Ford Credit Earns Full-Year 2014 Pre-Tax Profit of $1.9 Billion; Net Income of $1.7 Billion*

[Ford Super News Ticker]

Ford Motor Credit Company reported a pre-tax profit of $1.9 billion in 2014, its highest since 2011, up from $1.8 billion a year earlier. The improvement is more than explained by higher volume, partially offset by unfavorable lease residual performance in North America and lower financing margin. Ford Credit’s net income was $1.7 billion in 2014, compared with $1.5 billion in the previous year. The increase in net income reflects favorable tax items recorded during the year.

 

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[hybridbear]

partially offset by unfavorable lease residual performance in North America

I find this statement interesting. There are very few Focus Electrics on the road so they won't have a meaningful impact on the Ford Credit earnings, but when those leases end Ford Credit will be losing thousands (maybe $10,000 plus) on each car due to "unfavorable lease residual performance". The residual on our Focus Electric lease is $18,945.50. At that point it will be 3+ years old and have over 30k miles on it. A brand new 2015 Focus Electric can currently be purchased for MSRP of $29,170. Most dealers sell them close to invoice price and then with the federal tax credit a brand new Focus Electric costs only about $21,000. In Georgia it costs $16,000 since they have a $5000 state rebate. Californians get a $2500 state rebate so they can get a brand new Focus Electric for about $18,500.

 

This is why we chose to lease rather than buy... I'd guess that once lease return Focus Electrics start appearing their resale value will be under $10,000.