Ford Credit’s performance
Ford Credit is the financial services arm of Ford (F), offering a variety of automotive financing services to its customers and dealers. These services include providing financing options to customers to purchase Ford’s new and used vehicles and to enter into lease contracts.
In this part of the series, we’ll take a look at Ford Credit’s 3Q17 performance and how it supported the company’s Automotive business.
Ford Credit’s 3Q17 results
In 3Q17, Ford Credit’s net receivables rose 8.0% to $138.0 billion from $128.0 billion in 3Q16. Improved retail financing during the quarter and consolidation of $1.3 billion for its Forso Nordic joint venture were the two key reasons for this rise in its financial services receivables.
Likewise, Ford Credit’s 3Q17 pretax profits rose 6.0% to $600.0 million compared to $567.0 million in 3Q16.
In 2Q17, Ford Credit also reported a significant rise of 55.0% in its pretax profits to $619.0 million compared to $400.0 million in 2Q16. These were the best quarterly pretax profits for Ford’s Credit division since 2011.
Impact of positive trend in Ford Credit
Ford sells the majority of its vehicles to consumers who drive its cars and trucks on a regular basis. In contrast, Ferrari’s (RACE) customers view its luxury marque as a high-performance, exotic brand. As a result, financing services play an important role in attracting Ford’s retail consumers and encouraging them to purchase Ford vehicles. A consistent rise in Ford Credit’s profits is a positive indicator for Ford Motor’s overall profit margins.
In the final part of this series, we’ll see what analysts are recommending on Ford stock after its 3Q17 results.