Ford Motor intends to lower its mix of leasing in 2017 because of depreciating used car values at auction — due to an abundant volume of off-lease vehicles — said Chief Executive Mark Fields Tuesday during a presentation at Deutsche Bank’s Global Auto Industry Conference.
The company has acknowledged lower lease volume in previous earnings reports, which is a move that makes it less at risk to depreciating used-car values.
“We have seen our auction values declining and we still see that for 2017 based on the volume of off-lease vehicles, but certainly as the economy improves, we will look forward to some upside to that,” said Joy Falotico, CEO of Ford Credit, during the Q&A segment of the presentation.
Leasing in 2016 was down by 14% through September to 89,000 units in the third quarter compared with 103,000 units during the same period the year prior. Ford did not say how much more leasing volume would drop.
More than three million vehicles industry wide were returned off lease in 2016, which is a year-over-year increase of 25%, according to Black Book. That number could increase another 15% to nearly 3.5 million additional off-lease returns in 2017, the company previously told Auto Finance News.
Overall profits are expected to decline after a record breaking year in 2016 across all three of the company’s auto segments: automotive, financial services, and all other (read: mobility), he added.
Much of the decline in the non financial segments, though, is due to investments in new model cars as well as mobility platforms such as autonomous vehicles, smart connectivity, data analytics, and car sharing.
In the future, Fields said Ford’s mobility services has the opportunity to drive 20% of overall margins.
