Lower than expected residual values on remarketed lease vehicles will be “one of the drags in the industry” going into 2017, Bryan Bezold, senior economist at Ford Motor Co., said on Thursday during the November 2016 sales conference call.
Although the company’s finance arm, Ford Motor Credit, cut its pretax profit forecast by $300 million in November — in large part due to declining residual values — Bezold believes Ford’s relatively lower volume in leasing makes them better equipped to deal with these losses than its competition.
“With our strong residual values and our lower lease penetration in the industry, we run at a more favorable position,” Bezold said. “Overall residual values; that’s something that we are keeping our eye on, we’ve talked about it and that one of the reasons that our guidance was not having the industry going up next year.”
Ford’s lease volume has dropped compared to earlier this year, while the industry overall sees gains in lease originations, noted Joe Spak, analyst at RBC Capital Markets.
The Lincoln brand in particular has been driving Ford’s lease volume this year because of its position in the premium market, said Mark LaNeve, the company’s vice president of U.S. marketing, sales, and service, during the call. However, “it doesn’t have the material effect on overall lease portfolio for Ford,” he said.
