Ford Credit logs ‘strongest performance’ in 15 years

For the second consecutive quarter , Ford Motor Credit propped up Ford’s overall performance. Ford Credit saw it’s “strongest performance” in 15 years in the third quarter, generating $1.1 billion in earnings before taxes, an increase of 120% from last quarter and 57% year over year, John Lawler, Ford Motor Co. ’s new chief financial officer, said on the earnings call. Distributions from Ford Credit to the parent company amounted to $575 million, an increase of $300 million from last quarter but a decrease of $525 million from the same period a year ago. Total net receivables for consumer loans and leases clocked in at $76.3 billion, up from $73.7 billion last quarter, with an average FICO score of 738, and the percentage of “higher risk notes” in the portfolio remained at 6%. U.S. delinquencies for 60-plus days past due came in at 0.13%, a decrease of 2 bps from last quarter and 1 bps YoY. Loss-to-receivables (LTR) rates increased by 15 basis points from last quarter to 0.30% but remain down 21 bps YoY. After granting payment extensions on about 11% of loan and leases, Ford Credit has seen consumer requests return to pre-pandemic levels in the third quarter, with 99% of consumers with extensions having made at least one payment, Ford Credit President and Chief Executive Marion Harris said on the call. Repossession rates in the U.S. ticked up 52 bps from last quarter to 1.04% but remain down 28 bps YoY. Ford Credit’s liquidity came in at $31 billion, while Ford Motor Co.’s liquidity grew to $45.5 billion. The captive’s allowance for credit losses of $1.3 billion, or 1.19% of total receivables, aligns with last quarter and is an increase of $800 million from this time last year. Revenue for Ford Motor Co. climbed back to $37.5 billion after being halved to $19.4 billion last quarter, a $500 million increase from 2019, due in part to pent-up demand and limited inventory driving up prices, Lawler said on the call. Ford Motor sold 1.2 million wholesale units, an increase of 533,000 from last quarter and a YoY decrease of 66,000 units. Shares of Ford Motor Co. [NYSE: F] were trading up 2.14% to $7.86 as of 1:21 p.m. ET. Ford has a market capitalization of $31.1 billion.

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