Good day, ladies and gentlemen. And welcome to the Ford first quarter earnings conference call. My name is Towanda, and I will be your coordinator for today. (Operator Instructions) I would now like to turn the conference over to Mr. George Sharp, Executive Director of Investor Relations. Please proceed, sir.

Thank you, Towanda, and good morning. Welcome to everyone joining us today either by phone or by webcast. On behalf of the entire Ford management team, I would like to thank you for taking the time to be with us this morning, so we can provide you with additional details of our first quarter 2014 financial results. Presenting today are Alan Mulally, President and CEO of Ford; and Bob Shanks, Chief Financial Officer. Also participating are Mark Fields, Chief Operating Officer; Stuart Rowley, Corporate Controller; Neil Schloss, Corporate Treasurer; Paul Andonian, Director of Accounting; Mike Seneski, Ford Credit CFO. Copies of this morning's press release and presentation slides are available on Ford's Investor and Media website. Please note that the financial results discussed today are preliminary and include references to non-GAAP financial measures. Final data will be included in our Form 10-Q and any non-GAAP financial measures are reconciled to the U.S. GAAP equivalent in the appendix of the slide deck. Finally, today's presentation includes some forward-looking statements about our expectations for Ford's future performance. Of course, actual results could be different. The most significant factors that could affect future results are summarized at the end of this presentation and detailed in our SEC filings. With that, I'd now like to turn the presentation over to Alan.

Thank you, George, and good morning to everyone. We are pleased to have the opportunity today to review our first quarter 2014 business performance, as we continue to move forward with the implementation of our One Ford plan. Let's get started and turn to the first slide, please. Our One Ford plan shown here continues to guide everything that we do. We continue to aggressively restructure the business to operate profitably at the current demand and the changing model mix. Accelerate development of the new products our customers want and value. Finance our plan and improve our balance sheet. And work together effectively, as one team, leveraging our global assets. Our commitment remains to serve customers in all markets with a full family of best-in-class vehicles, small, medium and large; cars, utilities and trucks, delivering profitable growth for all. Now, let's turn to Slide 2 to review a summary of our first quarter accomplishments. The company achieved its 19th consecutive profitable quarter in the first quarter with a positive operating-related cash flow and continued strong liquidity. Once again, the topline grew with wholesale volume of 6% from year ago and company revenue improving about 1%. We saw a higher market share in Asia-Pacific, where we achieved a record share in China. Among our business units, Asia-Pacific reported a record quarterly profit. North America, Middle East and Africa we're profitable and Ford Credit once again delivered solid results. Europe reduced its loss substantially compared with last year, but South America incurred a larger loss. This year we'll feature the most product launches in our history and we remain on track with the 23 global product launches we announced late last year. Overall, the company's results were solid, but the quarter was impacted adversely by several significant factors that are not representative…

Thanks, Alan, and good morning, everyone. Starting at the top on Slide 4, first quarter wholesale volume was 1.6 million units, up 92,000 units from a year ago. And revenue was $35.9 billion, up $300 million. Pre-tax profit was $1.4 billion, excluding special items $765 million lower than a year ago. After-tax earnings per share at $0.25 were $0.16 lower. Net income attributable to Ford, including pre-tax special item charges of $122 million was $989 million, which was $622 million lower than a year ago. Earnings were $0.24 a share, down $0.16. The pre-tax special item charges of a $122 million are for separation-related actions, primarily in Europe to support our transformation plan. You can find additional detail on Appendix 3. Automotive operating-related cash flow was $1.2 billion, our 16th consecutive quarter of positive performance. And automotive gross cash was $25.2 billion, exceeding debt by $9.5 billion. Our first quarter operating effective tax rate, which isn't shown was 38%. Consistent with prior guidance, we expect our full year operating effective tax rate to be about 35%. As shown on Slide 5, both of our sectors, automotive and financial services, contributed to the company's first quarter pre-tax profit. As shown in the memo, the year-over-year decline in company first quarter pre-tax profit is explained primarily by the automotive sector. Within automotive, lower results in North and South America were offset partially by an improvement of nearly $600 million from the other automotive regions. Compared with the fourth quarter 2013, company pre-tax profit was $63 million higher, more than explained by financial services. The key market factors and financial metrics for our automotive business in the first quarter are shown on Slide 6. Continuing this quarter, we will report global and total regional industry SAAR and market share data to improve transparency…

