UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q






(Mark One)

 X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
- ---   EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2003 OR
                                                          -------------

     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


                               FORD MOTOR COMPANY
                               ------------------
             (Exact name of registrant as specified in its charter)


         Incorporated in Delaware                38-0549190
     ---------------------------------      --------------------
      (State or other jurisdiction of          (I.R.S. Employer
      incorporation or organization)        Identification Number)


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


        Registrant's telephone number, including area code: 313-322-3000
                                                            ------------

Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X|. No [ ].

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |X|.  No [ ].

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date: As of July 29, 2003, the Registrant had outstanding 1,761,117,906 shares
            -------------                                 -------------
of Common Stock and 70,852,076 shares of Class B Stock.
                    ----------














               Exhibit index located on sequential page number 34




Item 1.  Financial Statements
- -----------------------------

                       Ford Motor Company and Subsidiaries
                           SECTOR STATEMENT OF INCOME
                           --------------------------
                  For the Periods Ended June 30, 2003 and 2002
                     (in millions, except per share amounts)


                                                                                     Second Quarter               First Half
                                                                              -------------------------  --------------------------
                                                                                  2003          2002          2003          2002
                                                                              ------------- -----------  ------------ -------------
                                                                                      (unaudited)                 (unaudited)
<s>                                                                               <c>           <c>           <c>           <c>
       AUTOMOTIVE

       Sales                                                                      $34,182       $35,197       $68,382       $67,368
       Costs and expenses (Note 3)
       Cost of sales                                                               31,684        32,245        62,768        62,168
       Selling, administrative and other expenses                                   2,472         2,365         4,785         4,673
                                                                                  -------       -------       -------       -------
         Total costs and expenses                                                  34,156        34,610        67,553        66,841
                                                                                  -------       -------       -------       -------
       Operating income/(loss)                                                         26           587           829           527

       Interest income                                                                134           171           282           283
       Interest expense                                                               229           336           542           697
                                                                                  -------       -------       -------       -------
         Net interest income/(expense)                                                (95)         (165)         (260)         (414)
       Equity in net income/(loss) of affiliated companies                             72           (19)           93           (80)
                                                                                  -------       -------       -------       -------
       Income/(loss) before income taxes - Automotive                                   3           403           662            33


       FINANCIAL SERVICES
       Revenues                                                                     6,488         7,010        13,176        14,300

       Costs and expenses
       Interest expense                                                             1,598         1,885         3,242         3,873
       Depreciation                                                                 2,277         2,540         4,844         5,101
       Operating and other expenses                                                 1,219         1,214         2,425         2,652
       Provision for credit and insurance losses                                      679           771         1,272         1,731
                                                                                  -------       -------       -------       -------
         Total costs and expenses                                                   5,773         6,410        11,783        13,357
                                                                                  -------       -------       -------       -------

       Income/(loss) before income taxes - Financial Services                         715           600         1,393           943
                                                                                  -------       -------       -------       -------

       TOTAL COMPANY
       Income/(loss) before income taxes                                              718         1,003         2,055           976
       Provision for/(benefit from) income taxes                                      195           289           531           269
                                                                                  -------       -------       -------       -------
       Income/(loss) before minority interests                                        523           714         1,524           707
       Minority interests in net income/(loss) of subsidiaries                         98            95           200           168
                                                                                  -------       -------       -------       -------
       Income/(loss) from continuing operations                                       425           619         1,324           539
       Income/(loss) from discontinued/held-for-sale operations                        (3)           (9)           (6)          (21)
       Loss on disposal of discontinued/held-for-sale operations                       (5)          (40)           (5)          (40)
       Cumulative effect of change in accounting principle                              -             -             -        (1,002)
                                                                                  -------       -------       -------       -------
       Net income/(loss)                                                          $   417       $   570       $ 1,313       $  (524)
                                                                                  =======       =======       =======       =======
       Income/(loss) attributable to Common and Class B Stock
        after Preferred Stock dividends                                           $   417       $   567       $ 1,313       $  (531)
       Average number of shares of Common and Class B
        Stock outstanding                                                           1,832         1,813         1,832         1,810
       AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK (Notes 4 and 10)
       Basic income/(loss)
            Income/(loss) from continuing operations                              $  0.23       $  0.34       $  0.72       $  0.29
            Income/(loss) from discontinued/held-for-sale operations                    -         (0.01)            -         (0.01)
            Loss on disposal of discontinued/held-for-sale operations                   -         (0.02)            -         (0.02)
            Cumulative effect of change in accounting principle                         -             -             -         (0.55)
                                                                                  -------       -------       -------       -------
            Net income/(loss)                                                     $  0.23       $  0.31       $  0.72       $ (0.29)
       Diluted income/(loss)
            Income/(loss) from continuing operations                              $  0.22       $  0.31       $  0.67       $  0.29
            Income/(loss) from discontinued/held-for-sale operations                    -             -             -         (0.01)
            Loss on disposal of discontinued/held-for-sale operations                   -         (0.02)            -         (0.02)
            Cumulative effect of change in accounting principle                         -             -             -         (0.55)
                                                                                  -------       -------       -------       -------
            Net income/(loss)                                                     $  0.22       $  0.29       $  0.67       $ (0.29)

       Cash dividends                                                             $  0.10       $  0.10       $  0.20       $  0.20


The accompanying notes are part of the financial statements.

                                       2



Item 1.  Financial Statements (Continued)
- -----------------------------

                       Ford Motor Company and Subsidiaries
                        CONSOLIDATED STATEMENT OF INCOME
                        --------------------------------
                  For the Periods Ended June 30, 2003 and 2002
                     (in millions, except per share amounts)


                                                                                     Second Quarter               First Half
                                                                              -------------------------  --------------------------
                                                                                  2003          2002          2003          2002
                                                                              ------------- -----------  ------------ -------------
                                                                                      (unaudited)                 (unaudited)
<s>                                                                               <c>           <c>           <c>           <c>
Sales and revenues
Automotive sales                                                                  $34,182       $35,197       $68,382       $67,368
Financial Services revenue                                                          6,488         7,010        13,176        14,300
                                                                                  -------       -------       -------       -------
  Total sales and revenues                                                         40,670        42,207        81,558        81,668

Automotive interest income                                                            134           171           282           283

Costs and expenses
Cost of sales                                                                      31,684        32,245        62,768        62,168
Selling, administrative and other expenses                                          5,968         6,119        12,054        12,426
Interest expense                                                                    1,827         2,221         3,784         4,570
Provision for credit and insurance losses                                             679           771         1,272         1,731
                                                                                  -------       -------       -------        ------
  Total costs and expenses                                                         40,158        41,356        79,878        80,895
Automotive equity in net income/(loss) of affiliated companies                         72           (19)           93           (80)
                                                                                  -------       -------       -------        ------
Income/(loss) before income taxes                                                     718         1,003         2,055           976
Provision for/(benefit from) income taxes                                             195           289           531           269
                                                                                  -------        ------       -------       -------
Income/(loss) before minority interests                                               523           714         1,524           707
Minority interests in net income/(loss) of subsidiaries                                98            95           200           168
                                                                                  -------        ------       -------       -------
Income/(loss) from continuing operations                                              425           619         1,324           539
Income/(loss) from discontinued/held-for-sale operations                               (3)           (9)           (6)          (21)
Loss on disposal of discontinued/held-for-sale operations                              (5)          (40)           (5)          (40)
Cumulative effect of change in accounting principle                                     -             -             -        (1,002)
                                                                                  -------       -------       -------       -------
Net income/(loss)                                                                 $   417       $   570       $ 1,313       $  (524)
                                                                                  =======       =======       =======       =======

Income/(loss) attributable to Common and Class B Stock
 after Preferred Stock dividends                                                  $   417       $   567       $ 1,313       $  (531)

Average number of shares of Common and Class B
 Stock outstanding                                                                  1,832         1,813         1,832         1,810

AMOUNTS PER SHARE OF COMMON AND CLASS B STOCK
Basic income/(loss)
     Income/(loss) from continuing operations                                     $  0.23       $  0.34       $  0.72       $  0.29
     Income/(loss) from discontinued/held-for-sale operations                           -         (0.01)            -         (0.01)
     Loss on disposal of discontinued/held-for-sale operations                          -         (0.02)            -         (0.02)
     Cumulative effect of change in accounting principle                                -             -             -         (0.55)
                                                                                  -------       -------       -------       -------
     Net income/(loss)                                                            $  0.23       $  0.31       $  0.72       $ (0.29)
Diluted income/(loss)
     Income/(loss) from continuing operations                                     $  0.22       $  0.31       $  0.67       $  0.29
     Income/(loss) from discontinued/held-for-sale operations                           -             -             -         (0.01)
     Loss on disposal of discontinued/held-for-sale operations                          -         (0.02)            -         (0.02)
     Cumulative effect of change in accounting principle                                -             -             -         (0.55)
                                                                                  -------       -------       -------       -------
     Net income/(loss)                                                            $  0.22       $  0.29       $  0.67       $ (0.29)

Cash dividends                                                                    $  0.10       $  0.10       $  0.20       $  0.20


The accompanying notes are part of the financial statements.


                                       3



Item 1.  Financial Statements (Continued)
- -----------------------------

                       Ford Motor Company and Subsidiaries
                              SECTOR BALANCE SHEET
                              --------------------
                                  (in millions)


                                                                                                      June 30,         December 31,
                                                                                                        2003              2002
                                                                                                    --------------    --------------
                                                                                                     (unaudited)
<s>                                                                                                 <c>                 <c>
ASSETS
Automotive
Cash and cash equivalents                                                                           $  7,486            $  5,180
Marketable securities                                                                                 14,992              17,464
Loaned securities (Note 5)                                                                             4,647                   -
                                                                                                    --------            --------
   Total cash, marketable and loaned securities                                                       27,125              22,644

Receivables                                                                                            2,438               2,065
Inventories (Note 7)                                                                                   8,448               6,980
Deferred income taxes                                                                                  3,188               3,462
Other current assets                                                                                   6,316               4,551
Current receivable from Financial Services                                                             1,329               1,062
                                                                                                    --------            --------
   Total current assets                                                                               48,844              40,764

Equity in net assets of affiliated companies                                                           2,558               2,470
Net property                                                                                          38,054              36,364
Deferred income taxes                                                                                 12,112              11,694
Goodwill (Note 8)                                                                                      5,094               4,805
Other intangible assets (Note 8)                                                                         830                 812
Assets of discontinued/held-for-sale operations                                                            -                  98
Other assets                                                                                          11,240              10,783
                                                                                                    --------            --------
   Total Automotive assets                                                                           118,732             107,790

Financial Services
Cash and cash equivalents                                                                             10,198               7,070
Investments in securities                                                                                692                 807
Finance receivables, net                                                                             109,319              97,030
Net investment in operating leases                                                                    36,273              40,055
Retained interest in sold receivables                                                                 14,530              17,618
Goodwill (Note 8)                                                                                        762                 752
Other intangible assets (Note 8)                                                                         244                 248
Assets of discontinued/held-for-sale operations                                                            -               2,406
Other assets                                                                                          16,768              16,643
Receivable from Automotive                                                                             4,273               4,803
                                                                                                    --------            --------
   Total Financial Services assets                                                                   193,059             187,432
                                                                                                    --------            --------
   Total assets                                                                                     $311,791            $295,222
                                                                                                    ========            ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive
Trade payables                                                                                      $ 15,885            $ 14,606
Other payables                                                                                         3,326               2,485
Accrued liabilities                                                                                   31,509              27,644
Debt payable within one year                                                                             479                 557
                                                                                                    --------            --------
   Total current liabilities                                                                          51,199              45,292

Long-term debt                                                                                        14,001              13,607
Other liabilities                                                                                     49,252              46,886
Deferred income taxes                                                                                    177                 303
Liabilities of discontinued/held-for-sale operations                                                      27                 138
Payable to Financial Services                                                                          4,273               4,803
                                                                                                    --------            --------
   Total Automotive liabilities                                                                      118,929             111,029

Financial Services
Payables                                                                                               2,621               1,890
Debt                                                                                                 154,958             148,058
Deferred income taxes                                                                                 11,623              11,644
Other liabilities and deferred income                                                                  8,578               9,448
Liabilities of discontinued/held-for-sale operations                                                       -                 831
Payable to Automotive                                                                                  1,329               1,062
                                                                                                    --------            --------
   Total Financial Services liabilities                                                              179,109             172,933

Company-obligated mandatorily redeemable preferred securities of subsidiary
 trusts holding solely junior subordinated debentures of the Company                                   5,669               5,670

Stockholders' equity
Capital stock
 Common Stock, par value $0.01 per share (1,837 million shares issued)                                    18                  18
 Class B Stock, par value $0.01 per share (71 million shares issued)                                       1                   1
Capital in excess of par value of stock                                                                5,396               5,420
Accumulated other comprehensive income/(loss) (Note 11)                                               (5,065)             (6,531)
Treasury stock                                                                                        (1,872)             (1,977)
Earnings retained for use in business                                                                  9,606               8,659
                                                                                                    --------            --------
       Total stockholders' equity                                                                      8,084               5,590
                                                                                                    --------            --------
   Total liabilities and stockholders' equity                                                       $311,791            $295,222
                                                                                                    ========            ========


The accompanying notes are part of the financial statements.

                                       4



Item 1.  Financial Statements (Continued)
- -----------------------------

                       Ford Motor Company and Subsidiaries
                           CONSOLIDATED BALANCE SHEET
                           --------------------------
                                  (in millions)


                                                                                                    June 30,         December 31,
                                                                                                      2003               2002
                                                                                                  ---------------   ---------------
                                                                                                    (unaudited)
<s>                                                                                                <c>                <c>
      ASSETS
      Cash and cash equivalents                                                                    $ 17,684           $ 12,250
      Marketable securities                                                                          15,684             18,271
      Loaned securities                                                                               4,647                  -
      Receivables                                                                                     2,438              2,065
      Finance receivables, net                                                                      109,319             97,030
      Net investment in operating leases                                                             36,273             40,055
      Retained interest in sold receivables                                                          14,530             17,618
      Inventories                                                                                     8,448              6,980
      Equity in net assets of affiliated companies                                                    3,596              3,569
      Net property                                                                                   39,634             37,935
      Deferred income taxes                                                                          15,320             15,213
      Goodwill                                                                                        5,856              5,557
      Other intangible assets                                                                         1,074              1,060
      Assets of discontinued/held-for-sale operations                                                     -              2,504
      Other assets                                                                                   31,686             29,250
                                                                                                   --------           --------
        Total assets                                                                               $306,189           $289,357
                                                                                                   ========           ========

      LIABILITIES AND STOCKHOLDERS' EQUITY
      Payables                                                                                     $ 21,832           $ 18,981
      Accrued liabilities                                                                            29,117             25,088
      Debt                                                                                          169,438            162,222
      Other liabilities and deferred income                                                          57,547             56,276
      Deferred income taxes                                                                          14,475             14,561
      Liabilities of discontinued/held-for-sale operations                                               27                969
                                                                                                   --------           --------
        Total liabilities                                                                           292,436            278,097

      Company-obligated mandatorily redeemable preferred
       securities of subsidiary trusts holding solely
       junior subordinated debentures of the Company                                                  5,669              5,670

      Stockholders' equity
      Capital stock
       Common Stock, par value $0.01 per share (1,837 million shares issued)                             18                 18
       Class B Stock, par value $0.01 per share (71 million shares issued)                                1                  1
      Capital in excess of par value of stock                                                         5,396              5,420
      Accumulated other comprehensive income/(loss)                                                  (5,065)            (6,531)
      Treasury stock                                                                                 (1,872)            (1,977)
      Earnings retained for use in business                                                           9,606              8,659
                                                                                                   --------           --------
         Total stockholders' equity                                                                   8,084              5,590
                                                                                                   --------           --------
         Total liabilities and stockholders' equity                                                $306,189           $289,357
                                                                                                   ========           ========


      The accompanying notes are part of the financial statements.

