Ford Motor Co. (F) , struggling to catch up to rivals in technologies like self-driving cars and electric vehicles, also faces a looming threat to its conventional auto sales: tougher lending terms.
Delinquencies on auto loans have trended up over the past five years, and lenders are responding by increasing minimum credit scores. Banks also have widened lending margins relative to their own funding costs, even as the U.S. Federal Reserve raises benchmark rates.
So far, analysts have seen few signs of tighter loan terms hitting sales at Ford and bigger rival General Motors Co. (GM) . Yet the prospect of higher monthly payments could lead more consumers to opt for used vehicles or eschew truck and SUV purchases, which tend to carry high profit margins for the automakers. The companies also may have to sweeten incentives such as rebates to offset higher borrowing costs.
"Over time, interest rates will increase, and we think that's going to start to put some pressure in general on the purchases and what consumers are buying," said Jeff Windau, an analyst at Edward Jones in St. Louis.
Ford's stock price has slid about 4.8% this year to $11.22, missing out on a rally of more than 9% in the Standard & Poor's 500 Index. GM's shares are roughly flat.
Last month, Ford appointed Jim Hackett, a former office-furniture executive, to replace Mark Fields, a 28-year veteran who had led the company since 2014. Hackett joined Ford in March 2016 as a senior executive overseeing the company's self-driving vehicle unit.