Thank you, Bob. Slide 24 summarizes our view of the business environment for 2014. We project global economic growth to be in the 2.5% to 3% range and global industry sales to be about 85 million to 90 million units. U.S. economic growth is projected to be in the 2.5% to 3% range, with industry sales still supported by replacement demand as a result of the older age of vehicles on the road. Near-term conditions have shown signs of improvement after some weakness in January and February data. In South America, Brazil's economy is slowing due to high interest rates put in place to contain inflation. While the situation in Argentina and Venezuela remains volatile, with both economies facing unclear economic policy direction. In Europe, an economic recovery is underway. For 2014, we expect GDP growth of about 1% in the euro area and 2% to 2.5% in the U.K. The European Central Bank left its policy interest rate unchanged at 0.75% in April and indicated that it will keep rates low for an extended period. The Bank of England also indicated that it will keep rates low until economic growth reduces excess capacity in U.K. economy. And in Asia-Pacific, China's economic growth is expected to be slightly below 7.5% with several challenges, including excess capacity and excess debt. The government intends to be more focused on structural reforms and is willing to accept lower growth within a reasonable range of 7.5%. Growth in India is expected to improve modestly to about 5% from last year, as high inflation and high interest rates remain impediments to stronger growth. Overall, despite challenges in emerging markets, we expect global economic growth to continue in 2014. Slide 25, recaps the guidance disclosed earlier for all of our business units as well as for…

Thanks, Alan. Now, we'll open up the lines for about a 45 minute Q&A session. We'll begin with questions from the investment community and then take questions from the media. Now, in order to allow for as many participants as possible within this timeframe, please keep your questions brief and please avoid asking more than two. Towanda, can we have the first question?

(Operator Instructions) Your first question comes from the line of Adam Jonas with Morgan Stanley.

Two brief questions. First, on the Asia-Pacific margin 11.1%, pretty astonishing result. I think that's about at least 3x maybe the margin that the market expected. Can I give you a chance right now to kind of, say, hold your horses folks, please don't extrapolate this, consider the following headwinds that should keep us lower than that? That's my first question.

So I'll say hold some of your horses. We have improved our guidance, so we do expect the reason to contribute more positively than we did three months ago, because the performance is strong, and it's being driven by China and the great response that consumers are giving our products and our brands. So it is going to do better. I would not multiply times-four, which I think is just the question, Adam. And that's largely around the fact that we still have the six plants under construction. Some of them will be coming on stream later this year. I think two other ones come on stream in 2015. So as we get closer to launch of those facilities, the cost will increase, we bring people onboard, we start to train them before we start producing and that type of thing. The other factor is we've got Lincoln launching later this year. Of course, we're already incurring expense related to that. But as we get closer to the launch in latter part of the year, there will be more expense associated with that. So I think those are the caveats I would put on, but clearly the region is doing fabulously, and we think it's going to have a great, great year. And finally, we've been talking about and that's been kind of eking through a bit more quarter-by-quarter, we're starting to see the pay off of the big investments in the region.

Second quarter on the F-Series changeover. Another chance for you to take this opportunity to tell us anything in the remaining quarters of the year outlook, particularly in the second half you're like from the 13 weeks downtime and the cadence that you've already talked about that you might say, please guys, this is complicated, a big, big change for us. Can you add a little more -- any chance you'd add any more caution in that second half outlook in North America for us or not?

