Ford Credit Earnings Fall Despite Higher Lease Penetration, Stronger Auction Values | Auto Finance News | Auto Finance News

Ford Credit Earnings Fall Despite Higher Lease Penetration, Stronger Auction Values

Photographer: Daniel Acker/Bloomberg

Despite favorable lease residual performance driven by higher auction values, Ford Motor Credit Co. posted lower earnings last year, according to results released yesterday.

The captive’s full-year 2018 net income dropped 26% to $2.2 billion.

Lease penetration in the fourth quarter climbed 4 percentage points year over year, to 21%. The continued rise in leasing pushed 36-month lease return volume to 71,000 units, compared with 61,000 in the prior-year period.

Higher than expected auction values drove improvements in lease residuals, according to the report. In the fourth quarter, 36-month lease auction values stood at $17,865, an increase of 2.1% year over year. However, Ford expects auction values to decline 4% this year, reflecting the captive’s desire to lower lease returns, according to the report.

Overall, Ford Credit’s U.S. consumer financing portfolio grew 2.1% year over year to $53.3 billion.

Meanwhile, parent company Ford Motor Co. has been increasing its investments in mobility. Earlier this month, the OEM announced that it will spend the next 24 months undergoing global reshaping of operations in a bid to establish itself as a leader in the future of transportation and mobility. The OEM plans to reinvent the future of mobility by “transforming the company through operational fitness and allocating capital to high-growth and high-margin product segments and smart vehicles and services,” according to a Jan. 16 press release.

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