currencies of the relevant entities, (ii) effects of converting functional currency income to U.S. dollars, (iii) effects of remeasuring monetary assets and liabilities of the relevant entities in currencies other than their functional currency, or (iv) results of our foreign currency hedging

~~Net Interest~~

Other –includes a variety of items, such as parts and ~~Other~~services profits, royalties, government incentives and compensation-related changes

◦

In addition, definitions and calculations used in this report include:

Wholesales and Revenue – wholesale unit volumes include all Ford and Lincoln badged units (whether produced by Ford or by an unconsolidated affiliate) that are sold to dealerships, units manufactured by Ford that are sold to other manufacturers, units distributed by Ford for other manufacturers, and local brand units produced by our China joint venture, Jiangling Motors Corporation, Ltd. (“JMC”), that are sold to dealerships. Vehicles sold to daily rental car companies that are subject to a guaranteed repurchase option (i.e., rental repurchase), as well as other sales of finished vehicles for which the recognition of revenue is deferred (e.g., consignments), also are included in wholesale unit volumes. Revenue from certain vehicles in wholesale unit volumes (specifically, Ford badged vehicles produced and distributed by our unconsolidated affiliates, as well as JMC brand vehicles) are not included in our revenue

Automotive Segment Operating Margin – defined as Automotive segment pre-tax profit divided by Automotive segment revenue

Industry Volume and Market Share – based, in part, on estimated vehicle registrations; includes medium and heavy duty trucks

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

SAAR – seasonally adjusted annual rate

Automotive Cash – includes cash, cash equivalents, and marketable securities

~~Net Interest~~ – primarily measures profit variance driven by changes in our Automotive sector’s centrally-managed net interest, which consists of interest expense, interest income, fair market value adjustments on our cash equivalents and marketable securities portfolio (excluding strategic equity investments held in marketable securities), and other adjustments


◦	~~Other~~ ~~– items not included in the causal factors defined above~~

The charts on the following pages detail ~~first~~third quarter 2016 key metrics and the change in ~~first~~third quarter 2016 pre-tax results compared with the ~~first~~third quarter of 2015 by causal factor for our Automotive ~~sector and its segments.~~segment by business unit.

References to Automotive segment and business unit records are since at least 2000.

~~The~~

Shown above are the key market factors and financial metrics for our Automotive ~~business~~segment in the ~~first~~third quarter of 2016, ~~are shown above. All metrics~~which all declined from a year ago, consistent with expectations. The changes were ~~strong~~driven by North America. Wholesale volumes were down 4%, more than explained by reductions in dealer stocks this year in North America and ~~improved compared with~~Europe versus increases a year ago. Automotive revenue was down 7% due to the ~~first quarter of 2015. We grew the top line, with wholesale volumes up 10% and automotive revenue up 11%, or 15% at constant exchange.~~lower volume.

Our global market share, at ~~7.1% improved two-tenths~~7.5%, was down one-tenth of a percentage point compared to a year ago driven by ~~gains~~lower market shares in North America, South America, and Middle East & Africa. Market share was flat in Europe and higher in Asia Pacific.

Global industry SAAR in the quarter was estimated atto be 90.1 million units, ~~was up 2.6~~an increase of 2.9 million units or 3% compared with a year ago; the ~~first quarter of 2015.~~increase was driven by Asia Pacific and Europe.

~~Our~~ Automotive operating margin and pre-tax profit, at ~~9.8%~~3.3% and ~~$3.3~~$1.1 billion, respectively, were both ~~records~~significantly lower than a year ago.

As shown below the chart, the Automotive key metrics in the first nine months of 2016 were strong, about the same as last year.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Shown above are the factors that contributed to the $1.7 billion decline in third quarter Automotive segment pre-tax profit. The lower profit is explained by lower volume, mainly the unfavorable changes in dealer stocks in North America and Europe, as well as higher warranty costs related to a recall. Net pricing was favorable, mainly in North America.

Cost of sales and Selling, administrative, and other expenses for the third quarter of 2016 and 2015 was $33 billion and $33.6 billion, respectively, a decrease of $600 million. Cost of sales and Selling, administrative, and other expenses for the first nine months of 2016 and 2015 was $100.8 billion and $97.4 billion, respectively, an increase of $3.4 billion. The detail for the third quarter and first nine months of 2016 change is shown below (in billions):



	2016 Lower/(Higher) 2015
	Third Quarter			First Nine Months
Volume and mix, exchange, and other	$	1.8		$	(2.5	)
Contribution costs
Material excluding commodities	(0.3		)	0.2
Commodities	0.1			1.0
Warranty	(0.6		)	(0.8		)
Other	0.1			0.3
Structural costs	(0.5		)	(1.3		)
Special items	—			(0.3		)
Total	$	0.6		$	(3.4	)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Shown above are the third quarter 2016 key metrics for the North America business unit, which were lower in the quarter compared to a year ago.

The top line declined with wholesale volume down 11% and revenue down 8% from a year ago. Lower wholesales were driven by dealer stock reductions this year compared to an increase last year for F-150 following the Kansas City Assembly Plant launch, the launch effect of the all-new Super Duty, and aligning car production with demand.

Our North America market share was down five-tenths of a percentage point, with our U.S. share down by seven-tenths of a percentage point to 14%. The decrease was driven by lower retail sales of cars and utilities, as well as lower fleet sales, mainly rental. F-Series retail share was flat from a year ago. North America SAAR, at 21.8 million units, was down 200,000 units; U.S. SAAR, at 17.8 million units, was down 500,000 units.

Operating margin was 5.8%, down sharply from last year, and pre-tax profit was $1.3 billion, down $1.6 billion.

As shown below the chart, North America’s key metrics in the first nine months of 2016 were strong, though mixed from a year ago.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

As shown above, our third quarter 2016 pre-tax profit was $1.6 billion lower than a year ago, driven by the launch impact of our all-new Super Duty, the dealer stock reduction of F-150 versus the increase a year ago and normalization of series mix for F-150, and the previously announced door latch recall.

Net pricing was favorable for the first time in 2016. Average U.S. retail transaction prices were $1,300 per vehicle higher compared to a year ago, almost double the industry average increase.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

In South America, our results were negatively impacted by the difficult external conditions, including high inflation and unfavorable exchange in Argentina, and lower industry volume in Brazil.

The top line was lower with wholesales down 13% and revenue down 15%, reflecting lower industry and market share, and weaker local currencies.

Our market share for the region, at 9.4%, was down eight-tenths of a percentage point due to Fiesta in Brazil. Industry SAAR for the region, at 3.6 million units, was 400,000 units lower than a year ago, due to Brazil.

Operating margin and pre-tax results for the region were both lower than a year ago.

As shown below the chart, each of South America’s key metrics in the first nine months of 2016 was lower than a year ago.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

As shown above, the higher loss in South America in the third quarter of 2016 was more than ~~double~~explained by the unfavorable effects of high local inflation and weaker local currencies exceeding higher net pricing. This was offset partially by continued progress in reducing costs, including further workforce reductions as we optimized our manufacturing plant operating patterns.

Our team is continuing its work to further improve the cost structure of the business and identify revenue opportunities. Importantly, we are now seeing some key economic indicators beginning to improve, although still in negative territory, suggesting we may have passed the trough of the current economic cycle.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Shown above are the third quarter 2016 key metrics for Europe, where we delivered our best third quarter pre-tax profit since 2007, with pre-tax profit and operating margin up sharply from a year ago. The top-line declined from a year ago with wholesale volume down 15% and revenue down 10%, driven by lower volume.

Our market share, at 7.9%, was flat from a year ago. Ford remained Europe’s best selling commercial vehicle brand in the third quarter of 2016 with improved share from a year ago. Europe SAAR, at 20.1 million units, was 4% higher than in the third quarter of 2015.

Our operating margin, at 2.2%, was up 2.1 percentage points from a year ago, and pre-tax profit was $138 million, up $129 million.

As shown below the chart, each of Europe’s key metrics in the first nine months of 2016 improved except market share which was flat, with pre-tax profit exceeding $1 billion and operating margin at 4.9%.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

As shown above, we delivered our sixth consecutive profitable quarter, with pre-tax profit $129 million higher in the third quarter of 2016 compared to a year ago, driven by improved cost performance, strong mix, and favorable balance sheet exchange.

We delivered our fourth consecutive quarter of year-over-year cost performance improvement, reflecting our continued focus on material cost reductions. Mix remains strong, driven by the strength of our products, including Ranger, Mustang, and Kuga, and increasing demand for our higher trim series across all major vehicle lines. Lower volume was a partial offset, reflecting a reduction in dealer stocks compared to an increase a year ago as we took actions to align production to expected demand following Brexit.

Although not shown above, our operations in Russia contributed meaningfully to Europe’s improved results in the third quarter of 2016.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Shown above are key metrics for the Middle East & Africa region for the third quarter of 2016, where our key metrics were down compared to a year ago, reflecting lower industry and market performance in the Middle East.

The top line in the third quarter of 2016 was down 14% from a year ago, driven primarily by lower wholesale volume. The decline in volume largely reflects stock adjustments in Saudi Arabia for lower industry and market performance. We are working with our distributor to improve our performance.

SAAR for the region, at 3.7 million units, was down 500,000 units from the third quarter of 2015. Within this, the markets where we participate declined 500,000 units. The markets where we do not participate, with Iran being the largest, were about the same as a year ago. Our market share for the region was 4.1%, down three-tenths of a percentage point due to unfavorable market mix. In markets where we participate, our market share was flat.

Middle East & Africa operating margin was negative 19%, down sharply from a year ago, reflecting lower volume and unfavorable exchange, primarily the South African rand.

As shown below the chart, each of the key metrics in the first nine months of 2016 was lower compared with a year ago, reflecting the impact of adverse external conditions.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

In Asia Pacific, we delivered a record third quarter pre-tax profit with all key metrics improved compared to a year ago. Wholesale volume increased 30% and revenue from consolidated operations improved 16%, reflecting higher industry volume and strong performance from new products.

Asia Pacific SAAR was 40.9 million units, up 3.2 million units from the third quarter of 2015, ~~levels.~~mostly explained by a 2.8 million unit increase in China SAAR, estimated at 24.9 million units. This was driven by the government purchase tax incentive for vehicles with engine displacements of 1.6 liters or smaller. Asia Pacific market share was 4.0%, up five-tenths of a percentage point, with China share increasing five-tenths of a percentage point to 5.1%. The improvement in share was driven by strong C-car sales and new product introductions, including Taurus, the locally built Edge, Lincoln MKX, and Lincoln MKZ.

Asia Pacific operating margin was 4.3%, up 3.5 percentage points from a year ago, and pre-tax profit was $131 million, up $109 million. Our China joint ventures contributed $320 million to pre-tax profit, reflecting our equity share of the joint ventures’ after-tax earnings; this was $67 million higher than a year ago. The joint ventures’ net income margin was 13.4%, up seven-tenths of a percentage point.

As shown below the chart, all of our key metrics in the first nine months of 2016 improved compared with a year ago, except for operating margin.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

As shown above, our third quarter record profit in Asia Pacific was up sharply compared with 2015. Volume and mix was up reflecting higher market share, favorable industry and the non-repeat of dealer stock reductions in China a year ago.

Lower net pricing compared to a year ago reflects continued negative pricing trends in China. In the quarter, the rate of negative pricing in China continued to slow since the fourth quarter of 2015. We continue to expect full year negative pricing for the industry.

Unfavorable cost performance was driven by cost increases to support higher volumes and continued investment for future product and regulatory actions; it includes the impact of plant launches during the second half of 2015. The investments in structural cost were offset partially by our continued focus on material cost efficiencies.

Unfavorable exchange reflects mainly the impact of the weaker Chinese yuan; the Company has a substantial net revenue exposure to this currency.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

As shown above, the $2 billion improvement in Automotive pre-tax profit in the first quarter of 2016 was driven by higher volume, favorable mix, and lower costs. Volume and mix was favorable in all regions, except South America, reflecting the strength of our portfolio and the success of new product introductions. Stock changes are more than explained by North America, primarily reflecting the non-repeat of our F-150 launch in Kansas City in first quarter of 2015. Lower net pricing was a partial offset. This mainly reflected a one-time stock accrual effect in North America.