Let me give a couple of comments first broadly and then Mark can comment further on F-Series. So one thing I would say, first at the company level, we had a solid start for the year and I'm sure we're going to get questions throughout the call on the Slide 7 and the factors that we showed as being sort of standouts, if you will, in terms of the size and factor all sort of occurring in the quarter. But we see the run rate of the business has been very healthy and very strong, both in case of total company, North America, I'd even say in South America, and you heard my comments about the balance of the year. Clearly, the first quarter is not indicative of what we expect in the balance of the year there. So the run rate of business is much healthier than what the initial view of the bottomline would see impacted. In fact, if anything, when you think about the emerging market issues, which are more intense than what we expected three months ago, we're observing that, and still think that business is going to deliver what we expected. And in fact, we're now trying to see elements of the business where we're changing the guidance upward. So I just want to give you that sense of how we're kind of seeing the overall business. In terms of calendarization of profits for the balance of the year, what I'll say is that we expect the rest of the year, the quarters to be substantially stronger than what we're seeing in the first quarter. And of course, things will fluctuate from quarter-to-quarter, but they should all be better than what we're seeing in the first quarter. And so Mark, you want to comment on F-Series?

Overall, Adam, the preparations for the launch are going well and the team is very energized. We're going through, obviously the number of the production builds, but its going on plan. As we mentioned last quarter, we have three weeks of downtime of the '13 in the first quarter. And remember, we've mentioned that inclusive of that '13 was the summer shutdown week, so you can deduce what quarter that will be in. But clearly as we said, we got a manufacturing launch in the fourth quarter. So you can pretty much surmise where a lot of the downtime is going to be as we get the plan ready-to-go. But overall, when you stand back and look at our F-Series business, even with the existing model, our share is about the same as the full year for last year. We continue to run the plans, I think very efficiently. Our transaction prices are actually holding up very well, when you look at our transaction prices for '14 model a year, they're probably at the top of the segment of the under 8,500. So that business is going well. We're also looking at potential production opportunities for the existing F-Series in the remainder of this year. We have more work to do that could help us potentially get to the upper half of the margin range that we have for North America, but we have some work to do on that.

Your next question comes from the line of Brian Johnson with Barclays.

Just want to focus on the China results and kind of two related questions. One, kind of, can you give us the outlook for Asia Pacific x China and just directionally is that getting better, about the same or worse? And then secondly, within China how much of your success is from CUVs versus the car line up? How do you feel about your CUV position competitively? And as you kind of bring this plans on board, how they're going to be split between producing CUVs and cars?

Brian, I'll handle the first one and then Mark will address the second one. So as I mentioned in the remarks earlier, the quarter's results were driven by China and I think that's both in terms of the year-over-year results and in an absolute. The rest of Asia Pacific is not as strong. It's not necessarily a drag on the business. But just sort of in a different place I think in terms of where we are in putting in place the big global production hubs that we're working on in India, and also in Thailand, so I think we'll see them start to contribute in a more positive way, a little bit after if you will the results that we're seeing now with China. Mark?

On the second question, when you look at our share performance in China, as Bob mentioned upfront, it was actually -- it was a record for the quarter at 4.5%, which was up 1 point versus a year ago. When you look at some of the elements driving that to your point, when you look at the segment, the SUV, CUV segment in China, as an industry, it was up about 28%. Our sales were up almost 300%. And the reason for that was, all the products that we introduced last year, the EcoSport, we have the EcoSport, Explorer, the Kuga, so we have a full line up there, and that's been a really important part of our growth in addition to the car side of the business, which we've done very well with. And then when you look at the texture of that, a lot of our growth has been in the Tier-3 through six cities and that's been supported by our network expansion. And when you think of maybe some of the infrastructure around, it lends itself well to SUVs and CUVs. And actually the type of demographics of the customer that we're getting is very encouraging, in addition to the profile of the segmentation. We're getting younger customers than the industry average. And interestingly, depending upon the model lines, 70% to 90% of customers they're buying our vehicles. It's either a first-time purchase or an addition to the car in the household. So I think that bodes well for us going forward.

So the CUV almost becomes the plus one car for the mass affluent in China?

Well, we're also doing well and we continue to do well with our Focus. As we said our overall sales in the first quarter were up 45%, so we're doing well of Focus. Fusion is doing very well there and the Mondeo is actually doing very well, Mondeo is the Fusion, so both of them. It's a combination of both, but clearly our full family of SUVs and CUVs has really helped turbo charge that.

Your next question comes from the line of Colin Langan with UBS.

