Ford Credit Australia’s announcement that it is to withdraw from retail finance is a miserable act. Especially so because both Ford US and Ford Australia confirmed to Treasurer Swan that Ford Credit will remain in Australia and continue to provide financing to its dealer network.
The assurance was given prior to the Treasurer’s announcement in December of the AUD$2 billion Special Purpose Vehicle designed to fill the floorplan financing ‘hole’ left by GE and GMAC’s exit from the dealer financing market.
Technically, of course, Ford Credit is continuing to provide finance to its dealer network - it has not, at this stage, announced plans to withdraw from dealer wholesale finance (or ‘floorplan’ finance). But this is a technicality; withdrawing from retail finance will leave many of those dealers currently utilising Ford Credit finance without the facility to finance their customers in the purchase of vehicles.
This will mean lost sales opportunities and loss of commission revenues for the dealerships affected.
More alarming in this announcement is that private retail vehicle finance in Australia (which does not have the ‘no-recourse’ financial products available to US consumers and which shift risk away from the customer and back to the dealer and financier) is a profitable arm of the dealership and also profitable for financiers.
Here, the risks to the financier are relatively low in that vehicle finance is secured against the asset, the interest rate margins are relatively high, and the consumer remains liable for the loan - ie. carries the full risk of the value of the loan irrespective of the depreciation or dimunition in the value of the asset.
(In the US, under a no-recourse financing product, at the conclusion of the finance term a consumer can simply hand the vehicle back to the dealer or financier, with ‘no recourse’: no more to pay, provided they have made the agreed payments over the term.)
So why would Ford Credit be bailing on retail finance, but retaining a wholesale finance presence?
It makes no sense unless this is part of a two-step withdrawal from the Australian market. Withdrawing retail finance will put enormous pressure on dealers utilising Ford Credit floorplan to find alternative financiers. Most dealers offer retail finance through their floorplan provider. Ford Credit’s announced withdrawal from retail finance means that dealers using Ford Credit will be denied access to their floorplan financier for retail finance for their customers.
Many of the dealers affected - Ford, Mazda, Volvo, LandRover, among others - will likely seek a new floorplan financier in securing a new retail finance provider. Those who CAN, of course. Many will not, and, as The Motor Report has warned previously, worst-affected will be country dealerships.
You can take from this announcement that Ford Credit intends to also bail on wholesale dealer finance; perhaps not next month, but soon, because this announcement makes no sense otherwise. Also take it as read that assurances given to the Treasurer and to its dealer network from Ford Credit is just so much smoke being blown up so many skirts.
Lastly, we can also take from this announcement the grim reality that Ford’s Australian operation does not amount to a ‘hill of beans’ in Ford US thinking and future strategies.
If its dealer network is all-but expendible, so is its manufacturing operation. Every day, an Australian Ford Taurus, assembled here, sure, is increasingly likely and the end of the ‘local car’ for the local market increasingly certain.
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Another load of biased crap. Ford more than half way through a $2B investment in products and facilities. Why invest that kind of money to not use it down the track?
Ford Aus are the designers of the upcoming global T6 (Ranger) pickup destined to sell about 300,000 units a year, the designers of the Indian Fiesta and a centre for excellence in RWD technology.
So typical of the media, when it’s good news about Ford it will barely rate a mention, when it’s bad it gets blown out of proportion. The opposite happens to Holden.
Hi Phil,
We report all of the news, good and bad.
GM has cancelled the Pontiac G8 Ute - bad news for Holden (reported)
GM on brink of bankruptcy - bad news for Holden (reported many times)
GMAC pulls out of Aust - bad news for Holden and their dealers - (reported many times)
Ford keep Geelong engine plant open - good news for Ford (reported)
Ford to build Focus locally - good news for Ford (reported)
The list goes on both good news and bad for Holden/GM and Ford.
We gave the FG XR6T our Best Value - Best Drive award at the end of last year - that’s good news, and its still our favourite locally produced car.
The news, is the news is the news. Not much we can do about it, and odd things are afoot in both GM and Ford camps at the moment.
No point sugar coating it.
GMAC, GE Money and now Ford Credit don’t give a rats arse about their respective dealer networks in this country, and the way Ford Credit are going about this is suspect to say the least.
Biased - I’d refute that strongly. But you are welcome to your opinion and we appreciate you making it known.
Cheers,
Steane
Biased crap ????How on earth is this applicable to this article ?? I think Ford Australia’s biggest problems stem from its one eyed supporters around the country making constant public fools of themselves whinging and moaning .
Firstly, my apologies. Steane I agree with your response. But I took offence to the final 2 paragraphs. My claim of bias was more to do with this particular article than to the website which on the whole is a very good one which I view most days.
I was already riled by another website / publisher that turned the ‘GM cancels RWD platform into Commodore future saved’ & ‘Ford cancels GRWD platform into Falcon days are numbered’. See the bias?!
So when I read your suggestion that the manufacturing operation was expendible I hit redline. Thus why I pointed out all the things that Ford has achieved locally.
Thanks for the forum.
Kevien, if you’re talking about fools, maybe you should spell your name correctly on a public forum…
Steane,
FCAL has been suffering (corporate) near death experiences for some time. Insiders know they have been winding back in Australia for several years.
I agree that they are probably using the GFC (global financial crisis
) to accelerate their plans to pull out of Australia entirely.
Can you imagine what sort of customer service will be offered to people with existing GE Money, GMAC or Ford Credit loans over the next few years?
Can’t pay this month?
Lost your job?
Want to trade it in?
Need an extension?
Want us to waive our fees?
If you think nobody loves you try not paying your bills to these American ‘friends’. They will be all over you like a rash.
On a serious note, ASCIC should step in and warn ALL of these financiers existing Australia that full scrutiny will be made of sharp business practice and its application to those Aussies unlucky enough to be stuck with existing loans.
meant exiting Australia of course…
Whilst this is disappointing news, I am not sorry to see some of the staff lose their jobs. I have dealt with three different car finance companies over the years and Ford Credit was by far the rudest, most aggressive and uncaring! The way I was spoken to by (female) employees just astounded me and ensured I never buy a Ford again. I sincerely hope that one particular woman I dealt with loses her job and finds it hard to maintain her regular payments with a finance company. Poetic justice!
No worries Phil. Glad u enjoy the site. I get where you are coming from. You can give us a rev over what we write whenever you see it differently, we would expect nothing less! We hope the US parents of ford and Holden appreciate them as much as we do…let’s hope eh.
Floorplan finance for dealers remains unchanged…..unchanged. They have stopped financing private buyers vehicles which should not really be a problem because there are many other companies people could use. Only 10% of vehicles sold used Ford redit anyway.