May 6, 2025 (SEC Edgar Filings) –
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Recent Developments Trade Policy and Tariffs
To the extent governments in various regions implement or intensify barriers to trade, such as erecting tariff or non‑tariff barriers, implementing export controls, or manipulating their currency to provide advantages to domestic companies, there can be a significant negative impact on manufacturers based in other markets.
Tariffs implemented to date in
Although there is uncertainty regarding the application, scope, and duration of tariffs, those that have been implemented and any additional tariffs or other measures that are implemented in
For additional information regarding the impact and potential impact of trade policy and tariffs on Ford and Ford Credit’s business, see the Outlook section on page 36 of this Quarterly Report on Form 10-Q and on page 52 of Ford’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, and Item 1A. Risk Factors in our 2024 Form 10-K Report, as updated by Item 1A. Risk Factors on page 39 of this Quarterly Report on Form 10-Q.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Definitions and Information Regarding Causal Factors
In general, we measure period-over-period changes in earnings before taxes (“EBT”) using the causal factors listed below:
•Volume and Mix – Volume and Mix are primarily reflected within Net financing margin on the consolidated income statements.
◦Volume primarily measures changes in net financing margin driven by changes in average net receivables excluding the allowance for credit losses at prior period financing margin yield (defined below in financing margin) at prior period exchange rates. Volume changes are primarily driven by the volume of new and used vehicles sold and leased, the extent to which we purchase retail financing and operating lease contracts, the extent to which we provide wholesale financing, the sales price of the vehicles financed, the level of dealer inventories, Ford-sponsored special financing programs available exclusively through us, and the availability of cost-effective funding.
◦Mix primarily measures changes in net financing margin driven by period-over-period changes in the composition of our average net receivables excluding the allowance for credit losses by product within each region.
•Financing Margin – Financing Margin is reflected within Net financing margin on the consolidated income statements.
◦Financing margin variance is the period-over-period change in financing margin yield multiplied by the present period average net receivables excluding the allowance for credit losses at prior period exchange rates. This calculation is performed at the product and country level and then aggregated. Financing margin yield equals revenue, less interest expense and scheduled depreciation for the period, divided by average net receivables excluding the allowance for credit losses for the same period.
◦Financing margin changes are driven by changes in revenue and interest expense. Changes in revenue are primarily driven by the level of market interest rates, cost assumptions in pricing, mix of business, and competitive environment. Changes in interest expense are primarily driven by the level of market interest rates, borrowing spreads, and asset-liability management.
•Credit Loss – Credit Loss is reflected within Provision for credit losses on the consolidated income statements.
◦Credit loss is the change in the provision for credit losses at prior period exchange rates. For analysis purposes, management splits the provision for credit losses into net charge-offs and the change in the allowance for credit losses.
◦Net charge-off changes are primarily driven by the number of repossessions, severity per repossession, and recoveries. Changes in the allowance for credit losses are primarily driven by changes in historical trends in credit losses and recoveries, changes in the composition and size of our present portfolio, changes in trends in historical used vehicle values, and changes in forward looking macroeconomic conditions. For additional information, refer to the “Critical Accounting Estimates - Allowance for Credit Losses” section of Item 7 of Part II of our 2024 Form 10-K Report.
•Lease Residual – Lease Residual is reflected within Depreciation on vehicles subject to operating leases on the consolidated income statements.
◦Lease residual measures changes to residual performance at prior period exchange rates. For analysis purposes, management splits residual performance primarily into residual gains and losses, and the change in accumulated supplemental depreciation.
◦Residual gain and loss changes are primarily driven by the number of vehicles returned to us and sold, and the difference between the auction value and the depreciated value (which includes both base and accumulated supplemental depreciation) of the vehicles sold. Changes in accumulated supplemental depreciation are primarily driven by changes in our estimate of the expected auction value at the end of the lease term and changes in our estimate of the number of vehicles that will be returned to us and sold. Depreciation on vehicles subject to operating leases includes early termination losses on operating leases due to customer default events. For additional information, refer to the “Critical Accounting Estimates – Accumulated Depreciation on Vehicles Subject to Operating Leases” section of Item 7 of Part II of our 2024 Form 10-K Report.
•Exchange – Reflects changes in EBT driven by the effects of converting functional currency income to
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
•Other – Primarily includes Operating expenses, Other revenue, Insurance expenses, and Other income/(loss), net on the consolidated income statements at prior period exchange rates.
◦Changes in operating expenses are primarily driven by salaried personnel costs, facilities costs, and costs associated with the origination and servicing of customer contracts.
