Key Points on Ford Credit’s Role and Challenges
Ford Motor Company’s financing arm, Ford Credit, generated $2.6 billion in earnings before taxes (EBT) last year and returned $1.7 billion in cash to the parent company. While Ford Credit typically accounts for about 5% of Ford’s revenue, it contributes 15% to 20% of its profits. Despite its historical profitability — with only one annual loss since 2008 — it now faces potential challenges from off-lease electric vehicles (EVs) that are depreciating faster than anticipated.
Credit agency Experian forecasts that off-lease EV volumes will peak in 2028, with nearly 800,000 units expected. Currently, EVs comprise 15% of off-lease used vehicles, up from 7.7% earlier this year. Industry experts predict these EVs could resell for around $10,000 less than projected, leading to potential industry-wide losses of approximately $8 billion for vehicles coming off lease that year. Ford’s EV lease volume was over 52,000 last year, which is significantly less than Tesla and General Motors, highlighting the impact of these off-lease vehicles on profits.
