Ford Credit Is Pulling Back

Ford Credit's pullback from non-Ford and used-vehicle financing and lease originations is continuing this year, says the Ford Motor Co. captive lender's 10K report to the Securities & Exchange Commission.

For 2003, Ford Credit issued 2.2 million new vehicle loans, a 20% decline from 2002, and 274,000 new leases compared with 469,000 in 2002, a plunge of 41.9%. Data are for North America.

Increased use by Ford of cash rebate marketing programs was another factor affecting Ford Credit's volume of new loans and leases, says the report.

Ford Credit says its financing share of new Ford, Lincoln and Mercury cars sold in the U.S. dipped to 39% last year from 41% in 2002. Its wholesale financing penetration declined to 82% from 85%.

The report says lease termination volumes in North America dropped to 654,000 on Ford's domestic and foreign brands last year from 737,000 the year before. Of the terminations, 69% were returned to Ford Credit, up from 63%.

“As the economy continues to improve and termination volumes continue to decline, we expect residual values will stabilize and may even increase,” the report says. “As a result, we expect return rates to remain constant or decline further.”

Ford Credit reports financing revenue of $16.3 billion and net income of $1.8 billion in 2003. It paid Ford Motor Company dividends amounting to $3.7 billion for the year.

Ford Credit showed retail loan receivables totaling $77.8 billion and operating leases valued at $23.2 billion as of December 31.