◦In general, other income/(loss) changes are primarily driven by changes in earnings related to market valuation adjustments to derivatives (primarily related to movements in interest rates), which are included in unallocated risk management, and other miscellaneous items.
In addition, the following definitions and calculations apply to the charts contained in Item 2 of this Report:
•Cash (as shown in the Funding and Liquidity section) – Cash and cash equivalents, Marketable securities, and restricted cash reported on our consolidated balance sheets, excluding amounts related to insurance activities.
•Debt (as shown in the Key Metrics and Leverage tables) – Debt on our consolidated balance sheets. Includes debt issued in securitizations and payable only out of collections on the underlying securitized assets and related enhancements. Ford Credit holds the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions.
•Earnings Before Taxes – Reflects Income before income taxes as reported on our consolidated income statements.
•Loss-to-Receivables (“LTR”) Ratio (as shown in the Credit Loss tables) – LTR ratio is calculated using net charge-offs divided by average finance receivables, excluding unearned interest supplements and the allowance for credit losses.
•Reserve as a % of End of Period (“EOP”) Receivables Ratio (as shown in the Credit Loss tables) – The reserve as a percentage of EOP receivables ratio is calculated as the credit loss reserve amount, divided by EOP finance receivables, excluding unearned interest supplements and the allowance for credit losses.
•Return on Equity (“ROE”) (as shown in the Key Metrics table) – Reflects return on equity calculated by annualizing net income for the period and dividing by monthly average equity for the period.
•Securitization and Restricted Cash (as shown in the Liquidity table) – Securitization cash is held for the benefit of the securitization investors (for example, a reserve fund). Restricted cash primarily includes cash held to meet certain local governmental and regulatory reserve requirements and cash held under the terms of certain contractual agreements.
•Securitizations (as shown in the Public Term Funding Plan table) – Public securitization transactions, Rule 144A offerings sponsored by Ford Credit, and widely distributed offerings by Ford Credit Canada.
•Term Asset-Backed Securities (“ABS”) (as shown in the Funding Structure table) – Obligations issued in securitization transactions that are payable only out of collections on the underlying securitized assets and related enhancements.
•Total Net Receivables (as shown in the Key Metrics and Financial Condition tables) – Includes finance receivables (retail financing and wholesale) sold for legal purposes and net investment in operating leases included in securitization transactions that do not satisfy the requirements for accounting sale treatment. These receivables and operating leases are reported on our consolidated balance sheets and are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions; they are not available to pay the other obligations of Ford Credit or the claims of Ford Credit’s other creditors.
•Unallocated Other (as shown in the Segment Results table) – Items excluded in assessing segment performance because they are managed at the corporate level, including market valuation adjustments to derivatives and exchange-rate fluctuations on foreign currency-denominated transactions.
Taxes
Our organizational structure evolves to align with changes in our business. Additionally, we regularly review our subsidiaries’ tax classifications to align with business priorities. Future changes could alter any subsidiary’s classification as a taxable entity and whether taxes are provided for such subsidiary’s results within our financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Results of Operations
Key Metrics
First Quarter
GAAP Financial Measures 2024 2025 H / (L)
Total net receivables ($B) $ 135.5 $ 141.6 $ 6.1
Loss-to-receivables (bps) (a) 47 63 16
Auction values (b) $ 29,665 $ 30,635 3 %
EBT ($M) $ 326 $ 580 $ 254
ROE (%) 7.0 % 12.3 % 5.3 ppts
Other Balance Sheet Metrics
Debt ($B) $ 129.3 $ 134.3 $ 5.0
Net liquidity ($B) $ 27.0 $ 29.5 $ 2.5
Financial statement leverage (to 1) 9.6 9.5 (0.1)
__________
(a)
(b)
First Quarter 2025 Compared with First Quarter 2024
The following table shows the factors that contributed to first quarter 2025 EBT (in millions):
Change in EBT by Causal Factor
First quarter 2024 EBT $ 326 Volume / mix 55 Financing margin 213 Credit loss (56) Lease residual (11) Exchange (10) Other 63 First quarter 2025 EBT $ 580
Total net receivables were $141.6 billion, $6.1 billion or 5% higher than a year ago, reflecting higher consumer financing, a larger operating lease portfolio, and higher non-consumer financing, offset partially by exchange. The first quarter 2025 U.S. LTR ratio of 63 basis points increased from a year ago, reflecting higher repossessions and increased loss severity.
