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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
☑Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2023
or
☐Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from ____________________ to ____________________
Commission file number 1-6368

Ford Motor Credit Company LLC
(Exact name of registrant as specified in its charter)
Delaware38-1612444
(State of organization)
(I.R.S. employer identification no.)
One American Road
Dearborn,Michigan48126
(Address of principal executive offices)(Zip Code)
(313) 322-3000
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Floating Rate Notes due November 15, 2023*F/23DNew York Stock Exchange
3.021% Notes due March 6, 2024*F/24MNew York Stock Exchange
2.748% Notes due on June 14, 2024*F/24SNew York Stock Exchange
4.125% Notes due on June 20, 2024*F/24ONew York Stock Exchange
1.744% Notes due July 19, 2024*F/24RNew York Stock Exchange
Floating Rate Notes due December 1, 2024*F/24LNew York Stock Exchange
3.683% Notes due on December 3, 2024*F/24QNew York Stock Exchange
1.355% Notes due February 7, 2025*F/25INew York Stock Exchange
4.535% Notes due March 6, 2025*F/25KNew York Stock Exchange
3.250% Notes due September 15, 2025*F/25MNew York Stock Exchange
2.330% Notes due on November 25, 2025*F/25LNew York Stock Exchange
2.386% Notes due February 17, 2026*F/26ABNew York Stock Exchange
6.860% Notes due June 5, 2026*F/26ANew York Stock Exchange
3.350% Notes due Nine Months or More from the Date of Issue due August 20, 2026F/26NNew York Stock Exchange
4.867% Notes due August 3, 2027*F/27ANew York Stock Exchange
6.125% Notes due May 15, 2028*F/28BNew York Stock Exchange
     *Issued under Euro Medium Term Notes due Nine Months or More from The Date of Issue Program



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes  o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐     Non-accelerated filer þ Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐Yes☑No

All of the limited liability company interests in the registrant (“Shares”) are held by an affiliate of the registrant. None of the Shares are publicly traded.

REDUCED DISCLOSURE FORMAT

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format.
Exhibit Index begins on page 41



FORD MOTOR CREDIT COMPANY LLC
QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended June 30, 2023
Table of ContentsPage
Part I. Financial Information
Part II. Other Information

i

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements.

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in millions)
For the periods ended June 30,
2022202320222023
Second QuarterFirst Half
(unaudited)
Financing revenue
Operating leases$1,166 $1,029 $2,377 $2,078 
Retail financing874 1,013 1,780 1,942 
Dealer financing221 600 385 1,104 
Other financing15 31 22 58 
Total financing revenue2,276 2,673 4,564 5,182 
Depreciation on vehicles subject to operating leases(549)(555)(1,064)(1,114)
Interest expense(657)(1,530)(1,268)(2,922)
Net financing margin1,070 588 2,232 1,146 
Other revenue 
Insurance premiums earned 17 29 32 55 
Fee based revenue and other55 53 78 74 
Total financing margin and other revenue1,142 670 2,342 1,275 
Expenses 
Operating expenses307 340 655 660 
Provision for/(Benefit from) credit losses (Note 4)(56)40 (120)117 
Insurance expenses 9 35 2 40 
Total expenses260 415 537 817 
Other income/(loss), net (Note 11)21 126 (148)226 
Income before income taxes903 381 1,657 684 
Provision for/(Benefit from) income taxes 99 95 184 158 
Net income $804 $286 $1,473 $526 


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
For the periods ended June 30,
2022202320222023
Second QuarterFirst Half
(unaudited)
Net income $804 $286 $1,473 $526 
Other comprehensive income/(loss), net of tax
Foreign currency translation gains/(losses)(403)18 (446)106 
Reclassification of accumulated foreign currency translation (gains)/losses to net income36 — 231 — 
Comprehensive income/(loss)$437 $304 $1,258 $632 

The accompanying notes are part of the consolidated financial statements.

