O34633-01 R17 BRA WFC broch
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O34633-01 R17 BRA WFC broch O34633-01 R17 BRA WFC broch Presentation Transcript

  • FORD CREDIT MINORITY DEALER PROGRAMS www.finance.dealerconnection.com FC 18928
  • TABLE OF History of Ford Motor Credit 1– 2 Our Vision, Our Mission, Our Values 3–4 Who To Contact 4 CONTENTS Capital (Personal) Loans Capital Loans 5–6 7– 8 Renovation Loans Program 9 – 10 Revolving Line of Credit 11–12 Dealership Mortgage Loans 13 –14 Construction Loans 15 –16 Performance Consulting Group 17, 19 Marketing, Sales and Rate Promotion Funds 17 FordStar Broadcast 17 –18 Buy-Out Loans 18 Short-Term (Bridge Loan) Working Capital Loan 18 Purchase Support Initiatives 18 Dealership Consulting “Target” Selection Guidelines 19–20 Minority Dealer Monthly Report 21–22 Notes 23–24
  • THE HISTORY OF Ford Motor Company was founded on the premise that automobiles should be affordable for everyone. It’s an idea that helped drive Henry Ford to produce the first low-cost Model T. It was a key factor behind his experimental FORD layaway plan to spur sales in 1923. And it’s this very notion that provides the guiding force behind Ford Credit today. Ford Credit was established as the financial arm of Ford Motor Company in 1959. Since then, Ford Credit has provided smart, convenient consumer automotive financing through a number of trusted brands. In addition to our Ford Credit brand, our financing offerings include Jaguar Credit, Volvo Finance, Mazda Credit, Land Rover MOTOR Capital Group and PRIMUS, a subsidiary that provides a full range of automotive financing services to non-Ford vehicle customers worldwide. Today, Ford Credit is the world’s largest automotive financing organization. Ford Credit has more than 20,000 employees based in 290 locations worldwide. Ford Credit CREDIT operates in 36 countries, and conducts business in 32 currencies and 24 languages. With a network of offices throughout North America, Europe, Latin America and Asia- Pacific, Ford Credit has more than 11 million customers. Ford Credit manages assets of more than $150 billion in its worldwide operations, making it the largest company dedicated to automotive finance in the world. In 1995, Ford Credit was the first international automotive finance provider to introduce a simplified, shortened contract for auto leases written in plain English and highlighting all of the key factors to calculate payments. In 1996, it added a simplified contract for retail installment sales contracts. Ford Credit continues to provide its consumers with “best-in-class” financial services and has expanded to meet the financial service needs of automotive consumers with a diversified portfolio of affinity products and services, including the Vehicle Insurance Program, the Ford Money Market Account and Fixed Rate Notes. Ford Credit has won six J.D. Power and Associates No. 1 awards for dealer and customer satisfaction. 2
  • Our Values continued OUR VISION ■ Resourcefulness and High Performance Be recognized as the world leader in providing We approach our work with commitment and automotive financial services, achieving superior accountability. We constantly seek to improve every profitability through: aspect of what we do and explore new, faster and ■ Driving synergies with our automotive partners more creative approaches to the challenges we face. ■ Maximizing customer, dealer and employee We take action to achieve results. satisfaction ■ Working with Speed and Simplicity ■ Optimizing operating efficiencies and achieving high We approach our work with speed and a sense of performance through resourcefulness, flawless urgency. By acting quickly and simplifying how we do execution and teamwork our jobs, we make it easy for each other and our ■ Leveraging brands and customer relationships with a customers to do business with us. focused range of superior products and services ■ Diversity and the Opportunity to Contribute We value the differences that make the contributions of OUR MISSION each person unique. We are fair in all