Leasing on the Decline at Ford Credit While Loans Rise
Ford Motor Credit Co. continued to lessen its lease portfolio and grow its retail loan book in the first quarter to stay relatively flat in total originations when compared to the same period last year, the company reported in its earnings report.
The captive lender originated 310,000 lease and retail loan contracts in the North American market during the first quarter — down less than 1% year over year. Broken out separately, lease originations fell 8.4%, while loan originations grew 3.4%.
Decreased leasing is part of the company’s overall strategy to handle depreciation in the used-vehicle market, which Ford Credit feels it’s well positioned for given its lower levels of lease penetration compared to the industry overall. Leasing made up 24% of the company’s retail sales in the first quarter compared to 26% during the same period last year. Industry lease penetration in the first quarter totaled 31%.
“If you look at the 2017 first quarter versus 2016 first quarter, [Ford Credit saw] a 7% decline in auction values — that’s consistent with the industry.” Robert Shanks, Ford Motor Company’s executive vice president and chief financial officer, said during the earnings call. “Our view for the full year is that [auction values] will [decline] about 6% on average. And everything we see says that we’re on track for that.”
Delinquencies 60 days or more past due were up for the quarter at 0.16% of the portfolio, from 0.14% during the same period the year prior. In total, the Ford Credit’s portfolio has $806 million at least 30 days past due, including $38 million in contracts more than 120 days past due that have already been charged off.