                                       5



Item 1.  Financial Statements (Continued)
- -----------------------------

                       Ford Motor Company and Subsidiaries
                    CONDENSED SECTOR STATEMENT OF CASH FLOWS
                    ----------------------------------------
                  For the Periods Ended June 30, 2003 and 2002
                                  (in millions)


                                                                                First Half 2003              First Half 2002
                                                                          ---------------------------- -----------------------------
                                                                                          Financial                    Financial
                                                                           Automotive     Services      Automotive      Services
                                                                          ------------ --------------- ------------- ---------------
<s>                                                                         <c>          <c>             <c>          <c>
                                                                                (unaudited)                   (unaudited)


Cash and cash equivalents at January 1                                      $ 5,180      $  7,070        $ 4,064      $  3,133

Cash flows from operating activities before
 securities trading                                                           5,748         8,444          8,096         8,082
Net sales/(purchases) of trading securities                                      10          (380)        (3,766)          (60)
                                                                            -------      --------        -------      --------
   Net cash flows from operating activities                                   5,758         8,064          4,330         8,022

Cash flows from investing activities
 Capital expenditures                                                        (3,415)         (118)        (2,936)         (300)
 Acquisitions of receivables and lease investments                                -       (28,962)             -       (44,454)
 Collections of receivables and lease investments                                 -        18,800              -        27,078
 Net acquisitions of daily rental vehicles                                        -        (1,545)             -        (1,896)
 Purchases of securities                                                     (4,255)         (319)        (1,030)         (320)
 Sales and maturities of securities                                           2,093           376            898           268
 Proceeds from sales of receivables and lease investments                         -        13,573              -        19,430
 Proceeds from sale of businesses                                                77           204              -             -
 Net investing activity with Financial Services                               1,867             -             29             -
 Cash paid for acquisitions                                                       -             -            (22)            -
 Other                                                                          489           (37)           (45)          426
                                                                            -------      --------        -------      --------
   Net cash (used in)/provided by investing activities                       (3,144)        1,972         (3,106)          232

Cash flows from financing activities
 Cash dividends                                                                (366)            -           (369)            -
 Net sales/(purchases) of Common Stock                                           (3)            -             92             -
 Proceeds from mandatorily redeemable convertible
  preferred securities                                                            -             -          4,900             -
 Changes in short-term debt                                                    (119)       (2,342)           (91)       (6,929)
 Proceeds from issuance of other debt                                           825         7,720            265        12,359
 Principal payments on other debt                                              (548)      (12,395)          (691)      (13,965)
 Repayment of debt from discontinued operations                                   -         1,421              -             -
 Net financing activity with Automotive                                           -        (1,867)             -           (29)
 Other                                                                           (5)           48            (14)          478
                                                                            -------      --------        -------      --------
   Net cash (used in)/provided by financing activities                         (216)       (7,415)         4,092        (8,086)

Effect of exchange rate changes on cash                                         175           240             75           249
Net transactions with Automotive/Financial Services                            (267)          267         (1,001)        1,001
                                                                            -------      --------        -------      --------

   Net increase/(decrease) in cash and cash equivalents                       2,306         3,128          4,390         1,418
                                                                            -------      --------        -------      --------

Cash and cash equivalents at June 30                                        $ 7,486      $ 10,198        $ 8,454      $  4,551
                                                                            =======      ========        =======      ========

 The accompanying notes are part of the financial statements.

                                       6



Item 1.  Financial Statements (Continued)
- -----------------------------



                       Ford Motor Company and Subsidiaries
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                 ----------------------------------------------
                  For the Periods Ended June 30, 2003 and 2002
                                  (in millions)


                                                                                 First Half
                                                                              2003        2002
                                                                           ----------- ----------
                                                                                 (unaudited)
<s>                                                                        <c>           <c>
Cash and cash equivalents at January 1                                     $ 12,250      $  7,197

Cash flows from operating activities before
 securities trading                                                          14,192        16,178
Net sales/(purchases) of trading securities                                    (370)       (3,826)
                                                                           --------      --------
   Net cash flows from operating activities                                  13,822        12,352

Cash flows from investing activities
 Capital expenditures                                                        (3,533)       (3,236)
 Acquisitions of receivables and lease investments                          (28,962)      (44,454)
 Collections of receivables and lease investments                            18,800        27,078
 Net acquisitions of daily rental vehicles                                   (1,545)       (1,896)
 Purchases of securities                                                     (4,574)       (1,350)
 Sales and maturities of securities                                           2,469         1,166
 Proceeds from sales of receivables and lease investments                    13,573        19,430
 Proceeds from sale of businesses                                               281             -
 Cash paid for acquisitions                                                       -           (22)
 Other                                                                          452           381
                                                                           --------      --------
   Net cash (used in)/provided by investing activities                       (3,039)       (2,903)

Cash flows from financing activities
 Cash dividends                                                                (366)         (369)
 Net sales/(purchases) of Common Stock                                           (3)           92
 Proceeds from mandatorily redeemable convertible
  preferred securities                                                            -         4,900
 Changes in short-term debt                                                  (2,461)       (7,020)
 Proceeds from issuance of other debt                                         8,545        12,624
 Principal payments on other debt                                           (12,943)      (14,656)
 Repayment of debt from discontinued operations                               1,421             -
 Other                                                                           43           464
                                                                           --------      --------
   Net cash (used in)/provided by financing activities                       (5,764)       (3,965)

Effect of exchange rate changes on cash                                         415           324
                                                                           --------      --------


   Net increase/(decrease) in cash and cash equivalents                       5,434         5,808
                                                                           --------      --------

Cash and cash equivalents at June 30                                       $ 17,684      $ 13,005
                                                                           ========      ========

The accompanying notes are part of the financial statements.

                                       7



Item 1.  Financial Statements (Continued)
- -----------------------------

                       Ford Motor Company and Subsidiaries
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                                   (unaudited)

1.   Financial  Statements - The financial data presented  herein are unaudited,
     but in the opinion of management  fairly  present in all material  respects
     the results of operations and financial condition of Ford Motor Company and
     its  consolidated  subsidiaries for the periods and at the dates presented.
     Results for interim periods should not be considered  indicative of results
     for a full  year.  Reference  should  be made to the  financial  statements
     contained in our Annual Report on Form 10-K for the year ended December 31,
     2002  (the  "10-K  Report").  For  purposes  of this  report,  "Ford",  the
     "Company", "we", "our", "us" or similar references means Ford Motor Company
     and its consolidated  subsidiaries  unless the context requires  otherwise.
     Certain amounts for prior periods were reclassified to conform with current
     period  presentation  consistent with the  presentation in the 10-K Report.
     Reclassifications  include profits and losses related to  discontinued  and
     held-for-sale operations.

2.   New Accounting Standard - In May 2003, the Financial  Accounting  Standards
     Board ("FASB") issued Statement of Financial  Accounting Standards ("SFAS")
     No. 150, Accounting for Certain Financial  Instruments With Characteristics
     of Both  Liabilities  and Equity.  SFAS No. 150  establishes  how an issuer
     classifies   and  measures   certain   financial   instruments   that  have
     characteristics of both liabilities and equity. The statement requires that
     an issuer  classify  financial  instruments  that are within its scope as a
     liability. Previously, many of these instruments were classified as equity.
     SFAS No. 150 is effective  immediately for qualifying financial instruments
     issued  after May 31, 2003 and is effective  for existing  issuances in the
     third quarter  2003. We are adopting SFAS No. 150 as it becomes  effective.
     We expect  to  reclassify  the trust  preferred  securities  of Ford  Motor
     Company  Capital  Trust I  ($669  million  at June  30,  2003),  which  are
     presently reported in the mezzanine section of the balance sheet.

3.   Selected  Automotive  Costs and  Expenses  are  summarized  as follows  (in
     millions):


                                                                  Second Quarter             First Half
                                                              -----------------------    ----------------------
                                                                 2003          2002         2003         2002
                                                              ----------    ---------    ---------    ---------
<s>                                                              <c>           <c>         <c>          <c>
     Depreciation                                                $644          $631        $1,337       $1,219
     Amortization of special tools                                667           651         1,352        1,223
     Postretirement expense                                       790           572         1,588        1,060


4.   Accounting Policy - Stock-based  Compensation - During the first quarter of
     2003,  we adopted the fair value  recognition  provisions  of SFAS No. 123,
     Accounting  for  Stock-Based   Compensation,   for   stock-based   employee
     compensation,   effective  as  of  January  1,  2003.  Under  the  modified
     prospective method of adoption selected by the Company under the provisions
     of SFAS No. 148,  Accounting for Stock-Based  Compensation - Transition and
     Disclosure, stock-based employee compensation expense recognized in 2003 is
     the same as that  which  would  have  been  recognized  had the fair  value
     recognition  provisions of SFAS No. 123 been applied to all awards from its
     original effective date. Results of prior years have not been restated. The
     following table illustrates the effect on net income and earnings per share
     if the fair value method had been applied to all  outstanding  and unvested
     stock option awards in each period (in millions):


                                                                            Second Quarter              First Half
                                                                       -------------------------  ------------------------
                                                                         2003          2002         2003        2002
                                                                       ------------  -----------  ----------- ------------
<s>                                                                    <c>           <c>          <c>         <c>
     Net income/(loss) attributable to Common
      and Class B Stock, as reported                                   $  417        $  567       $1,313      $ (531)
     Add: Employee stock option expense included in
       reported net income, net of related tax effects                     28             -           55            -
     Deduct: Total employee stock option expense
       determined under fair value method for all
       awards, net of related tax effects                                 (28)          (41)         (55)        (70)
                                                                       ------        ------       ------      ------
     Pro forma net income/(loss)                                       $  417        $  526       $1,313      $ (601)
                                                                       ======        ======       ======      ======

     Earnings per share:
       Basic - as reported                                             $ 0.23        $ 0.31       $ 0.72      $(0.29)
       Basic - pro forma                                               $ 0.23        $ 0.29       $ 0.72      $(0.33)

       Diluted - as reported                                           $ 0.22        $ 0.29       $ 0.67      $(0.29)
       Diluted - pro forma                                             $ 0.22        $ 0.27       $ 0.67      $(0.33)


                                       8



Item 1.  Financial Statements (Continued)
- -----------------------------

                       Ford Motor Company and Subsidiaries
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                                   (unaudited)

5.   Loaned Securities - We loan certain  securities from our portfolio to other
     institutions.  Such  securities are classified as Loaned  securities on the
     Balance Sheet. Collateral for the loaned securities,  consisting of cash or
     other  securities,  is required to be  maintained  at a rate of 102% of the
     market value of a loaned security.  Cash collateral received is recorded as
     an asset in Other  current  assets,  offset by an  obligation to return the
     collateral in Other payables.  Income  received from loaning  securities is
     recorded as Interest income.

6.   FCAR Owner  Trust - Ford Credit uses a special  purpose  trust,  FCAR Owner
     Trust ("FCAR"), as a source of funds for its operations.  FCAR's activities
     are limited to issuing  asset-backed  commercial paper and other securities
     and buying highly rated  asset-backed  securities  issued by securitization
     special purpose entities ("SPEs") sponsored by Ford Credit.

     In the  second  quarter of 2003,  Ford  Credit  purchased  a portion of the
     equity of FCAR from unaffiliated  parties. As a result of this transaction,
     FCAR's assets, liabilities and results of operations were consolidated into
     Ford  Credit's   financial   statements.   In  addition,   the   accounting
     consolidation  of FCAR also  caused  certain of the Ford  Credit  sponsored
     securitization SPEs that sell asset-backed securities to FCAR to lose their
     status as  qualifying  SPEs under the  Statement  of  Financial  Accounting
     Standards  ("SFAS") No. 140,  Accounting  for  Transfers  and  Servicing of
     Financial  Assets and  Extinguishments  of Liabilities.  Consequently,  the
     receivables  previously  sold  by  us  to  these  SPEs  were  deemed  to be
     reacquired by us in accordance  with SFAS No.140  requirements  and are now
     reported on-balance sheet at fair value as of June 30, 2003.  Following the
     accounting  consolidation  of  FCAR,  most  sales  of  receivables  to Ford
     Credit-sponsored  SPEs that  sell  asset-back  securities  to FCAR will not
     qualify as sales for accounting  purposes and will,  instead,  be  reported
     on-balance sheet.

     The accounting consolidation of FCAR did not have a material impact on Ford
     Credit's  earnings,  back-up  credit  facilities,  unsecured  debt  funding
     programs or other  securitization  programs.  No gain or loss was  recorded
     upon  consolidation.  Notwithstanding  this accounting  consolidation,  the
     receivables sold to the SPEs and the  asset-backed  securities held by FCAR
     remain  available only for the SPEs and FCAR and their  investors and other
     participants and are not available to pay Ford Credit's  obligations or the
     claims of its creditors.  The  bankruptcy  remoteness of these entities and
     the isolation of assets achieved in these  transactions were not changed by
     the consolidation of FCAR.

     At June 30,  2003,  about $12  billion  of retail  installment  receivables
     reported on Ford Credit's  balance sheet have been sold for legal  purposes
     to Ford Credit-sponsored SPEs that sell asset-backed securities to FCAR and
     are available only to pay  securitization  investors and other participants
     and are not available to pay the  obligations  of Ford Credit or the claims
     of Ford Credit's  creditors.  These  finance  receivables  supported  $11.3
     billion of asset-backed  commercial  paper issued by FCAR, which is payable
     solely  out of  collections  on  these  receivables  and is not  the  legal
     obligation of Ford Credit.

7.   Automotive Inventories are summarized as follows (in millions):


                                                                 June 30,       December 31,
                                                                  2003             2002
                                                             ---------------  ----------------
<s>                                                              <c>              <c>
     Raw materials, work in process and supplies                 $3,543           $3,174
     Finished products                                            5,866            4,763
                                                                 ------           ------
       Total inventories at FIFO                                  9,409            7,937
     Less LIFO adjustment                                          (961)            (957)
                                                                 ------           ------
       Total inventories                                         $8,448           $6,980
                                                                 ======           ======


8.   Goodwill and Other  Intangibles - We perform  annual  testing in the second
     quarter on goodwill and certain other intangible assets to determine if any
     impairment (i.e., the comparison of estimated fair value to carrying value)
     has occurred.  Fair value is estimated  using the present value of expected
     cash  flows.  No  impairment  resulted  from our annual  test in the second
     quarter of 2003.

     Changes in the carrying amount of goodwill are as follows (in millions):


                                                          Automotive Sector                      Financial Services Sector
                                               ----------------------------------------    -----------------------------------
                                                 North America       International           Ford Credit          Hertz
                                               ------------------    ------------------    ----------------    ---------------
<s>                                              <c>                   <c>                   <c>                 <c>
     Beginning balance,
       December 31, 2002                         $  157                $4,648                $  129              $  623
      Impairment                                      -                     -                     -                   -
      Exchange translation/other *                    5                   284                     -                  10
                                                 ------                ------                ------              ------
     Ending balance, June 30, 2003               $  162                $4,932                $  129              $  633
                                                 ======                ======                ======              ======
     - - - - -
     * Primarily reflects the impact of foreign exchange.


     In addition,  included within Equity in net assets of affiliated  companies
was goodwill of $412 million at June 30, 2003.

