Products and Services. We offer a wide variety of automotive financing products
to and through automotive dealers throughout the world. The predominant share
of our business consists of financing Ford and Lincoln vehicles and supporting
the dealers of those brands. We earn our revenue primarily from:
Payments made under retail installment sale and lease contracts that we originate
and purchase;
Interest rate supplements and other support payments from Ford and affiliated
companies; and
Payments made under dealer financing programs.
As a result of our financing activities, we have a large portfolio of finance
receivables and operating leases which we classify into two segments: “consumer”
and “non-consumer.”
Finance receivables and operating leases in the consumer segment include products
offered to individuals and businesses that finance the acquisition of Ford and
Lincoln vehicles from dealers for personal and commercial use. Retail financing
includes retail installment sale contracts for new and used vehicles and direct
financing leases for new vehicles to retail and commercial customers including
leasing companies, government entities, daily rental companies, and fleet customers.
Finance receivables in the non-consumer segment include products offered to
automotive dealers, and receivables purchased from Ford and its affiliates.
We make wholesale loans to dealers to finance the purchase of vehicle inventory
(floorplan financing), as well as loans to dealers to finance working capital
and improvements to dealership facilities, finance the purchase of dealership
real estate, and finance other dealer vehicle programs. We also purchase receivables
from Ford and its affiliates, primarily related to the sale of parts and accessories
to dealers, receivables from Ford-related loans, and certain used vehicles from
daily rental fleet companies.
We also service the finance receivables and leases we originate and purchase,
make loans to Ford affiliates, and provide insurance services related to our
financing programs.
Geographic Scope of Operations and Segment Information. We conduct our financing
operations directly and indirectly through our subsidiaries and affiliates.
We offer substantially similar products and services throughout many different
regions, subject to local legal restrictions and market conditions. We divide
our business segments based on geographic regions: North America (“North
America Segment”) and International (“International Segment”).
The North America Segment includes our operations in the United States and Canada.
The International Segment includes our operations in all other countries in
which we do business directly and indirectly.
North America Segment
Managed receivables equal net finance receivables and net investment in operating
leases, excluding unearned interest supplements and residual support, allowance
for credit losses, and other (primarily accumulated supplemental depreciation).
In the United States and Canada, under the Ford Credit and Lincoln Automotive
Financial Services brand names, we provide financing services to and through
dealers of Ford and Lincoln vehicles.
International Segment
Our International Segment includes operations in three main regions: Europe,
Asia Pacific, and Latin America. Our European operations are managed through
a United Kingdom-based subsidiary, FCE Bank plc (“FCE”), which operates
in the United Kingdom and has branches in 10 other European countries. FCE also
has operating subsidiaries in Switzerland, Poland, the Czech Republic, and Hungary
that provide a variety of retail and dealer financing. The United Kingdom and
Germany are our largest markets in Europe, representing 67% of FCE’s finance
receivables and operating leases. Customers and dealers in Italy, France, and
Spain are 19% of FCE’s finance receivables and operating leases. FCE,
through its Worldwide Trade Financing (“WWTF”) division, provides
financing to distributors and importers in about 70 countries where Ford has
no national sales company presence. In the Asia Pacific region, we operate in
China and India. In the Latin America region, we operate in Mexico, Brazil,
and Argentina. Our operations include joint ventures with local financial institutions
and other third parties in various locations around the world. In addition,
other private label operations and alternative business arrangements exist in
some markets.