One, any color on, why the recall cost was so large within the quarter? I mean is it the nature of the repair. Just any color on why such a large recall cost is my first question?

This is a really important thing that we explain, so let me put in a little bit of a detail here. So first of all this is a warranty-reserve adjustment and I need to explain to how we at Ford account for field service actions. We use something that's called a pattern estimation model, so what that means is that every time that we sell a vehicle, we actually accrue a bit of reserve, if you will for field service actions that could happen in the future. So nothing specific in terms of a particular issue or problem, but based on history we expect that something could happen. So we reserve for that. And then what we do as we go forward in time, we then sort of top that reserve up or we might take it down, based on what we're seeing to changes in more recent history, if you will. I think we go back to about 2008s right now, so we don't go all the way back that, but kind of drop a year-over-year. And so it's just all based on history and what's actually happened. So what we've seen, we have seen more recalls at Ford and across the whole industry in the last couple of years or so. And so as that has occurred, what we've had to do is we've had to continue to look at the reserves and adjust them and that's what's happening in this quarter. It's based on a process that is disciplined, written in concrete. There is nothing behind this beyond just the update of the data and letting the date tell us that we need to increase reserves based on what's happened. Now, a couple of other things to let you know, is if we then have vehicles that…

And how often is that calculation done? Is it a quarterly analysis that you do or is that an annual?

This particular adjustment is we conducted, what are called sort of deep dives twice a year in the first quarter and the third quarter. So that's why it's happening in this quarter. And if I go back, because I did go back to and I expected that you guys might ask about what happened in the past and looking at 2013, and we actually didn't have much that was taking place for '13. We have one quarter where we have some reserve adjustment going up coincidently in that quarter. We also had a supplier recovery on a particular action, which sort of offset that. So that's why we didn't call, either the recovery or the reserve adjustment up, because they were sort of offsetting each other.

One last question. I believe in your comments you said that North America margins should be in the 8% to 9% range. You're starting up with 7.3% and there is a lot of launch cost in the second half of the year. Is that a still the valid range to think about for the full year or did I mishear that?

No, absolutely, because when you think about the first quarter, we were at 7.3% including in all the things that we've just been talking, the weather issues, the reserve adjustments. So if you think about the run rate of the business in the quarter, we were nearly at 10% in North America. As the year progresses we have a lot of new products that will be coming in addition to the For-Series. Some of that will give us some favorable product mix. This quarter we had favorable, unfavorable series mix and options, but that will start to be offset by favorable product mix as the year progresses. The other thing I think that is different than where we were three months ago, we guided to the fact that we thought North America would have negative pricing for the year. And certainly we see that in the quarter, but as we look ahead, I think we're starting to see the possibility of that being maybe more flat, maybe potentially somewhat positive, because the overall environment has been a bit more positive, more disciplined across the industry in general than what we maybe thought would be the case three months ago. Mark, anything to add?

No, as just mentioned earlier as we look at that 8% to 9%, we're looking at additional production opportunities on the current F-Series, which all things being equal, could actually pushes up in the upper range of that, but we have some work to do.

Your next question comes from the line of Ryan Brinkman with JPMorgan.

There have been a couple already on China and Asia Pacific, but I'd like to approach it from a little bit different of an angle. Obviously, the results there are quite strong despite the impact of some pretty aggressive, growth-related investments. So I am curious what comments that you could make regarding the potential earnings power of this region a few years out, after which presumably, we could see some tapering of the growth investments?

Well, we've said I think, Ryan, for quite a long time that we thought towards the mid-decade or so that the region would contribute very meaningfully significantly to the bottomline of the company. And I think that's still our point of view. We expect this to be one of the larger regions of the business going forward. It is largest region of the world in terms of industry and we're making great progress and taking and participating in that. We also have capacity increases that are still ahead of us. We have more expansion of our product portfolio ahead of this. As I mentioned earlier, we see India and Southeast Asia, maybe lagging a bit behind where we are in China in terms of the maturity of our investments there. So I think that's an opportunity down the road. So I think we feel like this will be a region that will definitely be a meaningful significant contributor to Ford's bottomline.