                                       9



Item 1.  Financial Statements (Continued)
- -----------------------------

                       Ford Motor Company and Subsidiaries
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                                   (unaudited)

8.   Goodwill and Other Intangibles (Continued)

     The components of identifiable  intangible assets are as follows as of June
30, 2003 (in millions):


                                                Automotive Sector                         Financial Services Sector
                                       ----------------------------------------    --------------------------------------------
                                         Amortizable        Non-amortizable           Amortizable            Non-amortizable
                                       ---------------    ---------------------    ------------------    ----------------------
<s>                                       <c>                  <c>                    <c>                     
     Gross carrying amount                $500                 $414                   $ 91                    $189
     Less:  accumulated
             amortization                  (84)                   -                    (36)                      -
                                          ----                 ----                   ----                    ----
     Net intangible assets                $416                 $414                   $ 55                    $189
                                          ====                 ====                   ====                    ====


     Pre-tax amortization expense for the six months ended June 30, 2003 was $13
     million.  Intangible  asset  amortization is forecasted to range from about
     $15 to $25 million per year for the next five years.

9.   Variable   Interest   Entities  -  In  January   2003,   the  FASB   issued
     Interpretation  No. 46,  Consolidation of Variable  Interest Entities ("FIN
     46"),  which clarifies  accounting  guidance on  consolidation.  A Variable
     Interest  Entity  ("VIE") does not share  economic risk and reward  through
     typical  equity  ownership  arrangements;  instead,  contractual  or  other
     relationships re-distribute economic risks and rewards among equity holders
     and other parties. Once an entity is determined to be a VIE, the party with
     the controlling financial interest, the primary beneficiary, is required to
     consolidate  it. FIN 46 also  requires  disclosures  regarding  significant
     relationships with VIEs, whether or not consolidated.

     Automotive:

     Ford has determined that a subsidiary  trust,  the Ford Motor Capital Trust
     II ("Trust  II") is a VIE,  of which Ford is not the  primary  beneficiary.
     Trust II has  outstanding  6.50%  Cumulative  Convertible  Trust  Preferred
     Securities with an aggregate liquidation preference of $5 billion. The sole
     assets of Trust II are  $5,155  million  principal  amount  of 6.5%  Junior
     Subordinated  Debentures due 2032 of Ford Motor  Company.  Prior to July 1,
     2003,  Trust II has been  consolidated  with Ford for  financial  statement
     purposes and the preferred  shares of Trust II have been  presented  within
     the mezzanine section of our balance sheet. Beginning in the third quarter,
     we expect to de-consolidate  Trust II and Ford's obligation  represented by
     the junior  subordinated  debentures  will be reported  as a  component  of
     Long-term debt within the balance  sheet.  The  de-consolidation  would not
     change  Trust  II's  obligations  to  its  preferred  shareholders  or  our
     obligations to Trust II.

     The Automotive sector has invested in and contracted with joint ventures to
     manufacture and/or assemble vehicles or components, several of which may be
     VIEs of which Ford expects to be the primary  beneficiary  and, upon Ford's
     adoption of FIN 46, plans to consolidate.

     In the  second  quarter  of 2003,  we  consolidated  a newly  formed  joint
     venture:

          Tekfor  Cologne Gmbh - a 50/50 joint  venture with  Neumayer  Holdings
          GmbH, a German company, to which we transferred our forging operations
          in Cologne.  The joint venture produces forged  components,  primarily
          for transmissions  and chassis,  for use in Ford vehicles and sales to
          third parties. Ford currently supplies most of the hourly and salaried
          labor requirements of this joint venture. Ford employees who worked at
          the  transferred  operations at the time of the formation of the joint
          venture  are  assigned to the joint  venture by Ford.  In the event of
          surplus labor at the joint  venture,  Ford  employees  assigned to the
          joint  venture  may return to Ford.  Employees  hired in the future to
          work in  these  operations  will be  employed  directly  by the  joint
          venture.  Tekfor Cologne Gmbh reimburses Ford for the full cost of the
          hourly and salaried labor supplied by Ford.

     In the  third  quarter  of  2003,  we plan  to  consolidate  the  following
     pre-existing joint ventures:

          Ford Otosan - a  long-standing  joint  venture in Turkey  between Ford
          (41%  partner),  the Koc  Group of Turkey  (41%  partner)  and  public
          investors (18%).  Ford Otosan is our single source supplier of the new
          Ford Transit Connect vehicle. In addition,  we recently announced that
          production of the Ford Transit Van in Europe currently taking place at
          our Genk Plant in Belgium  will be  transferred  to the Kocaeli  Plant
          owned by Ford Otosan.  Ford Otosan now  assembles a limited  number of
          Transit Vans for selected markets.  We expect that the Kocaeli Plant's
          capacity  will be  expanded  to  replace  the  Genk  Plant  production
          following conclusion of binding agreements. At that point, Ford Otosan
          will assemble  Transit as a major supplier to our European  Automotive
          operations. Production of the Transit Van in Southampton, England will
          continue.   Substantially   all  of  the  salaried  and  hourly  labor
          requirements of Ford Otosan are employees of Ford Otosan,  with only a
          limited number of Ford salaried  employees  assigned to Ford Otosan to
          provide technical  assistance.  Ford Otosan reimburses us for the full
          cost of the employees we supply.

                                       10




Item 1.  Financial Statements (Continued)
- -----------------------------

                       Ford Motor Company and Subsidiaries
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                                   (unaudited)

9.   Variable Interest Entities (Continued)

          Getrag Ford  Transmissions  GmbH - a 50/50 joint  venture  with Getrag
          Deutsche  Venture  GmbH & Co. Kg i.G., a German  company,  to which we
          transferred our European manual  transmission  operations in Halewood,
          England,  Cologne,  Germany and  Bordeaux,  France.  The Getrag  joint
          venture  produces  manual   transmissions  for  our  European  vehicle
          assembly  operations.  Ford currently  supplies most of the hourly and
          salaried  labor  requirements  of the  operations  transferred  to the
          Getrag joint  venture.  Ford  employees who worked at the  transferred
          operations  at the time of the  formation  of the  joint  venture  are
          assigned to the joint  venture by Ford.  In the event of surplus labor
          at the joint venture, Ford employees assigned to the joint venture may
          return  to  Ford.  Employees  hired  in the  future  to work in  these
          operations will be employed directly by the joint venture. Getrag Ford
          Transmissions GmbH reimburses Ford for the full cost of the hourly and
          salaried labor supplied by Ford.

          ZF  Transmission  Technologies  L.L.C. - a joint venture  between Ford
          (49% partner) and ZF Friedrichshafen Germany (51% partner). This joint
          venture owns ZF Batavia L.L.C. which operates our former Batavia, Ohio
          automatic  transmission  business.  ZF Batavia  L.L.C.  will  produce,
          starting  in  2003,   a  Front  Wheel  Drive   Continuously   Variable
          Transmission  ("CVT") for use in certain of our vehicles sold in North
          America  and  Europe.  ZF Batavia  also  produces a Front  Wheel Drive
          4-Speed  Automatic  Transmission  that is  currently  used in the Ford
          Mondeo,  as well as in both the Ford  Escape and Mazda  Tribute.  Ford
          supplies part of the hourly labor requirements to the ZF Batavia plant
          consisting  primarily of Ford hourly employees who worked at the plant
          prior to the joint venture being formed.  ZF Batavia  reimburses  Ford
          for the full cost of the hourly labor.

          Dealer Development  Automotive  Dealerships ("DDD") - Since 1950, Ford
          has been  operating its DDD program.  The DDD program's  purpose is to
          facilitate  the  establishment  of independent  franchised  dealers by
          allowing a participating  dealership operator to become the sole owner
          of a Ford and/or Lincoln Mercury dealership  corporation by purchasing
          equity from Ford using the operator's share of dealership net profits.
          Ford has launched over 1,600 dealerships via the DDD program since its
          inception and currently holds equity  interests in  approximately  160
          dealerships.

     We are currently  analyzing these and other joint ventures to determine the
     impact of  consolidation  under FIN 46. We believe  additional  liabilities
     recognized as a result of consolidating VIEs would not represent additional
     claims on our general assets;  rather,  they would represent claims against
     the additional  assets  recognized as a result of  consolidating  the VIEs.
     Conversely,  we  believe  additional  assets  recognized  as  a  result  of
     consolidating  these VIEs would not represent  additional assets that could
     be used to satisfy claims against our general assets.

     Additionally,  we have  identified  a VIE for which we are not the  primary
     beneficiary,  Kwik-Fit  Group  Limited,  of  which  we  have  a 19%  equity
     interest.  Kwik-Fit  Group  Limited is the company that acquired our former
     interest in Kwik-Fit Holdings Ltd.

     Ford Credit:

     Ford  Credit has  identified  FCAR as a VIE. As  discussed  in Note 6, Ford
     Credit purchased certain interests in FCAR from unaffiliated parties, which
     resulted in the  financial  statement  consolidation  of FCAR in the second
     quarter of 2003.

     In addition,  Ford Credit sells receivables to bank-sponsored  asset-backed
     commercial  paper issuers that are SPEs of the sponsor bank.  Under FIN 46,
     the sponsor banks may be required to consolidate the assets and liabilities
     of these SPEs into their  financial  results or restructure  these SPEs. At
     June  30,  2003,  these  SPEs  held  approximately  $6  billion  of  retail
     installment  sale contracts  previously  owned by Ford Credit.  Ford Credit
     believes it will not be required to  consolidate  any portion of these SPEs
     in its financial results under FIN 46. Also, none of the bank sponsors have
     indicated to Ford Credit any  intention  to terminate  their SPEs or reduce
     their purchases of receivables as a result of FIN 46.

     Ford  Credit  also has  reviewed  its joint  venture  arrangements  and has
     determined  that three may be VIEs.  Ford Credit is  continuing  to analyze
     these  joint  ventures  to  determine  if it is  the  primary  beneficiary.
     Consolidation  of these  entities  into Ford  Credit  would not  materially
     impact our financial statements.

                                       11



Item 1.  Financial Statements (Continued)
- -----------------------------

                       Ford Motor Company and Subsidiaries
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                                   (unaudited)

10.  Income Per Share of Common and Class B Stock - The  calculation  of diluted
     income per share of Common and Class B Stock takes into  account the effect
     of  obligations,  such  as  stock  options,  considered  to be  potentially
     dilutive.  Basic and  diluted  income per share were  calculated  using the
     following (in millions):


                                                                             Second Quarter                      First Half
                                                                        --------------------------       ---------------------------
                                                                           2003           2002               2003           2002
                                                                        -----------    -----------       -----------    ------------
<s>                                                                     <c>            <c>               <c>            <c>
     Diluted Income
     --------------
     Income/(loss) attributable to Common and Class B
      Stock after Preferred Stock dividends                             $  417         $  567            $1,313         $ (531)
     Convertible preferred securities interest                              54             54               107              -
                                                                        ------         ------            ------         ------
       Diluted income/(loss)                                            $  471         $  621            $1,420         $ (531)
                                                                        ======         ======            ======         ======

     Average shares outstanding                                          1,832          1,813             1,832          1,810
     Issuable and uncommitted ESOP shares                                   (2)            (1)               (2)            (1)
                                                                        ------         ------            ------         ------
       Basic shares                                                      1,830          1,812             1,830          1,809
     Net dilutive effect of options                                         12             18                 8             17
     Convertible preferred securities                                      282            282               282              -*
                                                                        ------         ------            ------         ------
       Diluted shares                                                    2,124          2,112             2,120          1,826
                                                                        ======         ======            ======         ======

     - - - - -
     * Not included in calculation of diluted earnings per share due to their
       antidilutive effect (282 million shares related to convertible preferred
       securities).


11.  Comprehensive  Income  -  Other  comprehensive  income  primarily  reflects
     adjustments for foreign currency  translation and SFAS No. 133,  Accounting
     for Derivative  Instruments  and Hedging  Activities.  Total  comprehensive
     income is summarized as follows (in millions):


                                                                             Second Quarter                      First Half
                                                                        --------------------------       ---------------------------
                                                                          2003           2002              2003           2002
                                                                        -----------    -----------       -----------    ------------
<s>                                                                     <c>            <c>               <c>            <c>
     Net income/(loss)                                                  $  417         $  570            $1,313         $ (524)
     Other comprehensive income/(loss)                                   1,054          2,321             1,466          2,981
                                                                        ------         ------            ------         ------
       Total comprehensive income/(loss)                                $1,471         $2,891            $2,779         $2,457
                                                                        ======         ======            ======         ======


12.  Guarantees - On November 26, 2002, FASB issued  Interpretation No. 45 ("FIN
     45"),  Guarantor's  Accounting and Disclosure  Requirements for Guarantees,
     Including  Indirect  Guarantees  of  Indebtedness  of Others.  For  certain
     guarantees  issued after  December 31, 2002, FIN 45 requires a guarantor to
     recognize,  upon issuance of a guarantee, a liability for the fair value of
     the guarantee.  The fair values of guarantees and  indemnifications  issued
     during 2003 are recorded in the financial statements and are de minimis.

     At June 30, 2003, the following guarantees were issued and outstanding:

     Guarantees  related to affiliates and third parties:  We guarantee debt and
     lease  obligations of certain joint  ventures as well as certain  financial
     obligations  of outside  third  parties to support  business  and  economic
     growth.  Expiration  dates vary, and  guarantees  will terminate on payment
     and/or  cancellation  of the  obligation.  A payment  would be triggered by
     failure of the guaranteed  party to fulfill its  obligation  covered by the
     guarantee. In some circumstances, we are entitled to recover from the third
     party  amounts  paid by us under the  guarantee.  However,  our  ability to
     enforce these rights is sometimes stayed until the guaranteed party is paid
     in full.  The  maximum  potential  payments  under these  guarantees  total
     approximately $541 million, the majority of which relates to the Automotive
     sector.

     Sales to third parties of Automotive receivables,  with recourse: From time
     to time,  the  Automotive  sector sells  receivables  to third parties with
     recourse.  Receivables  are sold on a rolling  basis and  individual  sales
     liquidate at different  times.  A payment  would be triggered by failure of
     the obligor to fulfill its obligations covered by the contract. The maximum
     potential amount of future payments is approximately $23 million.

     Indemnifications:  In the ordinary course of business, we execute contracts
     involving  indemnifications  standard in the industry and  indemnifications
     specific  to  a  transaction  such  as  the  sale  of  a  business.   These
     indemnifications  might  include  claims  against  any  of  the  following:
     environmental,  tax and shareholder matters;  intellectual property rights;
     governmental regulations and employment-related  matters; dealer, supplier,
     and other commercial contractual relationships; and financial matters, such
     as securitizations.  Performance under these indemnities would generally be
     triggered  by a breach of terms of the  contract or by a third party claim.
     We regularly evaluate the

                                       12



Item 1.  Financial Statements (Continued)
- -----------------------------

                       Ford Motor Company and Subsidiaries
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                                   (unaudited)

12.  Guarantees (Continued)

     probability of having to incur costs associated with these indemnifications
     and have accrued for expected  losses that are probable.  The primary types
     of indemnifications for which payments are possible are as follows:

          Environmental:   We  have   indemnified   various  parties  for  costs
          associated with  remediating  numerous  hazardous  substance  storage,
          recycling  or  disposal  sites and,  in some  instances,  for  natural
          resource  damages.   Costs  or  damages  for  which  we  may  be  held
          responsible could be substantial. The contingent losses that we expect
          to incur in  connection  with these  sites have been  accrued  and are
          reflected in our financial  statements in  accordance  with  generally
          accepted  accounting  principles.  The  aggregate  amount  accrued for
          environmental  indemnification  liabilities reflected in our financial
          statements is $100 million.  The accrual represents the estimated cost
          to study  potential  environmental  issues at sites and the  estimated
          cost to implement remediation actions, including on-going maintenance,
          as  required.  Cost  estimates  are  developed  by site.  Initial cost
          estimates are based on historical  experience at similar sites and are
          refined over time on the basis of in-depth studies of the site.