1
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions)
December 31,
2022		June 30,
2023
(unaudited)
ASSETS
Cash and cash equivalents (Note 3)$10,393 $11,461 
Marketable securities (Note 3)1,493 1,606 
Finance receivables, net
Retail installment contracts, dealer financing, and other financing94,090 98,566 
Finance leases6,423 6,868 
Total finance receivables, net of allowance for credit losses of $845 and $873 (Note 4)
100,513 105,434 
Net investment in operating leases (Note 5)21,821 20,640 
Notes and accounts receivable from affiliated companies 793 948 
Derivative financial instruments (Note 7)987 1,054 
Other assets (Note 8)2,576 2,647 
Total assets$138,576 $143,790 
LIABILITIES
Accounts payable
Customer deposits, dealer reserves, and other$1,097 $1,038 
Affiliated companies 581 489 
Total accounts payable1,678 1,527 
Debt (Note 9)119,039 123,657 
Deferred income taxes921 968 
Derivative financial instruments (Note 7)3,026 2,876 
Other liabilities and deferred revenue (Note 8)2,035 2,253 
Total liabilities126,699 131,281 
SHAREHOLDER’S INTEREST
Shareholder’s interest5,166 5,166 
Accumulated other comprehensive income/(loss)(1,017)(911)
Retained earnings7,728 8,254 
Shareholder’s interest attributable to Ford Motor Credit Company11,877 12,509 
Shareholder’s interest attributable to noncontrolling interests— — 
Total shareholder’s interest11,877 12,509 
Total liabilities and shareholder’s interest$138,576 $143,790 

The following table includes assets to be used to settle the liabilities of the consolidated variable interest entities (“VIEs”).  These assets and liabilities are included in the consolidated balance sheets above.  
December 31,
2022		June 30,
2023
(unaudited)
ASSETS
Cash and cash equivalents$2,274 $2,421 
Finance receivables, net49,142 52,504 
Net investment in operating leases12,545 8,929 
Derivative financial instruments264 279 
LIABILITIES
Debt$45,451 $47,891 
Derivative financial instruments2 — 

The accompanying notes are part of the consolidated financial statements.

2
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER’S INTEREST
(in millions, unaudited)

Shareholder’s InterestAccumulated Other Comprehensive Income/(Loss)Retained EarningsTotal Shareholder’s InterestShareholder’s Interest Attributable to Non-controlling InterestsTotal Shareholder’s Interest
Balance at December 31, 2021$5,227 $(690)$7,839 $12,376 $22 $12,398 
Net income/(loss)— — 669 669 — 669 
Other comprehensive income/(loss), net of tax — 152 — 152 — 152 
Distributions declared— — (1,000)(1,000)— (1,000)
Other (Note 10)(61)— — (61)(22)(83)
Balance at March 31, 20225,166 (538)7,508 12,136 — 12,136 
Net income/(loss)— — 804 804 — 804 
Other comprehensive income/(loss), net of tax— (367)— (367)— (367)
Distributions declared— — (600)(600)— (600)
Balance at June 30, 2022$5,166 $(905)$7,712 $11,973 $— $11,973 
Balance at December 31, 2022$5,166 $(1,017)$7,728 $11,877 $— $11,877 
Net income/(loss)— — 240 240 — 240 
Other comprehensive income/(loss), net of tax — 88 — 88 — 88 
Distributions declared— — — — — — 
Balance at March 31, 20235,166 (929)7,968 12,205 — 12,205 
Net income/(loss)— — 286 286 — 286 
Other comprehensive income/(loss), net of tax— 18 — 18 — 18 
Distributions declared— — — — — — 
Balance at June 30, 2023$5,166 $(911)$8,254 $12,509 $— $12,509 

The accompanying notes are part of the consolidated financial statements.


3
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
For the periods ended June 30,
20222023
First Half
(unaudited)
Cash flows from operating activities
Net income $1,473 $526 
Provision for/(Benefit from) credit losses(120)117 
Depreciation and amortization1,395 1,407 
Amortization of upfront interest supplements(987)(842)
Net change in deferred income taxes192 13 
Net change in other assets(521)(188)
Net change in other liabilities369 32 
All other operating activities126 (21)
   Net cash provided by/(used in) operating activities 1,927 1,044 
Cash flows from investing activities
Purchases of finance receivables(15,513)(20,432)
Principal collections of finance receivables 19,135 18,196 
Purchases of operating lease vehicles(4,515)(4,373)
Proceeds from termination of operating lease vehicles5,207 4,555 
Net change in wholesale receivables and other short-duration receivables(4,613)(1,497)
Purchases of marketable securities and other investments(2,683)(1,696)
Proceeds from sales and maturities of marketable securities and other investments2,606 1,610 
Settlements of derivatives128 (52)
All other investing activities(85)(36)
Net cash provided by/(used in) investing activities(333)(3,725)
Cash flows from financing activities
Proceeds from issuances of long-term debt17,924 26,401 
Payments of long-term debt(22,089)(22,075)
Net change in short-term debt(237)(554)
Cash distributions to parent(1,600)— 
All other financing activities(48)(96)
Net cash provided by/(used in) financing activities(6,050)3,676 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(229)77 
Net increase/(decrease) in cash, cash equivalents and restricted cash$(4,685)$1,072 
Cash, cash equivalents, and restricted cash at beginning of period (Note 3)$11,091 $10,520 
Net increase/(decrease) in cash, cash equivalents, and restricted cash(4,685)1,072 
Cash, cash equivalents, and restricted cash at end of period (Note 3)$6,406 $11,592 

