Ford Motor Credit Company reported net income of $427 million in the third quarter of 2009, an increase of $332 million from earnings of $95 million a year earlier. On a pre-tax basis, Ford Credit earned $677 million in the third quarter, compared with $161 million in the previous year. On a pre-tax basis, Ford Credit earned $1.3 billion in the first nine months of 2009.
The increase in pre-tax earnings primarily reflected lower depreciation expense for leased vehicles due to higher auction values, a lower provision for credit losses, and lower operating costs. These factors were offset partially by lower volume.
“We always adapt our operations to changing business conditions and had the additional benefit in the third quarter of improved used vehicle auction markets. We continue to profitably support Ford Motor Company sales,” Chairman and CEO Mike Bannister said.
On September 30, 2009, Ford Credit’s on-balance sheet net receivables totaled $93 billion, compared with $116 billion at year-end 2008. Managed receivables were $94 billion on September 30, 2009, down from $118 billion on December 31, 2008. The lower receivables primarily reflected lower industry volumes, lower dealer stocks, and the transition of Jaguar, Land Rover and Mazda financing to other finance providers.
On September 30, 2009, managed leverage was 7.7 to 1. During the third quarter of 2009, Ford Credit distributed $431 million to its immediate parent, Ford Holdings LLC.
Ford Credit expects to be profitable in the fourth quarter of 2009 and end the year with managed receivables between $90 billion and $95 billion. Ford Credit expects reduced profits in 2010 based on lower average receivables and non-recurrence of favorable 2009 factors.