And then for my second and final question. I guess, maybe just one on South America. You continue to take really a lot of price down there and at the same time some of the vehicle production forecasters, IHS, et cetera, they've recently slashed their expectations for sales and production in the back half of the year a lot, including for you guys. So I wonder if you think that it might be a concern as we transition to a potentially, I guess softer demand environment that it might become more difficult to continue to offset with price, the inflationary currency pressures as well as you have been in recent years.

Yes, I think it's different by market. We're actually, at least up till now, we've been able to more or less -- maybe it depends on timing of a quarter, because we've seen such significant deprecation that some times you can't fully recapture that all in a quarter. But I think in the case of Venezuela and in the case of Argentina, we've seen better ability to over a relatively reasonable period of time as to offset the effect of operating exchange weakness and/or low inflation. I think it's different in Brazil. It's a much more competitive environment. All that capacity, as you mentioned that's coming in, it's making that I think a tougher place in order to capture, to offset, if you will the effects that I talked about. I think the thing that is a positive for us though is the complete transformation of the portfolio. All the new products that are coming in, some are still ahead of us, because we're seeing an extremely favorable response from consumers, both in terms of what it's done for us in share, but also our ability to get a really healthy transaction price for those products. But nonetheless, Brazil is, as we've been talking about that for some time have been a concern around the competitive environment and all the capacity coming in.

The only other thing I'd add to Bob's point about the product lineup and working on the revenue side, as you can imagine, following our process of looking at the business environment, the team there is very focused on looking at optimizing our footprint that we have down there. We are working on our logistical cost, which is very important, material cost reductions, seeing where we can accelerate localization actions and just overall structural cost improvement. So we are working both sides of the profit equation for that part of the world.

Your next question comes from the line of Rod Lache with Deutsche Bank.

I was hoping, just not to harp on this too much, but is the field service charge is a pretty big number. Can you just elaborate on how much of it is related to adjusting the pattern estimation model? How much of it is discrete and how much is older vehicles? You did mention that there were some '01 to '05 vehicles in there, which obviously is going to raise some questions, in light of what some others are dealing with. So what is the issue there? And maybe if you could just say specifically, what is the issue with the '01 to '05 models?

Yes, and they are all public. We have about $400 million associated with the field service actions, of that about $350 million relates to the '09 through '13 model years -- is it '08, '09? '08 through '13 model years. We then have two issues that were for the older model years. We have a Crown Vic Rim -- I think it's a Crown Vic Grand Marquis lighting control module that was a recall that was for the '03, '05 model years that was about $30 million to $40 million. And then we had and Escape subframe issue that was roughly $30 million and that was '01 through '04. And there was maybe about $10 million of just general offsets to all of that. Most of it is the reserve adjustments. The other two were relatively small.

So there is not like a review of historical vehicles or something like that that's unusual?

No, those are simply -- we're always looking at data to understand where we have issues. Those were things that clearly popped up and indicated that we had an issue for our normal process, addressing ASAP.

And just two more things. Just on your material costs have been in North America really big offset to the price and mix recently through the past three quarters in a row. Obviously, it's depended on timing of new launches. Could you just give us some thoughts on how we should be thinking about price mix versus materials looking forward? And then on China, you mentioned again that you have a lot of plans to expand that are in launching. And you previously said that higher launch costs are going to be a factor this year, but this quarter it seems like your cost structure was actually improved. So can you quantify the magnitude of the launch costs that you'd anticipate for this year?

In the case of North America for the full year, we still would expect to see I think positive material cost overall. We're seeing very good material cost reductions. We will have as the new products are introduced increases related to them. But because they're launching more second half, if you will, at least lot of the volume on a year-over-year basis, the affect will be probably more in '15 than in this year. In the case of Asia Pacific, what we're seeing there is, as you said the quarter doesn't indicate what we expect to see for the full year. But for the full year, we'll see more cost come in and that will largely be around spending-related manufacturing, more in terms of engineering and also advertising sales promotions as we launch and support the products. And then a general, admin and expense selling will go up. Some of that related to Lincoln and some of it just related to the overall growth of the business that we need to put resources in place to support it. So it's really across, I guess I'm saying all parts of the business, but it's going to be sort of a growth quarter-by-quarter as the business expands.