Our first quarter 2025 EBT of $580 million was $254 million higher than a year ago, explained primarily by higher financing margin, favorable volume and mix, and a favorable derivative market valuation adjustment (included in Other), offset partially by higher credit losses. ROE was 12.3%, 5.3 percentage points higher than a year ago, driven by higher net income. At the end of the first quarter of 2025, we had $29.5 billion in net liquidity.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Segment Results
Results of operations by segment and Unallocated Other for the periods ended March 31 are shown below (in millions):
First Quarter
2024 2025 H / (L)
Results
Europe segment 72 86 14 All Other segment 20 3 (17) Total segments $ 355 $ 560 $ 205 Unallocated Other (29) 20 49 Earnings before taxes $ 326 $ 580 $ 254 (Provision for)/Benefit from income taxes (92) (156) (64) Net income $ 234 $ 424 $ 190
For additional information, see Note 11 of our Notes to the Financial Statements.
Europe Segment
The
All Other Segment
The All Other segment first quarter 2025 EBT of $3 million was $17 million lower than first quarter 2024, explained primarily by higher credit losses and unfavorable volume and mix.
Unallocated Other
Unallocated Other was a $20 million gain for first quarter 2025, a $49 million improvement from first quarter 2024, explained primarily by favorable derivative market valuation adjustment compared to prior year.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Financing Shares and Contract Placement Volume
Our focus is on supporting Ford and
The following table shows our retail financing and operating lease share of new Ford and
First Quarter
2024 2025
Share of Ford and Lincoln Sales (a)
United States 60 % 38 % Canada 65 68 United Kingdom 33 29 Germany 35 41 China 27 15 Wholesale Share United States 71 % 71 % United Kingdom 100 100 Germany 89 91 China 69 58
Contract Placement Volume - New and Used (000)
United States 226 159 Canada 27 32 United Kingdom 21 20 Germany 16 17 China 16 7 __________
(a)
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Financial Condition
Our receivables, including finance receivables and operating leases, were as follows (in billions):
March 31, December 31, March 31,
2024 2024 2025
Net Receivables
Consumer financing $ 64.0 $ 67.8 $ 66.6
Non-Consumer financing 26.8 29.7 28.7
Net investment in operating leases 19.9 21.4 22.1
Total United States and Canada Segment $ 110.7 $ 118.9 $ 117.4
Europe Segment
Consumer financing $ 11.8 $ 12.0 $ 12.8
Non-Consumer financing 8.0 8.2 7.4
Net investment in operating leases 0.2 0.3 0.3
Total Europe Segment $ 20.0 $ 20.5 $ 20.5
All Other Segment
Consumer financing $ 3.4 $ 2.6 $ 2.4
Non-Consumer financing 1.4 1.6 1.3
Net investment in operating leases — — —
Total Other Segment $ 4.8 $ 4.2 $ 3.7
Total net receivables $ 135.5 $ 143.6 $ 141.6
At March 31, 2024, December 31, 2024, and March 31, 2025, total net receivables includes consumer receivables before allowance for credit losses of $45.0 billion, $47.6 billion, and $43.9 billion, respectively, and non-consumer receivables before allowance for credit losses of $22.0 billion, $24.4 billion, and $22.5 billion, respectively, that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements. In addition, at March 31, 2024, December 31, 2024, and March 31, 2025, total net receivables includes net investment in operating leases of $11.2 billion, $13.3 billion, and $13.2 billion, respectively, that have been included in securitization transactions but continue to be reported in our consolidated financial statements. The receivables and net investment in operating leases are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions; they are not available to pay the other obligations or the claims of our other creditors. We hold the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions. For additional information on our securitization transactions, refer to the “Securitization Transactions” and “On-Balance Sheet Arrangements” sections of Item 7 of Part II of our 2024 Form 10-K Report and Note 6 of our Notes to the Financial Statements herein.
Total net receivables at March 31, 2025 were $6.1 billion higher compared with March 31, 2024, explained primarily by higher consumer financing, a larger operating lease portfolio, and higher non-consumer financing, offset partially by exchange. Total net receivables at March 31, 2025 were $2.0 billion lower compared with December 31, 2024, explained primarily by lower non-consumer and consumer financing, offset partially by a larger operating lease portfolio.
