THE QUALITY JOURNEY OF FORD Adrian Vido Ford

THE QUALITY JOURNEY OF FORD Adrian Vido Ford Motor Company Director, Global Manufacturing Quality

Where we were…below industry Lexus Cadillac Jaguar Honda Buick Mercury Hyundai Infiniti Toyota Mercedes-Benz Audi BMW Oldsmobile Volvo Acura Chevrolet INDUSTRY AVG Chrysler Dodge Lincoln Pontiac Subaru GMC Ford Mitsubishi Saab Jeep MINI Land Rover Saturn Suzuki Kia Nissan Mazda Scion Porsche Volkswagen Hummer J. D. Power and Associates 2004 Initial Quality Study Problems Per 100 Vehicles Ford ranks 23 rd

VIEW FROM THE BOTTOM: BELOW AVERAGE QUALITY THREATENED FORD’S FUTURE

How below average quality hurt Ford…. Unsatisfied customers n Lost sales and market share n Lower resale values n Poor reputation n Loss of credibility/trust n Higher warranty costs n Low employee morale n

Ford’s quality offensive plan…. Design in Quality q Standard global process q Global Product DNA: looks, sounds, feels like a Ford q Don’t compromise customer wants for lower cost q Verify designs further upstream through virtual tools Build in Quality q q q Read every claim, every day; address in 24 hours Virtual manufacturing to reduce worker injury/strain Each assembly function (body, paint, etc. ) has a dedicated team of problem-solvers People Quality q q Developing a critical mass of problem solvers Ford has trained over 90, 000 Green Belts, over 9, 000 Black Belts and over 500 Master Black Belts worldwide

The Road Back…. Ford #1 mainstream brand J. D. Power Initial Quality Study 2010 2009 Ford launches a new, stricter global quality standard Ford’s quality ranks below industry average J. D. Power Initial Quality Study Global Product Development System launched; quality built-in 2003 early 2002 2006 Things-gone-wrong per 1, 000 vehicles Then: 2, 350 Now: 1, 100 in 2009 2007 2008 Ford: “World-Class Reliability”; 90% of line-up average or better reliability Consumer Reports 2009 Annual Auto Issue Ford achieves initial quality that’s equal to Toyot and Honda—the tipping point RDA’s Global Quality Research Survey

GQRS CUSTOMER SATISFACTION US FLM better Industry Improvement = 0% FLM VW/Audi Honda/Acura New GM Hyundai/Kia Toyota/Lexus/Scion Nissan/Infiniti Chrysler LLC FLM ranks 1 st in Satisfaction, improving by 2 pct. Pts. GM Satisfaction improves 3 pct. pts. over last year, reaching 80%.

GQRS TGW/1000 US FLM better Industry Improvement = 1. 9% Chrysler LLC VW/Audi Hyundai/Kia Nissan/Infiniti Toyota/Lexus/Scion New GM FLM Honda/Acura FLM TGW continue to improve (5. 5%), but does not keep pace with Honda’s improvement rate (8. 6%). FLM gives up its first place ranking but remains statistically equivalent to Honda at 95% confidence level.

Where we are today…. #1 full-line brand J. D. Power and Associates 2010 Initial Quality Study Problems Per 100 Vehicles Ford #1 Mainstream Brand

Benefits of having industry-leading quality…. n Customer satisfaction – 82% customer satisfaction** Increased dealer showroom traffic n Higher U. S. sales – 20% jump in 2010 n U. S. market share growth – up 16% in 2010 n Better resale values – highest avg. auction value* n Improved credibility and reputation n Fewer warranty repairs – 40% lower globally v. s. n 2009 n Boosts employee morale *Data Source: Vehicles 1 -5 YIS, NADA Auction. Net May CYTD, Mileage and Mix Controlled, Luxury Brands

Ford’s Quality Strategy ü Improve our Product by identifying customer satisfaction opportunities with leading designs ü Standardize and adhere to key quality Processes in Manufacturing, New Model Programs, and Product Development ü Develop our People by building a world class quality organization with advanced problem-solving knowledge for improving quality and productivity ü Improve our Perception by delivering and communicating proof points to stakeholders Commitment To Innovation And Quality Excellence: Continuous Improvement For Life

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