Ford Motor Credit’s lease volume has dropped to its lowest level in more than four years, according to an analysis by Auto Finance News.
The captive originated 81,000 leases last quarter, down 22% year over year. In the past four years, Ford Credit’s leasing volume has dropped below 90,000 units only four times — once in 2016, once in 2017 and in both quarters so far this year. (Quarterly lease volume is unavailable prior to 2015.)
“We manage our level of leasing according to a variety of business factors, and changes in Ford marketing programs may influence customer choices in financing,” Margaret Mellott, a spokeswoman for Ford Credit, told Auto Finance News. “In the second quarter, specifically, marketing programs were weighted more toward retail purchases than leasing.”
Ford Credit’s lease origination volume has been dropping for the past year. The decline comes despite the fact that off-lease vehicles are fetching north of $18,000 each at auction. By comparison, auction prices hovered around $17,000 in 2016 and 2017.
Ford Credit’s lease return rate has remained steady since 2015, averaging 78%. In other words, no matter how many leases Ford Credit originates or what those vehicles are worth at auction, nearly eight out of 10 customers return their vehicles at lease-end.
Meanwhile, leasing share as a percent of Ford Credit’s total sales came in at 20% in the second quarter, its lowest level since 2017. By comparison, leases as a percent of vehicle sales industrywide were 30% last quarter, according to JD Power data.
“For some time, we have targeted and maintained leasing in the low 20% range as a percentage of Ford retail sales,” Mellott said. “In the second quarter, leasing was 20%, so very consistent with that target.”
Should Ford Credit’s lease ratio drop down to the high teens — as it did in the latter half of 2016 and 2017 — the captive’s lease origination volume will likely dip to 77,000 units, according to AFN estimates.
Here’s a look at Ford Credit’s lease origination volume (in units) since 2015: