Net Investment in Operating Leases (Notes)

12 Months Ended

Dec. 31, 2023

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 at the end of the scheduled lease term. 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. Adjustments to depreciation expense reflecting revised estimates of expected residual values at the end of the lease terms are recorded prospectively on a straight-line basis.

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


	2022		2023
Company excluding Ford Credit
Vehicles, net of depreciation	$	951	$	1,052
Ford Credit Segment
Vehicles, at cost (a)	26,055		24,182
Accumulated depreciation	(4,234)		(3,850)
Total Ford Credit Segment	21,821		20,332
Total	$	22,772	$	21,384

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(a)Includes Ford Credit’s operating lease assets of $12.5 billion and $11.2 billion at December 31, 2022 and 2023, 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 along with fees assessed to a customer at lease termination such as excess wear and use and excess mileage that are considered variable lease payments. Operating lease depreciation expense for the years ended December 31 was as follows (in millions):


	2021		2022		2023
Operating lease depreciation expense	$	1,626	$	2,240	$	2,309

The amounts contractually due on operating leases at December 31, 2023 were as follows (in millions):


	2024		2025		2026		2027		2028		Total
Operating lease payments	$	3,298	$	2,175	$	996	$	192	$	11	$	6,672