Your next question comes from the line of Pat Archambault with Goldman Sachs.

Actually just sort of building on that last question on Europe, the losses were pared back more than I think a number of us had thought. Can you just give us a sense of sequentially how some of the cost cadence plays out because I guess you still have the big Mondeo launch right at Valencia, which I imagine is going to be sort of a headwind? And any other factors obviously, we're not thinking about as we sort of try and model that out?

I guess, I'd say, first of all, you know that there is a sort of a pattern to profits in general in Europe, usually the first half is better than the second half, third quarter, I don't that was the case last year, but third quarter is usually a weaker quarter, because of the extensive plant shutdowns that take place for holidays and so forth. Of course, all of that as you said, Pat, is dependent upon particular cadence of product launches that we have over the course of the year. But again, there, we've had some more launches and we're launching actually some things right now in Europe. So I don't know that I'd call out any particular thing in terms of the cadence of our structural cost going forward. I think probably the fluctuations up and down will be more around volume levels, and I don't think I would call anything else out.

And one other one on South America. You might have said it, but can you kind of parse out what was sort of balance sheet remeasurement in Venezuela versus what was just kind of operating headwinds just from the lack of volume? And maybe can you give us a sense of just what you are seeing on the ground there? I mean it sounds like production is at a standstill. I understand visibility is poor, but what are the prospects for that to improve in coming quarters?

You're talking about Venezuela specifically?

Yes.

So maybe Mark can comment. And I'll just in terms of the balance sheet effects of the amount that we talked about on Slide 7, $310 million of that is Venezuela specifically, about $70 million is related Argentina. And then on a year-over-year basis, you can see on Slide 14, the year-over-year basis, the balance sheet effect was roughly half of what we're seeing in total. And of that, a good portion of that -- well, actually most of the overall effect is actually Argentina and Venezuela, and a bit of Brazil.

From a volume standpoint and industry standpoint in Venezuela, as we said last quarter, what we did in the fourth quarter of last year was literally cut our production by three quarters versus the running rate, in the first three quarters of 2013. And what we mentioned is that's our assumption going forward, the remainder of 2014. And when you look at the industry development to put it in perspective, the first quarter of last year, the Venezuela industry was about 113,000 units on a SAAR basis. This year it's 12,000 units. So I think we've baked those assumptions into our plan and we'll continue to watch the environment there and also continue to support Venezuelan customers at the same time minimize their exposures.

Your next question comes from the line of Itay Michaeli with Citi.

Just going back to the warranty item in the quarter, Bob, just why wouldn't that also potentially impact other regions if you are assessing sort of the overall experience just given the company's global platforms and commonality?

Well, because in part some of the products may not be in some of the regions. I mean we do the same reserve analysis everywhere. You also have different suppliers, in some cases the products are tailored to different design, different powertrains. So they are global, but there are differences region-by-region. We also as we launched, we don't launch everything all of one time, so as we launch in one region, then the next, then the next, then the next, we kind of learned from the first region, and we kind of build those learnings into a launch at the next region including design changes and so forth. So it's not all apples-and-apples, if you will.

Then just second question, hoping to gauge your temperature on the mid-decade 8% to 9% margin outlook. I know in December you labeled it at risk citing Europe. It seems like Europe is probably going better, Asia is certainly going better, but South America going worse. So maybe just give us an update of what you are thinking. Is that more at risk, less at risk or roughly the same today than it was in December

I don't think at the moment I'd say anything different.

Ladies and gentleman, we will now take questions from the media. Your next question comes from the line of Dee-Ann Durbin with Associated Press.

Alan, it's time for my quarterly question about your future. There is some speculation out there, obviously that the leadership change is going to happen earlier than the end of this year. Can you comment on whether the plans have changed?

Well, clearly, we don't comment on speculation and we have no change to the plan. And I just want to point out is, is I think you well know is that Bill and I have put a great high priority seven years ago, that we would further develop our team worldwide and have a very robust leadership development and succession plan. And we're very, very pleased with the progress on that to date.