Our operating lease portfolio was 16% of total net receivables at March 31, 2025. Leasing is an important product, and our leasing strategy balances sales, share, residuals, and long-term profitability. Operating leases in
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Credit Risk
Credit risk is the possibility of loss from a customer’s or dealer’s failure to make payments according to contract terms. Credit losses are a normal part of a lending business, and credit risk has a significant impact on our business. We manage the credit risk of our consumer (retail financing) and non-consumer (dealer financing) receivables to balance our level of risk and return using our consistent underwriting standards, effective proprietary scoring system (discussed below), and world-class servicing. The allowance for credit losses (also referred to as the credit loss reserve) represents our estimate of the expected credit losses inherent in our finance receivables for the lifetime of those receivables as of the balance sheet date. The allowance for credit losses is estimated using a combination of models and management judgment and is based on such factors as historical loss performance, portfolio quality, receivable levels, and forward-looking macroeconomic scenarios. The adequacy of our allowance for credit losses is assessed quarterly and the assumptions and models used in establishing the allowance are evaluated regularly.
Most of our charge-offs are related to retail financing. Net charge-offs are affected by the number of vehicle repossessions, the unpaid balance outstanding at the time of repossession, the auction price of repossessed vehicles, and other amounts owed. We also incur credit losses on our dealer financing, but default rates for these receivables historically have been substantially lower than those for retail financing.
In purchasing retail financing contracts, we use a proprietary scoring system that measures credit quality using information from sources including the credit application, proposed contract terms, credit bureau data, and other information. After a proprietary risk score is generated, we decide whether to purchase a contract using a decision process based on a judgmental evaluation of the applicant, the credit application, the proposed contract terms, credit bureau information (e.g., FICO score), proprietary risk score, and other information. Our evaluation emphasizes the applicant’s ability to pay and the applicant’s creditworthiness with a focus on payment, affordability, applicant credit history, and stability as key considerations. While FICO is a part of our scoring system, our models enable us to more effectively determine the probability that a customer will pay than using credit scores alone. When we originate business, our models project expected losses and we price accordingly. We ensure the business fits our risk appetite.
For additional information on our allowance for credit losses and the quality of our receivables, see Note 4 of our Notes to the Financial Statements.
United States Origination Metrics
The following table shows
First Quarter
2024 2025
Origination Metrics
Retail & lease average placement FICO 758 749
Retail & lease higher risk portfolio mix (%) 4 % 3 %
Retail greater than or equal to 84 months placement mix (%) 5 % 12 %
Retail average placement term (months) 66 65
Our first quarter 2025 average placement FICO score remained strong. We support customers across the credit spectrum. Our higher risk business, as classified at contract inception, represents 3% of our portfolio and has been stable for over 15 years.
Retail financing contracts of 84 months and longer increased by 7 percentage points compared to a year ago. The retail average placement term during the first quarter of 2025 decreased by one month compared to a year ago, reflecting changes in Ford’s marketing programs and a higher mix of commercial use contracts with lower average term. We remain focused on managing the trade cycle, building customer relationships and loyalty, while offering financing products and terms customers want. Our origination and risk management processes deliver robust portfolio performance.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
United States Retail Financing Credit Losses
The following table shows the primary drivers of credit losses in
First Quarter
2024 2025
Credit Loss Drivers
Over-60-Day delinquencies (excl. bankruptcies) (%) 0.20 % 0.19 %
Repossessions (000) 5 6 Repossession ratio (%) 1.07 % 1.20 % Loss severity (000) (a) $ 15.1 $ 17.2 Net charge-offs ($M) $ 67 $ 97 LTR ratio (%) (b) 0.47 % 0.63 % __________
(a)The expected difference between the amount a customer owes when the finance contract is charged off and the amount received, net of expenses, from selling the repossessed vehicle.
(b)See Definitions and Information Regarding Causal Factors section for calculation.
Our first quarter 2025 repossession ratio increased from a year ago by 13 basis points and is now consistent with historical levels. Loss severity increased from a year ago, consistent with the increase in new vehicle prices and the associated higher amount financed. Our first quarter 2025 LTR ratio of 0.63% increased from a year ago, reflecting higher repossessions and increased loss severity.
Worldwide Credit Losses
The following table shows key metrics related to worldwide credit losses:
First Quarter
2024 2025
Net charge-offs ($M) $ 87 $ 127
LTR ratio (%) (a) 0.30 % 0.42 %
Credit loss reserve ($M) $ 880 $ 881
Reserve as percent of EOP Receivables (%) (a) 0.73 % 0.71 %
__________
(a)See Definitions and Information Regarding Causal Factors section for calculation.
Our worldwide credit loss metrics remain strong. Net charge-offs and the worldwide LTR ratio in the first quarter of 2025 increased from a year ago, primarily driven by higher repossessions and increased loss severity.
