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Management’s Discussion and Analysis of Financial Condition and Results of Operations
40 Ford Motor Company | 2010 Annual Report
The following table shows operating lease placement, termination, and return volumes for Ford Credit's North
America operations, which accounted for about 97% of its total investment in operating leases at December 31, 2010
(in thousands, except for percentages):
Full Year
Full YearFull Year
Full Year
2010
20102010
2010
2009
20092009
2009
Placements ................................................................................................................................
................................
120 67
Terminations ................................................................................................................................
...............................
408 386
Returns ................................................................................................................................
................................
281 314
Memo:
Return rates................................................................................................................................
..............................
69% 81%
The increase in placement volumes primarily reflects higher industry sales, higher Ford market share and changes in
marketing programs. The increase in termination volumes primarily reflects the impact of higher placement volumes in
2007. The decrease in return volumes primarily reflects lower return rates, consistent with improved auction values
relative to Ford Credit's expectations of lease-end values at the time of contract purchase.
U.S. Ford, Lincoln, and Mercury Brand Retail Operating Lease Experience
The following table shows return volumes for Ford Credit's Ford, Lincoln and Mercury brand U.S. operating lease
portfolio. Also included are auction values at constant fourth quarter 2010 vehicle mix for lease terms comprising 59% of
Ford Credit's active Ford, Lincoln and Mercury brand U.S. operating lease portfolio (in thousands, except for
percentages):
Full Year
Full YearFull Year
Full Year
2010
20102010
2010
2009
20092009
2009
Retu
RetuRetu
Returns
rnsrns
rns
24-Month term ................................................................................................................................
..........................
39 60
36-Month term ................................................................................................................................
..........................
71 65
39-Month term ................................................................................................................................
..........................
49 34
Total returns ................................................................................................................................
...........................
159 159
Memo:
Return rates................................................................................................................................
..............................
65% 78%
Auction Values at Constant Fourth Quarter 20
Auction Values at Constant Fourth Quarter 20Auction Values at Constant Fourth Quarter 20
Auction Values at Constant Fourth Quarter 201
1110 Vehicle Mix
0 Vehicle Mix0 Vehicle Mix
0 Vehicle Mix
24-Month term ................................................................................................................................
..........................
$ 19,120 $ 18,225
36-Month term ................................................................................................................................
..........................
15,510 14,145
In 2010, Ford, Lincoln and Mercury brand U.S. return volumes were equal to 2009, primarily reflecting a lower return
rate, consistent with improved auction values relative to Ford Credit's expectations of lease-end values at the time of
contract purchase, offset by higher termination volume. The increase in auction values at constant fourth quarter 2010
mix primarily reflect overall auction value improvement in the used vehicle market.
Recent lease placement trends will result in a much lower mix of 24-month contracts within Ford Credit's return
volume over the next several quarters. Scheduled termination volume for vehicles under 24-month contracts is near zero
for all of 2011, but the mix of 24-month contracts is expected to increase in 2012 to the level seen in 2010.
2009 Compared with 2008
Details of the full-year Financial Services sector Revenues and Income/(Loss) before income taxes for 2009
and 2008 are shown below:
Revenues
RevenuesRevenues
Revenues
(in billions)
(in billions)(in billions)
(in billions)
Income/(Loss) Before Income Taxes
Income/(Loss) Before Income TaxesIncome/(Loss) Before Income Taxes
Income/(Loss) Before Income Taxes
(in millions)
(in millions)(in millions)
(in millions)
2009
20092009
2009
2008
20082008
2008
2009
2009 2009
2009
Over/(Under)
Over/(Under) Over/(Under)
Over/(Under)
2008
20082008
2008
2009
20092009
2009
2008
20082008
2008
2009
2009 2009
2009
Over/(Under)
Over/(Under) Over/(Under)
Over/(Under)
2008
20082008
2008
Ford Credit................................
................................
$ 12.1 $ 15.7 $ (3.6) $ 2,001 $ (473) $ 2,474
Other Financial Services
................................
0.3 0.3 — (106) (22) (84)
Special Items ................................
................................
— — — (81) (2,086) 2,005
Total................................
................................
$ 12.4 $ 16.0 $ (3.6) $ 1,814 $ (2,581) $ 4,395