Ford Credit’s earnings rose in the second quarter, but the captive’s penetration rate declined, and lease share shrank amid a push for consistent pricing ahead of tariff-induced increases. 

The captive’s earnings before taxes (EBT) totaled $645 million, up 88.1% year over year and 11.2% quarter over quarter, according to the company’s July 30 earnings presentation. The captive paid a $500 million distribution to Ford Motor in Q2, bringing first-half distributions to $700 million. 

The increase in EBT reflects “improved financing margin and receivables growth coupled with continued strong portfolio performance,” Sherry House, chief financial officer, said during Ford Motor’s earnings call. 

Ford Credit did not break out Q2 originations, but U.S. and Canada consumer loan and lease outstandings totaled $89.6 billion in Q2, up 4.7% YoY and 1% QoQ, according to the presentation. Ford Credit was the sixth-largest auto lender by outstandings at yearend 2024 with a portfolio of $76 billion, according to the latest Big Wheels Rankings data. 

Ford Credit’s finance penetration rate of U.S. Ford Motor retail sales, however, fell to 33% in Q2 compared with 51% a year earlier. 

Lease share dips 

U.S. and Canada lease outstandings rose 13.4% YoY and 3.6% QoQ to $22.9 billion, with the lease share of retail sales at 10%, down from 13% in Q2 2024 and 15% in Q1, according to the presentation. Industrywide leasing share was 21% in Q2.

Lease share fell as Ford promoted purchases via its employee pricing campaign amid auto tariffs. The company anticipates tariff-related costs to reach about $2 billion in 2025, President and Chief Executive Jim Farley said on the call. 

“Our bet is not to compete in high-volume generic segments that typically require overseas production for cost competitiveness,” he said. “Instead, we are doubling down on what we do best: trucks, iconic passion products, Ford Pro and breakthrough technology that you will soon see in our forthcoming EV platform.” 

“Our bet is not to compete in high-volume generic segments that typically require overseas production for cost competitiveness.” — Jim Farley, CEO, Ford Motor

Ford Credit’s lease return rate also fell to 39% in the quarter compared with 49% in the same period a year ago and 48% in Q1, in tandem with a rise in off-lease purchases, according to the presentation. The average auction value per unit rose 4.4% YoY and 4.5% QoQ to $32,410.  

The captive issued a $1.3 billion auto asset-backed securitization deal on July 22 backed by leases, according to Finsight, which monitors securities.  

DQs dip 

Credit performance improved in Q2, with 60-plus-day delinquencies at 0.16%, down 1 basis point (bps) YoY and 3 bps QoQ, according to the presentation.  

The U.S. retail loss-to-receivables ratio was 0.48% in Q2, up 7 bps YoY but down 15 bps QoQ. The repossession rate was 1.15%, up 14 bps YoY but down 5 bps QoQ.  

The percentage of loans with terms equal to or greater than 84 months sat at 16% of the portfolio in Q2 compared with 6% a year prior and 12% in Q1. 

Liquidity position stable 

Meanwhile, the captive had $27 billion in net liquidity in Q2, down 4.5% YoY but up 7.1% QoQ. Full-year 2025 public capital issuance is projected to land between $22 billion and $27 billion, including between $13 billion and $15 billion in securitizations.  

Ford Credit in 2024 issued $16 billion in securitization transactions and $33 billion in total public issuance. The lender came to market today with a $791 million prime auto asset-backed securitization deal, according to Finsight, which monitors securities. 

Ford shares [NYSE:F] traded at $11.02 as of 3:20 p.m. ET today, up 1.4% from market open. Ford has a market capitalization of $43.8 billion. 

Auto Finance Summit, the premier industry event for auto lending and leasing, returns Oct. 15-17 at the Bellagio Las Vegas. To learn more about the 2025 event and take advantage of the Aug. 29 early-bird registration, visit www.AutoFinance.live/AFS.