that we do. To support Ford Motor Company vehicle sales worldwide and consistently add shareholder value. Who to Contact Minority Dealer Relations OUR VALUES Fax Number: (313) 390-0559 ■ Winning with Our Customers Director: Gye Riddick Satisfying our customers drives our daily priorities. griddick@ford.com We value them and provide them with the highest level (313) 323-9426 of service so we can both achieve a winning result. (313) 595-3704 cell ■ Honesty and Integrity Coordinator: Shellie Simmons We are honest and forthright in all our actions. We ssimmons@ford.com have the courage to keep our commitments and, above (313) 337-5852 all, to “do the right thing. ” (313) 585-7291 cell ■ Teamwork and Achieving Our Best Together We work as a team in a culture of mutual trust and respect. We communicate with each other openly and candidly. We achieve the best outcome together. ■ Developing and Empowering People We proactively look for opportunities to learn and develop ourselves both personally and professionally. We teach, coach and mentor each other. 4
  • CAPITAL Program Parameters and Features Maximum Advance 25% of individual’s investment. Collateral (PERSONAL) The loan is unsecured. Repayment Annual principal payments of 50% of the operator’s bonus under the DD program are due upon receipt of that LOANS bonus. Interest is payable on a monthly basis. Payments are dependent on dealership profits; thus, a balloon payment of unamortized principal may be due at loan maturity. Term The balloon payment of unamortized principal is due 60 months from the date of loan inception. Capital (Personal) Loans for Minority Dealers Ford Credit may assist qualified minority individuals in Interest Rate becoming operators of Dealership Development (DD) The interest rate is the DD note rate, which is based on dealerships by granting personal loans to help meet the the rate established by the Internal Revenue Service. required 10% minimum investment. The unique provisions of this type of loan are the following: Refinancing The balloon payment may be considered for refinancing for an additional 60 months to a repayment schedule that includes monthly payment of principal and interest. Interest Rate The variable rate is indexed to Prime and adjusted monthly (standard rate). Collateral The loan is unsecured. Closing Fee $5,000 Notice: These are general loan guidelines/overviews. Specific terms, rates, eligibility requirements and loan availability may vary. Contact your local Ford Credit branch office for additional details. 6
  • CAPITAL Term Standard loan term — 60 months; longer terms are available. Amortization Straight-line over the term of the loan. LOANS Security Requirement ■ First security interest in dealership assets and the personal guarantee of the dealership’s principals ■ Subordination of the other borrower/dealership debts ■ Fire and theft insurance ■ Additional security may be required depending upon the creditworthiness of the borrower/dealership Purpose May offer borrowers a financing source to: Additional Optional Requirements ■ Fund improvements to their dealership facilities ■ Evaluation of the borrower’s creditworthiness ■ Debt retirement ■ Limitations on additional indebtedness ■ Buy out of partner’s interest ■ Limitations on salaries, dividends and capital ■ Purchase equipment expenditures ■ Provide additional working capital ■ Assignment of life insurance policy ■ Minimum TBC ■ The borrower is expected to pay any closing cost fees Program Parameters and Features or similar charges in some states ■ Minimum debt service coverage — Fixed Charge Loan Amount Coverage Ratio (FCCR) An amount not to exceed the lesser of the dealership’s Tangible Base Capital (TBC) or scaled value of the Eligibility Requirements dealership’s assets. Class I dealership, regardless of franchise, owned and controlled by a holder of a Ford or Lincoln Mercury Rate franchise. Variable indexed to Prime, adjusted monthly. Additional Information Closing Fee ■ Checklist of documents needed when applying for a $5,000 loan ■ Obtain application from local Ford Credit sales branch or on our website, www.finance.dealerconnection.com Notice: These are general loan guidelines/overviews. Specific terms, rates, eligibility requirements and loan availability may vary. Contact your local Ford Credit branch office for additional details. 8