Your next question comes from the line of David Whiston with Morningstar.

A question on the credit line extension. Is that primarily being done to increase the capital liquidity or are you also expecting some higher CapEx than planned or even returning more cash to shareholders down the road?

No, it's just basically is, as we get bigger and as we continue to expand and grow, we thought it was prudent for us to take advantage of actually very strong from our global banking group and also very healthy capital markets for us to increase and extend the credit facility. The other thing that's kind of great about it is we're actually returning out sort of a normal credit facility, five year terms that I think it's first time we have been there for quite a number of years with this change. So we feel very positive about that too. So that's what behind it.

And the incentive spending in North America, I know you have got some pretty tough comps in the U.S. given how well you guys have been doing there, but this quarter unfavorable headwinds from volume and mix combined with the incentive spending. Are you guys more just playing defense now for now until the next generation F-Series is out?

Well, I think overall when you look at our incentive spend, we look at our incentive spend in conjunction with our overall margins and transaction prices. And when you look at our transaction prices, they're at the top end of the industry and it kind of reinforces the margin that we have in North America. Clearly, in a number of our products, they're kind of late in their lifecycle, so we're accounting for that and also at the same time as those new products come on that will offer us opportunities once those products are launched. So that's kind of the way we're looking at balanced and making sure we profitability grow and take care to that.

And David, I would just add that in the quarter comparison, which just what you've seen in the data today, a bit of that is if you will a difficult comp because last year we had just launched the Kuga and we had just launched the Fusion. And they were in very, very high demand. We had very tight supplies. And so incentive levels for those products were very, very low and those are high volume products for us. Now, more normal if you will.

Your next question comes from the line of Jeff Flock with Fox Business Networks.

Mr. Mulally just to confirm and to clarify what you said earlier, I'm sorry that I have ask about this, but there you go. Earlier, I believe you said you were going to skip to the plan in terms of succession, and I think if I recall correctly, you said that you plan to serve through the end of 2014. Does that then indicate that the plan, that that you will serve through the end of 2014, can you clarify that?

Jeff, no change to the plan.

Well, I appreciate that clarification. And the rumors that you're going to coach the Detroit Lions, is that still a non-starter?

Yes. That's very interesting, but Bill has a great plan for the Lions.

So just to confirm, no change to the plan that was announced earlier in the plan, which was, you plan to serve through the end of 2014?

No change to the plans, yes.

Your next question comes from the line of Karl Henkel with Detroit News.

One quick question back to the warranty reserve, is there any way that you kind of put that in context, how big is that reserve? And I guess being up $400 million versus Q1 of 2013 in that department, I guess what is it a typical year-over-year increase when you look at the reserve directionally heading upward?

Two responses there, one at the end of last year, our total warranty reserve, which would include for field service actions was $3.9 million for the company. And in terms of the second question, I mean this is an unusually large increase. And as I mentioned earlier, if I go back and look at the four quarters of last year, we did not have something of this magnitude occur. So this is unusual. That's exactly why we're calling it out, so that everybody understands the run rate of the business, because you wouldn't expect something like this to happen quarter-in and quarter-out.

I guess is there any significant impact, as a follow-up, on just the global sales growth for Ford over the last few years and looking into the future having a significant impact on that number increasing further or am I kind of looking into that too much?

You mean related to the warranty reserve increase?

Yes.

I don't think so. Because, again, I think what you're seeing across the whole industry is all OEMs are responding very, very quickly in general to the issues that they see. Vehicles have a lot more technology and that they're far more complex. So I just think that this just seem to be more of a general industry phenomenon. And unfortunately, because we don't like product recalls on field service actions, unfortunately that's been our history as well over the last couple of years. But it's really an industry phenomenon.

And also, Karl, if you look from our perspective, we're really pleased with the value level we're seeing, really all-time record highs in some parts of the world. And even here in the U.S. we're starting to see some encouraging quality data, which hopefully will then lead through to a better performance, based on the reserves we set up. But as we said, we're very committed to delivering best-in-class quality to our customers and everybody is focused on that encouraging signs.

