Ford Credit - Out Of Oz.

[hypnodoc]

I found this on the internet news today. Another belt from the global economic crisis. It kinda makes you wonder how much longer they can hold on

Ford set for job losses

Mark Hawthorne

January 15, 2009

VICTORIA'S embattled car industry is facing further job losses as Ford has decided to stop providing finance for retail car sales.

Ford Credit Australia will no longer finance private car buyers from February 28, which gives dealers just six weeks to make alternative arrangements.

The decision will also affect Volvo, Land Rover, Jaguar and Mazda dealerships, some of which use Ford Credit to finance retail sales.

About 160 staff employed by Ford Credit's retail finance department will lose their jobs — the majority from the company's head office in South Melbourne.

Just 40 staff, all from Ford Credit's wholesale finance department, will remain. Wholesale finance provides credit to dealers for the cars on their showroom floors — it is finance companies who really own the cars at a dealership.

Ford Credit's decision has major implications for jobs in the local car industry.

■A banking source told The Age that the decision was a "precursor" to Ford Credit pulling out of wholesale finance in Australia. Ford dealers will be forced to close down if they cannot finance their floor stock.

■Many dealers told The Age they were considering switching to rival Japanese and Korean manufacturers and would stop selling Fords.

■Ford Credit finances 10 per cent of Ford's retail sales. Ford sold 107,800 cars last year.

■Regional dealerships are dependent on Ford Credit for retail finance and do not have adequate sales to find alternative financiers.

The staff of Ford Credit and car dealers from across the country met at Melbourne Airport at lunchtime, where they were told the bad news.

"This was a difficult but necessary decision," said Libbey Meredith, a spokeswoman for Ford Motor Credit in Detroit.

The owner of one of Melbourne's largest Ford dealerships told The Age: "I'll be selling Mitsubishis and Toyotas by the end of the year, and I reckon about a third of Ford dealerships around the country are thinking the same thing. The company is falling into disarray, and customers just don't want the Ford product."

Marcus Norton, who bought the Ford dealership in Warrnambool just six weeks ago, said about a quarter of his retail sales were financed by Ford Credit.

"It's a shock, but we will just have to find another source of credit," he said. "I already have some irons in the fire. At least Ford are still backing the wholesale side for now."

The decision comes as the Australian car industry faces its worst sales performance in 30 years.

Last year marked a 14.5 per cent fall in annual sales by Australian car manufacturers, and Ford's local production was down 9000 cars on 2007.

As a result of flagging car sales and difficulty sourcing money due to the global financial crisis, the two biggest specialist car financing companies —

GMAC and GE Money — quit the Australian market at the end of last year.

The Federal Government last month unveiled a rescue plan for car dealerships, announcing a $2 billion trust to provide loans to struggling car dealers.

Announcing a Special Purpose Vehicle funding facility in December, Treasurer Wayne Swan said that both Ford US and Ford Australia had confirmed that Ford Credit would remain in Australia and continue to provide financing to its dealer network.

Less than a month later, Ford Credit has done a backflip on that decision.

Edited 14/01/09 05:49 PM by hypnodoc

[sixfan]

I'm not surprised.

Given the pittance you get on resale, the loans were pretty much unsecured and with the very low interest rates now available on loans there can't have been much margin it it for them.

I doubt it's going to hurt sales too much though.

[typhoon_freak]

geez more job loses..

[turbo.vixen]

glad I dont work there, does anyone on here work there?

[Iconic Bionic]

The owner of one of Melbourne's largest Ford dealerships told The Age: "I'll be selling Mitsubishis and Toyotas by the end of the year, and I reckon about a third of Ford dealerships around the country are thinking the same thing. The company is falling into disarray, and customers just don't want the Ford product."

I say this admission is related to a lil more than availability of credit. All the BS years that most of us have had to put with, relating to service and warranty issues is finally going to hurt Ford.

I.B.

[Dagabond]

Ford Credit finances 10 per cent of Ford's retail sales. Ford sold 107,800 cars last year.

Is it really going to have that much effect...

Be interesting to run a poll on how many users we have here that use Ford Credit...

Bloody shame for those that work there though.

[tmac450]

Nice attitude from the Ford dealer! Which once again highlights Ford's lack of control over their dealerships, etc.

I used Ford Credit. If the issue of loan defaults due to resale values being below payouts is a problem, they only have themselves to blame (not an issue unique to Ford). Resale values have been plumeting on all cars for years because dealers have been giving less and less on trade-ins, in an attempt to make higher profits on their used cars.

Ford does need a rocket up it. They currently have a good range, the best large sedans, yet they still can't make a go of it.

[Pete A]

Doesn't surprise me, with cost of money so low, most would go to individual finance companies anyway. You'll find that Ford will develop a relationship with one or a number of finance companies to support their business. Like the old days. Ford Credit wasn't any better or worse than any other credit company (I've used them) It was just easier doing the whole thing with the one company.

Pity about the job losses but the change in business model is not surprising at all given that the retail volume car sales are down and money is cheap right now. It's hard to run that sort of business of financing only car sales. Notice they are continuing the commercial financing - that's volume.

[hypnodoc]

Trouble is that if the banks retract the money supply by tightening lending criteria then it will get all the more harder. I'm in London at the moment and the place is going down the gurgler really fast, property values have completely collapsed, and the Govt is threatening to nationalise all of the banks if they don't start lending again, they are also about to have the bank of england use taxpayers money to prop up the car industry including manfacturing and sales finance. My UK business partner who is with Barclays Bank was given 1 month to pay out a 1.4 million pound cashflow facitlity, the manager told him that basically all UK business customers were given the same ultimatum, and they expect 40% of them not to be here by the end of March, luckily he was in a position where he could do it, but he was still left with a cashflow drama. I don't think Aus is in a much better position, we are just lagging behind a bit. The chief controller of the international Bank of Settlements said last December that there was a derivitavies blowout of at least 1 quadrillion dollars due by the central banks at the end of Feb 09 and there ain't that much money in the whole universe, so March should be interesting. I owe Ford Credit for the Phoon for tax purposes but as far as the banks are concerned, I'm gad I don't owe the filthy ursurers anything.

Below is where Australian banks are at presently, no wonder GMAC and Ford Credit have run away. This jopint is about 3 trillion behind the 8 ball.

Here in Australia, no matter how many tens of billions Kevin Rudd and Wayne Swan loot from the taxpayer and pour into the banks, via the Future Fund, the Infrastructure Fund and other scams, the effort is still doomed, as is obvious from comparing the derivatives holdings of the Big Four to their assets (as at 2007): NAB: $565 billion in assets, $2.609 trillion in derivatives; CBA: $425 billion in assets, $1.296 trillion in derivatives; ANZ: $393 billion in assets, $1.727 trillion in derivatives; Westpac: $375 billion in assets, $1.527 trillion in derivatives.

[ZAP]

I am also with Ford Credit for my Phoon.

Would be nice if we just decided not to pay Ford Credit after the 28th of Feb.