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MONDAY, NOVEMBER 23, 2009
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SUV Credit Crunch Rolls Over Ford

Sinking value of big vehicles crashes auto firm's credit wing

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(Newser) – Ford's plans to get back in the black are being forced off the road by woes at its lending arm, the Wall Street Journal reports. The auto giant made a lot of cut-rate loans on trucks and SUVs in recent  years and has been unable to recoup losses on bad loans through repossessions because of the plummeting resale value of bigger vehicles.

The credit arm may still scrape into profitability this year, but with earnings way down from last year's $1.2 billion. The company, preparing to slash jobs as sales shrink, is unlikely to spin off its troubled credit arm the way GM did. Ford has relied on profits from Ford Credit even when the economy was cruising, and the division has been proven to boost customer loyalty. 

Unsold 2008 models are reflected in the chrome grille of an unsold 2008 Edge at a Ford dealership in the south Denver suburb of Littleton, Colo., on Sunday, May 11, 2008.
Unsold 2008 models are reflected in the chrome grille of an unsold 2008 Edge at a Ford dealership in the south Denver suburb of Littleton, Colo., on Sunday, May 11, 2008.   (AP Photo/David Zalubowski)
Unsold 2008 Super Duty pickup trucks sit at a Ford dealership in the south Denver suburb of Littleton, Colo., on Sunday, May 11, 2008.
Unsold 2008 Super Duty pickup trucks sit at a Ford dealership in the south Denver suburb of Littleton, Colo., on Sunday, May 11, 2008.   (AP Photo/David Zalubowski)
A sign promoting a discounted interest rate is seen on the windshield of an unsold 2007 Ford F-150 pickup truck at a Ford dealership.
A sign promoting a discounted interest rate is seen on the windshield of an unsold 2007 Ford F-150 pickup truck at a Ford dealership.   (AP Photo/David Zalubowski, file)
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