Ford Credit lease portfolio up 6.5%

Ford Credit ’s lease volume rose in the fourth quarter as lease return rates picked up, while credit losses rose. The captive’s U.S. and Canada consumer loan and lease outstandings totaled $89.2 billion in Q4, up 8.4% year over year and 1.3% quarter over quarter , according to Ford Credit’s Feb. 5 earnings presentation. U.S. and Canada operating leases tallied $21.4 billion in Q4, up 6.5% YoY and 2.4% QoQ. [caption id="attachment_58344052" align="aligncenter" width="1024"]<img class="wp-image-58344052 size-large" src="https://www.autofinancenews.net/wp-content/uploads/2024/08/415850303-1024x681.jpg" alt="Ford signage at a dealership in Richmond, California, US, on Friday, June 21, 2024. CDK Global, a software provider to some 15,000 car dealers, was waylaid by debilitating cyberattacks this week that have had a crippling effect on the auto sales industry. Photographer: David Paul Morris/Bloomberg" width="1024" height="681" /> (Courtesy/Bloomberg)[/caption] Ford Credit ’s finance penetration of U.S. Ford Motor sales landed at 46% in Q4 compared with 55% a year prior and was 53% for the full year, down from 51% in 2023. The captive’s finance penetration in China fell 48.5% YoY to 17% in Q4. Ford Motor sold 142,944 vehicles in January , down 6.3% YoY. Leasing grows Lease share of retail sales landed at 14% in Q4 compared with 13% in Q4 2023 and 15% in Q3, while the industry average was 23% in the quarter. The lease return rate was 54%, up from 41% a year ago and down from 55% in Q3, in line with expectations, according to the presentation. Auction values averaged $29,910 per unit in Q4, up 2.5% YoY and 4.2% QoQ. The full-year lease return rate was 52% compared with 27% in 2023, while auction volumes fell 3.7% YoY to $29,810 on average. Losses rise The U.S. retail loan-to-loss (LTR) ratio is “approaching historical levels” in Q4, up 10 basis points (bps) YoY but down 1 bps QoQ to 0.56%, according to the presentation. The repossession rate landed at 1.08% in Q4, up 18 bps YoY but down 7 bps QoQ. Sixty-plus-day delinquencies ticked down 1 bps YoY to 0.19% in Q4, flat QoQ. The mix of higher-risk receivables was 3% in Q4, down from 4% a year earlier and consistent with Q3. The mix of retail contracts with terms longer than or equal to 84 months rose to 9% in Q4 from 7% a year ago but was flat with Q3. Full-year 60-plus-day delinquencies ticked up 1 bps YoY to 0.19%, while the LTR ratio was 0.5%, up 15 bps YoY. EBT up 58% Ford Credit’s earnings before taxes (EBT) climbed 57.5% YoY to $441 million in Q4, down 18.9% QoQ, according to the presentation. The captive paid a $175 million distribution to parent company Ford Motor in Q4 compared with no distribution a year prior and flat with the amount paid in Q3. Full-year EBT tallied $1.7 billion and distributions for the year totaled $500 million. The company projects Ford Credit EBT of $2 billion in 2025, Sherry House , Ford’s chief financial officer, said during Ford Motor’s Feb. 5 earnings call. The captive’s net liquidity sat at $25.2 billion in Q4, according to the presentation. Ford Credit issued $33 billion in public funds across unsecured and secured transactions. Total issuance is projected between $24 billion and $30 billion in 2025, including between $13 billion and $16 billion in asset-backed securitization (ABS) volume . Ford Credit issued $16 billion in securitization volume in 2024, according to the presentation. The captive has issued more than $2 billion in auto ABS transactions so far in 2025, including a $1.3 billion lease deal on Jan. 22 and a $1.8 billion prime deal on Feb. 4, according to Finsight , which monitors securities. Considering tariffs The impacts of tariffs on Ford Motor are not yet known but depend on several factors, House said. While President Donald Trump threatened to enact tariffs against products from Canada, China and Mexico on Feb. 4, the Canada and Mexico tariffs were suspended for at least 30 days. “The precise impact of new tariffs would depend on a number of secondary and tertiary effects, such as price elasticities, how our Tier 1 and Tier 2 suppliers react, substitution effects, possible duty drawbacks,” she said. “Other potential changes in policy such as changes to the consumer tax credit or CTC, commercial and production tax credits or PTC would also be harmful.” Tariffs could have a larger impact down the line after Ford launches its electric vehicle battery factory, House said. Ford is preparing for potential tariff impacts, President and Chief Executive Jim Farley said during the call. "A few weeks of tariffs are manageable given the rate and flow of our products,” he said. “There is no question that tariffs at [the] 25% level from Canada and Mexico, if they're protracted, would have a huge impact on our industry with billions of dollars of industry profits wiped out and adverse effect on U.S. jobs, as well as the entire value system in our industry. “Tariffs would also mean higher prices for customers,” he said. “We believe, based on our conversations in D.C. with the Trump administration and congressional leaders that they are committed to strengthening, not weakening, our nation's auto industry.” Shares of Ford Motor [NYSE:F] were trading at $9.26 at market close in New York today, down 7.5% from market open. Ford has a market capitalization of $36.8 billion. Auto Finance Summit East 2025 is set for May 12-14 at the JW Marriott Nashville featuring fireside chats with Santander Consumer USA and Chase Auto. Visit autofinance.live for more information. Early-bird registration is available here .

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