Ford Motor Credit Co. is looking to grow along with overall U.S. auto sales in 2015, says Joy Falotico, the company’s executive vice president for marketing, sales, strategic planning and the Americas.
That’s a typical, steady-as-she-goes business plan for Ford Credit, which prides itself on sticking to consistent credit approval standards. That’s not to say Ford Credit rested in 2014 or that it intends to take it easy in 2015.
Last year Ford Credit’s U.S. retail loan and lease originations reached 1.2 million, up about 10 percent from 2013. Meanwhile, Ford Motor Co.’s U.S. sales fell 0.6 percent in 2014 to about 2.5 million units. Industrywide, U.S. light-vehicle sales rose 6 percent in 2014 to 16.5 million units.
Those numbers mean Ford Credit gained share in the U.S. light-vehicle market overall and in its share of U.S. retail volume for Ford and Lincoln dealers. Ford Credit financed 45 percent of U.S. Ford and Lincoln volume in 2014, up from 40 percent in 2013.
Falotico discussed Ford Credit’s performance and business expectations in a phone interview with Automotive News Special Correspondent Jim Henry.
What’s ahead in 2015?
For 2014, we [as an industry] were up about 6 percent, supported by strong sales and supported by a strong financing market as well.
As we look at 2015, we’re off to a good start. Ford sales were up 15 percent in January [to 178,351 light vehicles], and our forecast for industry sales [including medium and heavy trucks] here at Ford is 17 million to 17.5 million.
Do you expect to grow at the same pace as the industry?
We do expect to continue to grow this year along with the industry, based on the fact that the economy seems to be continuing to grow. We also have lower gas prices, which is a positive to the consumer.
There is still a good deal of pent-up demand. The average car is around 11.4 years old.
How did Ford Credit do, specifically?
We saw growth across all our regions in contract volume. In addition to contract volume growth, we launched Lincoln Automotive Financial Services in China and in Canada last year. We also will be launching our operations in India this quarter. That is we will be launching our wholesale operations this quarter.
We also grew share in major markets. We grew in Latin America and also in Europe. We are really thinking it’s a story of growth in 2015.
Is Ford Credit doing more leasing?
Last year we saw growth across every one of our groups. We think this year that will be the case as well. When it comes to leasing, we think leasing is a very important product for Ford and Lincoln because it drives a shorter trade cycle and it results in higher customer loyalty.
Looking at the mix last year, leasing was up about 2 percent for the industry, and we were also up about 2 percent. That puts us around 20 percent. We will continue to follow the industry.
[Editor’s note: Leasing accounted for about 25 percent of U.S. retail new-car volume in October and November 2014 combined, according to Experian Automotive.]
What’s the latest on e-contracting?
We’ve been at e-contracting for a while now. We had a phased-in launch over a two-year period, which concluded in 2013. We had over 626,000 e-contracts last year. That was around 56 percent, mid 50 percent range, that came in by e-contracting.
That was an increase of about 3 percentage points, 2014 over 2013.
Lincoln Automotive Financial Services launched in November 2011. Has the concept evolved now that Ford Credit has some experience with it?
We’re actually very pleased with Lincoln Automotive Financial Services and how we’re integrated with Lincoln and with the client experience. We launched a unique website, and there are some separate assets like unique call routing for our call centers.
We also support them with their product launches, like last year they launched the all-new MKC. With that, we offered complimentary credit monitoring and an identity theft protection product. We think ID theft protection is something that’s especially meaningful to those customers.
For the past two years, we have been very honored for Lincoln Automotive Financial Services to be the [luxury brand] award winner in the J.D. Power [U.S. Consumer Financing Satisfaction] study, so that kind of tells us we’re on the right track.
Is there a subprime bubble?
There does not appear to be any systemic risk. Having said that, every time you come out of a down economic period -- and I’ve been in this business over 25 years -- you always do get new entrants in the market.
The ones that come in with the right product management, their portfolios will perform as expected.
We continue to maintain the same 5 to 6 percent of the portfolio in the higher-risk segments. We continue to provide financing to three out of four Ford and Lincoln deals that are financed in those segments.