~~Total costs and expenses.~~ In the first quarter of 2016 and 2015, total costs and expenses, including special items, for our Automotive sector were $32.8 billion and $30.9 billion, respectively, a difference of $1.9 billion. The detail for the change is shown below (in billions):

First Quarter
Explanation of change:
2016
Lower/(Higher)
2015
Volume and mix, exchange, and other $ (2.3 )
Contribution costs
Material excluding commodities 0.4
Commodities 0.5
Warranty, freight, and other 0.1
Structural costs (0.4 )
Special items (0.2 )
Total $ (1.9 )

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

Shown above are the first quarter 2016 key metrics for the North America region, where we expect to have another outstanding year. A major factor in the quarter was the full deployment of our F-150 strategy, which is delivering great results for our business. In the first quarter of 2016, wholesale volume and revenue both increased sharply.

Our North America market share improved, with U.S. share increasing by eight-tenths of a percentage point to 15.5%. The improvement was driven by strong fleet performance, mainly SUVs, Transit, which now has a leadership position in the commercial van segment, and F-Series.

North America’s SAAR, at 21.3 million units, was up 700,000 units compared with the first quarter of 2015. U.S. SAAR, at 17.5 million units, was up 400,000 units compared with the first quarter of 2015.

~~Our operating margin at 12.9% and pre-tax profits of $3.1 billion were both records.~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

The $1.5 billion improvement in North America’s first quarter 2016 pre-tax profit was driven by favorable volume and mix and lower contribution costs. Lower net pricing and structural cost increases, to support a continued strong product line-up and future growth, were partial offsets.

~~The favorable change in stocks and about 40% of the increase in incentives was caused by normalization of the volume of F-150, which was being launched in Kansas City a year ago.~~

~~Although net pricing was lower in the first quarter of 2016, average U.S. retail transaction prices increased compared to year-ago levels, reflecting improved mix.~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

In South America, results were impacted negatively by the very difficult external conditions, particularly in Brazil where the economy continues to contract and industry volumes in the first quarter of 2016 declined by more than a quarter compared to prior year. In Argentina, our business was negatively impacted by the devaluation of the Peso, however, we are encouraged by actions taken by the new government which have the potential to improve future market conditions.

~~All of our key metrics deteriorated in the first quarter of 2016 compared with the first quarter of 2015. The top line was down sharply with wholesales lower by 38% and revenue lower by 44%.~~

~~Our market share for the region, at 8.4%, was down by 1.2 percentage points, as we focused on profitable share amid high industry discounting.~~

~~Industry SAAR for the region, at 3.7 million units, was 900,000 units lower than in the first quarter of 2015.~~

~~In the first quarter of 2016, operating margin and pre-tax results for the region were both lower than prior year.~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

As shown above, the higher loss in South America in the first quarter of 2016 was more than explained by lower industry volumes – primarily the result of the 29% reduction in Brazil. This was offset partially by our continued drive to reduce costs as we realized the benefits of actions taken in 2015, including a 10% reduction in our salaried personnel and overhead and a 20% reduction in labor costs. We also eliminated the third crew at our Camacari plant in the first quarter of 2016.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

Shown above are the key metrics for Europe, where our Transformation Strategy is building momentum. All metrics improved in the first quarter of 2016. We grew the top line with wholesale volume and revenue at constant exchange, both growing by 6%.

Our market share in Europe improved three-tenths of a percentage point to 8.0%, reflecting the strong performance of commercial and SUV vehicles, including Ranger, Transit, Kuga, and EcoSport. Ford remained Europe’s best-selling commercial vehicle brand in the first quarter of 2016.

~~Europe SAAR, at 20.1 million units, was 5% higher in the first quarter of 2016 compared with the first quarter of 2015.~~

~~Our operating margin at 6.3% and pre-tax profit of $434 million both improved significantly from last year’s loss.~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

As shown above, every aspect of the business contributed to the nearly half-billion dollar improvement in Europe’s pre-tax results in the first quarter of 2016. Favorable market factors were driven by improved product and series mix with strong consumer acceptance of our new products and increasing demand for higher series vehicles. Higher industry volumes also contributed. Contribution and structural costs were both lower in the first quarter of 2016 compared with the first quarter of 2015.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

Shown above are key metrics for the Middle East & Africa region, where the business was adversely impacted by weak local currencies, low oil prices, and political strife. Wholesale volume and revenue both declined in the first quarter of 2016.

~~Our market share for the region was unchanged at 4.3%. SAAR for the region, at 4.0 million units, was down 300,000 units compared with the first quarter of 2015.~~

~~Our financial results, which deteriorated to a loss of $14 million in the first quarter of 2016, reflect exchange impacts, primarily the South African Rand, and higher cost.~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

In Asia Pacific region, we had another strong quarter, driven by our great new products. All key metrics improved in the first quarter of 2016. Wholesale volumes increased by 9% and revenue from consolidated operations improved by 18%, or 25% at constant exchange.

Asia Pacific’s market share was 3.6% in the first quarter of 2016, up three-tenths of a percentage point and a record for the first quarter. China’s market share was 4.5%, up two-tenths of a percentage point compared with the first quarter of 2015 driven by SUVs. Sales in the region and China were a record for the first quarter.

Asia Pacific’s first quarter 2016 SAAR was 40.9 million units, up 2 million units from the first quarter of 2015, more than explained by a 2.4 million unit increase in China industry SAAR which is estimated at 26.2 million units for the first quarter.

Asia Pacific’s operating margin was 8.2%, up 3.6 percentage points from 2015, and pre-tax results of $220 million more than doubled compared with the first quarter of 2015. Our China joint ventures contributed $443 million to pre-tax profit in the first quarter of 2016, reflecting our equity share of their after-tax earnings which was $83 million higher compared with the first quarter of 2015. The net income margin at our China joint ventures was 16.4%.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

Shown above are the factors driving our higher first quarter 2016 pre-tax results in Asia Pacific. Favorable volume was driven by a strong industry in China, where we continue to leverage the government incentive program with our strong line-up of vehicles with 1.6L or smaller engines. Higher market share and favorable mix reflect the strength of our new products, including the Edge, Ranger, and Lincoln.

Higher structural costs to support future growth and lower net pricing in China were partial offsets. In the first quarter of 2016, the rate of decline in pricing in China slowed compared with the fourth quarter of 2015. We continue to expect full-year negative pricing in China in the 5-6 percent range.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

FINANCIAL SERVICES ~~SECTOR~~SEGMENT

~~Ford Credit has two operations, North America and International.~~ In general, we measure year-over-year changes in Ford Credit’s pre-tax results using the causal factors listed below:


◦	~~Volume and Mix:~~

Volume and Mix:

◦

Volume primarily measures changes in net financing margin driven by changes in average ~~finance~~managed receivables ~~and net investment in operating leases~~ at prior period financing margin yield (defined below in financing margin) at prior period exchange rates. Volume changes are primarily driven by the volume of new and used vehicle sales and leases, the extent to which Ford Credit purchases retail installment sale and lease contracts, the extent to which Ford Credit provides wholesale financing, the sales price of the vehicles financed, the level of dealer inventories, Ford-sponsored special financing programs available exclusively through Ford Credit, and the availability of cost-effective funding for the purchase of retail installment sale and lease contracts and to provide wholesale financing


◦	Mix primarily measures changes in net financing margin driven by period over period changes in the composition of Ford Credit’s average managed receivables by product and by country or region

◦•Financing Margin:

◦

Financing margin variance is the period-to-period change in financing margin yield multiplied by the present period average managed receivables at prior period exchange rates. This calculation is performed at the product and country level and then aggregated. Financing margin yield equals revenue, less interest expense and scheduled depreciation for the period, divided by average managed receivables for the same period


◦	Financing margin changes are driven by changes in revenue and interest expense. Changes in revenue are primarily driven by the level of market interest rates, cost assumptions in pricing, mix of business, and competitive environment. Changes in interest expense are primarily driven by the level of market interest rates, borrowing spreads, and asset-liability management

Credit Loss:


◦	Credit loss is the change in the provision for credit losses at prior period exchange rates. For analysis purposes, management splits the provision for credit losses ~~primarily~~ into net charge-offs and the change in the allowance for credit losses

◦

Net charge-off changes are primarily driven by the number of repossessions, severity per repossession, and recoveries. Changes in the allowance for credit losses are primarily driven by changes in historical trends in credit losses and recoveries, changes in the composition and size of Ford Credit’s present portfolio, changes in trends in historical used vehicle values, and changes in economic conditions. For additional information on the allowance for credit losses, refer to the “Critical Accounting Estimates - Allowance for Credit Losses” section of Item 7 of Part II of our 2015 Form 10-K Report

Lease Residual:


◦	Lease residual measures changes to residual performance at prior period exchange rates. For analysis purposes, management splits residual performance primarily into residual gains and losses, and the change in accumulated supplemental depreciation

◦

Residual gain and loss changes are primarily driven by the number of vehicles returned to Ford Credit and sold, and the difference between the auction value and the depreciated value (which includes both base and accumulated supplemental depreciation) of the vehicles sold. Changes in accumulated supplemental depreciation are primarily driven by changes in Ford Credit’s estimate of the expected auction value at the end of the lease term, and changes in the estimate of the number of vehicles that will be returned to it and ~~sold, and changes in the estimate of the expected auction value at the end of the lease term.~~sold. For additional information on accumulated supplemental depreciation, refer to the “Critical Accounting Estimates - Accumulated Depreciation on Vehicles Subject to Operating Leases” section of Item 7 of Part II of our 2015 Form 10-K Report

Exchange:


◦	Reflects changes in pre-tax results driven by the effects of converting functional currency income to U.S. dollars

Other:


◦	Primarily includes operating expenses, other revenue, and insurance expenses at prior period exchange rates


◦	Changes in operating expenses are primarily driven by salaried personnel costs, facilities costs, and costs associated with the origination and servicing of customer contracts


◦	In general, other revenue changes are primarily driven by changes in earnings related to market valuation adjustments to derivatives (primarily related to movements in interest rates), and other miscellaneous items

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Ford Credit. The chart below details the key metrics for Ford Credit for ~~first~~third quarter of 2016.

In the ~~first~~third quarter of 2016, Ford ~~Credit continued to grow, while remaining strongly profitable. Contract volumes were largely unchanged with lower volume in~~Credit’s pre-tax profit was strong – the ~~United States~~best quarterly profit since 2011 – and ~~growth in all other markets.~~

~~Managed~~ receivables were ~~$132 billion at March 31, 2016, up 17% from the first quarter of 2015, as the portfolio continues to grow~~higher than a year ago, in line with Ford’s growth. Managed receivables equal net finance receivables of $100.3 billion and $86.5 billion and net investment in operating leases of $25.9 billion and $22.0 billion reported on Ford Credit’s balance sheet at March 31, 2016 and March 31, 2015, respectively, excluding unearned interest supplements and residual support of $4.6 billion and $3.8 billion, allowance for credit losses of $500 million and $400 million, and other (primarily accumulated supplemental depreciation) of $500 million and $200 million at March 31, 2016 and March 31, 2015, respectively.

expectations. Portfolio performance ~~remains~~remained robust. FICO scores remained consistent. The over-60-day delinquency ratio ~~at 14~~of 16 basis points in the ~~first~~third quarter of 2016 ~~remains~~continued at the low end of Ford Credit’s historical experience. The loss-to-receivables ratio ~~in the first quarter~~ of ~~2016 was 44~~45 basis points was up 11 basis points, also below, but approaching, Ford Credit’s historical experience. Originations, servicing, and collections practices remained disciplined and consistent.