  • RENOVATION Payments Interest-only payments during the renovation period. Upon completion, the outstanding balance may be converted to a mortgage or capital loan. LOANS Advances Renovation progress draws are advanced monthly. Documentation requirements will vary with the scope of work and renovation loan amount. Rate The variable rate is indexed to Prime and adjusted PROGRAM monthly. Closing Fee $5,000 Other Purpose Approval requirement may recommend consulting May provide financing for borrowers to renovate or engineer/architect to be retained at the borrower’s expand their dealership facilities. Major structural expense, to evaluate plans and review the renovation changes to an existing facility or renovation costing more budget. than one million dollars may require funding under the terms of a Construction Loan. Security Requirement ■ First mortgage on the property ■ First security interest in the dealership assets Program Parameters and Features ■ A personal guarantee from the dealership’s principals Loan Amount Eligibility Requirements A percentage of the approved renovation budget subject Class I dealership, regardless of franchise, owned and to a minimum equity requirement, the effective age of the controlled by a holder of a Ford or Lincoln Mercury buildings and local market conditions. franchise. Term Additional Information Flexible term to provide for phased developments. ■ Checklist of documents needed when applying for a renovation loan ■ Obtain application from local Ford Credit branch or on our website, www.finance.dealerconnection.com Notice: These are general loan guidelines/overviews. Specific terms, rates, eligibility requirements and loan availability may vary. Contact your local Ford Credit branch office for additional details. 10
  • REVOLVING Advances Up to two advances per month. Rate The variable rate is indexed to Prime and adjusted LINE OF monthly. Closing Fee $5,000 Security Requirement ■ First security interest in dealership assets CREDIT ■ Personal guarantee of the dealership’s principals ■ Additional security may be required depending upon the creditworthiness of the borrower/dealership Additional Optional Requirements ■ Evaluation of the borrower’s creditworthiness ■ Limitations on additional indebtedness Purpose ■ Limitations on salaries, dividends and capital May offer creditworthy dealers a financing program, expenditures which gives them quick access to a source of funds for ■ Assignment of life insurance policy short-term operating needs of the dealership during ■ Minimum TBC periods when additional working capital is required. ■ The borrower is expected to pay any closing cost fees or similar charges in some states Common Uses ■ Minimum debt service coverage — Fixed Charge ■ Payment of the taxes Coverage Ratio (FCCR) ■ Consolidation of the short-term debt ■ Used-vehicle financing during seasonal peaks Eligibility Requirements ■ Short-term renovation or expansion projects Class I dealership, regardless of franchise, owned and controlled by a holder of a Ford or Lincoln Mercury franchise. The applicant must be adequately capitalized Program Parameters and Features and demonstrate a history of operating success. Amortization Additional Information Monthly interest-only payments. ■ Checklist of documents needed when applying for a revolving line of credit Term ■ Obtain application from local Ford Credit branch or on Line is reviewed annually. When terminated, the our website, www.finance.dealerconnection.com outstanding balance may be converted to straight-line amortized capital loan or paid off in full. Notice: These are general loan guidelines/overviews. Specific terms, rates, eligibility requirements and loan availability may vary. Contact your local Ford Credit branch office for additional details. 12