          For many sites,  the remediation  costs and other damages for which we
          ultimately may be responsible are not reasonably  estimable because of
          uncertainties  with respect to factors such as our  connection  to the
          site,  the  materials  there,  the  involvement  of other  responsible
          parties,  the  application of laws and other standards or regulations,
          site conditions, and the nature and scope of investigations,  studies,
          and  remediation to be undertaken  (including the  technologies  to be
          required and the extent,  duration, and success of remediation).  As a
          result,  we are unable to estimate a maximum amount for costs or other
          damages for which we are  potentially  responsible in connection  with
          these indemnifications.

          Tax: We provide various  tax-related  indemnifications  that typically
          protect the indemnified party from certain events that result in a tax
          treatment different from that originally  anticipated.  In some cases,
          tax indemnifications  relate to representations or warranties given by
          us.  Our  liability  is  fixed  when  a  final  determination  of  the
          indemnified  party's tax liability is made.  In some cases,  a payment
          under a tax  indemnification  may be  offset  in  whole  or in part by
          refunds from the  applicable  governmental  taxing  authority.  We are
          party to numerous tax  indemnifications  and many of these indemnities
          do not limit potential payment; therefore, we are unable to estimate a
          maximum  amount of potential  future  payments  that could result from
          claims made under these indemnities.

     Product Performance:
          Warranty:  Estimated warranty costs and additional service actions are
          accrued for at the time the  vehicle is sold to a dealer.  Included in
          the warranty cost accruals are costs for basic  warranty  coverages on
          vehicles sold.  Product recalls and other customer service actions are
          not included in the warranty reconciliation below but are also accrued
          for at the time of sale.  Estimates for warranty  costs are made based
          primarily on historical warranty claim experience.  The following is a
          tabular reconciliation of the product warranty accrual (in millions):

            Beginning balance, December 31, 2002                        $ 5,401
             Payments made in 2003                                       (1,694)
             Changes in accrual related to warranties issued in 2003      1,698
             Changes in accrual related to pre-existing warranties         (136)
             Foreign currency translation                                   131
                                                                        -------
             Ending balance, June 30, 2003                              $ 5,400
                                                                        =======

13.  Segment  Information - The  Company's  operating  activity  consists of two
     operating sectors, Automotive and Financial Services.

     The Automotive  sector  consists of the design,  development,  manufacture,
     sale and service of cars,  trucks and service parts.  Beginning in 2003, we
     are reporting our Automotive sector results as two primary segments,  North
     America and International. The North America segment includes primarily the
     sale of Ford,  Lincoln and Mercury brand vehicles and related service parts
     in the  U.S.,  Canada  and  Mexico,  and the  associated  costs to  design,
     develop,   manufacture   and  service   these   vehicles  and  parts.   The
     International  segment  includes  primarily the sale of Ford brand vehicles
     and related  service parts outside of North America and the sale of Premier
     Automotive Group brand vehicles (i.e., Volvo,  Jaguar, Land Rover and Aston
     Martin) and related  service parts  throughout the world  (including  North
     America),   together  with  the  associated   costs  to  design,   develop,
     manufacture  and  service  these  vehicles  and  parts.  Additionally,  the
     International  segment  includes  our share of the  results of Mazda  Motor
     Corporation  and  Mazda-related   joint  ventures.   The  Other  Automotive
     component  of the  Automotive  sector  consists  primarily  of net interest
     expense,   which  is  not  managed   individually   by  the  two  segments.
     Transactions  among  automotive  segments are presented on an absolute cost
     basis,  eliminating  the effect of legal entity  transfer prices within the
     Automotive sector for vehicles,  components and product engineering.  Prior
     to 2003,  the Automotive  sector was reported as one segment.  Prior period
     information  reflects  the two  reporting  segments  within the  Automotive
     sector.

                                       13



Item 1.  Financial Statements (Continued)
- -----------------------------

                       Ford Motor Company and Subsidiaries
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                                   (unaudited)

13.  Segment Information (Continued)

     The Financial Services sector primarily includes two segments,  Ford Credit
     and Hertz. Ford Credit provides  vehicle-related  financing,  leasing,  and
     insurance.  Hertz rents cars,  light trucks and industrial and construction
     equipment.

     Segment selection is based upon the organizational structure that we use to
     evaluate performance and make decisions on resource allocation,  as well as
     availability and materiality of separate  financial results consistent with
     that structure.

                                       14



Item 1.  Financial Statements (Continued)
- -----------------------------

                       Ford Motor Company and Subsidiaries
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                                   (unaudited)

13. Segment Information (Continued)


                                                                                                                 Elims/
                                              Automotive Sector               Financial Services Sector a/       Other     Total
                                    ----------------------------------    ------------------------------------  -------   -------
                                     North    Inter-                        Ford             Elims/               b/
                                    America  national  Other   Total       Credit    Hertz   Other     Total
                                    -------  -------- ------  --------    --------  -------  ------   --------
<s>                                 <c>      <c>      <c>     <c>         <c>       <c>      <c>      <c>       <c>       <c>
SECOND QUARTER 2003
Revenues
External customer                   $20,698  $13,484  $   -   $ 34,182    $  5,103  $ 1,266  $  119   $  6,488  $     -   $ 40,670
 Intersegment                         1,111      420      -      1,531          79        9      (6)        82   (1,613)         -
Income
 Income/(loss) before income taxes      445     (411)   (31)         3         661       57      (3)       715        -        718

SECOND QUARTER 2002
Revenues
 External customer                  $23,087  $11,815  $ 295   $ 35,197    $  5,640  $ 1,257  $  113   $  7,010  $     -   $ 42,207
 Intersegment                         1,456      191      -      1,647          90        8      (4)        94   (1,741)         -
Income
 Income/(loss) before income taxes      921     (371)  (147)       403         519       72       9        600        -      1,003


FIRST HALF 2003
Revenues
 External customer                  $42,913  $25,469  $   -   $ 68,382    $ 10,573  $ 2,411  $  192   $ 13,176  $     -   $ 81,558
 Intersegment                         2,127      710      -      2,837         158       15      (7)       166   (3,003)         -
Income
 Income/(loss) before income taxes    1,681     (764)  (255)       662       1,388       (2)      7      1,393        -      2,055
Other Disclosures
 Total assets at June 30                                       118,732     175,000   13,086   4,973    193,059        -    311,791

FIRST HALF 2002
Revenues
 External customer                  $44,560  $22,216  $ 592   $ 67,368    $ 11,497  $ 2,340  $  463   $ 14,300  $     -   $ 81,668
 Intersegment                         2,450      449      -      2,899         175       15       -        190   (3,089)         -
Income
 Income/(loss) before income taxes    1,386     (840)  (513)        33         915       13      15        943        -        976
Other Disclosures
 Total assets at June 30                                       100,797     172,567   12,038   4,889    189,494        -    290,291

- - - - - -
a/ Financial Services sector's interest income is recorded as Revenues.
b/ Includes intersector transactions occurring in the ordinary course of
   business.

                                       15



Item 1.  Financial Statements (Continued)
- -----------------------------

                        Report of Independent Accountants


To the Board of Directors and Stockholders
Ford Motor Company:

We have reviewed the accompanying consolidated balance sheet of Ford Motor
Company and its subsidiaries as of June 30, 2003, and the related consolidated
statement of income for each of the three-month and six-month periods ended June
30, 2003 and 2002 and the consolidated statement of cash flows for the six-month
periods ended June 30, 2003 and 2002. In addition, we have reviewed the
accompanying interim sector balance sheet and the related sector statements of
income and cash flows, presented for purposes of additional analysis. The
consolidated interim and sector financial statements (collectively, the
"financial statements") are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated and sector basis interim financial
statements for them to be in conformity with accounting principles generally
accepted in the United States of America.

As discussed in Note 4 to the consolidated financial statements, on January 1,
2003, the Company adopted Statement of Financial Accounting Standards No.148,
"Accounting for Stock-Based Compensation - Transition and Disclosure", which
changed the method for accounting for stock-based employee compensation.

We previously audited in accordance with auditing standards generally accepted
in the United States of America, the consolidated and sector balance sheets as
of December 31, 2002, and the related consolidated statements of income,
stockholders' equity, and of cash flows for the year then ended (not presented
herein), and in our report dated January 17, 2003 we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated and sector balance sheets
as of December 31, 2002, is fairly stated in all material respects in relation
to the consolidated and sector balance sheets from which it has been derived.


/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Detroit, Michigan
July 15, 2003

                                       16



Item 2. Management's Discussion and Analysis of Financial Condition and Results
- -------------------------------------------------------------------------------
of Operations
- -------------

SECOND QUARTER RESULTS OF OPERATIONS

     Our worldwide  earnings were $417 million in the second quarter of 2003, or
$0.22 per diluted  share of Common and Class B Stock.  In the second  quarter of
2002, earnings were $570 million, or $0.29 per share.

     Our worldwide  Automotive  sales and Financial  Services  revenues  totaled
$40.7 billion in the second quarter of 2003,  down $1.5 billion from a year ago.
Unit sales of cars and trucks were  1,717,000  units,  down 137,000 units from a
year ago. In the second  quarter of 2003,  our U.S.  corporate  market share was
20.6%,  down 0.7 percentage points from the same period a year ago. Our European
corporate  market share was 10.8% in the second quarter of 2003,  unchanged from
the same period a year ago.

     Results by  business  sector  for the  second  quarter of 2003 and 2002 are
shown below (in millions):


                                                                                Second Quarter Net Income/(Loss)
                                                                            ---------------------------------------
                                                                                                          2003
                                                                                                      Over/(Under)
                                                                                2003        2002*         2002
                                                                            ----------- ------------ --------------
<s>                                                                         <c>         <c>             <c>
Income/(loss) before income taxes
  Automotive sector                                                         $    3      $  403           $(400)
  Financial Services sector                                                    715         600             115
                                                                            ------      ------           -----
     Total Company                                                             718       1,003            (285)
 Provision for/(benefit from) income taxes                                     195         289             (94)
 Minority interests in net income/(loss) of subsidiaries                        98          95               3
                                                                            ------      ------           -----
Income/(loss) from continuing operations                                       425         619            (194)
 Income/(loss) from discontinued/held-for-sale operations                       (3)         (9)              6
 Loss on disposal of discontinued/held-for-sale operations                      (5)        (40)             35
                                                                            ------      ------           -----
Net income/(loss)                                                           $  417      $  570           $(153)
                                                                            ======      ======           =====

- ------------
* Certain amounts were  reclassified  to conform to current period  presentation
consistent with the presentation in our 10-K Report.  Reclassifications  include
profits and losses related to discontinued and held-for-sale operations.

Automotive Sector
- -----------------

     As discussed in our 10-K Report,  beginning with the first quarter of 2003,
we  expanded  the number of  operating  segments  we present  by  reporting  two
segments within our Automotive sector - North America and International.

     The North America  Automotive  segment primarily includes the sale of Ford,
Lincoln and Mercury brand vehicles and related service parts in the U.S., Canada
and Mexico, and the associated costs to design, develop, manufacture and service
these  vehicles  and  parts.  The  International  Automotive  segment  primarily
includes  the sale of Ford brand  vehicles  and service  parts  outside of North
America and the sale of Premier  Automotive  Group ("PAG") brand vehicles (i.e.,
Volvo, Jaguar, Land Rover and Aston Martin) and related service parts throughout
the world  (including  North  America),  together with the  associated  costs to
design,  develop,  manufacture  and service  these  vehicles  and parts.  We are
providing  separate  results for the  business  units  within our  International
Automotive segment (i.e., Ford Europe, Ford South America, Ford Asia Pacific and
PAG).

     Previously,  we reported Automotive financial results on a geographic/legal
entity basis. The new segment  reporting is on a business-unit  basis consistent
with the way our two Automotive segments are managed. Costs for each segment and
business unit within each segment reflect absolute corporate costs,  eliminating
the effect of  transfer  prices  within  the  Automotive  sector  for  vehicles,
components and product  engineering that were previously  reported in geographic
results.  Interest  income  and  expense  and  results  of  non-core  Automotive
businesses are reported in Other Automotive;  these were previously  included in
geographic results.

     Worldwide  income  before  income  taxes for our  Automotive  sector was $3
million in the second quarter of 2003 on sales of $34.2  billion,  compared with
income  before  income  taxes in the second  quarter of 2002 of $403  million on
sales of $35.2  billion.  The decline  reflected  the  non-recurrence  of a U.S.
dealer  stock  build in the second  quarter  of 2002 and lower  U.S.  and Europe
industry volume,  together with lower net pricing,  partially offset by improved
cost  performance.  Improved cost  performance is the net result of decreases in
current model  product  costs,  warranty and  additional  service  action costs,
manufacturing and engineering costs and overhead,  partially offset by increased
product costs for new models and pension and healthcare benefits.

                                       17



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

     Details of second quarter Automotive sector results before income taxes are
shown below (in millions):


                                                                                  Second Quarter Income/(Loss)
                                                                                      Before Income Taxes
                                                                           ----------------------------------------
                                                                                                          2003
                                                                                                      Over/(Under)
                                                                              2003         2002           2002
                                                                           ------------ ------------ --------------
<s>                                                                         <c>          <c>            <c>
North America Automotive segment                                            $ 445        $ 921          $(476)

International Automotive segment
 - Ford Europe                                                               (525)         (18)          (507)
 - Ford South America                                                         (69)        (198)           129
 - Ford Asia Pacific                                                          (28)         (53)            25
 - Premier Automotive Group                                                   166         (122)           288
 - Other International                                                         45           20             25
                                                                            -----        -----          -----
    Total International Automotive segment                                   (411)        (371)           (40)

Other Automotive                                                              (31)        (147)           116
                                                                            ------       -----          -----

    Total Automotive sector                                                 $   3        $ 403          $(400)
                                                                            =====        =====          =====


North America Automotive Segment

     Income  before income taxes for our North  America  Automotive  segment was
$445  million in the second  quarter of 2003 on sales of $20.7  billion.  Income
before  income taxes in the second  quarter of 2002 was $921 million on sales of
$23.1  billion.  The  decline  reflected  lower net  pricing  and lower  vehicle
production volume due to the  non-recurrence of a dealer stock build in 2002 and
lower industry  volume,  partially offset by strong cost performance and product
mix improvements.

     In the second quarter of 2003, our unit sales in North America were 980,000
down from  1,120,000  for the same period a year ago. Our U.S.  market share for
Ford,  Lincoln,  and Mercury brand  vehicles was 19.3% in the second  quarter of
2003,  down 0.8  percentage  points from a year ago,  reflecting  primarily  the
discontinuation  of various models (Ford Escort,  Lincoln  Continental,  Mercury
Cougar and Mercury Villager).

International Automotive Segment

     Losses before income taxes for our  International  Automotive  segment were
$411  million in the second  quarter of 2003 on sales of $13.5  billion.  Losses
before income taxes in the second  quarter of 2002 were $371 million on sales of
$11.8 billion.

     Ford  Europe.  Our  Ford  Europe  business  unit  consists  of the  sale of
     Ford-brand  vehicles and service parts  principally  throughout  the Europe
     region,  Turkey and Russia,  together  with the costs  associated  with the
     design, development, manufacture and servicing of those vehicles and parts.
     Losses  before  income  taxes for our Ford Europe  business  unit were $525
     million in the  second  quarter  of 2003 on sales of $5.2  billion.  Losses
     before income taxes in the second quarter of 2002 were $18 million on sales
     of $4.9 billion.  The decline in earnings was primarily  explained by lower
     net pricing,  less favorable  product mix, lower  industry  volume,  dealer
     stock  reductions  and  unfavorable   currency  exchange  effects,   offset
     partially by improved cost performance and market share.

