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Ford Reports Net Loss of $1,427 Million for Second Quarter

Ford Motor Credit Co. reported a net loss of $1,427 million in the second quarter of 2008, down $1,489 million from net income of $62 million a year earlier. On a pre-tax basis, Ford Motor Credit reported a loss of $2,380 million, compared with earnings of $112 million in the previous year. Excluding a $2.1 billion impairment charge for operating leases, Ford Motor Credit incurred a pre-tax loss of $294 million in the second quarter of 2008.

The decrease in pre-tax earnings primarily reflected the impairment charge for operating leases, higher depreciation expense for leased vehicles, and higher provision for credit losses, according to a press release issued by the company.

"Dramatic, rapid marketplace changes are driving increased weakness in the vehicle auction markets, in turn affecting the entire industry, including Ford Motor Credit," says Mike Bannister, chairman and CEO of Ford Motor Credit. "We regularly review and adjust lease residual values to align with market conditions. In addition, the core of our business remains strong, because it is built upon lending practices, risk management and collections activities that are consistent and prudent."

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