  • DEALERSHIP Amortization Typically ranges from 15 years to 25 years, influenced by the effective age of the facility and local market conditions. MORTGAGE Term 60 months. Security Requirement LOANS ■ First mortgage on the property ■ First security interest in the dealership assets Guarantee Personal guarantee of property owner and guarantee of dealership entity that will occupy facility. Third Party Requests Purpose Property appraisals and environmental assessments are May provide competitively-priced mortgage loans to Ford requirements for financing. Ford Credit will order them on or Lincoln Mercury franchise dealers. Loan proceeds may your behalf. be used to purchase or refinance their existing Ford or Lincoln Mercury and non-Ford dealership facility. Eligibility Requirements Class I dealership, regardless of franchise, owned and controlled by a holder of a Ford or Lincoln Mercury Program Parameters and Features franchise. Loan Amount Additional Information A percentage of the cost or adjusted appraised value of ■ Checklist of documents needed when applying for the land and facility. mortgage loan ■ Obtain application from local Ford Credit branch or on Rates our website, www.finance.dealerconnection.com Variable rate indexed to Prime or Commercial Paper rates, adjusted monthly. Caps/Floors are available. Fixed rate Notice: These are general loan guidelines/overviews. Specific terms, rates, eligibility requirements and loan availability may vary. Contact indexed to Treasury Bond rate. Standard rate commitment your local Ford Credit branch office for additional details. period is up to two months. 14
  • CONSTRUCTION Advances Construction progress payments are paid monthly and are subject to standard construction industry loan administration requirements. LOANS Purpose May provide construction loan financing for new Rate The variable rate is indexed to Prime and adjusted monthly. Commitment Fee Non-refundable fee equal to 1.0% of total loan amount. Fee compensates Ford Credit for incremental risks and administrative costs associated with construction lending. dealership facilities and major renovation/expansion of Other existing facilities. Consulting engineer is retained, at the borrower’s expense, to evaluate the plans, review the construction budget and monitor the contractor’s workmanship for Ford Credit. Program Parameters and Features Security Requirement Loan Amount First mortgage on the dealership land and improvements, Typically up to 85% of the approved construction budget. first security interest in the dealership assets and a The construction budget includes: land at cost or adjusted personal guarantee from the dealership’s principals. appraised value, the cost of improvements, a contingency amount and an interest reserve. Eligibility Requirements Class I dealership, regardless of franchise, owned and Liquidity Requirement controlled by a holder of a Ford or Lincoln Mercury franchise. Borrower must have liquidity of at least 10% of construction costs to cover cost overruns. Additional Information ■ Construction Budget Worksheet: This will allow Amortization you to calculate your expenses to arrive at an None. approximate figure ■ Checklist of documents needed when applying for Term construction loan Construction period — up to 15 months. Interest reserve ■ Obtain application from local Ford Credit branch or on projected for the term is included in the budget to our website, www.finance.dealerconnection.com minimize out-of-pocket expenses during construction. Notice: These are general loan guidelines/overviews. Specific terms, rates, eligibility requirements and loan availability may vary. Contact your local Ford Credit branch office for additional details. 16