     In the second  quarter of 2003,  unit sales for Ford Europe  were  409,000,
     down from 417,000 for the same period a year ago. European market share for
     our Ford-brand  vehicles improved to 8.7% in the second quarter of 2003, up
     0.1 percentage points from the same period a year ago.

     Ford South  America.  Our Ford South America  business unit consists of the
     sale of Ford brand vehicles and service parts in South America, principally
     Brazil,  Argentina and Venezuela,  together with the costs  associated with
     the design,  development,  manufacture  and servicing of those vehicles and
     parts.  Losses before income taxes for our Ford South America business unit
     were $69  million in the second  quarter of 2003 on sales of $435  million,
     compared  with losses  before income taxes of $198 million on sales of $426
     million for the same period a year ago. The improvement reflected primarily
     the non-recurrence of currency  devaluation a year ago, as well as improved
     net pricing and market share.

     In the second  quarter of 2003,  unit  sales for Ford  South  America  were
     49,000,  up from  46,000 for the same  period a year ago.  Market  share of
     Ford-brand vehicles sold in Brazil was 11.7% in the second quarter of 2003,
     up 2.7 percentage points from a year ago, reflecting primarily sales of the
     new Ford Fiesta and EcoSport models.

                                       18



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

     Ford Asia Pacific. Our Ford Asia Pacific business unit consists of the sale
     of Ford brand vehicles and service parts principally in Australia,  Taiwan,
     South Africa,  China and Thailand,  together with the costs associated with
     the design,  development,  manufacture  and servicing of those vehicles and
     parts.  Losses before income taxes for our Ford Asia Pacific  business unit
     were $28  million on sales of $1.4  billion in the second  quarter of 2003.
     Losses before  income taxes in the second  quarter of 2002 were $53 million
     on sales of $1.0 billion. The improvement reflected primarily favorable net
     pricing and the market acceptance of the new Ford Falcon in Australia.

     In the  second  quarter  of 2003,  unit  sales for Ford Asia  Pacific  were
     83,000,  up from 75,000 for the same period a year ago. Our market share in
     Australia  improved to 13.6% in the second quarter of 2003, up from 12.8% a
     year ago, primarily due to the introduction of the new Ford Falcon model.

     Premier Automotive Group. Our PAG business unit consists of the sale of PAG
     brand  vehicles  (i.e.,  Volvo,  Jaguar,  Land Rover and Aston  Martin) and
     related  service parts  throughout  the world  (including  North  America),
     together with the  associated  costs to design,  develop,  manufacture  and
     service  those  vehicles and parts.  Income before income taxes for our PAG
     business  unit was $166  million  in the  second  quarter  of 2003,  a $288
     million  improvement from losses before income taxes of $122 million in the
     second quarter of 2002. The improvement  reflected primarily favorable cost
     performance,  improved net pricing and  favorable  product mix.  Sales were
     $6.4  billion in the second  quarter  of 2003  compared  with sales of $5.5
     billion in the second  quarter of 2002.  The  increase  in sales  reflected
     primarily  stronger  European  currencies and improved product mix with the
     launch of the new Volvo XC90 and Jaguar XJ models.

     In the second  quarter of 2003,  worldwide unit sales for PAG were 196,000,
     about the same as a year ago. U.S. market share was 1.3%, up 0.1 percentage
     points for the second  quarter of 2003  compared  to the second  quarter of
     2002.  European market share was 2.1%, down 0.1 percentage  points from the
     second quarter of 2002.

     Other International. Other International consists primarily of our share of
     the results of Mazda Motor  Corporation,  of which we own 33.4%, and of our
     Mazda-related  joint  ventures.  Other  International  had  profits  of $45
     million for the second  quarter of 2003, up from $20 million for the second
     quarter of 2002 reflecting improved Mazda results.

Other Automotive

     In 2003, Other Automotive  represents primarily interest income and expense
(including  realized and unrealized gains and losses on marketable  securities).
Other  Automotive  reduced  income  before  income  taxes by $31 million for the
second quarter of 2003. The  improvement of $116 million  compared with the same
period a year ago is due to lower net interest expense and the non-recurrence of
losses in non-core businesses that have now been sold or shut down.

Financial Services Sector
- -------------------------

     Our Financial  Services  sector  consists  primarily of two segments,  Ford
Credit  and  Hertz.   Details  of  second  quarter  Financial   Services  sector
income/(loss)  before income taxes for the second  quarters of 2003 and 2002 are
shown below (in millions).


                                                             Second Quarter Income/(Loss)
                                                                  Before Income Taxes
                                                      ------------------------------------------
                                                                                       2003
                                                                                   Over/(Under)
                                                         2003          2002            2002
                                                      ------------   ----------   --------------
<s>                                                     <c>            <c>           <c>
Ford Credit                                             $661           $519          $142
Hertz*                                                    57             72           (15)
Minority interests and other                              (3)             9           (12)
                                                        ----           ----          ----

   Total Financial Services sector                      $715           $600          $115
                                                        ====           ====          ====

- ------------
*   The Hertz results include amortization expense related to intangibles at
    Ford FSG, Inc., Hertz' parent company.


Ford Credit

     FCAR  Consolidation.  Ford Credit uses a special purpose trust,  FCAR, as a
source of funds for its  operations.  FCAR's  activities  are limited to issuing
asset-backed  commercial  paper and other  securities  and buying  highly  rated
asset-backed securities issued by securitization SPEs sponsored by Ford Credit.

                                       19



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

     In the second  quarter of 2003,  Ford Credit  purchased  from  unaffiliated
parties a portion of the equity of FCAR. As a result of this transaction, FCAR's
assets,  liabilities  and  results of  operations  were  consolidated  into Ford
Credit's financial statements. In addition, the accounting consolidation of FCAR
also caused certain of the Ford Credit sponsored  securitization  SPEs that sell
asset-backed  securities to FCAR to lose their status as  qualifying  SPEs under
SFAS No. 140.  Consequently,  the receivables  previously sold by Ford Credit to
these  SPEs were  deemed  to be  reacquired  in  accordance  with  SFAS No.  140
requirements.  These receivables are now referred to as "reacquired receivables"
and are reported  on-balance sheet at fair value as of June 30, 2003.  Following
the accounting  consolidation  of FCAR, most sales of receivables to Ford Credit
sponsored  SPEs that sell  asset-backed  securities  to FCAR will not qualify as
sales for accounting purposes and, instead, will be reported on-balance sheet.

     The accounting consolidation of FCAR did not have a material impact on Ford
Credit's earnings, back-up credit facilities, unsecured debt funding programs or
other securitization programs. The consolidation of FCAR did, however,  increase
Ford Credit's financial  statement  debt-to-equity  ratio to 11.3 to 1, compared
with  10.5 to 1 with  FCAR  unconsolidated.  No gain or loss was  recorded  upon
consolidation.

     Notwithstanding this accounting consolidation,  the receivables sold to the
SPEs and the asset-backed  securities held by FCAR remain available only for the
SPEs and FCAR and their investors and other  participants  and are not available
to pay Ford Credit's obligations or the claims of its creditors.  The bankruptcy
remoteness  of these  entities  and the  isolation  of assets  achieved in these
transactions were not changed by the consolidation of FCAR.

     As a result of the  consolidation  of FCAR,  we have modified the reporting
categories for Ford Credit's receivables, credit losses and allowance for credit
losses.  Previously,  we reported  receivables  under four categories:  "owned",
"securitized", "managed" and "serviced". We have changed the "owned" category to
"on-balance  sheet"  because,  as  discussed  above,  some  of  the  securitized
receivables  (which  remain sold for legal  purposes)  are now  reflected in our
financial  statements.  These include the reacquired  receivables related to the
FCAR consolidation.  Other securitized receivables that remain off-balance sheet
are now categorized as "securitized  off-balance  sheet".  There is no impact to
the "managed" and "serviced" categories.  Credit losses and allowance for credit
losses have been modified to the new categories as appropriate.

     Results of  Operations.  Ford  Credit's  consolidated  income before income
taxes in the second  quarter of 2003 was $661 million,  up $142 million from the
second  quarter of 2002.  Compared with 2002, the increase  primarily  reflected
higher  income  related to the sales of  receivables  and a lower  provision for
credit losses, offset partially by the impact of lower average net receivables.

     As shown in the  table  below,  investment  and  other  income  related  to
receivables sales was $672 million,  up $153 million from a year ago, reflecting
primarily higher excess spread and higher levels of retained interest related to
securitized off-balance sheet wholesale receivables.

     The  provision  for credit  losses in the  second  quarter of 2003 was $543
million,  down $117 million from a year ago, reflecting  primarily lower average
net  receivables.  Credit  losses  related  to Ford  Credit's  on-balance  sheet
receivables  in the second  quarter of 2003 were $452 million,  down $94 million
from the second quarter of 2002,  reflecting primarily a reduction in the amount
of Ford Credit's  on-balance  sheet  receivables.  Managed  credit losses in the
second quarter of 2003 were $641 million,  about the same as a year ago. On June
30, 2003,  credit loss reserves  were $3.2 billion or 2.42% of on-balance  sheet
receivables,  up from  2.19% a year ago.  In the  second  quarter  of 2003,  the
loss-to-receivables  ratio (that is, actual net credit losses during a period as
a percentage of average  outstanding  net  receivables for that period) for Ford
Credit's  on-balance  sheet  portfolio  was 1.44%  (excluding  credit  losses on
reacquired  receivables relating to the FCAR consolidation) and 1.50% (including
credit  losses on  reacquired  receivables  relating to the FCAR  consolidation)
compared  with  1.58% a year ago and  1.61% in the  first  quarter  of 2003.  We
believe  that  the  use of the  non-GAAP  on-balance  sheet  credit  loss  ratio
(including  credit losses on reacquired  receivables) is useful to our investors
because it  provides a more  complete  representation  of our actual  on-balance
sheet loss performance.

     Net financing margins in the second quarter of 2003 were $875 million, down
$174  million  from a year  ago  reflecting  lower  placement  volumes  and  the
continued off-balance sheet sales of receivables.

     Sales  of  receivables  through   off-balance  sheet   securitizations  and
whole-loan sale transactions reduce Ford Credit's financing revenues in the year
the  receivables  are sold, as well as in future years,  compared with what they
otherwise  would  be if Ford  Credit  continued  to own the  receivables.  These
foregone  revenues can reduce  financing  margins and offset any positive impact
associated with the gain on sales of receivables.  The net impact of off-balance
sheet  securitizations  on Ford Credit's revenues and earnings in a given period
will  vary   depending  on  the  amount,   type  of  receivable  and  timing  of
securitizations  in the  current  period  and the  preceding  two to three  year
period,  as well as the  interest  rate  environment  at the times  the  finance
receivables were originated and securitized. The following

                                       20



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

table shows the calculations and amounts Ford Credit uses to analyze the pre-tax
impact of sales of receivables  through  off-balance sheet  securitizations  and
whole-loan sale transactions for the second quarter of 2003 and 2002, net of the
effect  of  reduced  financing  margins  resulting  from  the  foregone  revenue
attributable to the sold receivables (in millions):


                                                                                              Second Quarter
                                                                                         -----------------------
                                                                                           2003           2002
                                                                                         ----------    ---------
<s>                                                                                      <c>           <c>
Net gain on sales of receivables                                                         $  51         $  18
Servicing fees                                                                             179           180
Interest income from retained securities                                                   197           148
Excess spread and other                                                                    245           173
                                                                                         -----         -----
  Total revenue related to receivables sales                                               672           519
Reduction in financing margin from current-period securitizations*                         (12)          (12)
Reduction in financing margin from prior-period securitizations*                          (853)         (633)
                                                                                         -----         -----
Pre-tax impact of receivables sales                                                      $(193)        $(126)
                                                                                         =====         =====

- ------------
*  Calculated  on a basis using a borrowing  cost equal to the actual  financing
rate paid to securitization  investors,  which was significantly lower than Ford
Credit's average borrowing cost for unsecured debt for the periods presented. If
calculated on a basis using Ford Credit's  average  borrowing cost for unsecured
debt,  the  reduction  in  financing   margin  from   securitization   would  be
significantly  lower and the  pre-tax  impact of sales of  receivables  would be
significantly higher than the amounts shown.

     The  quantification  of investment  and other income related to receivables
sales and financing  margin  impact set forth above  includes the effects of the
reacquired  receivables  through  May  15,  2003,  the  date  of the  accounting
consolidation  of  FCAR.  In  accordance  with  generally  accepted   accounting
principles,  such amounts will not be re-stated for prior reporting periods.  In
the future, any on-balance sheet securitizations will not generate gains on sale
or other securitization income or have any financing margin impact.

Hertz

     In the second quarter of 2003,  Hertz had income before income taxes of $57
million,  down from $72  million in the  second  quarter  of 2002.  Strong  cost
performance was more than offset by unfavorable pricing and lower volume.


FIRST HALF RESULTS OF OPERATIONS

     Our worldwide  earnings  were $1,313  million in the first half of 2003, or
$0.67 per diluted share of Common and Class B Stock.  In the first half of 2002,
losses were $524 million, or $0.29 per share.

     Our worldwide  Automotive  sales and Financial  Services  revenues  totaled
$81.6  billion  in the first half of 2003,  down from $81.7  billion a year ago.
Unit sales of cars and trucks were  3,430,000  units,  down 100,000 units from a
year ago. In the first half of 2003, our U.S.  corporate market share was 20.9%,
down 0.1  percentage  points  from the same  period  a year  ago.  Our  European
corporate  market share was 11.1% in the first half of 2003,  unchanged from the
first half of 2002.

     Results  by  business  sector for the first half of 2003 and 2002 are shown
below (in millions):


                                                                                    First Half Net Income/(Loss)
                                                                             ----------------------------------------
                                                                                                           2003
                                                                                                       Over/(Under)
                                                                               2003        2002*           2002
                                                                             ----------- ------------ ---------------
<s>                                                                          <c>         <c>              <c>
Income/(loss) before income taxes
  Automotive sector                                                          $   662     $    33          $  629
  Financial Services sector                                                    1,393         943             450
                                                                             -------     -------          ------
     Total Company                                                             2,055         976           1,079
 Provision for/(benefit from) income taxes                                       531         269             262
 Minority interests in net income/(loss) of subsidiaries                         200         168              32
                                                                             -------     -------          ------
Income/(loss) from continuing operations                                       1,324         539             785
 Income/(loss) from discontinued/held-for-sale operations                         (6)        (21)             15
 Loss on disposal of discontinued/held-for-sale operations                        (5)        (40)             35
 Cumulative effect of change in accounting principle                               -      (1,002)          1,002
                                                                             -------     --------         ------
Net income/(loss)                                                            $ 1,313     $  (524)         $1,837
                                                                             =======     =======          ======

*    Certain   amounts  were   reclassified   to  conform  with  current  period
     presentation   consistent  with  the   presentation  in  our  10-K  Report.
     Reclassifications  include profits and losses related to  discontinued  and
     held-for-sale operations.

                                       21



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

Automotive Sector
- -----------------

     Worldwide  income  before income taxes for our  Automotive  sector was $662
million in the first half of 2003 on sales of $68.4 billion compared with income
before  income taxes of $33 million in the first half of 2002, on sales of $67.4
billion.