Our credit loss reserve is based on such factors as historical loss performance, portfolio quality, receivables level, and forward-looking macroeconomic scenarios. Our credit loss reserve reflects lifetime expected losses as of the balance sheet date and is adjusted accordingly based on our assessment of the portfolio and economic trends and conditions. Our credit loss reserve at March 31, 2025 was about flat compared to a year ago. See Note 4 of our Notes to the Financial Statements for more information.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Residual Risk
Leasing is an important product that many customers want and value, and operating lease customers also are more likely to buy or lease another Ford or
We are exposed to residual risk on operating leases and similar balloon payment products where the customer may return the financed vehicle to us. At the time we purchase a lease, we establish an expected residual value for the vehicle. Residual risk is the possibility that the amount we obtain from returned vehicles will be less than our estimate of the expected residual value for the vehicle. We estimate the expected residual value based on recent auction values, return volumes for our leased vehicles, industrywide used vehicle prices, marketing incentive plans, and vehicle quality data, and benchmark to third-party data depending on availability. For operating leases, changes in expected residual values impact depreciation expense, which is recognized on a straight-line basis over the life of the lease.
For additional information on our residual risk on operating leases, refer to the “Critical Accounting Estimates – Accumulated Depreciation on Vehicles Subject to Operating Leases” section of Item 7 of Part II of our 2024 Form 10-K Report.
United States Ford and Lincoln Operating Leases
The following table shows our share of Ford and
First Quarter
2024 2025
Lease Share of Retail Sales (%)
Ford Credit 14 % 15 % Industry (a) 24 % 23 % Placement Volume (000) 24-Month 9 6 36-Month 22 35 39-Month / other 18 12 Total 49 53 Residual Performance Return rates (%) 50 % 48 % Return volume (000) 27 17 Off-lease auction values (b) $ 29,665 $ 30,635 __________ (a)Source: J.D. Power PIN.
(b)
Our
Lease return rates are lower than prior year as more customers and dealers are electing to purchase the off-lease vehicles at a higher rate given their equity position in the vehicle. Auction values increased 3% year over year, reflecting low industrywide used vehicle availability; tariffs and economic outlook create uncertainty for used vehicle pricing.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Credit Ratings
Our short-term and long-term debt is rated by four credit rating agencies designated as nationally recognized statistical rating organizations (“NRSROs”) by the United States Securities and Exchange Commission (“SEC”): DBRS, Fitch, Moody’s, and S&P.
In several markets, locally recognized rating agencies also rate us. A credit rating reflects an assessment by the rating agency of the credit risk associated with a corporate entity or particular securities issued by that entity. Rating agencies’ ratings of us are based on information provided by us and other sources. Credit ratings assigned to us from all of the NRSROs are closely associated with their opinions on Ford. Credit ratings are not recommendations to buy, sell, or hold securities and are subject to revision or withdrawal at any time by the assigning rating agency. Each rating agency may have different criteria for evaluating company risk and, therefore, ratings should be evaluated independently for each rating agency.
The following rating actions were taken by these NRSROs since the filing of our 2024 Form 10-K Report:
•On February 6, 2025, S&P affirmed the credit ratings for Ford Credit at BBB- and revised the outlook to negative from stable.
The following table summarizes certain of the credit ratings and outlook presently assigned by these four NRSROs:
NRSRO RATINGS
Ford Credit NRSROs
Long-Term Senior Unsecured Short -Term Unsecured
Outlook/Trend Minimum
Long-Term Investment Grade Rating
DBRS BBB (low) R-2 (low) Stable BBB (low)
Fitch BBB- F3 Stable BBB-
Moody’s Ba1 NP Stable Baa3
S&P BBB- A-3 Negative BBB-
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Funding and Liquidity
We remain well capitalized with a strong balance sheet and funding diversified across platforms and markets, and ended the first quarter of 2025 with $29.5 billion of liquidity, up $4.3 billion from year-end. We completed $11 billion of public term issuances through May 2, 2025.
Key elements of our funding strategy include:
•Maintain strong liquidity and funding diversity;
•Prudently access public markets;
•Continue to leverage retail deposits in
•Flexibility to increase ABS mix as needed; preserving assets and committed capacity;
•Target financial statement leverage of 9:1 to 10:1; and
•Maintain self-liquidating balance sheet.
Our liquidity profile continues to be diverse, robust, and focused on maintaining liquidity levels that meet our business and funding requirements. We regularly stress test our balance sheet and liquidity to ensure that we continue to meet our financial obligations through economic cycles.