  • Putting Together a Buyable Deal continued ADDITIONAL PLANS economic conditions. Targeted to teach financial managers how to build and present deals.The course will teach how to: AND PROGRAMS ■ Structure a deal ■ Present customer characteristics ■ Identify indicators of creditworthiness Performance Consulting Group (PCG) Buy-Out Loans Mission Ford Credit’s standard capital loan arrangements may be Help dealerships identify and capitalize on opportunities to available to minority dealers for the purpose of buying potentially improve their sales operations, which may out DD or private capital ownership. Standard rates, result in higher volumes, profits and customer satisfaction, provisions and conditions apply, but with a limited while supporting Ford Credit branches and regions. personal guarantee: ■ Work with branches, regions and divisions to identify ■ Excludes selected personal items such as homestead dealerships that need and want help and furnishings ■ May improve sales volumes, grosses, financial ■ Personal liability is limited to 50% of the original services, Customer Viewpoint, etc. loan amount ■ Extensive pre-work on each dealership ■ Complete an in-dealership analysis to understand “present” sales process Short-Term (Bridge Loan) Working Capital Loan ■ Recommendations and well-defined action plan — Although capital loans are normally handled within the based on facts and observation DD system, occasionally Ford Credit may extend short- ■ Detailed and in writing term bridge loans (three to six months) to DD dealerships to cover operating needs while additional DD investments are pending. Marketing, Sales and Rate Promotion Funds ■ Standard rates, provisions and conditions apply, A special budget (subject to fund availability) for minority including a resolution of the dealership Board of dealers is available through Minority Dealer Relations. Directors authorizing the loan Use of Funds ■ Personal guarantee may not be required, but adequate This special budget has been established to supplement branch and regional sales budgets and may be used to assurance must be given that the loan will be repaid develop strategies to stimulate traffic and incremental sales. with the additional investment when it is finalized ■ Rate promotions and sales incentives that generate Purchase Support Initiatives specific contracts for Ford Credit ■ Ford Credit used/wholesale financing support ■ Minority dealers reporting an operating loss in the ■ Rate promotion programs calendar year ■ Rate concessions ■ PCG scheduled minority dealers reporting an operating ■ Deeper purchase policy with spread of business loss in the calendar year requiring seed monies for ■ Provide training in F&I — deal structuring, sharing best action plan recommendations practices, understanding products (features and ■ Minority dealers requiring assistance to eliminate aged inventory benefits), etc. ■ Provide training to attract customers — proper FordStar Broadcast advertising, proper F&I practices, etc. Putting Together a Buyable Deal Designed to assist minority dealers through tough 18
  • Performance Consulting Group Dealer Development DEALERSHIP SALES DEPARTMENT Minority Dealer Relations BREAK-EVEN EXERCISE Dealership Consulting “Target” Selection Guidelines DEALERSHIP FINANCIAL STATEMENT All Ford Motor Company Dealer Development minority- Dealership Name: owned dealerships are eligible to receive assistance from the Ford Credit Performance Consulting Group (PCG). Period Reviewed through # months Understanding that the demand for consulting services CATEGORY New Dept. Used Dept. may easily exceed the capacity of the group, a set of broad selection guidelines has been developed to aid in the selection/recommendation process. The following is Total Selling Expenses a list of selection guidelines (not criteria). Final Page 2 / Line 6 (enter #s) recommendations should be based on consensus between the Ford Credit Branch and Region. Allocation of Fixed Expenses + + 1. “Millennium Equity Incentive Program” participants. Page 2 / Line 10 (enter #s) Items for consideration in these dealerships: a. Not on-track to restore the remaining financial impairment after restructure Allocation of Dealer Salary + + b. Presently in an operating loss position Page 2 / Line 12 (enter #s) c. Could be deemed “at risk” in the program 2. The dealership was in an operating loss position, or is presently in an