As shown below the chart, Ford Credit’s year-to-date key metrics were unfavorable compared with the first quarter of 2015. U.S. retail and lease credit losses have been better than Ford Credit’s expectations for an extended time period. Credit losses have been trending higher for the last few quarters, as they continue to normalize toward Ford Credit’s expectations.a year ago.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

~~The~~As shown above, Ford Credit's profit improvement of ~~$31~~$26 million in ~~pre-tax profit in~~ the ~~first~~third quarter of 2016 ~~compared with the first quarter of 2015~~ is ~~more than~~ explained primarily by favorable volume, mix, and market valuation adjustments to derivatives. Partial offsets include unfavorable lease residual performance and higher credit losses. The favorable volume and mix was driven by ~~increases~~growth in ~~consumer and non-consumer finance receivables globally, as well as an increase in operating leases in North America.~~all products globally.

~~Credit losses were $65 million~~Lease residual performance reflects higher ~~as Ford Credit increased the reserve and had higher charge-offs~~depreciation in North America ~~primarily reflecting higher severity.~~

~~Unfavorable lease residual performance of $61 million in the first quarter of 2016 primarily reflects higher depreciation on Ford Credit’s North America lease portfolio, as Ford Credit expects~~related to expected lower auction values in the ~~future.~~lease portfolio.

Credit loss performance primarily reflects higher charge-offs as a result of higher defaults and severities in North America. Credit losses have been at historically low levels for quite some time, and we continued to see credit losses increase toward more normal levels.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

~~Industry leasing continues to grow. Ford’s~~Leasing is a great trade cycle management product, but lease share ~~of retail sales was 26% in the first quarter of 2016 but remains below the industry. Ford Credit and Ford work together under a One Ford Lease Strategy that~~must be managed carefully to protect residuals. Our leasing strategy considers many factors including share, term, model mix, and geography to optimize sales, share, profits, and ~~other factors. Full year~~residuals.

Over the last several years, we have seen industry lease share grow with rising industry volumes. As a result, the supply of off-lease vehicles is ~~expected~~higher and will continue to begrow for the next several years. The increased supply of used vehicles, along with higher new vehicle incentives, is resulting in lower ~~than~~auction values, particularly in smaller, more fuel efficient vehicles given low fuel prices. We expect this trend to continue, and we are planning for lower auction values going forward.

Given significant industry growth in leasing and higher new vehicle incentives, we lowered our projection on residual values which makes the ~~first~~relative cost of leasing higher. As a result, Ford Credit’s lease share and lease placement volume in the third quarter of 2016 ~~reflecting the parameters of our strategy.~~were lower compared to a year ago.

Ford Credit’s ~~used~~off-lease vehicle auction ~~prices~~values in the ~~first~~third quarter of 2016 were lower than a year ago ~~but up from~~and slightly lower than the ~~fourth~~prior quarter, ~~of 2015, although not as high as expected.~~with 36-month off-lease auction values about $600 lower year-over-year. Ford Credit’s auction performance has been consistent with the industry when comparing similar vehicle age and segment.

On longer-term financing, Ford Credit’s average retail term ~~has remained~~remains largely ~~consistent~~unchanged from last year, and ~~lower than the industry. Retail~~retail contracts of 73 months and longer ~~remain~~continued to be a relatively small part of Ford Credit’s business.

~~The~~Finally, the average placement FICO score ~~in the first quarter of 2016 reflected the mix of customers attracted by Ford’s marketing programs. These levels are~~remained consistent with the second quarter and the same period last year, reflecting Ford ~~Credit’s experience over the last five years and reflect normal quarterly variances. Ford Credit uses proprietary credit scoring models, and its~~Credit's consistent underwriting practices have been consistent for years. Ford Credit’s higher risk business, as classified at contract inception, consistently represents 5%-6% of its portfolio and has been stable for over 10 years.practices.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

ALLOTHER

All Other is a combination of operating segments that did not meet the quantitative thresholds in this reporting period to qualify as reportable segments. All Other consists of our Central Treasury Operations (formerly Other Automotive) and Ford Smart Mobility LLC.

The Central Treasury Operations segment is primarily engaged in decision making for investments, risk management activities, and providing financing for the Automotive segment. Interest income (excluding interest earned on our extended service contract portfolio that is included in our Automotive segment), interest expense, gains and losses on cash equivalents and marketable securities, and foreign exchange derivatives associated with intercompany lending are included in the results of Central Treasury Operations. The underlying assets and liabilities, primarily cash and cash equivalents, marketable securities, debt, and derivatives, remain with the Automotive segment.

Ford Smart Mobility LLC is a new subsidiary formed to design, build, grow, and invest in emerging mobility services. Designed to compete like a start-up company, Ford Smart Mobility LLC will design and build mobility services on its own, and collaborate with start-ups and tech companies.

Our third quarter 2016 All Other pre-tax results were a loss of $223 million, a $60 million greater loss compared with a year ago. This increase is more than explained by higher net interest expense and net losses on cash equivalents and marketable securities.

SPECIAL ITEMS

As detailed in Note 3 of the Notes to the Financial Statements, special items are reflected as a separate reconciling item, as opposed to allocating them among the Automotive segment, Financial Services segment, and All Other. This reflects the fact that management excludes these items from its review of operating segment results for purposes of measuring segment profitability and allocating resources.

Our pre-tax and tax special items were as follows:

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

TAXES

Our tax provision in the third quarter and first nine months of 2016 was $426 million and $2.5 billion, respectively, resulting in an effective tax rate of 30.7% and 31.9%, respectively.

Our third quarter and first nine months 2016 adjusted effective tax rate, which excludes special items, was 25.9% and 29.1%, respectively, 7.4 and 5 percentage points lower than a year ago. The lower adjusted effective tax rates through the first nine months of 2016 reflect tax benefits from legislation enacted December 18, 2015 making permanent the U.S. research and development tax credit.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

LIQUIDITY AND CAPITAL RESOURCES

~~Automotive Sector~~

~~Our~~ Automotive ~~liquidity strategy includes ensuring~~Segment

Liquidity. One of our key priorities is to finance our plan and maintain a strong balance sheet, while at the same time having resources available to grow our core business and invest in emerging opportunities. Based on our planning assumptions, we believe that we have sufficient liquidity and capital resources to continue to invest in new products and services that customers want and value, transform and grow our business, pay our debts and obligations as and when they come due, pay a sustainable dividend, and provide protection within an uncertain global economic environment.

Our key balance sheet metrics include cash, cash equivalents, and marketable securities (collectively, “Automotive cash”), Automotive liquidity, which includes Automotive cash and total available ~~with a high degree~~committed credit lines, and cash net of ~~certainty throughout~~debt.

At September 30, 2016, we had $24.3 billion of Automotive cash, of which 85% was held by consolidated entities domiciled in the ~~business cycle by generating cash from operations and maintaining access to other sources of funding.~~United States. We target to have an average ongoing Automotive cash balance of about $20 billion. We expect to have periods when we will be above or below this amount due to (i) future cash flow expectations, such as for pension contributions, debt maturities, capital investments, or restructuring requirements, (ii) short-term timing differences, and (iii) changes in the global economic environment. In addition, we also target to maintain a revolving credit facility for our Automotive business of about $10 billion to protect against exogenous shocks. Our revolving credit facility is discussed below.

We assess the appropriate long-term target for total Automotive liquidity, comprised of Automotive cash and the revolving credit facility, to be about $30 billion, which is an amount we believe is sufficient to support our business priorities and to protect our business. Our Automotive cash and Automotive liquidity targets could be reduced over time based on improved operating performance and changes in our risk profile.

For a discussion of risks to our liquidity, see “Item 1A. Risk Factors,” in our 2015 Form 10-K Report, as well as Note 16 of the Notes to the Financial Statements, regarding commitments and contingencies that could impact our liquidity.

Our ~~key liquidity metrics are~~ Automotive cash ~~Automotive liquidity, and operating-related cash flow (which best represents the ability of our Automotive operations to generate cash).~~

~~Automotive cash is detailed below as of the dates shown (in billions):~~

March 31,
2016
December 31,
2015

March 31,
2015
Cash and cash equivalents $ 5.6
$ 5.4
$ 5.1
Marketable securities 18.7
18.2
14.4
Automotive cash $ 24.3
$ 23.6
$ 19.5

~~Our cash, cash equivalents, and marketable securities are held primarily in highly liquid~~ investments ~~which provide for anticipated and unanticipated cash needs. Our cash, cash equivalents, and marketable securities~~ primarily include U.S. Department of Treasury obligations, federal agency securities, bank time deposits with investment-grade institutions, corporate investment-grade securities, commercial paper rated A-1/P-1 or higher, and debt obligations of a select group of non-U.S. governments, non-U.S. governmental agencies, and supranational institutions. The average maturity of these investments ranges from about 90 days to up to about one year, and is adjusted based on market conditions and liquidity needs. We monitor our Automotive cash levels and average maturity on a daily basis. ~~At March 31, 2016, consolidated entities domiciled in the United States held 85% of our total Automotive cash.~~

~~Automotive cash and liquidity as of the dates shown were as follows (in billions):~~

March 31,
2016
December 31,
2015

March 31,
2015
Automotive cash $ 24.3
$ 23.6
$ 19.5
Available credit lines

Revolving credit facility, unutilized portion 10.3
10.3
10.1
Local lines available to foreign affiliates, unutilized portion 0.6
0.6
0.6
Automotive liquidity $ 35.2
$ 34.5
$ 30.2

In managing our business, we classify changes in Automotive cash into operating-related and other items (which includes the impact of certain special items, contributions to funded pension plans, certain tax-related transactions, acquisitions and divestitures, capital transactions with the Financial Services sector, dividends paid to shareholders, and other—primarily financing-related).

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

In addition to our target Automotive cash balance, we also target to maintain a corporate credit facility for our Automotive business of about $10 billion to protect against exogenous shocks. Our corporate credit facility is discussed below. We ~~believe~~assess the appropriate long-term target for total Automotive liquidity, comprised of Automotive cash ~~flow analysis reflected in~~and the ~~table below is useful to investors because it includes in operating-related cash flow elements that we consider~~corporate credit facility, to be ~~related~~about $30 billion, which is an amount we believe is sufficient to support our business priorities and to protect our business. At September 30, 2016, we had $35.2 billion of Automotive liquidity. Our Automotive cash and Automotive liquidity targets could be reduced over time based on improved operating ~~activities (e.g., capital spending)~~performance and ~~excludes cash flow elements that we do not consider to be related to the ability of~~changes in our ~~operations to generate cash. This differs from a cash flow statement prepared~~risk profile.

Changes in ~~accordance with GAAP and differs from~~ Automotive Cash.~~Netcash provided by/(used in) operating activities, the most directly comparable GAAP financial measure.~~

Changes in Automotive cash are summarized below (in billions):

In managing our Automotive business, we classify changes in Automotive cash into operating, and other items. Operating items include: Automotive segment pre-tax profits, capital spending, which we report as an operating cash flow as it is a key contributor to our Automotive segment financial results, depreciation and tooling amortization, changes in working capital, and All Other and timing differences. Other items include: separation payments, transactions with other segments, acquisitions and divestitures, changes in Automotive debt, contributions to funded pension plans, and dividends paid to shareholders.

Third quarter 2016 Automotive operating cash flow was $2 billion negative, primarily reflecting the impact of lower production and dealer stocks on working capital and timing differences. First nine months 2016 Automotive operating cash flow was a strong $4.9 billion positive, more than explained by Automotive segment pre-tax profit.

Third quarter 2016 capital spending was $1.7 billion, and first nine months 2016 capital spending was $4.9 billion. Full year 2016 capital spending is expected to be about $7 billion. Based on expected cash flows and the identification of additional opportunities for profitable growth, the ongoing amount of capital spending to support product development, growth, restructuring, and infrastructure is expected to increase to about $9 billion annually by 2020.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

First Quarter
2016 2015
Automotive cash at end of period $ 24.3
$ 19.5
Automotive cash at beginning of period 23.6
21.7
Change in Automotive cash $ 0.7
$ (2.2 )

Automotive pre-tax profits (excluding special items) $ 3.3
$ 0.9
Capital spending (1.5 ) (1.8 )
Depreciation and tooling amortization 1.1
1.1
Changes in working capital (a) —
0.8
Other/Timing differences (b) (0.2 ) (0.5 )
Automotive operating-related cash flows 2.7
0.5

Separation payments —
(0.4 )
Net receipts from Financial Services sector (c) —
—
Other 0.2
(0.3 )
Cash flow before other actions 2.9
(0.2 )

Changes in debt (0.1 ) (0.6 )
Funded pension contributions (0.4 ) (0.8 )
Dividends/Other items (1.7 ) (0.6 )
Change in Automotive cash $ 0.7
$ (2.2 )

~~_________~~


~~(a)~~	~~Working capital is comprised of changes in receivables, inventory, and trade payables.~~


~~(b)~~	Primarily expense and payment timing differences for items such as pension and OPEB, compensation, marketing, warranty, and timing differences between unconsolidated affiliate profits and dividends received. Also includes other factors, such as the impact of tax payments and vehicle financing activities between Automotive and Financial Services sectors.


