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?