The following table shows funding for our net receivables (in billions):
Funding Structure March 31, December 31, March 31,
2024 2024 2025
Term unsecured debt $ 57.0 $ 59.2 $ 63.2
Term asset-backed securities 54.9 60.4 52.8
Retail deposits / Ford Interest Advantage 17.4 18.3 18.3
Other 1.6 1.2 0.7
Equity 13.5 13.8 14.1
Cash (8.9) (9.3) (7.5)
Total Net Receivables $ 135.5 $ 143.6 $ 141.6
Securitized Funding as a percent of Total Debt 42.5 % 43.8 % 39.3 %
Net receivables of $141.6 billion at March 31, 2025 were funded primarily with term unsecured debt and term asset-backed securities. Securitized funding as a percent of total debt was 39.3% as of March 31, 2025, down from 43.8% at December 31, 2024.
Public Term Funding Plan
The following table shows our issuances for full year 2023 and 2024, planned issuances for full year 2025, and our global public term funding issuances through May 2, 2025, excluding short-term funding programs (in billions):
2023 Actual 2024 Actual 2025 Forecast Through
May 2
Unsecured $ 14 $ 17 $ 9 - 12 $ 6
Securitizations 14 16 12 - 15 5
Total public $ 28 $ 33 $ 21 - 27 $ 11
For 2025, we now project full year public term funding in the range of $21 billion to $27 billion.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Liquidity
We define available liquidity as cash, cash equivalents, and marketable securities (excluding amounts related to insurance activities) and committed capacity (which includes our asset-backed facilities and unsecured credit facilities), less utilization of liquidity. Utilization of liquidity is the amount funded under our liquidity sources and also includes the cash required to support securitization transactions and restricted cash. Net liquidity available for use is defined as available liquidity plus certain adjustments as shown in the table below.
The following table shows our liquidity sources and utilization (in billions):
March 31, December 31, March 31,
2024 2024 2025
Liquidity Sources
Cash $ 8.9 $ 9.3 $ 7.5
Committed asset-backed facilities 42.6 42.9
43.0
Other unsecured credit facilities 2.3 1.7 1.7 Total liquidity sources $ 53.8 $ 53.9 $ 52.2 Utilization of Liquidity Securitization and restricted cash $ (3.4) $ (3.1)
$ (3.0)
Committed asset-backed facilities (23.3) (25.6)
(19.3)
Other unsecured credit facilities (0.4) (0.5)
(0.6)
Total utilization of liquidity $ (27.1) $ (29.2) $ (22.9) Available liquidity $ 26.7 $ 24.7 $ 29.3 Other adjustments 0.3 0.5 0.2
Net liquidity available for use $ 27.0 $ 25.2 $ 29.5
Our net liquidity available for use will fluctuate quarterly based on factors including near-term debt maturities, receivable growth and decline, and timing of funding transactions. At March 31, 2025, our net liquidity available for use was $29.5 billion, $4.3 billion higher than year-end 2024, reflecting strong public market execution in the first quarter. At March 31, 2025, our liquidity sources totaled $52.2 billion, down $1.7 billion from year-end 2024, primarily explained by lower cash.
Cash. At March 31, 2025, our cash totaled $7.5 billion, compared with $9.3 billion at year-end 2024. In the normal course of our funding activities, we may generate more proceeds than are required for our immediate funding needs. These excess amounts are held primarily in highly liquid investments, which provide liquidity for our anticipated and unanticipated cash needs and give us flexibility in the use of our other funding programs. Our cash primarily includes United States Department of Treasury obligations, federal agency securities, bank time deposits with investment-grade institutions, investment-grade commercial paper, debt obligations of a select group of non-
The average maturity of these investments ranges from overnight to six months and is adjusted based on market conditions and liquidity needs. We monitor our cash levels and average maturity on a daily basis. Cash includes restricted cash and amounts to be used only to support our securitization transactions of $3.1 billion and $3.0 billion at December 31, 2024 and March 31, 2025, respectively.
Material Cash Requirements. Our material cash requirements include: (1) the purchase of retail financing and operating lease contracts from dealers and providing wholesale financing for dealers to finance new and used vehicles; and (2) debt repayments (for additional information on debt, see the “Aggregate Contractual Obligations” table in Item 7 and Note 9 of the Notes to the Financial Statements in our 2024 Form 10-K Report). In addition, subject to approval by our Board of Directors, shareholder distributions may require the expenditure of a material amount of cash. Moreover, we may be subject to additional material cash requirements that are contingent upon the occurrence of certain events, e.g., legal contingencies, uncertain tax positions, and other matters.