~~(c)~~	~~Primarily distributions from Ford Holdings (Ford Credit’s parent) and tax payments received from Ford Credit.~~

With respect to “Changes in working capital,” in general we carry relatively low Automotive ~~sector~~segment trade receivables compared with our trade payables because the majority of our Automotive wholesales are financed (primarily by Ford Credit) immediately upon sale of vehicles to dealers, which generally occurs at the time the vehicles are gate-released shortly after being produced. In addition, our inventories are lean because we build to order, not for inventory. In contrast, our Automotive trade payables are based primarily on industry-standard production supplier payment terms generally ranging between 30 days to 45 days. As a result, our cash flow tends to improve as wholesale volumes increase, but can deteriorate significantly when wholesale volumes drop sharply. These working capital balances generally are subject to seasonal changes that can impact cash flow. For example, we typically experience cash flow timing differences associated with inventories and payables due to our annual summer and December shutdown periods, when production, and therefore inventories and wholesale volumes, are usually at their lowest levels, while payables continue to come due and be paid. The net impact of this typically results in cash outflows from changes in our working capital balances during these shutdown periods.

~~Item 2. Management’s Discussion~~Available Credit Lines. Total committed Automotive credit lines at September 30, 2016 were $11.9 billion, consisting of $10.4 billion of our corporate credit facility and ~~Analysis~~$1.5 billion of ~~Financial Condition and Results~~local credit facilities available to non-U.S. Automotive affiliates. At September 30, 2016, the utilized portion of ~~Operations (Continued)~~

the corporate credit facility was about $40 million, representing amounts utilized for letters of credit. At September 30, 2016, the utilized portion of local credit facilities was about $1 billion.

~~Shown below is a reconciliation between financial statement~~ ~~Net cash provided by/(used in) operating activities~~ ~~and operating-related cash flows (calculated as shown in the table above), as of the dates shown (in billions):~~

Memo:
Full Year
2015
First Quarter
2016 2015
Net cash provided by/(used in) operating activities $ 3.6
$ 1.0
$ 12.3
Items included in operating-related cash flows

Capital spending (1.5 ) (1.8 ) (7.1 )
Proceeds from the exercise of stock options —
0.1
0.2
Net cash flows from non-designated derivatives 0.1
0.1
(0.1 )
Items not included in operating-related cash flows

Separation payments —
0.4
0.6
Funded pension contributions 0.4
0.8
1.1
Tax refunds, tax payments, and tax receipts from affiliates —
—
—
Other 0.1
(0.1 ) 0.3
Operating-related cash flows $ 2.7
$ 0.5
$ 7.3

~~Credit Agreement~~. Lenders under our ~~Third Amended and Restated Credit Agreement dated as of April 30, 2015 and as further amended (the “revolving~~corporate credit ~~facility”)~~facility have commitments to us totaling $13.4 billion, with 75% of the commitments maturing on April 30, ~~2020~~2021 and 25% of the commitments maturing on April 30, ~~2018.~~2019. We have ~~allocated$3~~allocated $3 billion of commitments to Ford Credit on an irrevocable and exclusive basis to support its growth and liquidity. Any borrowings by Ford Credit under the ~~revolving~~corporate credit facility would be guaranteed by us.

The ~~revolving~~corporate credit facility is unsecured and free of material adverse change conditions to borrowing, restrictive financial covenants (for example, interest or fixed charge coverage ratio, debt-to-equity ratio, and minimum net worth requirements), and credit rating triggers that could limit our ability to obtain funding. The ~~revolving~~corporate credit facility contains a liquidity covenant that requires us to maintain a minimum of $4 billion in aggregate of domestic cash, cash equivalents, and loaned and marketable securities and/or availability under the ~~revolving credit~~ facility. If our senior, unsecured, long-term debt does not maintain at least two investment grade ratings from Fitch, Moody’s, and S&P (each as defined under ~~“Total Company”~~“Credit Ratings” below), the guarantees of certain subsidiaries will be required.

~~At March 31, 2016, the utilized portion of the revolving credit facility was $45 million, representing amounts utilized for letters of credit.~~

Although not yet complete, we are in the process of amending our revolving credit facility. When complete, we expect to maintain total commitments of $13.4 billion, extend the respective maturity dates by one year, and maintain the $3 billion allocation to Ford Credit. The closing will occur during the second quarter of 2016.

~~Other Automotive Credit Facilities.~~Debt. ~~At March 31, 2016, we had about $1.4 billion of local credit facilities available to non-U.S. Automotive affiliates, of which $807 million had been utilized.~~

~~Net Cash.~~ ~~Our Automotive sector net cash calculation as of the dates shown was as follows (in billions):~~

March 31,
2016
December 31, 2015
Automotive cash $ 24.3
$ 23.6
Less:

Long-term debt 11.1
11.0
Debt payable within one year 1.9
1.8
Total debt 13.0
12.8
Net cash $ 11.3
$ 10.8

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

Total Automotive debt at ~~March 31,~~September 30, 2016 was $13.1 billion, which is about ~~$200~~$300 million higher than it was at December 31, 2015. The increase primarily reflects local funding in international markets and foreign currency exchange, offset partially by debt repayments.

Leverage. We manage Automotive debt levels with a leverage framework to maintain strong, investment grade credit ratings through a normal business cycle. The leverage framework includes a ratio of Automotive debt, underfunded pension liabilities, operating leases, and other adjustments, divided by Automotive income before income tax, adjusted for depreciation, amortization, interest expense on Automotive ~~interest,~~debt, and other adjustments. Ford Credit’s leverage is calculated as a separate business as described in the Liquidity - Financial Services section of Item 2. Ford Credit is self-funding and its debt, which is used to fund its operations, is separate from our Automotive debt.

~~Liquidity Sufficiency~~. One of our key priorities is to finance our plan and maintain a strong balance sheet, while at the same time having resources available to grow our business. Based on our planning assumptions, we believe that we have sufficient liquidity and capital resources to continue to invest in new products and services that customers want and value, transform and grow our business, pay our debts and obligations as and when they come due, pay a sustainable dividend, and provide protection within an uncertain global economic environment.

Based on expected cash flows and the identification of additional opportunities for profitable growth, the ongoing amount of capital spending to support product development, growth, restructuring, and infrastructure is expected to increase to about $9 billion annually by 2020. Our capital spending was $7.1 billion and $7.4 billion in 2015 and 2014, respectively, and is expected to be about $7.7 billion in 2016.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Financial Services ~~Sector~~Segment

Ford Credit

Funding Overview. Ford Credit’s primary funding and liquidity objective is to maintain a strong investment grade balance sheet with ample liquidity to support its financing activities and growth under a variety of market conditions, including short-term and long-term market disruptions. Ford Credit’s funding strategy remains focused on diversification, and it plans to continue accessing a variety of markets, channels, and investors.

Ford Credit’s liquidity profile continues to be diverse, robust, and focused on maintaining liquidity levels that meet its business and funding requirements. Ford Credit regularly stress tests its balance sheet and liquidity to ensure that it continues to meet its financial obligations through economic cycles.

The following chart ~~below~~ shows the trends in funding for Ford Credit’s managed receivables:

Ford Credit’s ~~higher cash balance~~managed receivables of $134 billion at the end of the ~~first~~third quarter of 2016 ~~reflects pre-funding of near-term~~were funded primarily with term debt ~~maturities.~~

~~Ford Credit projects year-end 2016 managed receivables to be in the range of $134 billion to $139 billion~~ and ~~securitized~~term asset-backed securities. Securitized funding as a percent of managed receivables ~~to be between 36% and 39%~~was 33%.

Ford Credit expects the ~~percentage~~mix of ~~securitization~~securitized funding to trend lower over time. The calendarization of the funding plan may result in quarterly fluctuations of the ~~securitization~~securitized funding percentage. Ford Credit expects this mix to be higher in the fourth quarter.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Public Term Funding Plan. The following ~~table~~chart shows Ford Credit’s issuances for full-year 2014 and 2015, planned issuances for full-year 2016, and its global public term funding issuances through ~~April 27,~~October 26, 2016, ~~full-year 2015, and full-year 2014 (in billions),~~ excluding short-term funding programs:

Public Term Funding Plan
2016

Full-Year
Forecast

Through
April 27

Full-Year
2015

Full-Year
2014
Unsecured $ 14-19 $ 7
$ 17
$ 13
Securitizations (a) 12-15 7
13
15
Total $ 26-34 $ 14
$ 30
$ 28

~~__________~~


~~(a)~~	~~Includes Rule 144A offerings.~~

For 2016, Ford Credit now projects full-year public term funding in the range of $26 billion to ~~$34~~$29 billion. ~~Both the amount and composition of their full-year funding plan are consistent with their issuance in 2015.~~ Through ~~April 27,~~October 26, 2016, Ford Credit has completed ~~$14~~$26 billion of public term ~~issuance, representing about half~~issuance.

Item 2. Management’s Discussion and Analysis of ~~their full-year public term funding plan.~~Financial Condition and Results of Operations (Continued)

Liquidity. The following chart shows Ford Credit’s liquidity sources and utilization:

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

Ford Credit’s liquidity available for use will fluctuate quarterly based on factors including near-term debt maturities, receivable growth, and timing of funding transactions. Ford Credit ~~targets liquidity~~has a target of at least $25 billion. As of ~~March 31,~~September 30, 2016, Ford Credit’s liquidity available for use was up ~~$11.6~~$9.8 billion from year-end 2015 ~~reflecting new committed ABS facilities~~ and ~~higher cash balances to meet their near-term maturities.~~down $500 million from second quarter 2016.

As of ~~March 31,~~September 30, 2016, Ford Credit’s liquidity remained strong at ~~$35.1~~$33.3 billion. Its sources of liquidity include cash, committed asset-backed facilities, unsecured credit facilities, and the corporate ~~revolver~~credit facility allocation. As of ~~March 31,~~September 30, 2016, Ford Credit’s liquidity sources including cash totaled ~~$56.8~~$50.2 billion, up ~~$7.1 billion~~$500 million from year-end.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Leverage. Ford Credit uses leverage, or the debt-to-equity ratio, to make various business decisions, including evaluating and establishing pricing for finance receivable and operating lease financing, and assessing its capital structure.

The following chart shows the calculation of Ford Credit’s financial statement leverage and managed leverage (in billions, except for ratios):

Ford Credit plans its managed leverage by considering prevailing market conditions and the risk characteristics of its business. ~~Ford Credit targets~~At September 30, 2016, financial statement leverage was 9.7:1, and managed leverage inwas 9.2:1. Managed leverage is above the targeted range of 8:1 to 9:~~1. Managed leverage~~1, but continues to trend toward the target range.

Total Company

Pension Plans - Underfunded Balances. As of September 30, 2016, our total Company pension underfunded status reported on our balance sheet was $7 billion and reflects the net underfunded status at ~~March~~December 31, ~~2016 was above the targeted range, reflecting growth in managed receivables~~2015 updated for service and interest cost, expected return on assets, separation expense, actual benefit payments, and cash contributions. The discount rate and rate of expected return assumptions are unchanged from year-end 2015, and the reported number does not reflect the impact from the decline in interest rates throughout 2016.

