Ford Credit penetration rate drops to 38% in Q1

Ford Credit ’s finance penetration rate dropped in the first quarter amid tariff concerns and rising credit losses. U.S. financing penetration on Ford Motor sales sat at 38% in Q1, down from 60% a year prior and 46% in Q4 2024, according to Ford Credit’s May 5 earnings presentation. The captive’s U.S. and Canada consumer loan and lease outstandings hit $88.7 billion in Q1, up 5.7% year over year but down 0.6% quarter over quarter , according to the presentation. Captives GM Financial and Tesla Finance , as well as lenders like Ally Financial also saw leasing uptick in Q1. U.S. and Canada operating leases totaled $22.1 billion in Q1, up 11.1% YoY and 3.3% QoQ, according to the presentation. Ford Motor vehicle sales rose 16.2% YoY in April to 208,675 vehicles, according to the OEM’s sales report. Leasing share rises, return rate falls The captive’s lease share of retail sales hit 15% in Q1 compared with 14% both a year ago and in Q4, according to the presentation. The industry average was 23% for the quarter. Ford Credit’s lease return rate landed at 48%, down from 50% in Q1 2024 and 54% in Q4 2024. The trend comes from customers and dealers “electing to purchase the off-lease vehicles due to their higher equity position,” according to the presentation. Auction values averaged $30,635 per unit in Q1, up 3.3% YoY and up 4.2% QoQ “reflecting low industrywide used vehicle availability,” according to Ford Credit. “We've seen elevated auction prices; that's reflecting ... relatively low used vehicle stock,” Sherry House , chief financial officer, said during Ford’s May 5 earnings call. “Higher new vehicle prices as a result of tariffs ... could lend support to auction values in the near-term. That might be muted somewhat by a slowdown in the economy in the second half.” Credit losses climb The U.S. retail loss-to-receivables ratio rose 16 bps YoY and 7 bps QoQ to 0.63%, according to the presentation. Ford Credit’s repossession rate rose 13 bps YoY and 12 bps QoQ to 1.2%, “aligned with historical trends,” according to the presentation. Delinquencies of 60-plus days sat at 0.19%, down 1 bps YoY and flat QoQ. Ford Credit’s retail and lease FICO score also dropped to 749 in Q1 compared with 758 in Q1 2024 and 755 in Q4, according to the presentation. The mix of higher-risk receivables in the captive’s portfolio fell 1 bps YoY to 3% in Q1, flat from Q4. The captive’s mix of retail contract terms at 84 months or longer rose sat at 12% in Q1 compared with 5% a year ago and 9% in Q4, according to the presentation. “Customers are doing what they need to adjust for their payments,” Ford Chief Executive and President Jim Farley said on the call. EBT soars 77.9% Ford Credit’s earnings before taxes climbed 77.9% YoY to $580 million, up 31.5% QoQ, according to the presentation. The captive also paid a $200 million distribution to Ford Motor in Q1, compared with no payment in Q1 2024 and up from $175 million in Q4. “Ford Credit delivered another solid quarter with EBT up significantly, reflecting its high-quality book of business, higher financing margin, and higher net receivables,” House said. “Ford Credit also continues to grow its active commercial lines of credit, making it a strategic asset for our Ford Pro customers.” Net liquidity for Ford Credit hit $29.5 billion in Q1, up 9.3% YoY and 17.1% QoQ, according to the presentation. Ford Credit’s total public fund issuances are projected to reach between $21 billion and $27 billion in 2025, including $12 billion to $15 billion in securitization volume. The captive has issued three asset-backed securitization (ABS) transactions so far in 2025, including a $1.5 billion issuance March 18 , according to Finsight , which monitors securities. Ford expects $1.5B loss from tariffs Ford joined other automakers in rescinding its full-year forecast on the earnings call, citing tariff uncertainty. “It’s still too early to fully understand our competitors’ responses to these tariffs,” Farley said. “It’s also early to gauge the related market dynamics, including the potential industrywide supply-chain disruptions. … As a result, we’ve decided to suspend our guidance.” Ford’s decision was in line with its April 30 announcement that it would not increase vehicle prices until it sees how its competitors respond. The automaker expects tariffs will cost Ford $1.5 billion, Farley said. “But there is no doubt that Ford, given our manufacturing footprint, has the opportunity that few companies have,” he said. “We don't want to get ahead of ourselves, but we have the freshest lineup we've ever had in North America.” Ford shares [NYSE:F] traded at $10.44 as of market close, up 2.65% from market open. Ford has a market capitalization of $41.52 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. Registration is available here .

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