The following statistics are from the Ford Credit Auto Lease Trust 2011-B prospectus filed with the SEC on October, 26, 2011. These trends are reflective of the leasing industry as a whole, although Ford certainly had some swings which were greater in magnitude than the industry as a whole. (The data reflects all Ford Credit leases written since 2002.)
End-of-term residuals: from big losses to big gains. In 2008, Ford Credit experienced an average loss of $3,390 per end-of-term vehicle returned and sold. In the first six months of this year, that flipped to its mirrored image – a gain of $3,445 per unit.
And, of course, the percentage of end-of-term units that were being returned was highest when the losses were the worst. Specifically:
|
Return Rate |
2007 |
77.4% |
2008 |
82.2% |
2009 |
75.7% |
2010 |
66.0% |
6 mos. 2011 |
57.5% |
The change in the return rate meant that Ford Credit sold 7% fewer end-of-term units in 2010 compared to 2008, even though actual terminations rose by 15%.
Losses were a result of the market, not subvention. The spread between contract residuals and ALG projected residuals remained fairly constant throughout this period. It was the ALG projected residuals that proved overly optimistic in 2008 and overly pessimistic in 2011.
Outlook: In 2012 and 2013 we expect that the average dollar gains at end-of-term will be smaller (as contract and ALG residuals move up), but we expect return rates will continue to fall.
Recent Comments