As a result of our pension de-risking strategy, the sensitivity of our funded status to changes in interest rates has been significantly reduced, especially in the United States. In Europe, however, where our de-risking is less advanced, lower Eurozone and U.K. bond yields will negatively impact our funded status. Based on our planning assumptions for asset returns, discount rates, and contributions, we expect a ~~strong U.S. dollar.~~modest deterioration in our funded status at year-end 2016 compared to year-end 2015.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Supplemental Financial Information

The tables below provide supplemental consolidating financial information. The data is presented by our reportable segments, Automotive and Financial Services. All Other and Adjustments include our operating segments that did not meet the quantitative threshold to qualify as a reportable segment, eliminations of intersegment transactions, deferred tax netting, and special items (if applicable). See Note 3 of the Notes to the Financial Statements for information regarding our segments.

Selected Balance Sheet Information. The following tables provide supplemental balance sheet information, by segment, at September 30, 2016 (in millions):



Assets	Automotive		Financial Services		All Other and Adjustments			Consolidated
Cash and cash equivalents	$	7,655	$	5,675	$	10		$	13,340
Marketable securities	16,645		4,180		—			20,825
Financial Services finance receivables, net	—		45,550		—			45,550
Trade and other receivables, less allowances	4,481		5,548		—			10,029
Inventories	10,219		—		—			10,219
Other assets	2,372		1,180		—			3,552
Receivable from other segments	4		589		(593		)	—
Total current assets	41,376		62,722		(583		)	103,515

Financial Services finance receivables, net	—		49,614		—			49,614
Net investment in operating leases	2,235		26,961		—			29,196
Net property	32,106		151		—			32,257
Equity in net assets of affiliated companies	3,633		151		11			3,795
Deferred income taxes	13,125		141		(3,791		)	9,475
Other assets	4,794		2,271		46			7,111
Receivable from other segments	—		968		(968		)	—
Total assets	$	97,269	$	142,979	$	(5,285	)	$	234,963



Liabilities	Automotive		Financial Services		All Other and Adjustments			Consolidated
Payables	$	21,184	$	1,200	$	—		$	22,384
Other liabilities and deferred revenue	18,550		974		7			19,531
Automotive debt payable within one year	2,472		—		—			2,472
Financial Services debt payable within one year	—		44,801		—			44,801
Payable to other segments	589		—		(589		)	—
Total current liabilities	42,795		46,975		(582		)	89,188

Other liabilities and deferred revenue	22,913		739		—			23,652
Automotive long-term debt	10,675		—		—			10,675
Financial Services long-term debt	—		79,276		—			79,276
Deferred income taxes	239		4,129		(3,791		)	577
Payable to other segments	968		—		(968		)	—
Total liabilities	$	77,590	$	131,119	$	(5,341	)	$	203,368

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Selected Cash Flow Information. The following tables provide supplemental cash flow information, by segment, for the nine months ended September 30, 2016 (in millions):



Cash flows from operating activities	Automotive			Financial Services		All Other and Adjustments		Consolidated
Net cash provided by /(used in) operating activities	$	8,233		$	8,761	$	—	$	16,994

Reconciling Adjustments to Automotive Segment Operating Cash Flows*
Automotive capital spending	(4,879		)
Net cash flows from non-designated derivatives	322
Funded pension contributions	835
Separation payments	198
Other	208
Automotive Segment Operating Cash Flows	$	4,917

_________

We measure and evaluate our Automotive segment operating cash flow on a different basis than Net cash provided by/(used in) operating activities in our consolidated statement of cash flows. Automotive segment operating cash flow includes additional elements management considers to be related to our Automotive operating activities, primarily capital spending and non-designated derivatives, and excludes outflows for funded pension contributions, separation payments, and other items that are considered operating cash flows under U.S. GAAP. The table above quantifies the reconciling adjustments to Net cash provided by/(used in) operating activities for the period ended September 30, 2016.



Cash flows from investing activities	Automotive			Financial Services			All Other and Adjustments			Consolidated
Capital spending	$	(4,879	)	$	(33	)	$	—		$	(4,912	)
Acquisitions of finance receivables and operating leases	—			(43,746		)	—			(43,746		)
Collections of finance receivables and operating leases	—			30,254			—			30,254
Purchases of equity and debt securities	(16,249		)	(5,794		)	(6		)	(22,049		)
Sales and maturities of equity and debt securities	17,654			4,368			—			22,022
Settlements of derivatives	322			8			—			330
Other	148			(61		)	(44		)	43
Investing activity (to)/from other segments	63			—			(63		)	—
Net cash provided by/(used in) investing activities	$	(2,941	)	$	(15,004	)	$	(113	)	$	(18,058	)



Cash flows from financing activities	Automotive			Financial Services			All Other and Adjustments		Consolidated
Cash dividends	$	(2,780	)	$	—		$	—	$	(2,780	)
Purchases of Common Stock	(145		)	—			—		(145		)
Net changes in short-term debt	252			948			—		1,200
Proceeds from issuance of other debt	330			31,626			—		31,956
Principal payments on other debt	(764		)	(29,255		)	—		(30,019		)
Other	46			(90		)	—		(44		)
Financing activity to/(from) other segments	—			(123		)	123		—
Net cash provided by/(used in) financing activities	$	(3,061	)	$	3,106		$	123	$	168

Effect of exchange rate changes on cash and cash equivalents	$	38		$	(74	)	$	—	$	(36	)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

~~Total Company~~CREDIT RATINGS

~~Equity.~~ ~~At March 31, 2016,~~ ~~Total equity attributable to Ford Motor Company~~ ~~was $29.6 billion, an increase of $963 million compared with December 31, 2015. The increase primarily reflects favorable changes in~~ ~~Retained earnings~~ ~~of $864 million related to~~ ~~Net income attributable to Ford Motor Company~~ ~~of $2.5 billion in the first three months of 2016, net of cash dividends declared of $1.6 billion; favorable changes in~~ ~~Accumulated other comprehensive income/(loss)~~ ~~of $211 million; offset partially by increases in~~ ~~Treasury Stock~~ ~~of $145 million related to stock repurchases.~~

~~Credit Ratings.~~ Our short-term and long-term debt is rated by four credit rating agencies designated as nationally recognized statistical rating organizations (“NRSROs”) by the U.S. Securities and Exchange Commission:

DBRS Limited (“DBRS”);

Fitch, Inc. (“Fitch”);

Moody’s Investors Service, Inc. (“Moody’s”); and

Standard & Poor’s Ratings Services, a division of McGraw Hill Financial (“S&P”).

In several markets, locally-recognized rating agencies also rate us. A credit rating reflects an assessment by the rating agency of the credit risk associated with a corporate entity or particular securities issued by that entity. Rating agencies’ ratings of us are based on information provided by us and other sources. Credit ratings assigned to us from all of the NRSROs are closely associated with their opinions on Ford. Credit ratings are not recommendations to buy, sell, or hold securities, and are subject to revision or withdrawal at any time by the assigning rating agency. Each rating agency may have different criteria for evaluating company risk and, therefore, ratings should be evaluated independently for each rating agency.

~~The following~~There have been no rating actions ~~have been~~ taken by these NRSROs since the filing of our ~~2015~~Quarterly Report on Form ~~10-K Report:~~

~~On February 16, 2016, Moody’s upgraded Ford and Ford Credit’s long-term ratings to Baa2 from Baa3 with a stable outlook.~~

~~On February 17, 2016, DBRS upgraded Ford and Ford Credit’s long-term ratings to BBB from BBB (low) with a stable trend.~~

~~On March 11, 2016, S&P upgraded Ford and Ford Credit’s long-term ratings to BBB from BBB- with a stable outlook.~~10-Q for the quarter ended June 30, 2016.

The following chart summarizes certain of the credit ratings and outlook presently assigned by these four NRSROs:

NRSRO RATINGS

Ford

Ford Credit

NRSROs

Issuer

Default /

Corporate /

Issuer Rating

Long-Term Senior Unsecured

Outlook / Trend

Long-Term Senior Unsecured

Short-Term

Unsecured

Outlook / Trend

Minimum Long-Term Investment Grade Rating

DBRS

BBB

Stable

BBB

R-2M

Stable

BBB (low)

Fitch

~~BBB-~~BBB

~~Positive~~Stable

~~BBB-~~BBB

F3F2

~~Positive~~Stable

BBB-

Moody’s

N/A

Baa2

Stable

Baa2

P-2

Stable

Baa3

S&P

BBB

Stable

BBB

A-2

Stable

BBB-

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

PRODUCTION VOLUMES

The third quarter 2016 actual and fourth quarter 2016 forecast production volumes for our Automotive business units are as follows:

Production volumes above include Ford brand and JMC brand vehicles produced by our unconsolidated affiliates.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

~~PRODUCTION VOLUMES (a)~~

~~Our first quarter 2016 production volumes and second quarter 2016 projected production volumes are as follows (in thousands):~~

2016

First Quarter
Actual

Second Quarter
Forecast
Units O/(U) 2015 Units O/(U) 2015
North America 854
131
850
35
South America 65
(37 ) 75
(19 )
Europe 425
(11 ) 440
37
Middle East & Africa 21
—
24
1
Asia Pacific 424
51
345
(17 )
Total 1,789
134
1,734
37

~~_________~~


~~(a)~~	~~Includes Ford brand and JMC brand vehicles produced by our unconsolidated affiliates.~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

OUTLOOK

Business Environment

We continue to expect the external environment this year to be one of growth globally with GDP expanding in the 3.1% to 3.5% range. This will be driven by the United States, a continued modest recovery in the Euro Area, growth in the United Kingdom despite increased volatility aheadOur view of the ~~June 2016 Brexit referendum, and continued growth in China, although at a slower pace than in recent years.~~global business environment is as follows:


▪	Global growth outlook for 2016 remains modest at just under 3%

The U.S. dollar is expected to remain strong against most major currencies, and commodity prices, including oil, are expected to remain at low levels. We expect conditions in Brazil and Russia to remain difficult through 2016.


▪	Full year GDP outlook reduced for United States on weak first half data; consumer spending remains solid with vehicle sales at high plateau


▪	Europe growth steady; U.K. data improving after initial Brexit shock but tone heading into formal exit negotiations is driving a weaker sterling


▪	China growth still supported by consumer and services sector strength, with vehicle purchase tax reduction in place through year end


▪	Russia and Brazil economies show signs of bottoming out

2016 Planning Assumptions and Key Metrics

Based on the current economic environment, our industry and GDP planning assumptions for 2016 include the following:

All in all, we see ~~conditions~~some risks to global GDP growth as ~~being supportive~~policy uncertainty, including Brexit negotiations, adds to existing weakness in global trade flows and business investment spending. This is offset partially by a steady consumer sector in most major markets. We are updating our global GDP guidance to 2.9%, the low end of ~~growth~~our prior range. For industry volumes, we are providing upward adjustments for China and Europe, with a small downward adjustment for Brazil.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

2016 Business Unit and Total Company Guidance

We continue to expect healthy returns from North America in ~~automotive industry sales globally and~~2016, with an operating margin in the 9% to 9.5% range. Excluding the door latch recall, the margin would exceed 9.5%, consistent with our original guidance for ~~the major markets shown above.~~2016. We continue to expect ~~full-year industry sales by market~~South America’s loss to be ~~unchanged from~~greater in 2016 than in 2015. In Europe, we continue to expect a significantly higher profit in 2016 compared to last year. In Middle East & Africa, we continue to expect a loss in 2016 compared to the small profit we earned last year. In Asia Pacific, we continue to expect a lower profit in 2016 than last year, driven by adverse China industry pricing and unfavorable exchange. For the full year, we continue to expect Ford Credit’s pre-tax profit to be about $1.8 billion.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Shown above is our 2016 Company Guidance, including guidance for total Company adjusted pre-tax results, which is a non-GAAP financial measure. We do not provide guidance on our net income, the comparable GAAP financial measure. Full-year net income will include potentially significant special items that have not yet occurred and are difficult to predict with reasonable certainty prior ~~guidance.~~to year end, specifically pension and OPEB remeasurement gains and losses.

