content_image/14197.jpg
## MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

## Ford Asia Pacific and Africa/Mazda Segment 

Ford Asia Pacific and Africa. The improvement in earnings primarily reflected favorable changes in currency exchange rates, higher vehicle unit sales and positive net pricing. 

Mazda. The improvement in earnings primarily reflected our share of Mazda’s improved operating results. 

## Other Automotive 

The improvement in loss primarily reflected the non-recurrence of a charge in 2002 related to the sale of non-core businesses, primarily Kwik-Fit Holdings Ltd. 

## FINANCIAL SERVICES SECTOR RESULTS OF OPERATIONS 

## 2004 COMPARED WITH 2003 

Details of the full year Financial Services sector Income/(loss) before income taxes for 2004 and 2003 are shown below (in millions): 

<img src='content_image/14197.jpg'>

## Ford Credit 

The increase in income before income taxes of $1,475 million primarily reflected improved credit loss performance and improved leasing results. The improved credit loss performance primarily resulted from fewer repossessions and a lower average loss per repossession. The improvement in leasing results primarily reflected higher used vehicle prices and a reduction in the percentage of vehicles returned to Ford Credit at lease termination. 

Ford Credit reviews its business performance from several perspectives, including: 

• On-balance sheet basis - includes the receivables Ford Credit owns and receivables sold for legal purposes that remain on Ford Credit’s balance sheet; 

• Securitized off-balance sheet basis - includes receivables sold in securitization transactions that are not reflected on Ford Credit’s balance sheet; 

• Managed basis - includes on-balance sheet and securitized off-balance sheet receivables that Ford Credit continues to service; and 

• Serviced basis - includes managed receivables and receivables sold in whole-loan sale transactions where Ford Credit retains no interest in the sold receivables, but which it continues to service. 

Ford Credit analyzes its financial performance primarily on an on-balance sheet and managed basis. It retains interests in receivables sold in off-balance sheet securitizations, and with respect to subordinated retained interests, has credit risk. As a result, it evaluates credit losses, receivables and leverage on a managed basis as well as on an on-balance sheet basis. In contrast, Ford Credit does not have the same financial interest in the performance of receivables sold in whole-loan sale transactions, and as a result it generally reviews the performance of the serviced portfolio only to evaluate the effectiveness of its origination and collection activities. To evaluate the performance of these activities, Ford Credit monitors a number of measures, such as repossession statistics, losses on repossessions and the number of bankruptcy filings. 