operating loss position. Selling Gross Required = = 3. There is potential for the dealership to achieve To Break Even (calculate) at least a “break-even” status from its new and used operations. Average Sales Gross / / a. Complete the “Break-even Exercise” (attachment) New: Page 3 / Lines 21 and 44, (enter #s) b. Determine: does the dealership have potential to divided by total new retail sales generate enough additional sales? Used: Page 4 / Line 8, divided by total used retail sales Units (sales) to Break Even = = (calculate) Sales - Period to Date – – Retail sales only (enter #s) Volume Difference = = (calculate) CAN THE DEALERSHIP ACHIEVE THESE VOLUMES? Yes No Maybe
  • MINORITY Throughout the years, support for minority dealers has been demonstrated by an array of innovative plans, programs and initiatives designed to help improve and grow their business. DEALER The Minority Dealer Monthly Report continues that commitment. Ford Credit demonstrated to the Ford Motor Minority Dealer Association (FMMDA) board that having a single metric as the control measurement of Ford Credit’s MONTHLY value to any dealer is not sustainable in the long term. The following general commitment was given: If a minority dealer provides a “full” spread of business with a non-fleet market share equal to or REPORT greater than branch average, then the branch will, in turn, work to support that dealer to a level better than the branch’s marginal mix. This will be reviewed with the dealer on a monthly basis. To monitor adherence to this commitment, the following metrics will be reviewed monthly: ■ Volume ■ Non-fleet share ■ Approval ratios by tiers ■ PAC ratio ■ FICO analysis ■ LTR ■ Repo ratio This report will enable the branch sales team to demonstrate our support while focusing on our key core business metrics. ▲ Open for sample charts 22
  • Dealer Name MINORITY DEALER MONTHLY REPORT Dealer Number NEW RETAIL USED RETAIL RCL Branch Name / Code Dealer Branch Dealer Branch Dealer Branch Period (Month / Year) Month YTD Month YTD Month YTD Month YTD Month YTD Month YTD PURCHASE DATA: Non-Fleet Share 53% 63% 0% 17% N/A N/A N/A N/A 7% 3% 0% 14% Offerings Tier 0 12 61 210 913 11 45 103 427 1 1 123 584 Tier 1 9 32 125 603 16 67 223 1,060 0 2 60 352 Tier 2 9 28 94 410 10 40 180 1,004 2 2 28 155 Tier 3 1 4 24 130 2 11 71 364 0 0 20 78 Tier 4 4 18 69 298 5 19 188 940 0 0 32 150 Tier 5 4 15 46 243 0 28 166 935 0 0 18 126 Contracts Purchased Tier 0 11 52 147 748 7 36 55 266 0 1 0 0 Tier 1 6 24 78 364 14 56 95 539 0 1 0 0 Tier 2 6 16 34 168 7 32 75 403 0 0 0 0 Tier 3 0 0 1 12 1 4 9 64 0 0 0 0 Tier 4 1 3 5 23 0 8 12 92 0 0 0 0 Tier 5 0 0 0 1 0 0 0 2 0 0 0 0 Approval Ratio Tier 0 92% 98% 98% 96% 91% 91% 85% 86% 100% 100% 0% 98% Tier 1 89% 84% 88% 84% 94% 91% 73% 71% 0% 50% 0% 94% Tier 2 78% 75% 64% 60% 70% 65% 50% 49% 0% 100% 0% 81% Tier 3 0% 25% 21% 22% 50% 36% 17% 26% 0% 0% 0% 67% Tier 4 50% 28% 10% 16% 40% 42% 10% 12% 0% 0% 0% 43% Tier 5 0.0% 0.0% 0.0% 0.0% 0.0% 10.7% 0.6% 2.6% 0.0% 0.0% 0.0% 4.0% PAC Ratio * Tier 0-2 77% 78% 64% 71% 80% 83% 52% 55% 33% 50% 0% 0% Tier 3-5 33% 38% 30% 28% 20% 48% 32% 35% 0% 0% 0% 0% TOTAL 73% 75% 0% 0% 73% 78% 0% 0% 0% 0% 0% 0% Average FICO Tier 0 0 0 745 742 0 0 0 0 0 0 755 762 Tier 1 0 0 653 646 0 0 0 0 0 0 681 685 Tier 2 650 643 608 606 656 664 656 664 0 0 635 633 Tier 3 635 600 593 573 616 617 616 617 0 582 598 596 Tier 4 0 0 605 557 0 579 0 579 0 0 577 558 Tier 5 0 0 0 483 598 573 598 573 0 0 0 513 TOTAL 716 700 696 694 669 664 669 664 0 582 688 693 % Marginal Mix by FICO > 620 (Tier 3-5) 0% 0% 1% 17% 7% 2% 2% 88% 0% 6% 2% 2% < 620 (Tier 0-2) 5% 18% 16% 21% 17% 18% 25% 22% 0% 22% 12% 11% < 620 (Tier 3-5) 5% 3% 2% 96% 3% 8% 6% 27% 0% 33% 13% 12% TOTAL 11% 21% 18% 134% 28% 28% 32% 137% 0% 61% 28% 25% PORTFOLIO PERFORMANCE: LTR - Net 1.95% 0.34% 0.60% 0.64% 5.31% 4.71% 3.46% 3.07% -2.97% 1.52% 2.20% 2.04% Repo Ratio 3.01% 0.59% 0.90% 1.06% 5.84% 6.69% 3.99% 3.86% 0.00% 5.21% 4.50% 4.20% *PAC ratio is the % of Approved + Conditioned Offerings that were purchased (Unit Vol. / Apv. Off. + Cond. Off.)
  • NOTES NOTES 23 24