We have had a strong first nine months of the year, and we continue to expect 2016 full year total Company adjusted pre-tax profit to be about $10.2 billion – an outcome that would be our second best since 2000.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

GAAP RECONCILIATIONS TO NON-GAAP FINANCIAL MEASURES

~~Our 2016 guidance for each~~The following charts show GAAP reconciliations of our ~~business units is unchanged.~~Non-GAAP financial measures for: Adjusted Pre-Tax Profit, Adjusted Earnings Per Share, Adjusted Effective Tax Rate, and Ford Credit Managed Receivables. The GAAP reconciliation for Ford Credit Managed Leverage can be found in the Financial Services Segment section of “Liquidity and Capital Resources.”

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

~~Our 2016 Company guidance is unchanged.~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)~~

Risk Factors

Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:

Decline in industry sales volume, particularly in the United States, Europe, or China, due to financial crisis, recession, geopolitical events, or other factors;

Decline in Ford’s market share or failure to achieve growth;

Lower-than-anticipated market acceptance of Ford’s new or existing products or services;

Market shift away from sales of larger, more profitable vehicles beyond Ford’s current planning assumption, particularly in the United States;

An increase in or continued volatility of fuel prices, or reduced availability of fuel;

Continued or increased price competition resulting from industry excess capacity, currency fluctuations, or other factors;

Fluctuations in foreign currency exchange rates, commodity prices, and interest rates;

Adverse effects resulting from economic, geopolitical, or other events;

Economic distress of suppliers that may require Ford to provide substantial financial support or take other measures to ensure supplies of components or materials and could increase costs, affect liquidity, or cause production constraints or disruptions;

Work stoppages at Ford or supplier facilities or other limitations on production (whether as a result of labor disputes, natural or man-made disasters, tight credit markets or other financial distress, production constraints or difficulties, or other factors);

Single-source supply of components or materials;

Labor or other constraints on Ford’s ability to maintain competitive cost structure;

Substantial pension and postretirement health care and life insurance liabilities impairing liquidity or financial condition;

Worse-than-assumed economic and demographic experience for postretirement benefit plans (e.g., discount rates or investment returns);

Restriction on use of tax attributes from tax law “ownership change;”

The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns, or increased warranty costs;

Increased safety, emissions, fuel economy, or other regulations resulting in higher costs, cash expenditures, and/or sales restrictions;

Unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, perceived environmental impacts, or otherwise;

A change in requirements under long-term supply arrangements committing Ford to purchase minimum or fixed quantities of certain parts, or to pay a minimum amount to the seller (“take-or-pay” contracts);

Adverse effects on results from a decrease in or cessation or clawback of government incentives related to investments;

Inherent limitations of internal controls impacting financial statements and safeguarding of assets;

Cybersecurity risks to operational systems, security systems, or infrastructure owned by Ford, Ford Credit, or a third-party vendor or supplier;

Failure of financial institutions to fulfill commitments under committed credit and liquidity facilities;

Inability of Ford Credit to access debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts, due to credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors;

Higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles;

Increased competition from banks, financial institutions, or other third parties seeking to increase their share of financing Ford vehicles; and

New or increased credit regulations, consumer or data protection regulations, or other regulations resulting in higher costs and/or additional financing restrictions.

We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise. For additional discussion, see “Item 1A. Risk Factors” in our 2015 Form 10-K Report, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED

The Financial Accounting Standards Board (“FASB”) has issued the following standards, which are not expected to have a material impact (with the exception of standards ~~2014-09,~~ 2016-02, 2016-09, and ~~2016-09)~~2016-13) to our financial statements or financial statement disclosures:



Standard		Effective Date (a)
2014-15	Going Concern - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern	December 31, 2016
2016-09	Stock Compensation - Improvements to Employee Share-Based Payment Accounting	January 1, 2017 (b)
2016-07	Equity Method and Joint Ventures - Simplifying the Transition to the Equity Method of Accounting	January 1, 2017
2016-06	Derivatives and Hedging - Contingent Put and Call Options in Debt Instruments	January 1, 2017
2016-05	Derivatives and Hedging - Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships	January 1, 2017
~~2015-17~~2016-16	Income Taxes - ~~Balance Sheet Classification~~Intra-Entity Transfers of ~~Deferred Taxes~~Assets Other Than Inventory	January 1, ~~2017~~2018
2016-15	Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments	January 1, 2018
2016-04	Extinguishments of Liabilities - Recognition of Breakage for Certain Prepaid Stored-Value Products	January 1, 2018
2016-01	Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities	January 1, 2018
2014-09	Revenue - Revenue from Contracts with Customers	January 1, 2018 (b) (c)
2016-02	Leases	January 1, 2019 (b)
2016-13	Credit Losses - Measurement of Credit Losses on Financial Instruments	January 1, 2020 (b)

__________

(a)Early adoption for each of the standards, except standard 2016-01, is permitted.

(b)For additional information, see Note 2 of the Notes to the Financial Statements.

(c)

The FASB has issued the following updates to the Revenue from Contracts with Customers standard: Accounting Standard Update (“ASU”) 2015-14 (Deferral of the Effective Date), ASU 2016-08 (Principal versus Agent Considerations (Reporting Revenue Gross versus Net)), ASU 2016-10 (Identifying Performance Obligations and Licensing), and ASU 2016-12 (Narrow-Scope Improvements and Practical Expedients). We plan to adopt the new revenue guidance effective January 1, 2017.

OTHER FINANCIAL INFORMATION

The interim financial information included in this Quarterly Report on Form 10-Q for the periods ended

~~March 31,~~September 30, 2016 and 2015 has not been audited by PricewaterhouseCoopers LLP (“PwC”). In reviewing such information, PwC has applied limited procedures in accordance with professional standards for reviews of interim financial information. Readers should restrict reliance on PwC’s reports on such information accordingly. PwC is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for its reports on interim financial information, because such reports do not constitute “reports” or “parts” of registration statements prepared or certified by PwC within the meaning of Sections 7 and 11 of the Securities Act of 1933.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

Automotive ~~Sector~~

Foreign Currency Risk. The net fair value of foreign exchange forward contracts (including adjustments for credit risk), as of ~~March 31,~~September 30, 2016, was an asset of ~~$380~~$791 million compared with an asset of $322 million as of December 31, 2015. The potential decrease in fair value from a 10% adverse change in the underlying exchange rates, in U.S. dollar terms, would be ~~$2.5~~$2.7 billion at ~~March 31,~~September 30, 2016, compared with $2.2 billion at December 31, 2015.

Commodity Price Risk. The net fair value of commodity forward contracts (including adjustments for credit risk) as of ~~March 31,~~September 30, 2016 was ~~a liability~~an asset of ~~$13~~$6 million, compared with a liability of $24 million as of December 31, 2015. The potential decrease in fair value from a 10% adverse change in the underlying commodity prices, in U.S. dollar terms, would be ~~$63~~$53 million at ~~March 31,~~September 30, 2016, compared with $62 million at December 31, 2015.

Financial Services ~~Sector~~

Interest Rate Risk. To provide a quantitative measure of the sensitivity of its pre-tax cash flow to changes in interest rates, Ford Credit uses interest rate scenarios that assume a hypothetical, instantaneous increase or decrease of one percentage point in all interest rates across all maturities (a “parallel shift”), as well as a base case that assumes that all interest rates remain constant at existing levels. The differences in pre-tax cash flow between these scenarios and the base case over a 12-month period represent an estimate of the sensitivity of Ford Credit’s pre-tax cash flow. Under this model, Ford Credit estimates that at ~~March 31,~~September 30, 2016, all else constant, such an increase in interest rates would ~~decrease~~increase its pre-tax cash flow by $7$5 million over the next 12 months, compared with an increase of $7 million at December 31, 2015. In reality, interest rate changes are rarely instantaneous or parallel and rates could move more or less than the one percentage point assumed in Ford Credit’s analysis. As a result, the actual impact to pre-tax cash flow could be higher or lower than the results detailed above.

ITEM 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. Mark Fields, our Chief Executive Officer (“CEO”), and Bob Shanks, our Chief Financial Officer (“CFO”), have performed an evaluation of the Company’s disclosure controls and procedures, as that term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of ~~March 31,~~September 30, 2016, and each has concluded that such disclosure controls and procedures are effective to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by SEC rules and forms, and that such information is accumulated and communicated to the CEO and CFO to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting. There were no changes in internal control over financial reporting during the quarter ended ~~March 31,~~September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

~~ITEM 2.~~ ~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

In the first quarter of 2016, we repurchased shares of Ford Common Stock from our employees or directors related to certain exercises of stock options, in accordance with our various compensation plans. We also completed a modest anti-dilutive share repurchase program to offset the dilutive effect of share-based compensation granted during 2016. The plan authorized repurchases of up to 10.7 million shares of Ford Common Stock.

Period
Total Number
of Shares
Purchased

Average
Price Paid
per Share

Total Number
of Shares
Purchased as
Part of Publicly-
Announced
Plans or
Programs

Maximum Number
(or Approximate
Dollar Value) of
Shares that May Yet
Be Purchased Under
the Plans or
Programs
January 1, 2016 through January 31, 2016 1,323
$ 13.11
—
—
February 1, 2016 through February 29, 2016 4,361
12.56
—
—
March 1, 2016 through March 31, 2016 10,700,000
13.50
—
—
Total/Average 10,705,684
$ 13.50

ITEM 6. Exhibits.

Please see exhibit index below.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FORD MOTOR COMPANY



By:	/s/ ~~Stuart Rowley~~John Lawler
	~~Stuart Rowley,~~John Lawler, Vice President and Controller
	(principal accounting officer)

Date:	~~April 28,~~October 27, 2016

EXHIBIT INDEX



Designation	Description	Method of Filing
Exhibit 12	Calculation of Ratio of Earnings to Fixed Charges.	Filed with this Report.
Exhibit 15	Letter of PricewaterhouseCoopers LLP, dated ~~April 28,~~October 27, 2016, relating to financial information.	Filed with this Report.
Exhibit 31.1	Rule 15d-14(a) Certification of CEO.	Filed with this Report.
Exhibit 31.2	Rule 15d-14(a) Certification of CFO.	Filed with this Report.
Exhibit 32.1	Section 1350 Certification of CEO.	Furnished with this Report.
Exhibit 32.2	Section 1350 Certification of CFO.	Furnished with this Report.
Exhibit 101.INS	XBRL Instance Document.	*
Exhibit 101.SCH	XBRL Taxonomy Extension Schema Document.	*
Exhibit 101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.	*
Exhibit 101.LAB	XBRL Taxonomy Extension Label Linkbase Document.	*
Exhibit 101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.	*
Exhibit 101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.	*

__________

* Submitted electronically with this Report in accordance with the provisions of Regulation S-T.

6368



(Mark One)
R	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended ~~March 31,~~September 30, 2016

	or

o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the transition period from __________ to __________

	Commission file number 1-3950



Delaware	38-0549190
(State of incorporation)	(I.R.S. Employer Identification No.)