     Details of first half  Automotive  sector  results  before income taxes are
shown below (in millions):


                                                                                    First Half Income/(Loss)
                                                                                      Before Income Taxes
                                                                           -----------------------------------------
                                                                                                           2003
                                                                                                       Over/(Under)
                                                                              2003         2002            2002
                                                                           ------------ ------------ ---------------
<s>                                                                         <c>          <c>           <c>
North America Automotive segment                                            $1,681       $1,386        $  295

International Automotive segment
 - Ford Europe                                                                (774)        (286)         (488)
 - Ford South America                                                         (100)        (283)          183
 - Ford Asia Pacific                                                           (54)         (92)           38
 - Premier Automotive Group                                                     78         (192)          270
 - Other International                                                          86           13            73
                                                                            ------       ------        ------
    Total International Automotive segment                                    (764)        (840)           76

Other Automotive                                                              (255)        (513)          258
                                                                            -------      ------        ------

    Total Automotive sector                                                 $  662       $   33        $  629
                                                                            ======       ======        ======



North America Automotive Segment

     Income  before income taxes for our North  America  Automotive  segment was
$1.7 billion in the first half of 2003 on sales of $42.9 billion.  Income before
income  taxes  in the  first  half of 2002 was  $1.4  billion  on sales of $44.6
billion.  Cost reductions and favorable  product mix more than accounted for the
improvement.  These  improvements  were  partially  offset  by  unfavorable  net
pricing,  a lower dealer stock build in 2003  compared  with 2002 and lower U.S.
industry volume.

     In the first half of 2003, our unit sales in North America were  2,004,000,
down from  2,150,000  for the same period a year ago. Our U.S.  market share for
Ford,  Lincoln,  and Mercury brand vehicles was 19.6% in the first half of 2003,
down 0.2 percentage  points from a year ago, due in part to the  discontinuation
of various models (Ford Escort, Lincoln Continental,  Mercury Cougar and Mercury
Villager).

International Automotive Segment

     Losses before income taxes for our  International  Automotive  segment were
$764 million in the first half of 2003 on sales of $25.5 billion.  Losses before
income  taxes in the  first  half of 2002 were  $840  million  on sales of $22.2
billion.

     Ford Europe.  Losses before income taxes for our Ford Europe  business unit
     were  $774  million  in the first  half of 2003 on sales of $10.2  billion.
     Losses  before  income taxes in the first half of 2002 were $286 million on
     sales of $9.0  billion.  The change was  primarily  the result of lower net
     pricing,  a less  favorable  product mix and lower industry  volumes.  Cost
     reductions and improved market share were partial offsets.

     In the first half of 2003, unit sales for Ford Europe were 800,000, up from
     759,000  for the same  period a year  ago.  European  market  share for our
     Ford-brand  vehicles  improved  to 9.0% in the first  half of 2003,  up 0.1
     percentage points from the same period a year ago.

     Ford South  America.  Losses before income taxes for our Ford South America
     business  unit were $100 million in the first half of 2003 on sales of $765
     million compared with losses before income taxes of $283 million a year ago
     on sales of $822 million.  The improvement was primarily due to the absence
     of adverse currency exchange rate effects  experienced in the first half of
     2002,  favorable net pricing and higher market share,  partially  offset by
     lower industry volumes.

     In the first half of 2003,  unit sales for Ford South  America were 93,000,
     up from 87,000 for the same period a year ago.  Market share of  Ford-brand
     vehicles  sold in  Brazil  was  11.1% in the  first  half of  2003,  up 2.4
     percentage  points from a year ago,  reflecting  primarily sales of the new
     Ford Fiesta and EcoSport models.

                                       22



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

     Ford Asia  Pacific.  Losses  before  income taxes for our Ford Asia Pacific
     business  unit were $54 million on sales of $2.7  billion in the first half
     of 2003.  Losses  before  income  taxes in the first  half of 2002 were $92
     million on sales of $2.0 billion.  The improvement  reflects  favorable net
     pricing and higher unit sales volume  following  the launch of the new Ford
     Falcon model in Australia.

     In the first half of 2003,  unit sales for Ford Asia Pacific were  165,000,
     up from  150,000  for the  same  period a year  ago.  Our  market  share in
     Australia improved to 13.9% in the first half of 2003, up from 12.9% a year
     ago, primarily due to the introduction of the new Ford Falcon model.

     Premier  Automotive Group.  Income before income taxes for our PAG business
     unit was $78 million in the first half of 2003, a $270 million  improvement
     from losses before income taxes of $192 million in first half of 2002.  The
     improvement  reflects  primarily cost reductions and favorable  product mix
     with the  launch of the new Volvo  XC90 and  Jaguar XJ  models.  Sales were
     $11.8 billion in the first half of 2003, up from $10.3 billion in the first
     half of 2002. The increase in sales reflected  primarily  stronger European
     currencies  and improved  product mix with the launch of the new Volvo XC90
     and Jaguar XJ models.

     In the first half of 2003, worldwide unit sales for PAG were 368,000,  down
     from 383,000 for the same period a year ago. U.S. market share was 1.2%, up
     0.1 percentage points compared with the same period a year ago and European
     market share was 2.1%,  down 0.1  percentage  points from the first half of
     2002.

     Other International. Other International consists primarily of our share of
     the results of Mazda Motor  Corporation,  of which we own 33.4%, and of our
     Mazda-related  joint  ventures.  Other  International  had  profits  of $86
     million in the first half of 2003, up from $13 million in the first half of
     2002  reflecting  improved  Mazda results and other gains related to Ford's
     investment in Mazda.

Other Automotive

     Other  Automotive  reduced earnings before income taxes by $255 million for
the first half of 2003. The  improvement of $258 million  compared with the same
period a year ago is due to lower  interest  expense and the  non-recurrence  of
losses in non-core businesses that have now been sold or shut down.

Financial Services Sector
- -------------------------

     Our Financial  Services  sector  consists  primarily of two segments,  Ford
Credit and Hertz.  Details of first half Financial Services sector income/(loss)
before income taxes for 2003 and 2002 are shown below (in millions):


                                                               First half Income/(Loss)
                                                                  Before Income Taxes
                                                      --------------------------------------------
                                                                                       2003
                                                                                   Over/(Under)
                                                         2003          2002            2002
                                                      ------------   ----------   ----------------
<s>                                                    <c>           <c>            <c>
Ford Credit                                            $1,388        $  915         $  473
Hertz*                                                     (2)           13            (15)
Minority interests and other                                7            15             (8)
                                                        -----        ------         ------

   Total Financial Services sector                     $1,393        $  943         $  450
                                                       ======        ======         ======

- ------------
* The Hertz results include amortization expense related to intangibles at Ford
FSG, Inc., Hertz' parent company.

Ford Credit

     Ford Credit's  consolidated income before income taxes in the first half of
2003 was $1,388 million,  up $473 million from the first half of 2002.  Compared
with 2002, the increase primarily  reflected a lower provision for credit losses
and higher income related to the sales of receivables,  offset  partially by the
impact of lower average net receivables.

     The  provision  for  credit  losses  in the first  half of 2003 was  $1,063
million,  down $488 million from a year ago, reflecting  primarily lower average
net  receivables.  Credit losses on Ford Credit's  on-balance sheet portfolio in
the first half of 2003 were $945 million,  down $186 million from the first half
of 2002,  reflecting  primarily  a  reduction  in the  amount  of Ford  Credit's
on-balance  sheet  receivables.  Managed credit losses in the first half of 2003
were $1,326 million, about the same as a year ago. On June 30, 2003, credit loss
reserves were $3.2 billion or 2.42% of on-balance sheet receivables,

                                       23



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

up from  2.19% a year ago.  In the first half of 2003,  the  loss-to-receivables
ratio (that is,  actual net credit  losses  during a period as a  percentage  of
average   outstanding  net  receivables  for  that  period)  for  Ford  Credit's
on-balance  sheet  portfolio  was 1.51%  (excluding  credit losses on reacquired
receivables  relating to the FCAR  consolidation)  and 1.54%  (including  credit
losses on reacquired receivables relating to the FCAR accounting consolidation),
compared with 1.62% a year ago.

     As shown in the  table  below,  investment  and  other  income  related  to
receivables  sales  was  $1,563  million,  up  $406  million  from a  year  ago,
reflecting primarily higher excess spread and higher levels of retained interest
related to securitized off-balance sheet wholesale receivables.

     Net financing margins for the first half of 2003 were $1,552 million,  down
$545  million  from a year  ago  reflecting  lower  placement  volumes  and  the
continued off-balance sheet sales of receivables.

     The following table shows the  calculations and amounts Ford Credit uses to
analyze the pre-tax impact of sales of  receivables  through  off-balance  sheet
securitizations  (including with respect to FCAR-related receivables through May
15, 2003) and whole-loan sale  transactions for the first half of 2003 and 2002,
net of the effect of  reduced  financing  margins  resulting  from the  foregone
revenue attributable to the sold receivables (in millions):


                                                                                                First half
                                                                                         -----------------------
                                                                                           2003           2002
                                                                                         ----------    ---------
<s>                                                                                      <c>           <c>
Net gain on sales of receivables                                                         $  284        $  231
Servicing fees                                                                              376           338
Interest income from retained securities                                                    407           300
Excess spread and other                                                                     496           288
                                                                                         ------        ------
  Total revenue related to receivables sales                                              1,563         1,157
Reduction in financing margin from current-period securitizations*                         (300)         (244)
Reduction in financing margin from prior-period securitizations*                         (1,470)       (1,152)
                                                                                         ------        ------
Pre-tax impact of receivables sales                                                      $ (207)       $ (239)
                                                                                         ======        ======

*    Calculated on a basis using a borrowing cost equal to the actual  financing
     rate paid to securitization  investors,  which was significantly lower than
     Ford Credit's  average  borrowing  cost for unsecured  debt for the periods
     presented.  If calculated on a basis using Ford Credit's average  borrowing
     cost  for  unsecured   debt,   the  reduction  in  financing   margin  from
     securitization would be significantly lower and the pre-tax impact of sales
     of receivables would be significantly higher than the amounts shown.

Hertz

     In the first  half of 2003,  Hertz had  losses  before  income  taxes of $2
million,  down from a $13 million profit in the first half of 2002.  Strong cost
performance was more than offset by unfavorable pricing.

LIQUIDITY AND CAPITAL RESOURCES

Automotive Sector
- -----------------

     For the Automotive  sector,  liquidity and capital  resources  include cash
generated  by  operations,  gross cash  balances,  our ability to raise funds in
capital markets and committed credit lines.

     Gross Cash - We  consider  Automotive  gross cash to include  cash and cash
equivalents,  marketable securities, loaned securities and assets contained in a
Voluntary Employee  Beneficiary  Association ("VEBA") trust, which are financial
assets available to fund certain future employee benefit obligations in the near
term, as summarized below (in billions):


                                                                                 2003                          2002
                                                                       --------------------------    -------------------------
                                                                         June 30      January 1        June 30     January 1
                                                                       ------------  ------------    ------------ ------------
<s>                                                                     <c>            <c>             <c>          <c>
   Cash and cash equivalents                                            $  7.5         $  5.2          $  8.5       $  4.1
   Marketable securities                                                  15.0           17.4            14.9         10.9
   Loaned securities *                                                     4.6              -               -            -
                                                                        ------         ------          ------       ------
    Total cash, marketable securities and loaned securities               27.1           22.6            23.4         15.0
   VEBA assets                                                             1.6            2.7             1.5          2.7
                                                                        ------         ------          ------       ------
      Gross cash                                                        $ 28.7         $ 25.3          $ 24.9       $ 17.7
                                                                        ======         ======          ======       ======

     *    As part of our investment strategy, we engage in securities lending to
          improve the income  received from our cash  portfolios.  See Note 5 of
          the  Notes  to  Financial  Statements  for  additional  discussion  on
          securities lending.

                                       24



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

     In  managing  our  business,  we  classify  changes  in gross cash in three
categories:  operating  related  (including  capital  expenditures  and  capital
transactions with the Financial Services sector), acquisitions and divestitures,
and financing related.  We believe the cash flow analysis reflected in the table
below is useful to investors because it includes cash flow elements not included
in "cash flows from  operating  activities  before  securities  trading" that we
consider to be related to our operating  activities  (e.g.,  capital  spending).
Changes in Automotive  gross cash for the second  quarter and first half of 2003
and 2002 are summarized below (in billions):


                                                                              Second Quarter            First Half
                                                                          -----------------------  ----------------------
                                                                             2003         2002       2003        2002
                                                                          ----------  -----------  ---------- -----------
<s>                                                                         <c>         <c>         <c>        <c>
   Gross cash at end of period                                              $28.7       $24.9       $28.7      $24.9
   Gross cash at beginning of period                                         26.6        21.5        25.3       17.7
                                                                            -----       -----       -----      -----
    Total change in gross cash                                              $ 2.1       $ 3.4       $ 3.4      $ 7.2
                                                                            =====       =====       =====      =====

   Operating related cash flows
    Automotive income/(loss) before income taxes                            $   -       $ 0.4       $ 0.7      $   -
    Capital expenditures                                                     (2.0)       (1.4)       (3.4)      (2.9)
    Depreciation and special tools amortization                               1.3         1.3         2.7        2.4
    Changes in receivables, inventory and trade payables                     (0.2)        0.6        (0.6)       0.2
    U.S. pension fund contributions                                             -           -        (1.0)         -
    Capital transactions with Financial Services sector *                     0.9           -         1.7       (0.7)
    Other                                                                     1.6         1.7         2.1        2.5
                                                                            -----       -----       -----      -----
     Total operating related cash flows before tax refunds                    1.6         2.6         2.2        1.5
    Tax refunds                                                                 -         0.8         0.9        0.8
                                                                            -----       -----       -----      -----
     Total operating related cash flows                                       1.6         3.4         3.1        2.3

   Divestitures and asset sales                                               0.2         0.1         0.4        0.4
   Acquisitions and capital contributions                                       -           -           -       (0.1)
                                                                            -----      ------       -----      -----
     Total acquisitions and divestitures                                      0.2         0.1         0.4        0.3

   Financing related cash flows
    Dividends paid to shareholders                                           (0.2)       (0.2)       (0.4)      (0.4)
    Convertible preferred securities                                            -           -           -        4.9
    Changes in total Automotive sector debt                                   0.4           -         0.2          -
    Other                                                                     0.1         0.1         0.1        0.1
                                                                           ------      ------       -----      -----
     Total financing related cash flows                                       0.3        (0.1)       (0.1)       4.6
                                                                           ------      ------       -----      -----

      Total change in gross cash                                           $  2.1      $  3.4       $ 3.4      $ 7.2
                                                                           ======      ======       =====      =====
- - - - - -

     *    Reflects  operating  related  cash  flows  (i.e.,  dividends,  capital
          contributions, loans, and loan repayments).

     Shown in the table below is a reconciliation  between  financial  statement
cash flows from operating  activities  before  securities  trading and operating
related  cash  flows,  calculated  as shown in the table  above,  for the second
quarter and first half of 2003 and 2002 (in billions):


                                                                              Second Quarter                 First Half
                                                                          ------------------------  ---------------------------
                                                                             2003        2002           2003           2002
                                                                          ----------- ------------  -------------  ------------
<s>                                                                        <c>         <c>           <c>            <c>
   Cash flows from operating activities before securities
    Trading                                                                $ 2.7       $ 5.8         $ 5.7 *        $ 8.1 *
   Items included in operating related cash flow
    Capital transactions with Financial Services sector                      0.9           -           1.7           (0.7)
    Capital expenditures                                                    (2.0)       (1.4)         (3.4)          (2.9)
    Net transactions between Automotive and
     Financial Services sectors                                                -        (0.6)         (0.3) **       (1.0) **
    Other, primarily exclusion of cash in-flows from VEBA
     draw-down                                                                 -        (0.4)         (0.6)          (1.2)
                                                                           -----       -----         -----          -----
      Total reconciling items                                               (1.1)       (2.4)         (2.6)          (5.8)
                                                                           -----       -----         -----          -----
   Operating related cash flows                                            $ 1.6       $ 3.4         $ 3.1          $ 2.3
                                                                           =====       =====         =====          =====
- - - - - -

*    As shown in our condensed sector statement of cash flows for the Automotive
     sector.
**   Primarily payables and receivables between the sectors in the normal course
     of business, as shown in our Condensed Sector Statement of Cash Flows.

