Ford at Deutsche Bank Conference Notes

Bernard Silverstone – Chairman and CEO, Ford Motor Credit Company and Group VP, Ford Motor Company

We’re not too concerned about anything that is going on in subprime auto lending

“If you look at the Experian report or the Moody’s report, they validate that actually if you refer just to subprime rather than high risk using this consistent FICA measure. But it’s grown with the industry, risk grown in proportion. So as the industry is coming back, then so has the subprime. And those customers, of course, are coming from a perspective when things were really tough and credit was rationed, those customers weren’t getting access to credit at all. So they’ve only grown back to pre-’07 levels. They haven’t grown back in excess of that. There are going to be individual examples. I mean I think there is some relatively new start businesses that need to get seasoned. I can’t comment on how they’re going to perform in the future. So yes, there may be some individuals that when you look at the macro numbers, it’s not going in any way that we would be concerned about.”

May be some changes at the margin when rates go up

“I would say what’s happening is even customers who might normally pay cash are taking advantage of the very low rate environment. It’s hard to predict the future but I expect when rates go up, maybe some of those customers might revert to cash, for example. ”

Relatively limited financing of vehicles in China

“I would say that what we are seeing is it’s growing. It’s about from our numbers about 20%, 22% of retail sales is financed. There are reports – I think IHS is projected that it could go to around 30% by the end of this decade. And I certainly see enough evidence to suggest that could be a reasonable estimate.”

We’re very attuned to the fact that the marketplace is changing

“we’re very attuned to is the fact that the marketplace is changing, consumer preference are changing and you’ve got new disruptors that we wouldn’t have thought of talking about for – just need to pickup any automotive press and those names associated with the future of autonomous vehicles we would have historically not associated with automotive at all; Apple, Google, et cetera. So it’s clear that we need to be equipped to be very nimble, which is why we put the focus of our employees that it’s innovation at all levels.”

We just want to see what’s going to win first

“But I think that needs to merge before we make decisions around make-buy for example. Those really are decisions you make when you really understand what it is you’re going to kind of deliver. The important thing is first to understand what technologies are going to be winning, what customer deliverables will be like, products, services, combinations are really going to be winning. And once you understand that, then I think we can decide how we play in those different areas. We do accept it’s going to change”