One American Road, Dearborn, Michigan	48126
(Address of principal executive offices)	(Zip Code)



	Table of Contents	Page
	Part I - Financial Information
Item 1	Financial Statements	1
	Consolidated Income Statement	1
	Consolidated Statement of Comprehensive Income	1
	~~Sector Income Statement~~	2
	Consolidated Balance Sheet	3
	~~Sector Balance Sheet~~	42
	Condensed Consolidated Statement of Cash Flows	5
	~~Condensed Sector Statement of Cash Flows~~	63
	Consolidated Statement of Equity	74
	Notes to the Financial Statements	85
	Report of Independent Registered Public Accounting Firm	2625
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2726
	Overview	26
	Results of Operations	27
	~~Automotive Sector~~	30
	~~Financial Services Sector~~	42
	Liquidity and Capital Resources	4647
	Credit Ratings	56
	Production Volumes	5457
	Outlook	5558
	GAAP Reconciliations of Non-GAAP Financial Measures	61
	Risk Factors	63
	Accounting Standards Issued But Not Yet Adopted	5964
	Other Financial Information	5964
Item 3	Quantitative and Qualitative Disclosures About Market Risk	5964
	Automotive ~~Sector~~	5964
	Financial Services ~~Sector~~	5965
Item 4	Controls and Procedures	6065

	Part II - Other Information
Item 2	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	61
~~Item~~ 6	Exhibits	6166
	Signature	6267
	Exhibit Index	6368


	For the periods ended March 31,				For the periods ended September 30,
	2016		2015		2016		2015		2016		2015
	First Quarter				Third Quarter				First Nine Months
	(unaudited)				(unaudited)
Revenues
Automotive	$	35,257	$	31,800	$	33,331	$	35,818	$	105,520	$	102,723
Financial Services	2,461		2,100		2,612		2,326		7,626		6,584
Total revenues	37,718		33,900		35,943		38,144		113,146		109,307

Costs and expenses
Automotive cost of sales	30,281		28,472
Cost of sales					30,446		31,213		93,075		90,011
Selling, administrative, and other expenses	3,823		3,465		2,535		2,386		7,758		7,402
Financial Services interest expense	658		647
Financial Services provision for credit and insurance losses	141		73
Financial Services interest, operating, and other expenses					2,200		1,905		6,518		5,363
Total costs and expenses	34,903		32,657		35,181		35,504		107,351		102,776

Automotive interest expense	200		165
Interest expense on Automotive debt					238		206		650		561

Automotive interest income and other income/(loss), net (Note 12)	404		190
Financial Services other income/(loss), net (Note 12)	91		74
Non-Financial Services interest income and other income/(loss), net (Note 13)					328		446		1,121		908
Financial Services other income/(loss), net (Note 13)					132		97		305		241
Equity in net income of affiliated companies	541		437		403		314		1,342		1,237
Income before income taxes	3,651		1,779		1,387		3,291		7,913		8,356
Provision for/(Benefit from) income taxes	1,196		625		426		1,099		2,525		2,849
Net income	2,455		1,154		961		2,192		5,388		5,507
Less: Income/(Loss) attributable to noncontrolling interests	3		1		4		—		9		2
Net income attributable to Ford Motor Company	$	2,452	$	1,153	$	957	$	2,192	$	5,379	$	5,505

EARNINGS PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK (Note 14)
EARNINGS PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK (Note 15)					EARNINGS PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK (Note 15)
Basic income	$	0.62	$	0.29	$	0.24	$	0.55	$	1.35	$	1.39
Diluted income	0.61		0.29		0.24		0.55		1.35		1.38

Cash dividends declared	0.40		0.15		0.15		0.15		0.70		0.45



	For the periods ended March 31,
	2016			2015
	First Quarter
	(unaudited)
Net income	$	2,455		$	1,154
Other comprehensive income/(loss), net of tax (Note 11)
Foreign currency translation	(64		)	103
Marketable securities	6			—
Derivative instruments	246			(90		)
Pension and other postretirement benefits	22			(148		)
Total other comprehensive income/(loss), net of tax	210			(135		)
Comprehensive income	2,665			1,019
Less: Comprehensive income/(loss) attributable to noncontrolling interests	2			1
Comprehensive income attributable to Ford Motor Company	$	2,663		$	1,018


	March 31, 2016			December 31, 2015			September 30, 2016			December 31, 2015
	(unaudited)						(unaudited)
ASSETS
Cash and cash equivalents (Note 3)	$	15,917		$	14,272
Marketable securities (Note 3)	23,556			20,904
Finance receivables, net (Note 4)	94,280			90,691
Other receivables, net	11,252			11,284
Cash and cash equivalents (Note 4)							$	13,340		$	14,272
Marketable securities (Note 4)							20,825			20,904
Financial Services finance receivables, net (Note 5)							45,550			45,137
Trade and other receivables, less allowances of $359 and $372							10,029			11,042
Inventories (Note 7)							10,219			8,319
Other assets							3,552			2,913
Total current assets							103,515			102,587

Financial Services finance receivables, net (Note 5)							49,614			45,554
Net investment in operating leases	28,234			27,093			29,196			27,093
Inventories (Note 6)	9,770			8,319
Net property							32,257			30,163
Equity in net assets of affiliated companies	3,820			3,224			3,795			3,224
Net property	31,164			30,163
Deferred income taxes	10,579			11,509			9,475			11,509
Other assets	8,716			7,466			7,111			4,795
Total assets	$	237,288		$	224,925		$	234,963		$	224,925

LIABILITIES
Payables	$	22,072		$	20,272		$	22,384		$	20,272
Other liabilities and deferred revenue (Note 7)	43,949			42,546
Automotive debt (Note 9)	13,022			12,839
Financial Services debt (Note 9)	127,973			120,015
Other liabilities and deferred revenue (Note 8)							19,531			19,089
Automotive debt payable within one year (Note 10)							2,472			1,779
Financial Services debt payable within one year (Note 10)							44,801			41,196
Total current liabilities							89,188			82,336

Other liabilities and deferred revenue (Note 8)							23,652			23,457
Automotive long-term debt (Note 10)							10,675			11,060
Financial Services long-term debt (Note 10)							79,276			78,819
Deferred income taxes	556			502			577			502
Total liabilities	207,572			196,174			203,368			196,174

Redeemable noncontrolling interest	95			94			96			94

EQUITY
Capital stock
Common Stock, par value $.01 per share (3,974 million shares issued of 6 billion authorized)	40			40
Common Stock, par value $.01 per share (3,976 million shares issued of 6 billion authorized)							40			40
Class B Stock, par value $.01 per share (71 million shares issued of 530 million authorized)	1			1			1			1
Capital in excess of par value of stock	21,454			21,421			21,598			21,421
Retained earnings	15,278			14,414			17,013			14,414
Accumulated other comprehensive income/(loss) (Note 11)	(6,046		)	(6,257		)
Accumulated other comprehensive income/(loss) (Note 12)							(6,046		)	(6,257		)
Treasury stock	(1,122		)	(977		)	(1,122		)	(977		)
Total equity attributable to Ford Motor Company	29,605			28,642			31,484			28,642
Equity attributable to noncontrolling interests	16			15			15			15
Total equity	29,621			28,657			31,499			28,657
Total liabilities and equity	$	237,288		$	224,925		$	234,963		$	224,925



The following table includes assets to be used to settle liabilities of the consolidated variable interest entities (“VIEs”). These assets and liabilities are included in the consolidated balance sheet above.
	September 30, 2016		December 31, 2015
	(unaudited)
ASSETS
Cash and cash equivalents	$	2,318	$	3,949
Financial Services finance receivables, net	47,627		45,902
Net investment in operating leases	9,951		13,309
Other assets	7		85
LIABILITIES
Other liabilities and deferred revenue	$	10	$	19
Debt	39,123		43,086


~~(a)~~	Operating activities include outflows of $876 million and $656 million for the periods ended March 31, 2016 and 2015, respectively, of interest supplements and residual value support to Financial Services. Interest supplements and residual value support from Automotive to Financial Services~~are eliminated in the condensed consolidated statement of cash flows.~~


~~(b)~~	~~Reclassified to operating activities in the condensed consolidated statement of cash flows.~~


~~(c)~~	~~Eliminated in the condensed consolidated statement of cash flows.~~


	Equity Attributable to Ford Motor Company																						Equity Attributable to Ford Motor Company
	Capital Stock		Cap. in Excess of Par Value of Stock		Retained Earnings			Accumulated Other Comprehensive Income/(Loss) (Note 11)			Treasury Stock			Total			Equity Attributable to Non-controlling Interests			Total Equity			Capital Stock		Cap. in Excess of Par Value of Stock		Retained Earnings			Accumulated Other Comprehensive Income/(Loss) (Note 12)			Treasury Stock			Total			Equity Attributable to Non-controlling Interests			Total Equity
Balance at December 31, 2015	$	41	$	21,421	$	14,414		$	(6,257	)	$	(977	)	$	28,642		$	15		$	28,657		$	41	$	21,421	$	14,414		$	(6,257	)	$	(977	)	$	28,642		$	15		$	28,657
Net income	—		—		2,452			—			—			2,452			3			2,455			—		—		5,379			—			—			5,379			9			5,388
Other comprehensive income/(loss), net of tax	—		—		—			211			—			211			(1		)	210			—		—		—			211			—			211			(2		)	209
Common stock issued (including share-based compensation impacts)	—		33		—			—			—			33			—			33			—		177		—			—			—			177			—			177
Treasury stock/other	—		—		—			—			(145		)	(145		)	(1		)	(146		)	—		—		—			—			(145		)	(145		)	(2		)	(147		)
Cash dividends declared	—		—		(1,588		)	—			—			(1,588		)	—			(1,588		)	—		—		(2,780		)	—			—			(2,780		)	(5		)	(2,785		)
Balance at March 31, 2016	$	41	$	21,454	$	15,278		$	(6,046	)	$	(1,122	)	$	29,605		$	16		$	29,621
Balance at September 30, 2016																							$	41	$	21,598	$	17,013		$	(6,046	)	$	(1,122	)	$	31,484		$	15		$	31,499

Balance at December 31, 2014	$	40	$	21,089	$	9,422		$	(5,265	)	$	(848	)	$	24,438		$	27		$	24,465		$	40	$	21,089	$	9,422		$	(5,265	)	$	(848	)	$	24,438		$	27		$	24,465
Net income	—		—		1,153			—			—			1,153			1			1,154			—		—		5,505			—			—			5,505			2			5,507
Other comprehensive income/(loss), net of tax	—		—		—			(135		)	—			(135		)	—			(135		)	—		—		—			(607		)	—			(607		)	—			(607		)
Common stock issued (including share-based compensation impacts)	1		184		—			—			—			185			—			185			1		265		—			—			—			266			—			266
Treasury stock/other	—		—		—			—			—			—			(1		)	(1		)	—		—		—			—			(129		)	(129		)	(4		)	(133		)
Cash dividends declared	—		—		(593		)	—			—			(593		)	—			(593		)	—		—		(1,785		)	—			—			(1,785		)	(6		)	(1,791		)
Balance at March 31, 2015	$	41	$	21,273	$	9,982		$	(5,400	)	$	(848	)	$	25,048		$	27		$	25,075
Balance at September 30, 2015																							$	41	$	21,354	$	13,142		$	(5,872	)	$	(977	)	$	27,688		$	19		$	27,707



Footnote		Page
Note 1	Presentation	96
Note 2	New Accounting Standards	106
Note 3	Segment Information	8
Note 4	Cash, Cash Equivalents, and Marketable Securities	1110
Note 45	Financial Services ~~Sector~~ Finance Receivables	12
Note 56	Financial Services ~~Sector~~ Allowance for Credit Losses	15
Note 67	Inventories	16
Note 78	Other Liabilities and Deferred Revenue	16
Note 89	Retirement Benefits	17
Note 910	Debt	18
Note 1011	Derivative Financial Instruments and Hedging Activities	19
Note 1112	Accumulated Other Comprehensive Income/(Loss)	21
Note 1213	Other Income/(Loss)	22
Note 1314	Income Taxes	22
Note 1415	Capital Stock and Earnings Per Share	22
~~Note 15~~	~~Segment Information~~	23
Note 16	Commitments and Contingencies	23



	March 31, 2016			December 31, 2015
Sector balance sheet presentation of deferred income tax assets
Automotive sector current deferred income tax assets	$	2,443		$	3,664
Automotive sector non-current deferred income tax assets	11,409			10,687
Financial Services sector deferred income tax assets (a)	142			135
Total	13,994			14,486
Reclassification for netting of deferred income taxes	(3,415		)	(2,977		)
Consolidated balance sheet presentation of deferred income tax assets	$	10,579		$	11,509

Sector balance sheet presentation of deferred income tax liabilities
Automotive sector current deferred income tax liabilities	$	130		$	13
Automotive sector non-current deferred income tax liabilities	302			287
Financial Services sector deferred income tax liabilities	3,539			3,179
Total	3,971			3,479
Reclassification for netting of deferred income taxes	(3,415		)	(2,977		)
Consolidated balance sheet presentation of deferred income tax liabilities	$	556		$	502


~~(a)~~	~~Included in~~ ~~Financial Services Other assets~~ ~~on our sector balance sheet.~~



Standard		Effective Date
2015-16	Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments	January 1, 2016
2015-09	Insurance - Disclosures about Short-Duration Contracts	January 1, 2016
2015-05	Internal-Use Software - Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement	January 1, 2016
2015-02	Consolidation - Amendments to the Consolidation Analysis	January 1, 2016
2015-01	Extraordinary and Unusual Items - Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items	January 1, 2016
2014-12	Stock Compensation - Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period	January 1, 2016



