News - Ford
Ford Credit axes buyer finance service
Over and out: Ford Credit has pulled out of customer financing in Australia.
Jobs to go at Ford Credit as credit crunch hits
15 January 2009
FORD Credit will withdraw its customer finance arm from Australia at the end of February, but will continue to support dealer stock.
The move will see 45 Melbourne-based jobs cut in the next year, with more positions at its 160-strong headquarters to go during the next three years.
Ford Credit will continue to support existing customer finance accounts, which will operate as normal, but will not initiate more.
Around 10 per cent of Fords sold in Australia last year were bought using Ford Credit through dealerships.
Ford Credit’s wholesale division will continue to provide wholesale finance for dealer inventory into the foreseeable future.
The Ford Credit move comes after GM Finance and GM Money withdrew their complete automotive finance arms, including both the wholesale and customer finance, leaving dealers scrambling to find alternative finance backing.
This led to a $2 billion Rudd government bailout aimed at helping other financial institutions cover the existing floorstock and keep dealers operating.
Speaking from Ford Credit’s headquarters in Detroit, spokeswoman Meredith Libby told GoAuto that the decision to withdraw customer finance in Australia was not easily made.
“This was a difficult decision. We have a really highly skilled team there, unfortunately this was necessary,” she said.
Ms Libby said Ford Credit was assessing all of its global operations, and had made other cuts.
“With the global credit situation, it is a very difficult time for the automotive industry worldwide,” she said.
“We have made some decisions in other countries. We want to emphasise that we look at every market on its own. Recently we announced that we are making some changes in China, for example. In that case, we are making changes to the wholesale side.”
Ms Libby said Ford Credit did not have a large slice of the retail finance market in Australia.
“We were not a huge player. In fact, we finance around 10 per cent of Ford sales in Australia,” she said.
That number varies from dealer to dealer, with some relying more heavily on Ford Credit.
One dealer contacted by GoAuto said about 40 per cent of his finance went through Ford Credit.
Others expressed disappointment that Ford Credit was withdrawing its customer finance facility, but said it was a relief that it was still covering financing of its floor stock.
“It would have been a nightmare if they shut down the wholesale side,” he said. “The bigger dealerships could find alternatives, but the smaller ones who just don’t have the volume would really struggle to find someone to take it over.”
The Victorian arm of the Australian Automobile Dealer Association believes the Ford Credit partial withdrawal could have been worse.
AADA spokesperson, Murray Collins said: “While this is not good news, the withdrawal of retail services by Ford Credit is not as bad as it sounds.
“Three months ago, GMAC and GE Money announced they were pulling out of wholesale credit finance. This was a serious threat to new car dealers as there were only a limited number of alternative players in the ‘floorplan’ market,” he said.
“However, in this case, new-car dealers have more options when it comes to finding new retail credit to offer consumers. Therefore, while it is a headache and an unwanted distraction, we anticipate that dealers will be able to source alternative retail finance without too much disruption.”
While Ford Credit has said it will continue to provide wholesale finance support, a Ford dealer, who did not wish to be named, expressed some doubt.
“A few months ago they told us that they were here for the long run as a complete operation (wholesale and customer), and then this happens so who knows? Hopefully it won’t come to that.”
Ford Credit had already decided last year to discontinue its sponsorship of the Ford Performance Racing V8 Supercar Falcon driven by Mark Winterbottom. It will be replaced on the car’s livery for the 2009 season by the WesTRAC CAT heavy equipment company.