Net Investment in Operating Leases (Notes)

12 Months Ended

Dec. 31, 2020

Net investment in operating leases consists primarily of lease contracts for vehicles with individuals, daily rental companies, government entities, and fleet customers. Assets subject to operating leases are depreciated using the straight-line method over the term of the lease to reduce the asset to its estimated residual value. Estimated residual values are based on assumptions for used vehicle prices at lease termination and the number of vehicles that are expected to be returned.

The net investment in operating leases at December 31 was as follows (in millions):


	2019		2020
Automotive Segment
Vehicles, net of depreciation	$	1,612	$	1,304
Ford Credit Segment
Vehicles and other equipment, at cost (a)	33,386		32,486
Accumulated depreciation	(5,768)		(5,839)
Total Ford Credit Segment	27,618		26,647
Total	$	29,230	$	27,951

__________

(a)Includes Ford Credit’s operating lease assets of $14.9 billion and $12.8 billion at December 31, 2019 and 2020, respectively, that have been included in securitization transactions. These net investments in operating leases are available only for payment of the debt or other obligations issued or arising in the securitization transactions; they are not available to pay other obligations or the claims of other creditors.

Ford Credit Segment

Included in Ford Credit interest, operating, and other expense is operating lease depreciation expense, which includes gains and losses on disposal of assets. Operating lease depreciation expense for the years ended December 31 was as follows (in millions):


	2018		2019		2020
Operating lease depreciation expense	$	3,972	$	3,635	$	3,235

The amounts contractually due on operating leases at December 31, 2020 were as follows (in millions):


	2021		2022		2023		2024		Thereafter		Total
Operating lease payments	$	4,369	$	2,530	$	878	$	98	$	4	$	7,879