Ford Says Auto Loans Are Still Available for Customers
By MATTHEW DOLAN
Ford Motor Co. sent a letter to dealers that sought to reassure their customers that the auto maker still has a credit arm willing to lend. The move had become necessary as the company worried car buyers were staying away from showrooms because they were convinced they wouldn't qualify for a loan.
The letter sent Wednesday comes as GMAC LLC, the big home-loan and auto-financing company, this week began restricting new loans to only the most credit-worthy buyers after an attempt to raise new funds failed. Limiting the pool of people eligible for loans threatens to crimp General Motors Corp.'s U.S. sales, forcing the auto maker to push its potential buyers to other lenders.
Some Ford dealers, seeing a marketing opportunity, have relayed the corporate letter to potential customers in emails, according to a person familiar with the matter.
"As valued Ford Motor Company dealers, we wanted to reassure you that Ford Credit will continue as your strong and supportive finance source during these difficult economic times," the letter said. "Many companies providing automotive lending have recently decided to exit this market or reduce their exposure by tightening their purchase policies. These actions by others may be unnerving, but Ford Credit is here for you."
The letter also said that "Ford Credit has not tightened its financing standards."
A person briefed on the company's plans at a meeting this month said Ford also is considering putting employee pricing on every model sold in the U.S., with financing through Ford Credit. The campaign, which could be launched later this month, would also have a dealer cash payment of $500 to $1,500 included as part of the program.
Despite the letter, Ford Credit has had its own struggles. Starting at the beginning of this month, Ford's credit arm stopped providing financing for customers buying vehicles in the U.S. from Mazda Motor Corp., Ford's Japanese affiliate. Chase Auto Finance now provides those lending services for Mazda customers. Last week, people familiar with the matter said that Ford's board has decided to sell at least part of its 33.4% controlling stake in Mazda.
The lending arm for Ford told investors in August it is scaling back the number of vehicles it expects to lease and warned that if market conditions continue to deteriorate, further losses could place Ford Credit's lending plan at further risk.
Squeezed by falling used-vehicle prices and tumult in the credit markets, Ford and GM have curbed their auto-leasing business. Chrysler LLC ended leasing altogether as a result of tightening credit.
Ford posted a loss of $8.7 billion for the second quarter, taking a write-down of $2.1 billion to cover unprofitable auto leases made by its credit arm.
