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Comment by jdsully | Hacker News Reader

Ford Credit (loans to purchasers of their vehicles) is on Ford's balance sheet while the others had to spin off those businesses in '08. So the debt situation is a bit misleading if you just compare the top level numbers to industry peers.

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Ford Credit is what sells Ford vehicles, but it’s also where the profit is (roughly half of profits). Take away the credit biz, and that’s a material impact to both profits and volume.

As the below article notes, it’s a balance and pushing risk around.

https://www.detroitnews.com/story/business/autos/ford/2020/0...

Does that mean if you buy a vehicle outright all those folks buying on credit are subsidising you?

I think that creating money always raises prices, so you're probably merely being screwed less, rather than being subsidized.

(I count loans as "creating money" because buyers look at how much X to buy based on how costly it is to borrow money. People are seeing this in the housing market now; when loans were 2.5%, sellers raised their price to fit the monthly payment budget. Now at 7%, it's harder to sell at those prices. If everyone had to pay cash for everything, everything would probably be cheaper, because money would be intrinsically more valuable.)

Ford probably isn't selling you the vehicle for a loss, but you are contributing far less to the profit margin. In normal times dealers operate on fairly thin margins, which is why they're always looking for ways to extract extra cash from the customer. Financing is an amazing vehicle for this. But it's also why dealers are so interested in the window tint, undercoating, racing stripe, nitrogen filled tires, etc... add ons. Those are almost pure profit to the dealer and can account for the lion's share of what the dealer actually takes home.

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