     Capital  transactions with the Financial Services sector improved operating
related cash flow by $900 million in the second quarter of 2003,  compared to no
change in cash flow in the second quarter of 2002, primarily related to improved
operating  performance at Ford Credit.  Capital  transactions with the Financial
Services  sector  improved  operating  related  cash flow by $1.7 billion in the
first half of 2003,  compared to a $700  million  reduction  in cash flow in the
first  half of 2002  related  to a  capital  contribution  to  Ford  Credit.  In
addition,  $204 million of dividends from the Financial  Services  sector in the
first half of 2003 is  reflected in the table above as  "divestitures  and asset
sales" because it results from the sale by Ford Credit of its Axus vehicle fleet
leasing unit.

                                       25



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

     Debt - At June 30,  2003,  our  Automotive  sector  had total debt of $14.5
billion, compared with $14.2 billion at December 31, 2002.

     Ford Motor Company  Capital Trust I and Ford Motor Company Capital Trust II
together  have   outstanding  an  aggregate  $5.7  billion  of  trust  preferred
securities.  The dividend and  liquidation  preferences on these  securities are
paid from interest and principal payments on our junior subordinated  debentures
held by the Trusts in an aggregate  principal  amount  exceeding  the  aggregate
liquidation  preference of the trust preferred  securities.  The trust preferred
securities and the junior  subordinated  debentures  have been classified in the
mezzanine section of our balance sheet in accordance with applicable  accounting
standards  and,  therefore,  neither has been  included in the total debt amount
discussed  above.  During the third quarter of 2003,  these  securities  will be
reclassified as debt as the result of the adoption of new accounting  standards.
See Notes 2 and 9 of the Notes to Financial  Statements.  This  reclassification
will not impact the status of the holders of our senior debt relative to holders
of the subordinated debentures or the trust preferred securities.

     Credit Facilities - At July 1, 2003, the Automotive sector had $6.9 billion
of contractually  committed credit  agreements with various banks, of which $6.8
billion were  available  for use.  91.0% of the total  facilities  are committed
through June 30, 2008.  Of the $6.9  billion,  $6.7  billion  constitute  global
credit  facilities  and may be used, at Ford's  option,  by any of its direct or
indirect  majority-owned  subsidiaries on a guaranteed  basis. Ford also has the
ability to  transfer,  on a  non-guaranteed  basis,  $2.5 billion of such global
credit facilities to Ford Credit and $543 million to FCE Bank plc. ("FCE"), Ford
Credit's  European  operation.  All of the global credit  facilities are free of
material  adverse  change  clauses  and  restrictive  financial  covenants  (for
example,  debt-to-equity limitations,  minimum net worth requirements and credit
rating triggers that would limit our ability to borrow).

Financial Services Sector
- -------------------------

Ford Credit

     Debt and Cash - Ford  Credit's  total debt was  $146.2  billion at June 30,
2003, up $5.9 billion  compared  with  December 31, 2002.  This increase is more
than explained by the consolidation of FCAR. Ford Credit's unsecured  commercial
paper at June 30, 2003  totaled  $8.4  billion.  At June 30,  2003,  the average
remaining maturity of Ford Credit's unsecured  commercial paper in North America
and  Europe  was 36  days.  At June  30,  2003,  Ford  Credit  had cash and cash
equivalents  of $9.7 billion.  In the normal  course of its funding  activities,
Ford Credit may generate  more  proceeds  than are  necessary  for its immediate
funding needs.  This excess funding is referred to as  "overborrowings."  Of the
$9.7  billion  of  cash  and  cash   equivalents,   $8.0   billion   represented
overborrowings,  while the  remaining  $1.7  billion was  employed in  operating
activities.

     Ford Credit expects its full-year 2003 public term funding  requirements to
be between  $20 billion to $25  billion.  As of June 30,  2003,  Ford Credit had
completed about $15 billion of public term funding  transactions,  or 60% to 75%
of its full-year requirements.

     Credit Facilities - For additional funding and to maintain liquidity,  Ford
Credit and its  majority-owned  subsidiaries  (including FCE) have contractually
committed   credit   facilities   with  financial   institutions   that  totaled
approximately  $9.8  billion at July 1, 2003,  including  $5.2  billion and $3.2
billion  of global  credit  facilities  at Ford  Credit  and FCE,  respectively.
Approximately  $1.2 billion of the total facilities were in use at July 1, 2003.
44.4% of these  facilities,  which have various  maturity  dates,  are committed
through  June 30,  2008.  The  global  credit  facilities  may be used,  at Ford
Credit's or FCE's  option,  by any of their  direct or  indirect  majority-owned
subsidiaries.  Ford Credit or FCE, as the case may be, will  guarantee  any such
borrowings.  All of the global credit  facilities  are free of material  adverse
change clauses and restrictive financial covenants (for example,  debt-to-equity
limitations,  minimum net worth  requirements  and credit  rating  triggers that
would limit its ability to borrow).

     Additionally,   at  July  1,  2003,   banks   provided   $16.4  billion  of
contractually   committed  liquidity  facilities   supporting  two  asset-backed
commercial paper programs;  $16.0 billion support Ford Credit's FCAR program and
$425 million support Ford Credit's Motown NotesSM Program.

     In  addition,   Ford  Credit  has  entered  into  agreements  with  several
bank-sponsored,  commercial paper issuers ("conduits") under which such conduits
are  contractually  committed  to purchase  from Ford Credit,  at Ford  Credit's
option,  up to an aggregate of approximately  $12.6 billion of receivables.  The
agreements  have varying  maturity  dates  between  August 14, 2003 and June 28,
2004.  As of  June  30,  2003,  approximately  $5.0  billion  of  these  conduit
commitments have been utilized.

                                       26



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

     Leverage - At June 30, 2003,  Ford Credit's  financial  statement  leverage
(debt-to-equity ratio) was 11.3 to 1. Ford Credit's managed leverage was 12.9 to
1. The following table  illustrates  the calculation of Ford Credit's  financial
statement leverage (debt and stockholder's equity in billions):


                                                                       June 30                       December 31
                                                                 ---------------------  --------------------------------------
                                                                  2003       2002        2002       2001      2000       1999
                                                                  ----       ----        ----       ----      ----       ----
<s>                                                              <c>        <c>         <c>        <c>       <c>        <c>
      Total debt                                                 $146.2     $142.1      $140.3     $145.8    $145.6     $132.1
      Total stockholder's equity                                   12.9       13.7        13.6       12.0      12.2       10.9
      Debt-to-equity ratio (to 1)                                  11.3       10.4        10.3       12.2      11.9       12.1


     The following table  illustrates  the calculation of Ford Credit's  managed
leverage (debt and stockholder's equity in billions):



                                                                       June 30                       December 31
                                                                 ---------------------  ---------------------------------------
                                                                   2003       2002        2002       2001      2000       1999
                                                                   ----       ----        ----       ----      ----       ----
<s>                                                              <c>        <c>         <c>        <c>       <c>        <c>
      Total debt                                                 $146.2     $142.1      $140.3     $145.8    $145.6     $132.1
      Securitized off-balance sheet receivables
       outstanding                                                 56.0       65.7        71.4       58.7      28.4       19.5
      Retained interest in securitized off-balance
       sheet receivables                                          (14.5)     (11.5)      (17.6)     (12.5)     (3.7)      (3.5)
      Adjustments for cash and cash equivalents                    (9.7)      (4.2)       (6.8)      (2.9)     (1.1)      (0.9)
      Adjustments for SFAS No. 133                                 (6.6)      (3.3)       (6.2)      (2.1)       --         --
                                                                 ------     ------      ------     ------    ------     ------
        Adjusted debt                                            $171.4     $188.8      $181.1     $187.0    $169.2     $147.2
                                                                 ======     ======      ======     ======    ======     ======

      Total stockholder's equity                                 $ 12.9     $ 13.7      $ 13.6     $ 12.0    $ 12.2     $ 10.9
      Adjustment for SFAS No. 133                                   0.4        0.5         0.5        0.6        --         --
      Adjustment for minority interest                                *          *           *          *         *        0.4
                                                                 ------     ------      ------     ------    ------     ------
        Adjusted equity                                          $ 13.3     $ 14.2      $ 14.1     $ 12.6    $ 12.2     $ 11.3
                                                                 ======     =======     ======     ======    ======     ======

      Managed debt-to-equity ratio (to 1)                          12.9       13.3        12.8       14.8      13.9       13.0

      * Less than $50 million.

     We  believe  that the use of the  managed  leverage  measure,  which is the
result of several adjustments to Ford Credit's financial statement leverage,  is
useful to our  investors  because it reflects  the way Ford  Credit  manages its
business. Ford Credit retains interests in receivables sold in off-balance sheet
securitization   transactions   and,  with  respect  to  subordinated   retained
interests,  has credit  risk.  Accordingly,  it considers  securitization  as an
alternative  source of funding and  evaluates  credit  losses,  receivables  and
leverage on a managed as well as a financial  statement basis. As a result,  the
managed  leverage  measure  provides our investors with  meaningful  information
regarding management's decision-making processes.

Hertz

     Debt and Cash - Hertz'  total debt was $8.0  billion at June 30,  2003,  up
$1.0 billion from December 31, 2002,  reflecting  seasonal  rental fleet demand.
Outstanding  commercial  paper at June 30, 2003  totaled  $3.0 billion at Hertz,
with an average  remaining  maturity of 34 days  compared  with $1.5  billion at
December 31, 2002. At June 30, 2003, Hertz had cash and cash equivalents of $384
million, up from $287 million at December 31, 2002.

     During 2002, Hertz launched an asset-backed  securitization program for its
domestic  car  rental  fleet to  reduce  its  borrowing  costs and  enhance  its
financing  resources.  As  of  June  30,  2003,  $861  million  of  asset-backed
commercial paper was outstanding under this program.

Total Company

     Stockholders'  Equity - Our  stockholders'  equity was $8.1 billion at June
30, 2003, up $2.5 billion compared with December 31, 2002. The increase reflects
primarily  net income of $1.3  billion  and other  comprehensive  income of $1.5
billion,  less dividends of $366 million.  See Note 11 of the Notes to Financial
Statements for further discussion of other comprehensive income.

OFF-BALANCE SHEET ARRANGEMENTS

     Special  Purpose  Entities  - At  June  30,  2003,  the  total  outstanding
principal amount of receivables sold by Ford Credit that was held by off-balance
sheet securitization  trusts was $56.0 billion, down $15.4 billion from December
31, 2002. Ford Credit's retained  interests in such sold receivables at June 30,
2003 were $14.5 billion,  down $3.1 billion from December 31, 2002. The decrease
in receivables held by off-balance sheet securitization  trusts and the decrease
in retained interests reflected  primarily the accounting  consolidation of FCAR
during the second quarter of 2003.

                                       27



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

     Variable  Interest  Entities  -  For  a  discussion  of  variable  interest
entities, see Note 9 of the Notes to Financial Statements.

2003 OUTLOOK

     Industry  Volumes.  We are changing our  assumption of industry  volume for
Europe in 2003 to 16.3 million  units from 17 million  units at the beginning of
the year and  16.5  million  units in May  2003  because  we  anticipate  a more
challenging  economic  environment  in the second  half of 2003.  For the United
States, our assumption of 16.5 million units for 2003 remains  unchanged.  These
industry volume  assumptions  are based on economic  growth  assumptions for the
United States and Europe of about 2% and 1%, respectively, in 2003.

     Production.  Due to lower U.S. and Europe  industry  volume and significant
model-year changeovers (e.g., the Ford F-150 pickup truck and Freestar minivan),
we are  projecting  lower vehicle unit  production in the third quarter of 2003,
compared with the third quarter of last year, as follows:

                                                 Unit Production
                                     -----------------------------------------
                                                            Third Quarter 2003
                                     Projected Third          Over/(Under)
          Business Unit                Quarter 2003         Third Quarter 2002
          -------------              --------------         ------------------

          Ford North America                810,000                (141,000)
          Ford Europe                       335,000                 (22,000)
          PAG                               150,000                  (4,000)

     Net Pricing.  The level of competitive  incentive  activity remains high in
the U.S.  and Europe and we believe  net  pricing for the full year will be less
than zero in both  markets.  However,  we expect  second half net pricing in the
U.S.  and Europe to be better than the first half  primarily  as a result of new
product  introductions (e.g., Ford F-150 pickup truck, Ford Freestar and Mercury
Monterey  minivans in North  America,  and Ford Focus C-Max in Europe).  The net
pricing  metric  measures  the  percentage  change in revenue  from the combined
effect of changes in vehicle  wholesale prices and marketing  incentives,  while
excluding the effects of changes in unit sales  volume,  product mix and foreign
currency exchange rates.

     Costs.  We expect to continue  to achieve  year-over-year  cost  reductions
(excluding the effects of changes in production volume, product mix and currency
exchange  rates) during the second half of 2003,  although at a slower pace than
we have seen year-to-date,  with a full  year improvement of about $2.5 billion.
Product  costs for the full year are  expected to be unchanged  from 2002,  with
cost increases on new models being offset by cost  reductions on current models.
However, new model costs will be higher in the second half, primarily reflecting
the launch of the new Ford F-150 pickup truck and Freestar  minivan.  Similar to
the  first  half,   pension  and  healthcare   costs  are  expected  to  show  a
year-over-year increase in the second half. We also expect second half increases
in depreciation and amortization,  reflecting higher capital spending associated
with  the  new  products.  Improvements  in  quality  will  contribute  to  cost
reductions due  to lower warranty  related-costs  and fewer  additional  service
actions  throughout  the year,  with savings  expected to be higher in the first
half  than  the  second  half.  We  have  also  moved   aggressively  to  reduce
manufacturing,  engineering  and overhead costs in the first half, and we expect
those reductions to continue.  By the end of 2003, we plan to implement  actions
to reduce on-going salaried personnel costs by about 10%.

     Ford  Credit.  We expect  second half 2003  earnings  for Ford Credit to be
lower  than  first  half  earnings,   reflecting   primarily   lower  levels  of
securitization and receivables.

     Earnings.  Based on the foregoing  expectations and projections and subject
to the risk  factors  described  below,  we  expect to incur a loss in the third
quarter of 2003 of about  $0.15 per share and  continue  to expect to earn about
$0.70 cents per share for full-year 2003.  These  projections and our milestones
do not, however,  include the effects of any special items, such as our adoption
of new accounting standard FIN 46 (discussed in Note 9 of the Notes to Financial
Statements), or actions to reduce salaried personnel costs.

                                       28



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.  These  statements  involve  a number of risks,
uncertainties,  and other  factors  that could  cause  actual  results to differ
materially from those stated, including, without limitation:

o    greater price  competition  in the U.S. and Europe  resulting from currency
     fluctuations, industry overcapacity or other factors;
o    a  significant  decline in  industry  sales,  particularly  in the U.S.  or
     Europe,  resulting from slowing  economic growth,  geo-political  events or
     other factors;
o    lower-than-anticipated market acceptance of new or existing products;
o    work stoppages at key Ford or supplier facilities or other interruptions of
     supplies;
o    the  discovery  of defects  in  vehicles  resulting  in delays in new model
     launches, recall campaigns or increased warranty costs;
o    increased safety,  emissions, fuel economy or other regulation resulting in
     higher costs and/or sales restrictions;
o    unusual or significant  litigation or governmental  investigations  arising
     out of alleged defects in our products or otherwise;
o    worse-than-assumed   economic  and  demographic  experience  for  our  post
     retirement benefit plans (e.g., investment returns,  interest rates, health
     care cost trends, benefit improvements);
o    currency or commodity price fluctuations;
o    a market shift from truck sales in the U.S.;
o    economic difficulties in South America or Asia;
o    reduced availability of or higher prices for fuel;
o    labor or other constraints on our ability to restructure our business;
o    a change in our  requirements  under long-term  supply  arrangements  under
     which we are  obligated  to  purchase  minimum  quantities  or pay  minimum
     amounts;
o    a further credit rating downgrade;
o    inability  to access  debt or  securitization  markets  around the world at
     competitive rates or in sufficient amounts;
o    higher-than-expected credit losses;
o    lower-than-anticipated residual values for leased vehicles;
o    increased  price  competition  in the rental car industry  and/or a general
     decline in business or leisure  travel due to  terrorist  attacks,  acts of
     war,  epidemic disease or measures taken by governments in response thereto
     that negatively affect the travel industry; and
o    our inability to implement the Revitalization Plan.


