Ford Credit’s Lease Originations down 14% YoY in the Third Quarter

Ford Motor Credit Co.’s third quarter overall retail contracts were down 16% year over year to 384,000, compared with the same time a year prior. Leasing, — at 89,000 in 3Q when broken out alone — was also down 16% from the previous quarter, and nearly 14% for the year, when leases were at 103,000 for 3Q15.

“The decrease in total contract volume for the third quarter and first nine months of 2016 reflects lower retail installment and lease financing share in the United States,” the company said in its earnings presentation, released today.

Ford Credit lowered its projection on residual values, in the face of “significant” industry growth in leasing and higher new vehicle incentives. “As a result, our lease share and lease placement volume in the third quarter were lower compared to a year ago. We continue to expect full-year lease share to be lower than the first quarter of 2016, reflecting the parameters of our lease strategy,” the company wrote in its presentation.

Auction values for both 24-month lease returns and 36-month lease returns — at $19,110 and $17,255 respectively — were at their lowest levels since they last dipped in 4Q15. Auction performance has been consistent, however, with the industry when comparing similar vehicle age and segment, the captive said.

The captive experienced weaker credit metrics as well with delinquencies and repossessions both up at 0.16% and 1.06% respectively, trends that are simply “normalizing,” Joy Falotico, Ford group vice president, chairman and chief executive said during the company’s earnings call today.

“We still have good consumer delinquency performance, it still remains very strong,” she said. “And we do think that we’re going to continue to see a little higher degree of defaults, but it’s normalizing where we are in the later stage of the credit cycle.”