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How Ford Credit Company Performed in Q1 2019

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Apr. 26 2019, Published 8:08 a.m. ET

Ford Credit Company

Ford Credit 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 performed in the first quarter and what it meant for the company’s automotive business.

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Ford Credit’s Q1 2019 performance

In the first quarter, Ford Credit’s net receivables fell by 0.5% to $146.9 billion from $147.7 billion in the first quarter of 2018 but rose 0.4% as compared to $146.3 billion in the fourth quarter of 2018. Ford’s financial services arm reported a 25.0% increase in its EBT (earnings before taxes) to $801 million as compared to $641 million a year ago.

In the second quarter, Ford Credit also reported a 48.7% YoY increase in its EBT to $663 million. Stronger EBT from its financial arm helped Ford improve its overall profitability in the first quarter.

Positive for overall business

Most of Ford’s vehicle lineup is targeted at auto buyers with average income unlike in the case of Ferrari (RACE), which exclusively targets buyers with high income. Thus, financing services play an important role in attracting and encouraging these retail consumers to buy Ford’s cars. A consistent YoY improvement in Ford Credit’s retail financing activities and higher profits could be a healthy indication for Ford’s overall retail segment.

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

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