We plan to utilize our liquidity (as described above) and our cash flows from business operations to fund our material cash requirements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Committed Capacity. At March 31, 2025, our committed capacity totaled $44.7 billion, compared with $44.6 billion at December 31, 2024. Our committed capacity is primarily comprised of committed ABS facilities from bank-sponsored commercial paper conduits and other financial institutions and committed unsecured credit facilities with financial institutions.
Committed Asset-Backed Facilities. We and our subsidiaries have entered into agreements with a number of bank-sponsored asset-backed commercial paper conduits and other financial institutions. Such counterparties are contractually committed, at our option, to purchase from us eligible retail financing receivables or to purchase or make advances under asset-backed securities backed by retail financing or wholesale finance receivables or operating leases for proceeds of up to $43.0 billion ($26.1 billion of retail financing, $10.5 billion of operating leases, and $6.4 billion of wholesale financing) at March 31, 2025. In
Our ability to obtain funding under these facilities is subject to having a sufficient amount of eligible assets as well as our ability to obtain interest rate hedging arrangements for certain facilities. At March 31, 2025, $19.3 billion of these commitments were in use and we had $0.3 billion of asset-backed capacity that was in excess of eligible receivables. These programs are free of material adverse change clauses, restrictive financial covenants (for example, debt-to-equity limitations and minimum net worth requirements), and generally, credit rating triggers that could limit our ability to obtain funding. However, the unused portion of these commitments may be terminated if the performance of the underlying assets deteriorates beyond specified levels. Based on our experience and knowledge as servicer of the related assets, we do not expect any of these programs to be terminated due to such events.
As of March 31, 2025, FCE Bank plc (“FCE”) had liquidity of £162 million (equivalent to $210 million) in the form of eligible collateral available for use in the monetary policy programs of the Bank of
Unsecured Credit Facilities. At March 31, 2025, we and our subsidiaries had $1.7 billion of contractually committed unsecured credit facilities with financial institutions, including the FCE syndicated credit facility (the “FCE Credit Agreement”) and Ford Bank’s syndicated credit facility (the “Ford Bank Credit Agreement”). At March 31, 2025, $1.1 billion was available for use.
At March 31, 2025, £284 million (equivalent to $369 million) was available for use under FCE’s £685 million (equivalent to $887 million) Credit Agreement and all €210 million (equivalent to $227 million) was available for use under the Ford Bank Credit Agreement. Both the FCE Credit Agreement and Ford Bank Credit Agreement mature in 2027.
Both the FCE Credit Agreement and Ford Bank Credit Agreement contain certain covenants, including an obligation for FCE and Ford Bank to maintain their ratio of regulatory capital to risk-weighted assets at no less than the applicable regulatory minimum. The FCE Credit Agreement requires the support agreement between FCE and Ford Credit to remain in effect (and enforced by FCE to ensure that its net worth is maintained at no less than $500 million). The Ford Bank Credit Agreement requires a guarantee of Ford Bank’s obligations under the agreement, provided by Ford Credit, to remain in effect. In addition, both the FCE Credit Agreement and the Ford Bank Credit Agreement include certain sustainability-linked targets, pursuant to which the applicable margin may be adjusted if Ford achieves, or fails to achieve, the specified targets.
Funding and Liquidity Risks
Our funding plan is subject to risks and uncertainties, many of which are beyond our control, including disruption in the capital markets, that could impact both unsecured debt and asset-backed securities issuance and the effects of regulatory changes on the financial markets. Refer to the “Funding and Liquidity Risks” section of Item 7 of Part II of our 2024 Form 10-K Report for more information.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Leverage
We use leverage, or the debt-to-equity ratio, to make various business decisions, including evaluating and establishing pricing for finance receivable and operating lease financing, and assessing our capital structure. We refer to our shareholder’s interest as equity.
The following table shows the calculation of our financial statement leverage (in billions):
March 31, December 31, March 31,
2024 2024 2025
Leverage Calculation
Debt $ 129.3 $ 137.9 $ 134.3
Equity $ 13.5 $ 13.8 $ 14.1
Financial statement leverage (to 1) 9.6 10.0 9.5
We plan our financial statement leverage by considering market conditions and the risk characteristics of our business. At March 31, 2025, our financial statement leverage was 9.5:1. We target financial statement leverage in the range of 9:1 to 10:1.
During the first quarter 2025, we paid $200 million in cash distributions to our parent.