NEW ACCOUNTING STANDARDS

     FASB issued Statement of Financial Accounting Standards ("SFAS") No. 150 in
May 2003. For a discussion of our adoption of this  standard,  see Note 2 of the
Notes to Financial Statements.


OTHER FINANCIAL INFORMATION

     The interim financial information included in this 10-Q Report 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.  Accordingly, you should restrict your
reliance  on  their  reports  on such  information.  PwC is not  subject  to the
liability  provisions  of  Section  11 of the  Securities  Act of 1933 for their
reports  on the  interim  financial  information  because  such  reports  do not
constitute  "reports"  or "parts" of the  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 Discussion about Market Risks
- ------------------------------------------------------------------

     There is no material change in the information  reported under Part I, Item
3 of our Quarterly  Report on Form 10-Q for the quarter ended March 31, 2003 and
Item 7A of our 10-K Report.

                                       29



Item 4.  Controls and Procedures
- --------------------------------

     Evaluation of disclosure  controls and procedures.  William Clay Ford, Jr.,
our Chief Executive  Officer,  and Don R. Leclair,  our Chief Financial Officer,
have  performed  an  evaluation  of  the  Company's   disclosure   controls  and
procedures,  as  that  term is  defined  in Rule  13a-14  (c) of the  Securities
Exchange Act of 1934, as amended (the "Exchange  Act"),  as of June 30, 2003 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 the Securities and Exchange Commission's rules and
regulations.

     Change in internal controls.  No changes in the Company's internal controls
over financial  reporting  occurred  during the quarter ended June 30, 2003 that
have materially  affected,  or are reasonably likely to materially  affect,  the
Company's internal controls over financial reporting.


                           Part II. Other Information


Item 1.  Legal Proceedings
- --------------------------


Firestone Matters
- -----------------

     Firestone Tire Related Litigation
     ---------------------------------

     Firestone  Class  Actions.  (Previously  discussed  on page 27 of the  10-K
Report.) On June 20, 2003, the U.S. Court of Appeals  enjoined the  prosecutions
of state cases that purport to  represent a  nationwide  class on the basis that
the court's prior decisions  establish  conclusively  that these cases cannot be
tried as  nationwide  class  actions.  State cases that involve  only  statewide
classes  are  unaffected  by the June 20  decision,  but are likely to be stayed
pending  completion of a settlement  that Firestone has  tentatively  negotiated
with the plaintiffs. The proposed settlement would require plaintiffs to dismiss
all class action claims against Ford that are based on alleged tire defects.


Other Product Liability Matters
- -------------------------------

     Romo v Ford.  (Previously  discussed on page 28 of the 10-K Report.) On May
19, 2003, the United States  Supreme Court granted our petition for  certiorari,
vacated the decision of the California  appeals court, and remanded the case for
reconsideration in light of the Supreme Court's recent decision in State Farm v.
Campbell,  which reversed a $145 million punitive damage award on the basis that
punitive awards generally  cannot exceed nine times the  compensatory  award and
that punitive awards cannot be based on out of state or dissimilar conduct.


Environmental Matters
- ---------------------

     Wixom  Assembly  Plant Notice of  Violation.  On May 20, 2003,  the City of
Wixom, Michigan, issued a notice of violation ("NOV") alleging that Ford's Wixom
Assembly Plant  discharged  unusually high  concentrations  of molybdenum in its
wastewater during the summer of 2002. The NOV alleges that wastewater  discharge
from the Wixom  Assembly  Plant  caused the levels of  molybdenum  in the city's
wastewater  treatment  plant  biosolids to exceed  regulatory  limits that would
allow the city to dispose of the  biosolids  through land  application.  The NOV
requests payment of approximately  $150,000 to cover handling and disposal costs
associated with alternate disposal.

     Cleveland Engine Plant Notice of Violation.  On July 2, 2003, the Cleveland
Local Air  Agency  (acting  on behalf of Ohio  Environmental  Protection  Agency
("Ohio EPA")) issued a NOV to our Cleveland Engine Plant alleging  violations of
permit requirements for paint booth emissions. The NOV also alleges the Plant to
be in violation of its permit limits for an engine testing process, based on the
Plant's previous  self-reporting  of the matter to Ohio EPA. It is possible that
the Agency or Ohio EPA could seek  monetary  sanctions  of  $100,000 or more for
these alleged violations.


Class Actions
- -------------

     Seat  Back  Class  Actions.  (Previously  discussed  on page 31 of the 10-K
Report.) The New Jersey  Appellate Court has affirmed the trial court's grant of
summary judgment in our favor.

     Crown Victoria Police Interceptor Class Actions.  (Previously  discussed on
page 32 of the 10-K Report and on page 24 of our  Quarterly  Report on Form 10-Q
for the quarter ended March 31, 2003 (the "First Quarter 10-Q Report").) A state
court in Illinois has certified a state-wide class of all  municipalities in the
state of Illinois that own 1992-2002  Police  Interceptor  vehicles.  Additional
cases have been filed in state  courts in Florida  and  Pennsylvania,  involving
allegations and demands for relief similar to those described under this caption
in the 10-K Report;  these cases were  removed to federal

                                       30



Item 1.  Legal Proceedings (Continued)
- --------------------------

court and our motions  for  transfer to the Multi  District  Litigation  ("MDL")
proceeding in the U.S. District Court,  Northern District of Ohio are pending. A
case  in Ohio  was  dismissed.  A  Louisiana  case  was  transferred  to the MDL
proceeding.

     Apartheid  Class  Action.  (Previously  discussed  on page  32 of the  10-K
Report.) The defendants in this class action have filed a motion to dismiss.

     Fifteen-Passenger Van Class Action. (Previously discussed on page 33 of the
10-K Report and on page 24 of First  Quarter 10-Q  Report.) On June 11 2003,  we
received a summons and  complaint in a fourth case,  filed in state court in New
Jersey,  involving allegations and demands for relief similar to those described
under this  caption in the 10-K Report.  One of the Texas cases was  voluntarily
dismissed by the plaintiffs.

     Antitrust  Class  Actions.  (Previously  discussed  on page 34 of the  10-K
Report and on page 25 of First Quarter 10-Q Report.) Five additional  cases have
been  filed in  federal  courts in New York  (three  cases),  Massachusetts  and
Pennsylvania.  Eighteen  additional  cases  have been  filed in state  courts in
California (10 cases), New Jersey (three cases),  Arizona,  Florida,  Minnesota,
New York,  and  Wisconsin.  All cases  filed in federal  courts  throughout  the
country have been  consolidated  for pretrial  proceedings  in federal  court in
Maine.

     TFI Module Class  Actions.  (Previously  discussed on page 26 of our Annual
Report  on Form 10-K for the year  ended  December  31,  2001  (the  "2001  10-K
Report"),  on page 21 of our Quarterly Report on Form 10-Q for the quarter ended
June  30,  2002  and on page 21 of our  Quarterly  Report  on Form  10-Q for the
quarter ended  September 30, 2002.) All appeals from the court's order approving
the  nationwide  settlement in the  California  case have been withdrawn and all
related class actions in the United States have been  dismissed.  The nationwide
settlement  described in the 2001 10-K Report became effective December 9, 2002.
The settlement agreement,  described in the 2001 10-K Report, provides that Ford
will extend the warranties applicable to Motorcraft(R)  distributor-mounted  TFI
modules to 100,000 miles, reimburse class members who previously paid to replace
Motorcraft(R)  distributor-mounted  TFI  modules  within the  extended  warranty
period,  donate $5 million to various colleges and universities for research and
education  in the  field  of  automotive  safety,  and pay  plaintiffs'  counsel
reasonable fees and expenses.


Item 2.  Changes in Securities and Use of Proceeds
- --------------------------------------------------

     During the second  quarter of 2003,  we issued a total of 33,697  shares of
our common stock under the 1998 Long-Term  Incentive  Plan to certain  directors
and officers as part of their total  compensation.  Such shares,  which included
shares issued on June 30, 2003 pursuant to the consulting  agreement  between us
and Mr.  Edsel  B.  Ford II,  a  director  of the  Company,  and the  employment
agreement between us and Mr. Carl E. Reichardt, a director and former officer of
the Company,  were not  registered  pursuant to the  Securities  Act of 1933, as
amended, in reliance on Section 4(2) thereof.


Item 4.  Submission of Matter to a Vote of the Security-Holders
- ---------------------------------------------------------------

     On June 16, 2003,  the 2003 Annual Meeting of  Stockholders  of the Company
was held. The following is a brief  description of the matters voted upon at the
meeting and tabulation of the voting therefor:

     Proposal 1 Election of Directors.

                                                Number of Votes
                                    ------------------------------------
Nominee                             For                         Against
- -------                             ---                         -------
John R. H. Bond                     2,643,423,897               98,709,688
Edsel B. Ford II                    2,686,708,291               55,425,294
William C. Ford                     2,683,534,466               58,599,119
William C. Ford, Jr.                2,684,094,466               58,039,119
Irvine O. Hockaday, Jr.             2,682,156,592               59,976,993
Marie-Josee Kravis                  2,649,519,629               92,613,956
Richard A. Manoogian                2,650,254,972               91,878,613
Ellen R. Marram                     2,683,421,544               58,712,041
Homer A. Neal                       2,685,489,762               56,643,823
Jorma J. Ollila                     2,685,140,027               56,993,558
Carl E. Reichardt                   2,684,240,081               57,893,504
Robert E. Rubin                     2,648,157,964               93,975,621
Nicholas V. Scheele                 2,686,045,529               56,088,056
John L. Thornton                    2,536,085,312              206,048,273

There were no broker non-votes with respect to the election of directors.

                                       31



Item 4.  Submission of Matter to a Vote of the Security-Holders (Continued)
- ---------------------------------------------------------------

     Proposal 2 Ratification of Selection of Independent Public  Accountants.  A
proposal to ratify the selection of  PricewaterhouseCoopers  LLP as  independent
public  accountants to audit the books of account and other corporate records of
the Company for 2003 was adopted,  with 2,676,434,481 votes cast for, 45,418,904
votes cast against, 20,280,200 votes abstained and 0 broker non-votes.

     Proposal  3  Approval  of the  Terms  of  the  Company's  Annual  Incentive
Compensation  Plan.  A proposal  to approve  the terms of the  Company's  Annual
Incentive  Compensation  Plan was adopted,  with  2,564,498,928  votes cast for,
142,971,238  votes  cast  against,  34,663,419  votes  abstained,  and 0  broker
non-votes.

     Proposal 4 Approval of the Terms of the Company's 1998 Long-Term  Incentive
Plan. A proposal to approve the terms of the Company's 1998 Long-Term  Incentive
Plan was adopted,  with  2,300,156,989  votes cast for,  406,009,708  votes cast
against, 35,966,888 votes abstained and 0 broker non-votes.

     Proposal 5 Relating to  Disclosure  of Officers'  Compensation.  A proposal
relating to disclosure  of Company  officers who are  contractually  entitled to
receive  more  than  $500,000  annually  in  compensation  was  rejected,   with
2,039,723,234  votes cast against,  235,017,387 votes cast for, 37,269,521 votes
abstained and 430,123,443 broker non-votes.

     Proposal 6 Relating to the Method of Nominating  and Electing the Company's
Directors.  A proposal to amend the By-laws so that  common  stock  shareholders
would  nominate and elect 60% of the  Company's  directors and the Class B Stock
shareholders  would  nominate  and  elect  40% of the  Company's  directors  was
rejected,  with  2,065,492,841  votes cast against,  203,212,672 votes cast for,
43,304,629 votes abstained and 430,123,443 broker non-votes.

     Proposal 7 Relating to Establishing  an Independent  Committee of the Board
to Evaluate  Conflicts of  Interests.  A proposal  relating to  establishing  an
independent  committee of the Board to evaluate  conflicts of interests  between
Class B Stock  shareholders  and common stock  shareholders  was rejected,  with
1,839,313,007  votes cast against,  427,947,376 votes cast for, 44,749,758 votes
abstained and 430,123,444 broker non-votes.


Item 5.  Other Information
- --------------------------

Government Standards
- --------------------

Motor Vehicle Fuel Economy--U.S. Requirements
- ---------------------------------------------

     Three state Attorneys General have filed suit against EPA seeking to compel
the agency to list carbon dioxide (CO2) as a "criteria air pollutant"  under the
Clean Air Act, the first step toward establishing a national ambient air quality
standard for CO2. In a separate  lawsuit,  a number of private  entities  allege
that EPA has a duty to regulate  emissions of greenhouse  gases  (including CO2)
from new motor vehicles. If successful,  either of these suits has the potential
to lead to the development of a "CO2 emissions standard" for motor vehicles that
could  effectively  supersede  the  federal  CAFE  law.  We  expect  that  trade
associations  representing a number of  industries,  including the motor vehicle
industry, will seek to intervene in both lawsuits.

End-of-Life Vehicle Directive
- -----------------------------

     One additional  country,  Italy, has enacted  legislation  implementing the
End-of-Life Vehicle Directive during the second quarter 2003.

                                       32



Item 6.  Exhibits and Reports on Form 8-K
- -----------------------------------------

     (a)  Exhibits
          --------

          Please refer to the Exhibit Index on Page 34.

     (b)  Reports on Form 8-K
          -------------------

          The Registrant filed the following  Current Reports on Form 8-K during
          the quarter ended June 30, 2003:

          Current  Report on Form 8-K dated April 1, 2003  included  information
          relating to U.S. retail sales of Ford vehicles in March 2003.

          Current  Report on Form 8-K dated April 16, 2003 included  information
          relating to Ford's first quarter 2003 financial results.

          Current  Report on Form 8-K dated  May 1,  2003  included  information
          relating to U.S. retail sales of Ford vehicles in April 2003.

          Current  Report on Form 8-K dated May 21,  2003  included  information
          relating to an investor presentation.

          Current  Report on Form 8-K dated May 23,  2003  included  information
          relating to valuation of stock options.

          Current  Report on Form 8-K dated  June 3, 2003  included  information
          relating to U.S. retail sales of Ford vehicles in May 2003.



                                    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
                            ------------------------------

                                    (Registrant)






Date: August 1, 2003         By:/s/Don R. Leclair
      --------------            --------------------------
                                Don R. Leclair
                                Group Vice President and Chief Financial Officer




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                                  EXHIBIT INDEX



  Designation                            Description                              Method of Filing
  ------------------    ----------------------------------------------------    -----------------------
<s>                     <c>                                                     <c>
  Exhibit 12            Ford Motor Company and Subsidiaries Calculation         Filed with this Report
                        of Ratio of Earnings to Combined Fixed Charges
                        and Preferred Stock Dividends

  Exhibit 15            Letter of PricewaterhouseCoopers LLP, Independent       Filed with this Report
                        Accountants, dated August 1, 2003, relating to
                        Financial Information

  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                       Filed with this Report

  Exhibit 32.2          Section 1350 Certification of CFO                       Filed with this Report




                                       34