The accompanying notes are part of the consolidated financial statements.


4
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


Table of Contents
Footnote Page
Presentation
Accounting Policies
Cash, Cash Equivalents, and Marketable Securities
Finance Receivables and Allowance for Credit Losses
Net Investment in Operating Leases
Transfers of Receivables and Variable Interest Entities
Derivative Financial Instruments and Hedging Activities
Other Assets and Other Liabilities and Deferred Revenue
Debt
Restructuring Actions
Other Income/(Loss)
Segment Information
Commitments and Contingencies




5
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 1. PRESENTATION

Principles of Consolidation

For purposes of this report, “Ford Credit,” the “Company,” “we,” “our,” “us,” or similar references mean Ford Motor Credit Company LLC, our consolidated subsidiaries, and our consolidated VIEs of which we are the primary beneficiary, unless the context requires otherwise. We are an indirect, wholly owned subsidiary of Ford Motor Company (“Ford”). Our consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X. We reclassified certain prior year amounts in our consolidated financial statements to conform to the current year presentation.

In the opinion of management, these unaudited financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of our results of operations and financial condition for the periods, and at the dates, presented. The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. Reference should be made to the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K Report”).

NOTE 2. ACCOUNTING POLICIES

Adoption of New Accounting Standards
Accounting Standards Update (“ASU”) 2022-02, Financial Instruments – Credit Losses, Troubled Debt Restructurings and Vintage Disclosures. Effective January 1, 2023, we adopted the new standard, which eliminates the troubled debt recognition and measurement guidance and requires disclosure of current-period gross charge-offs by year of origination (vintage disclosure). Adoption of the new standard did not have a material impact to our consolidated financial statements or financial statement disclosures.

We also adopted the following ASUs during 2023, none of which had a material impact to our consolidated financial statements or financial statement disclosures:
ASUEffective Date
2022-01Derivatives and Hedging – Fair Value Hedging – Portfolio Layer HedgingJanuary 1, 2023
2022-03Fair Value Measurement of Equity Securities Subject to Contractual Sale RestrictionsJanuary 1, 2023
2018-12Targeted Improvements to the Accounting for Long Duration Contracts (and related amendments)January 1, 2023

Accounting Standards Issued But Not Yet Adopted

ASUs issued but not yet adopted were assessed and determined to be not applicable or are not expected to have a material impact on our consolidated financial statements or financial statement disclosures.

Provision for Income Taxes

For interim tax reporting, we estimate one single effective tax rate for subsidiaries that are subject to tax, which is applied to the year-to-date ordinary income/(loss). Tax effects of significant unusual or infrequently occurring items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur.












6
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 3. CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES

The fair values of cash, cash equivalents, and marketable securities measured at fair value on a recurring basis were as follows (in millions):

Fair Value LevelDecember 31,
2022		June 30,
2023
Cash and cash equivalents
United States government1$1,045 $1,252 
United States government agencies2150 650 
Non-United States government and agencies2199 441 
Corporate debt2792 756 
Total marketable securities classified as cash equivalents2,186 3,099 
Cash, time deposits, and money market funds8,207 8,362 
Total cash and cash equivalents$10,393 $11,461 
Marketable securities
United States government1$187 $281 
United States government agencies2221 319 
Non-United States government and agencies2658 577 
Corporate debt2266 271 
Other marketable securities2161 158 
Total marketable securities$1,493 $1,606 

Cash, Cash Equivalents, and Restricted Cash 

Cash, cash equivalents, and restricted cash, as reported in the consolidated statements of cash flows, were as follows (in millions):
December 31,
2022		June 30,
2023
Cash and cash equivalents$10,393 $11,461 
Restricted cash (a)127 131 
Total cash, cash equivalents, and restricted cash$10,520 $11,592 
__________
(a)Restricted cash is included in Other assets on our consolidated balance sheets and is primarily held to meet certain local governmental and regulatory reserve requirements and cash held under the terms of certain contractual agreements. Restricted cash does not include required minimum balances or cash securing debt issued through securitization transactions.