Outlook
Given material near-term risks, especially the potential for industrywide supply chain disruption impacting vehicle production, the potential for future or increased tariffs in
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Cautionary Note on Forward-Looking Statements
Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:
•Ford’s long-term success depends on delivering the Ford+ plan, including improving cost and competitiveness;
•Ford’s vehicles could be affected by defects that result in recall campaigns, increased warranty costs, or delays in new model launches, and the time it takes to improve the quality of Ford’s vehicles and services and reduce the costs associated therewith could continue to have an adverse effect on Ford’s business;
•Ford is highly dependent on its suppliers to deliver components in accordance with Ford’s production schedule and specifications, and a shortage of or inability to timely acquire key components or raw materials, can disrupt Ford’s production of vehicles;
•Ford’s production, as well as Ford’s suppliers’ production, and/or the ability to deliver products to consumers could be disrupted by labor issues, public health issues, natural or man-made disasters, adverse effects of climate change, financial distress, production difficulties, capacity limitations, or other factors;
•Ford may not realize the anticipated benefits of existing or pending strategic alliances, joint ventures, acquisitions, divestitures, or business strategies or the benefits may take longer than expected to materialize;
•Ford may not realize the anticipated benefits of restructuring actions and such actions may cause Ford to incur significant charges, disrupt its operations, or harm its reputation;
•Failure to develop and deploy secure digital services that appeal to customers and grow Ford’s subscription rates could have a negative impact on Ford’s business;
•Ford’s ability to maintain a competitive cost structure could be affected by labor or other constraints;
•Ford’s ability to attract, develop, grow, support, and reward talent is critical to its success and competitiveness;
•Operational information systems, security systems, vehicles, and services could be affected by cybersecurity incidents, ransomware attacks, and other disruptions and impact Ford, Ford Credit, their suppliers and dealers;
•To facilitate access to the raw materials and other components necessary for the production of electric vehicles, Ford has entered into and may, in the future, enter into multi-year commitments to raw material and other suppliers that subject Ford to risks associated with lower future demand for such items as well as costs that fluctuate and are difficult to accurately forecast;
•With a global footprint and supply chain, Ford’s results and operations could be adversely affected by economic or geopolitical developments, including protectionist trade policies such as tariffs, or other events;
•Ford’s new and existing products and digital, software, and physical services are subject to market acceptance and face significant competition from existing and new entrants in the automotive and digital and software services industries, and Ford’s reputation may be harmed based on positions it takes or if it is unable to achieve the initiatives it has announced;
•Ford may face increased price competition for its products and services, including pricing pressure resulting from industry excess capacity, currency fluctuations, competitive actions, or economic or other factors, particularly for electric vehicles;
•Inflationary pressure and fluctuations in commodity and energy prices, foreign currency exchange rates, interest rates, and market value of Ford or Ford Credit’s investments, including marketable securities, can have a significant effect on results;
•Ford’s results are dependent on sales of larger, more profitable vehicles, particularly in
•Industry sales volume can be volatile and could decline if there is a financial crisis, recession, public health emergency, or significant geopolitical event;
•The impact of government incentives on Ford’s business could be significant, and Ford’s receipt of government incentives could be subject to reduction, termination, or clawback;
•Ford and Ford Credit’s access to debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts could be affected by credit rating downgrades, market volatility, market disruption, regulatory requirements, asset portfolios, or other factors;
•Ford Credit could experience higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles;
•Economic and demographic experience for pension and other postretirement employee benefit plans (e.g., discount rates or investment returns) could be worse than Ford has assumed;
•Pension and other postretirement liabilities could adversely affect Ford’s liquidity and financial condition;
•Ford and Ford Credit could experience unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, services, perceived environmental impacts, or otherwise;
•Ford may need to substantially modify its product plans and facilities to comply with safety, emissions, fuel economy, autonomous driving technology, environmental, and other regulations;
•Ford and Ford Credit could be affected by the continued development of more stringent privacy, data use, data protection, data access, and artificial intelligence laws and regulations as well as consumers’ heightened expectations to safeguard their personal information; and
•Ford Credit could be subject to new or increased credit regulations, consumer protection regulations, or other regulations.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake, and expressly disclaim to the extent permitted by law, any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise. For additional discussion, see “Item 1A. Risk Factors” in our 2024 Form 10-K Report, as updated by Item 1A. Risk Factors in this Quarterly Report on Form 10-Q as well as our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Accounting Standards Issued But Not Yet Adopted
For a discussion of recent accounting standards, see Note 2 of our Notes to the Financial Statements.
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