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Sunday, January 30, 2005

RPT-UPDATE 1-Ford to extend more loans to young buyers

NEW ORLEANS, Jan 30 (Reuters) - Ford Motor Co. (F.N: Quote, Profile, Research) hopes to eke out a gain in its U.S. sales this year by offering more loans to young car buyers, a senior company official said on Sunday.
Steve Lyons, head of the automaker's core Ford Division, spoke of the change in policy toward young buyers -- and an easing of some previous restrictions on loans -- in remarks to reporters on the sidelines of the annual convention of the National Automobile Dealers Association.
"Ford Credit is doing some things for young buyers that we think will make a difference," Lyons said, referring to Ford's financial arm.
Among other moves to ease its lending policies, Lyons said Ford Credit was "changing the way they look at debt to income ratios for young buyers."
He did not elaborate, but said the changes meant that Ford would not longer use the same credit standards to assess people across all age groups and income levels.
For young people, who often have no credit rating at all, Ford Credit's analysts will now allow them "to stretch a little more, anticipating growth in income later on," Lyons said.
He indicated that the same lending policies had also been introduced by Ford in Hispanic markets in the United States.
Substantial cuts in Ford's loan-loss reserve provisions helped the No. 2 U.S. automaker book stronger-than-expected profits last year. But Lyons said those provisions would not be affected by the new credit policy toward young people.
"We will not finance people that don't pay us back. Nobody wants us to do that," Lyons said.
"We're not going there," he added, referring to how Japan's Mitsubishi Motors Corp. (7211.T: Quote, Profile, Research) plunged deep into the red two years ago after easy loans to mostly young car buyers with poor credit histories went sour.
In a new consumer incentive, also aimed at ratcheting up Ford's sales, Lyons said Ford was also now matching downpayments toward purchases of its compact Focus car.
"We'll match up to $500 in addition to any other rebates. If you want to put the $500 down we'll match it," he said.
Ford has lost U.S. market share for 10 straight years and Lyons said boosting its share was a crucial goal for this year.
Lyons said Ford's highly profitable F-Series pickup trucks were unlikely to contribute to any gain in share, however.
Ford sold a record high total of nearly 940,000 of the trucks last year, and they account for about one-third of its U.S. sales volume and a huge chunk of its profits.
But Lyons said restraints on production capacity, and a desire to keep incentives on the trucks as low as possible, meant that the 2004 sales record was unlikely to be broken anytime soon.
"If I wanted to, I could match the other guys dollar for dollar on incentives," said Lyons, referring to Ford's cross-town rivals at General Motors Corp. (GM.N: Quote, Profile, Research) in Detroit.
"But that's not the smart move for us or our dealers."