Ford Motor Credit Hits the Wall
Even though Ford Motor Credit avoided the mortgage madness haunting GMAC, the credit crisis is taking its toll. Today's Wall Street Journal reports that FMC's delinquencies are up. Upside-down car and truck owners are giving up and giving back. With resale values falling through the floor, the bankers are stuck with monster truck-sized losses on repossessed vehicles. Even clean lease returns are a problem. Contemplating their ailing credit ops and DOA truck market, The Blue Oval Boyz have pushed out it's profitability date from 2009 to… someday. "Ford started the year expecting its credit arm to match the $1.2 billion in pretax profit it earned last year, but now has a much dimmer outlook. In the first quarter, Ford Credit earned just $36 million, $257 million less than in the year-earlier period." Unlike GM's sell-off of GMAC, Ford continues to say it "has reviewed the option of selling the unit many times over the years but has always come to the conclusion that Ford Credit is a strategic asset for the auto maker." Which is lucky; who'd buy it? Never one to miss the obvious, Ford share stalker Kirk Kerkorian's go-to guy Jerome York fingers Ford Credit as "an area of weakness." Ya think?
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RE: 12k rebate. It's not a true rebate. IE it's not from the factory. You can see all the rebates (including the hidden rebates on imports) listed every week in Automotive News, which also lists the financing incentives offered. My guess is the deal is the real rebate (up to 6k) plus some other shenanigens like a trade in "allowance". You all remember the man screaming on your radio about the local dealer offering 2, 3, or 4 thousand on your trade "no matter what"? "Tow it in, push it in, we will give $X on your trade for a new ____!!!"
Good feedback from everyone. For all you CPA's out there. When will Ford be required to write down the asset value of all those leases? If they are truly not able to resell vheicals for close to residual value then eventually they have to fix the book value. I wonder if they sold these leases as securities.....? Now, that's going to be a lawsuit!!
"When will Ford be required to write down the asset value of all those leases?" Good question. A few weeks ago BMW announced a write-down of over $300M for just that reason.
From my little corner of the woods... My wife and I have two good Ford vehicles and because of depreciation and fuel prices, we will drive them until they rot. Of course, an R/C F150 can only hold three, and a 2nd might be on the way.