Ford Credit closed out 2019 with $3 billion in earnings before taxes, a 14% year-over-year increase, and best result in nine years, Tim Stone, chief financial officer of Ford Motor Co., said during the company’s fourth-quarter earnings call. The spike was largely fueled by favorable lease residuals and credit loss performance, he explained, as well as revenue growth across retail, lease and floorplan financing.
Revenue from operating leases grew 1.8% YoY to $5.9 billion, and revenue from retail financing notched up 1.7% to nearly $4 billion. Revenue from dealership financing also posted a modest increase, rising to $2.3 billion, a 2.6% YoY increase.
Yet, auction values for off-lease vehicles were still down 2% for the year, beating expectations that they would fall 3% by year end, according to former Ford Credit Chief Executive David McClelland in the second quarter of 2019. Stone expects that trend to continue through 2020, with auction values to drop an additional 5% by year end, according to third-party assessments.
Meanwhile, total finance receivables for the captive decreased 1.3% to $53.7 billion.
Looking ahead, Ford Motor expects lower EBT from Ford Credit, a continued investment in mobility, increased cost of emission compliance and a higher effective tax rate to serve as headwinds for the automaker, Stone said.
Shares of Ford (NYSE: F) were trading down 9.4% to $8.32 per share at press time. Ford has a market capitalization of $33 billion.
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