Analyzing Ford Credit Company’s Q2 2018 Performance



Ford Credit Company

Ford Credit Company is the financial services subsidiary of Ford Motor Company (F). Ford Credit offers a wide variety of automotive financing services to its dealers and customers. These services include providing financing options to auto buyers to purchase Ford’s new or used vehicles and lease contracts.

Let’s find out how Ford Credit’s second-quarter performance was and what it means for the company’s automotive business (XLY).

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Ford Credit’s second-quarter performance

In the second quarter, Ford Credit’s net receivables rose 6% to $143 billion from $135 billion in the corresponding quarter of 2017. Continued strength in Ford Credit’s retail financing in all segments was the key factor that drove these receivables higher in the quarter.

Similarly, Ford’s financial services arm reported a 4.2% rise in its earnings before taxes to $645 million compared to $619 million a year ago.

In the first quarter, Ford Credit reported a rise of 33.3% YoY (year-over-year) in its earnings before taxes to $641 million.

Positive indications for retail business

Unlike Ferrari (RACE), Ford sells the majority of its vehicles to auto buyers from a regular income group. Thus, financing services play an important role in attracting and encouraging these retail consumers to buy Ford’s vehicles. Consistent improvement in Ford Credit’s retail financing and profits could be seen as a positive indicator of Ford Motor’s overall retail growth to some extent.

Among other major auto giants, General Motors (GM), Toyota Motor (TM), and Volkswagen (VLKAY) also provide financing facilities to consumers through their own financial services subsidiaries.

In the next article, we’ll see what analysts are recommending for Ford stock after its second-quarter report.


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