Ford Drops $2.72b, Finance Unit Stumbles

Edward Niedermeyer
by Edward Niedermeyer
ford drops 2 72b finance unit stumbles

After a $12.6b loss in 2006, Ford is reporting a slightly smaller shortfall this year. After releasing preliminary 2007 losses at $2.67b in January, Ford has revised the number slightly to $2.72b. As we reported below, Bill Ford is spinning this smaller loss as an indication of profits to come on the auto-making end of the business. If those profits are to be realized, FoMoCo will have to overcome the drag projected for Ford's finance wing. Reuters reports Ford Motor Credit was down about 40 percent last year, reflecting larger credit market jitters. Ford now thinks 2008 could see credit profits drop even lower. Credit and depreciation losses are driving this shortfall, the latter likely accounting for the overall loss in loan volume. Ford relies on in-house financing to move 78 percent of its inventory financing and 38 percent of customer financing. But if the credit crunch spells the end of the buyer-incentive interest rates era at Ford, an unanswered question remains: how else do they plan on moving those vehicles?

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  • Jaje Jaje on Feb 28, 2008

    Add to the fact that NHTSA just released a request to 4.6m Ford owners to immediately bring their Ford to a dealer to deactivate the cruise control from the fire hazard it has had for so long. Note that ~ 16m Fords have this Ford designed / TI built cruise control unit but Ford only recalled 9m of them and not all (even though the danger was the same). Note that Ford had rerecall 300k vehicles b/c the repairs were improper. So there's ~ 7m Fords that have this danger but no recall however there's an on going NHTSA investigation and Ford will be forced to finally fix this fiery forgotten fatal defect (That's a lot of "f"s.) Note there are over 100 fatalities from houses burning down b/c the vehicle was parked in the garage. This will hit their profits pretty badly when this comes to fruition and a lot of Ford customers realize that their safety and wellfare are not "job 1".

  • Frank Williams Frank Williams on Feb 28, 2008

    The numbers have been corrected. Thanks for keeping us honest.

  • Edward Niedermeyer Edward Niedermeyer on Feb 28, 2008

    Yes, thank you. It ain't easy keeping track of all that loss... I agree with RobertSD about things not being as dire as they could be. Based on how dependent auto sales are on credit though, I'd be very hesitant to start counting the "profitable by '09" chickens before they hatch.

  • Nick Nick on Feb 28, 2008

    If you want another example of why Ford is struggling, go to the website and try and configure and price a Ford Ranger. Let me know what your experience is like.