Ford 2012 Annual Report Download - page 93

Download and view the complete annual report

Please find page 93 of the 2012 Ford annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 164

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164

Ford Motor Company | 2012 Annual Report 91
FORD MOTOR COMPANY AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
91
NOTE 7. FINANCE RECEIVABLES (Continued)
Non-Consumer Credit Quality. We extend credit to dealers primarily in the form of lines of credit to purchase new
Ford and Lincoln vehicles as well as used vehicles. Each non-consumer lending request is evaluated by taking into
consideration the borrower's financial condition and the underlying collateral securing the loan. We use a proprietary
model to assign each dealer a risk rating. This model uses historical performance data to identify key factors about a
dealer that we consider significant in predicting a dealer's ability to meet its financial obligations. We also consider
numerous other financial and qualitative factors including capitalization and leverage, liquidity and cash flow,
profitability, and credit history with ourselves and other creditors. A dealer's risk rating does not reflect any guarantees
or a dealer owner's net worth.
Dealers are assigned to one of four groups according to their risk rating as follows:
• Group I – strong to superior financial metrics
• Group II – fair to favorable financial metrics
• Group III – marginal to weak financial metrics
• Group IV – poor financial metrics, including dealers classified as uncollectible
We suspend credit lines and extend no further funding to dealers classified in Group IV.
We regularly review our model to confirm the continued business significance and statistical predictability of the
factors and update the model to incorporate new factors or other information that improves its statistical predictability.
In addition, we verify the existence of the assets collateralizing the receivables by physical audits of vehicle
inventories, which are performed with increased frequency for higher-risk (i.e., Group III and Group IV) dealers. We
perform a credit review of each dealer at least annually and adjust the dealer's risk rating, if necessary.
Performance of non-consumer receivables is evaluated based on our internal dealer risk rating analysis, as
payment for wholesale receivables generally is not required until the dealer has sold the vehicle. A dealer has the
same risk rating for all of its dealer financing regardless of the type of financing.
The credit quality analysis of our dealer financing receivables at December 31 were as follows (in millions):
2012 2011
North America International Total North America International Total
Dealer Financing
Group I $ 16,526 $ 4,551 $21,077 $13,506 $5,157 $ 18,663
Group II 2,608 1,405 4,013 2,654 1,975 4,629
Group III 277 1,279 1,556 331 1,337 1,668
Group IV 18 7 25 10 10 20
Total recorded investment $ 19,429 $ 7,242 $26,671 $16,501 $8,479 $ 24,980
For more information visit www.annualreport.ford.com