7
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

We manage finance receivables as “consumer” and “non-consumer” portfolios. The receivables are generally secured by the vehicles, inventory, or other property being financed.

Finance receivables are recorded at the time of origination or purchase at fair value and are subsequently reported at amortized cost, net of any allowance for credit losses.

For all finance receivables, we define “past due” as any payment, including principal and interest, that is at least 31 days past the contractual due date.

Total Finance Receivables, Net

Total finance receivables, net were as follows (in millions):
December 31,
2022		June 30,
2023
Consumer
Retail installment contracts, gross$67,043 $70,023 
Finance leases, gross6,765 7,256 
Retail financing, gross73,808 77,279 
Unearned interest supplements from Ford and affiliated companies(2,305)(2,721)
Consumer finance receivables 71,503 74,558 
Non-Consumer
Dealer financing 28,408 30,060 
Other financing1,447 1,689 
Non-Consumer finance receivables 29,855 31,749 
Total recorded investment $101,358 $106,307 
Recorded investment in finance receivables$101,358 $106,307 
Allowance for credit losses(845)(873)
Total finance receivables, net$100,513 $105,434 
Net finance receivables subject to fair value (a)$94,090 $98,566 
Fair value (b)91,410 96,233 
__________
(a)Net finance receivables subject to fair value exclude finance leases. 
(b)The fair value of finance receivables is categorized within Level 3 of the fair value hierarchy.

Finance leases are comprised of sales-type and direct financing leases. Financing revenue from finance leases for the second quarter of 2022 and 2023 was $73 million and $91 million, respectively, and for the first half of 2022 and 2023 was $150 million and $174 million, respectively, and is included in Retail financing on our consolidated income statements.

At December 31, 2022 and June 30, 2023, accrued interest was $187 million and $219 million, respectively, which we report in Other assets on our consolidated balance sheets.

Included in the recorded investment in finance receivables were consumer and non-consumer receivables that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements. See Note 6 for additional information.



8
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Credit Quality

Consumer Portfolio. Credit quality ratings for consumer receivables are based on our aging analysis. Consumer receivables credit quality ratings are as follows:

•Pass – current to 60 days past due;
•Special Mention – 61 to 120 days past due and in intensified collection status; and
•Substandard – greater than 120 days past due and for which the uncollectible portion of the receivables has already been charged off, as measured using the fair value of collateral less costs to sell.

The credit quality analysis of consumer receivables at December 31, 2022 was as follows (in millions):

Amortized Cost Basis by Origination Year
Prior to 201820182019202020212022TotalPercent
Consumer
31-60 days past due$41 $60 $91 $181 $150 $126 $649 0.9 %
61-120 days past due9 12 20 39 40 29 149 0.2 
Greater than 120 days past due9 4 5 7 7 6 38 0.1 
Total past due59 76 116 227 197 161 836 1.2 
Current883 2,564 6,149 13,864 18,382 28,825 70,667 98.8 
Total$942 $2,640 $6,265 $14,091 $18,579 $28,986 $71,503 100.0 %

The credit quality analysis of consumer receivables at June 30, 2023 was as follows (in millions):
Amortized Cost Basis by Origination Year
Prior to 201920192020202120222023TotalPercent
Consumer
31-60 days past due$61 $62 $141 $127 $156 $45 $592 0.8 %
61-120 days past due11 13 32 34 44 13 147 0.2 
Greater than 120 days past due10 4 8 9 9 1 41 — 
Total past due82 79 181 170 209 59 780 1.0 
Current1,860 4,093 10,446 14,679 24,613 18,087 73,778 99.0 
Total$1,942 $4,172 $10,627 $14,849 $24,822 $18,146 $74,558 100.0 %
Gross charge-offs$27 $20 $37 $40 $48 $2 $174 

Non-Consumer Portfolio. The credit quality of dealer financing receivables is evaluated based on our internal dealer risk rating analysis. We use a proprietary model to assign each dealer a risk rating. This model uses historical dealer performance data to identify key factors about a dealer that we consider most significant in predicting a dealer’s ability to meet its financial obligations. We also consider numerous other financial and qualitative factors of the dealer’s operations, including capitalization and leverage, liquidity and cash flow, profitability, and credit history with ourselves and other creditors.