Your next question comes from the line of Mike Ramsey with Wall Street Journal.

So if I say that the warranty reserve is reflective of a larger number of recalls over the last several years, not just for Ford, but also for the industry. Is that an accurate statement?

The warranty reserves are going up because of our experience. What I am trying to say is that our experience though is not necessarily unique, if you will, to the automotive industry, you are seeing more and more companies, higher number of recalls, higher number of units being affected, and that's an industry phenomenon. But what drives our warranty reserves is our experience.

And just as a follow-up, I think it was 2007, wasn't there inverse of this that was beneficial? There was a big readjustment of warranty reserves some time I think it was 2007, am I crazy or does anyone remember those?

It could have been because one of the things that as I mentioned, we only hold these reserves for about six or seven years. So when that oldest year, if you will, is ready to run off as we move into the next calendar year. If there is anything left in that reserve that hasn't been used, we release it. So it's possible that could have happened back in 2007, somewhere in that timeframe. I actually kind of remember something like that as well, Mike, but I know we've had situations like that.

Your next question comes from the line of Alisa Priddle with Detroit Free Press.

Just first question for Mark, if you could just clarify, when you say you want to get more production of current F-150, so are you talking about running more over time in plants or changeover schedule or what kinds of things that you're looking at?

We're working very closely with our supply base. In terms of seeing if they can support some additional production opportunities and that may mean running more over time at some of our -- whether it is Dearborn Truck as we run out the existing model and get ready for the new one or in Kansas City where, as you know, we're not launching that plant till next year. So, yes, it's so far encouraging, more work to do, but it involves the whole team. And the good news, Alisa, is it's really based on market demand. And as we said, if you look at the month of March and another month where we sold over a 70,000 F-Series, so the demand is out there, customers really like the product, the existing product. And we're going to trying to get as many as we can to them.

So you're not talking about changing any of the dates of changeover?

No.

Those are locked in.

Those are locked in, making more out of the time, we do have.

And then, Alan, so it sounds like you'll still be with us on the next earnings call.

No, change with that.

Your next question comes from the line of John Murphy with Bank of America

Two quick questions for you. First, when you guys were on Slide 12 and talking about the drivers of a slight market share deterioration, you mentioned daily rent and small cars declining. It seems like that is kind of a trend that has been happening, but also something you might be doing more actively as your larger vehicles are getting more fuel-efficient and particularly as we think forward to the launch of the F-150 where you guys have alluded to the fact that it will be net accretive to your CAFE measurements and standalone on its own. Are we sort of seeing the precursor in the potential for you to deemphasize the not so profitable small car business as we go forward?

Absolutely, not. We're focused on delivering what customers want and it's not really driven -- those are kind of not the way we're thinking about it. We're thinking very much from a customer and a market-end standpoint. As you know, we're doing well with our car lineup. We're doing well with our truck lineup. And we're going to go wherever the customer demands with that full family of vehicles.

But if they demand larger more fuel-efficient vehicles and not so many small cars, you will go that direction. You will go where the market goes?

Well, we're always going to match capacity to demand, and in the context of running a good business and a profitably growing business.

And then a second question. You guys mentioned $2 billion of the new credit facility would be allocated to Ford Motor Credit. Just curious what that is relative to history and are we seeing more capital being allocated to Ford Motor Credit, so you can grow that business significantly sort of similar to where it was historically?

No, we haven't done that before and we're doing that so that we can allow them to diversify their overall funding structure. So it's just a better balance sheet for Ford Credit to support their, own overall funding structure.

So it's less of a reliance on the securitization market and more of a reliance on your sort of on-balance sheet financing now?

No, it's also to support, we had something called FCAR in the past, which we're actually moving away from it. And we're going to replace that with more unsecured debt and this is just part of supporting that.

Ladies and gentleman, that concludes the question-and-answer session. I would now like to turn the conference back over to Mr. George Sharp for closing remarks.

Well, thank you everyone. That wraps up today's presentation. We're really glad that you were able to join us.

Thank you for joining today's conference. That concludes the presentation. You may now disconnect. And have a great day.