	March 31, 2016		December 31, 2015
Dealer Financing
Group I	$	28,606	$	26,560
Group II	7,204		7,175
Group III	1,853		1,683
Group IV	128		111
Total recorded investment	$	37,791	$	35,529



	Fair Value Level	March 31, 2016		December 31, 2015
Automotive Sector
Cash and cash equivalents
U.S. government	1	$	—	$	115
U.S. government agencies	2	109		22
Non-U.S. government and agencies	2	77		173
Corporate debt	2	130		20
Total marketable securities classified as cash equivalents		316		330
Cash, time deposits, and money market funds		5,251		5,056
Total cash and cash equivalents		$	5,567	$	5,386

Marketable securities
U.S. government	1	$	3,088	$	1,623
U.S. government agencies	2	4,752		5,240
Non-U.S. government and agencies	2	6,917		7,451
Corporate debt	2	3,323		3,279
Equities	1	257		240
Other marketable securities	2	347		348
Total marketable securities		$	18,684	$	18,181

Financial Services Sector
Cash and cash equivalents
U.S. government	1	$	450	$	—
U.S. government agencies	2	25		—
Non-U.S. government and agencies	2	500		266
Corporate debt	2	50		—
Total marketable securities classified as cash equivalents		1,025		266
Cash, time deposits, and money market funds		9,325		8,620
Total cash and cash equivalents		$	10,350	$	8,886

Marketable securities
U.S. government	1	$	1,594	$	298
U.S. government agencies	2	1,746		1,169
Non-U.S. government and agencies	2	1,194		832
Corporate debt	2	294		384
Other marketable securities	2	44		40
Total marketable securities		$	4,872	$	2,723



	Automotive			Financial Services		All Other			Special Items			Adjustments				Total
Third Quarter 2016
Revenues	$	33,331		$	2,612	$	—		$	—		$	—			$	35,943
Pre-tax results - income/(loss)	1,084			552		(223		)	(26		)	—				1,387
Equity in net income/(loss) of affiliated companies	395			8		—			—			—				403
Cash, cash equivalents, and marketable securities	24,300			9,855		10			—			—				34,165
Total assets	97,269			142,979		67			—			(5,352		)	(a)	234,963
Debt	13,147			124,077		—			—			—				137,224
Operating cash flows	(1,954		)	5,953		—			—			1,161			(b)	5,160

Third Quarter 2015
Revenues	$	35,818		$	2,326	$	—		$	—		$	—			$	38,144
Pre-tax results - income/(loss)	2,762			526		(163		)	166			—				3,291
Equity in net income/(loss) of affiliated companies	306			8		—			—			—				314
Cash, cash equivalents, and marketable securities	22,177			9,670		—			—			—				31,847
Total assets	92,873			130,626		—			—			(3,921		)	(a)	219,578
Debt	12,798			113,627		—			—			—				126,425
Operating cash flows	2,787			2,167		—			—			1,501			(b)	6,455

	Automotive			Financial Services		All Other			Special Items			Adjustments				Total
First Nine Months 2016
Revenues	$	105,520		$	7,626	$	—		$	—		$	—			$	113,146
Pre-tax results - income/(loss)	7,380			1,436		(573		)	(330		)	—				7,913
Equity in net income/(loss) of affiliated companies	1,319			23		—			—			—				1,342
Operating cash flows	4,917			8,761		—			—			3,316			(b)	16,994

First Nine Months 2015
Revenues	$	102,723		$	6,584	$	—		$	—		$	—			$	109,307
Pre-tax results - income/(loss)	7,246			1,486		(542		)	166			—				8,356
Equity in net income/(loss) of affiliated companies	1,213			24		—			—			—				1,237
Operating cash flows	5,199			5,329		—			—			3,550			(b)	14,078


(a)	Includes eliminations of intersegment transactions occurring in the ordinary course of business and deferred tax netting.



	March 31, 2016			December 31, 2015
Consumer
Retail financing, gross	$	63,185		$	62,068
Unearned interest supplements	(2,231		)	(2,119		)
Consumer finance receivables	60,954			59,949
Non-Consumer
Dealer financing	37,791			35,529
Other financing	1,034			958
Non-Consumer finance receivables	38,825			36,487
Total recorded investment	$	99,779		$	96,436

Recorded investment in finance receivables	$	99,779		$	96,436
Allowance for credit losses	(410		)	(373		)
Finance receivables, net (a)	$	99,369		$	96,063

Net finance receivables subject to fair value (b)	$	97,379		$	94,248
Fair value	98,771			95,420


~~(a)~~	~~On the consolidated balance sheet at March 31, 2016 and~~ ~~December 31, 2015, $5.1 billion and $5.4 billion, respectively, are reclassified to~~ ~~Other receivables, net,~~ ~~resulting in~~ ~~Finance receivables, net~~ of ~~$94.3 billion~~ ~~and~~ ~~$90.7 billion, respectively.~~


~~(b)~~	~~At March 31, 2016 and~~ ~~December 31, 2015, excludes~~ ~~$2 billion~~ ~~and~~ ~~$1.8 billion~~, respectively, of certain receivables (primarily direct financing leases) that are not subject to fair value disclosure requirements. The fair value of finance receivables is categorized within Level 3 of the hierarchy.



	First Quarter 2016
	Consumer			Non-Consumer		Total
Allowance for credit losses
Beginning balance	$	357		$	16	$	373
Charge-offs	(102		)	1		(101		)
Recoveries	29			1		30
Provision for credit losses	102			1		103
Other (a)	4			1		5
Ending balance (b)	$	390		$	20	$	410

Analysis of ending balance of allowance for credit losses
Collective impairment allowance	$	371		$	13	$	384
Specific impairment allowance	19			7		26
Ending balance (b)	390			20		410

Analysis of ending balance of finance receivables
Collectively evaluated for impairment	60,581			38,676		99,257
Specifically evaluated for impairment	373			149		522
Recorded investment	60,954			38,825		99,779

Ending balance, net of allowance for credit losses	$	60,564		$	38,805	$	99,369


~~(a)~~	~~Primarily represents amounts related to translation adjustments.~~


~~(b)~~	~~Total allowance, including reserves for operating leases, was $463 million.~~



	First Quarter 2015
	Consumer			Non-Consumer			Total
Allowance for credit losses
Beginning balance	$	305		$	16		$	321
Charge-offs	(80		)	1			(79		)
Recoveries	30			2			32
Provision for credit losses	53			(4		)	49
Other (a)	(7		)	(2		)	(9		)
Ending balance (b)	$	301		$	13		$	314

Analysis of ending balance of allowance for credit losses
Collective impairment allowance	$	280		$	12		$	292
Specific impairment allowance	21			1			22
Ending balance (b)	301			13			314

Analysis of ending balance of finance receivables
Collectively evaluated for impairment	53,135			32,356			85,491
Specifically evaluated for impairment	396			126			522
Recorded investment	53,531			32,482			86,013

Ending balance, net of allowance for credit losses	$	53,230		$	32,469		$	85,699



	March 31, 2016			December 31, 2015
Raw materials, work-in-process, and supplies	$	4,356		$	4,005
Finished products	6,367			5,254
Total inventories under FIFO	10,723			9,259
LIFO adjustment	(953		)	(940		)
Total inventories	$	9,770		$	8,319



		September 30, 2016
	Fair Value Level	Automotive		Financial Services		All Other		Consolidated
Cash and cash equivalents
U.S. government	1	$	599	$	—	$	—	$	599
U.S. government agencies	2	—		4		—		4
Non-U.S. government and agencies	2	551		280		—		831
Corporate debt	2	60		50		—		110
Total marketable securities classified as cash equivalents		1,210		334		—		1,544
Cash, time deposits, and money market funds		6,445		5,341		10		11,796
Total cash and cash equivalents		$	7,655	$	5,675	$	10	$	13,340

Marketable securities
U.S. government	1	$	3,982	$	1,724	$	—	$	5,706
U.S. government agencies	2	3,284		1,354		—		4,638
Non-U.S. government and agencies	2	5,423		520		—		5,943
Corporate debt	2	3,709		540		—		4,249
Equities	1	198		—		—		198
Other marketable securities	2	49		42		—		91
Total marketable securities		$	16,645	$	4,180	$	—	$	20,825

		December 31, 2015
	Fair Value Level	Automotive		Financial Services		All Other		Consolidated
Cash and cash equivalents
U.S. government	1	$	115	$	—	$	—	$	115
U.S. government agencies	2	22		—		—		22
Non-U.S. government and agencies	2	173		266		—		439
Corporate debt	2	20		—		—		20
Total marketable securities classified as cash equivalents		330		266		—		596
Cash, time deposits, and money market funds		5,056		8,620		—		13,676
Total cash and cash equivalents		$	5,386	$	8,886	$	—	$	14,272

Marketable securities
U.S. government	1	$	1,623	$	298	$	—	$	1,921
U.S. government agencies	2	5,240		1,169		—		6,409
Non-U.S. government and agencies	2	7,451		832		—		8,283
Corporate debt	2	3,279		384		—		3,663
Equities	1	240		—		—		240
Other marketable securities	2	348		40		—		388
Total marketable securities		$	18,181	$	2,723	$	—	$	20,904



	September 30, 2016
										Fair Value of Securities with Contractual Maturities:
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Less than 1 Year		1-5 Years
Automotive
U.S. government	$	447	$	—	$	—		$	447	$	—	$	447
U.S. government agencies	100		—		—			100		—		100
Non-U.S. government and agencies	77		—		—			77		—		77
Corporate debt	337		—		—			337		247		90
Total	$	961	$	—	$	—		$	961	$	247	$	714

	December 31, 2015
										Fair Value of Securities with Contractual Maturities:
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Less than 1 Year		1-5 Years
Automotive
U.S. government	$	—	$	—	$	—		$	—	$	—	$	—
U.S. government agencies	—		—		—			—		—		—
Non-U.S. government and agencies	82		—		(12		)	70		—		70
Corporate debt	—		—		—			—		—		—
Total	$	82	$	—	$	(12	)	$	70	$	—	$	70


(a)	At September 30, 2016 and December 31, 2015, excludes $2.1 billion and $1.8 billion, respectively, of certain receivables (primarily direct financing leases) that are not subject to fair value disclosure requirements. The fair value of finance receivables is categorized within Level 3 of the fair value hierarchy.


(a)	Primarily represents amounts related to translation adjustments.


(b)	Total allowance, including reserves for operating leases, was $541 million.



	First Quarter
	Pension Benefits
	U.S. Plans						Non-U.S. Plans						Worldwide OPEB
	2016			2015			2016			2015			2016			2015
Service cost	$	128		$	147		$	118		$	135		$	12		$	15
Interest cost	381			454			195			239			48			60
Expected return on assets	(673		)	(732		)	(339		)	(375		)	—			—
Amortization of prior service costs/(credits)	42			39			10			12			(35		)	(51		)
Net remeasurement (gain)/loss	—			—			—			—			—			—
Separation programs/other	—			2			7			7			—			—
Settlements and curtailments	—			—			—			—			—			—
Net periodic benefit cost/(income)	$	(122	)	$	(90	)	$	(9	)	$	18		$	25		$	24


~~(a)~~	~~The fair value of debt includes~~ ~~$676 million~~ ~~and~~ ~~$560 million~~ ~~of Automotive sector short-term debt and~~ ~~$10.8 billion~~ ~~and~~ ~~$10.3 billion~~ of Financial Services sector short-term debt at March 31, 2016 and December 31, 2015, respectively, carried at cost, which approximates fair value. All other debt is categorized within Level 2 of the fair value hierarchy.


~~(b)~~	~~Adjustments related to designated fair value hedges of unsecured debt.~~


(a)	The fair value of debt includes $941 million and $560 million of Automotive short-term debt and $12.5 billion and $10.3 billion of Financial Services short-term debt at September 30, 2016 and December 31, 2015, respectively, carried at cost, which approximates fair value. All other debt is categorized within Level 2 of the fair value hierarchy.