Ford Credit posted a $962 million profit in the first quarter, fueled by strong vehicle prices amid the semiconductor shortage and favorable comparisons to 2020, when the coronavirus pandemic first impacted balance sheets.
The captive’s results came as parent Ford Motor Co. reported a $3.3 billion net income, its best first-quarter performance in a decade.
Ford Credit benefited from an improving economy, foregoing the need to set aside as much money to cover credit losses as it did a year ago amid the COVID-19 outbreak. It also was aided in the quarter by higher auction values, which jumped 14 percent from the same period last year to $21,925.
Ford CEO Jim Farley said the lender “delivered an outstanding quarter,” calling it “the best automotive finance captive in the industry.”
Ford CFO John Lawler said Ford Credit also benefited from strong residual values, as used-vehicle sales soared amid a worsening inventory crisis. Still, he expects those values will moderate through the rest of the year.
Ford Credit’s loss-to-receivables ratio fell to 0.22 percent, down from 0.37 percent last quarter and well below the 0.62 percent mark from the first quarter of 2020.
The lender ended the quarter with $33.7 billion in liquidity, up from the $28.1 billion it had this time last year. Credit-loss reserves in the quarter fell slightly from the previous quarter to $1.2 billion.