Dealers are assigned to one of four groups according to risk ratings as follows:

•Group I – strong to superior financial metrics;
•Group II – fair to favorable financial metrics;
•Group III – marginal to weak financial metrics; and
•Group IV – poor financial metrics, including dealers classified as uncollectible.



9
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The credit quality analysis of dealer financing receivables at December 31, 2022 was as follows (in millions):
Amortized Cost Basis by Origination Year
Dealer Loans
Prior to 201820182019202020212022TotalWholesale LoansTotalPercent
Group I$402 $148 $35 $67 $185 $224 $1,061 $24,242 $25,303 89.1 %
Group II2 21 — 5 2 42 72 2,751 2,823 9.9 
Group III— — — — — 10 10 233 243 0.9 
Group IV— — 1 — — 3 4 35 39 0.1 
Total (a)$404 $169 $36 $72 $187 $279 $1,147 $27,261 $28,408 100.0 %
__________
(a)Total past due dealer financing receivables at December 31, 2022 were $9 million. 

The credit quality analysis of dealer financing receivables at June 30, 2023 was as follows (in millions):
Amortized Cost Basis by Origination Year
Dealer Loans
Prior to 201920192020202120222023TotalWholesale LoansTotalPercent
Group I$520 $32 $67 $165 $83 $264 $1,131 $25,989 $27,120 90.2 %
Group II2 — 1 2 3 57 65 2,504 2,569 8.5 
Group III— — 1 — 1 6 8 301 309 1.1 
Group IV— 1 — — — 3 4 58 62 0.2 
Total (a)$522 $33 $69 $167 $87 $330 $1,208 $28,852 $30,060 100.0 %
Gross charge-offs$— $— $— $— $— $— $— $— $— 
__________
(a)Total past due dealer financing receivables at June 30, 2023 were $4 million.

Non-Accrual of Revenue. The accrual of financing revenue is discontinued at the time a receivable is determined to be uncollectible or when it is 90 days past due. Accounts may be restored to accrual status only when a customer settles all past-due deficiency balances and future payments are reasonably assured. For receivables in non-accrual status, subsequent financing revenue is recognized only to the extent a payment is received. Payments are generally applied first to outstanding interest and then to the unpaid principal balance.

Loan Modifications. Consumer and non-consumer receivables that have a modified interest rate and/or a term extension (including receivables that were modified in reorganization proceedings pursuant to the U.S. Bankruptcy Code) are typically considered to be loan modifications. We do not grant modifications to the principal balance of our receivables. If a receivable is modified in a reorganization proceeding, all payment requirements of the reorganization plan need to be met before remaining balances are forgiven.



10
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

During the collection process, we may offer a term extension to a customer experiencing financial difficulty. During the extension period, finance charges continue to accrue. If the customer's financial difficulty is not temporary, but we believe the customer is willing and able to repay their loan at a lower payment amount, we may offer to modify the interest rate and/or extend the term in order to lower the scheduled monthly payment. In those cases, the outstanding balance generally remains unchanged. The use of interest rate modifications and term extensions helps us mitigate financial loss. Term extensions may assist in cases where we believe the customer will recover from short-term financial difficulty and resume regularly scheduled payments. Before offering an interest rate modification or term extension, we evaluate and take into account the capacity of the customer to meet the revised payment terms. Although the granting of an extension could delay the eventual charge-off of a receivable, we are typically able to repossess and sell the related collateral, thereby mitigating the loss. The effect of most loan modifications made to borrowers experiencing financial difficulty is included in the historical trends used to measure the allowance for credit losses. A loan modification that improves the delinquency status of a borrower reduces the probability of default, which results in a lower allowance for credit losses. At June 30, 2023, an insignificant portion of our total finance receivables portfolio had been granted a loan modification and these modifications are generally treated as a continuation of the existing loan.

Allowance for Credit Losses

The allowance for credit losses represents our estimate of the lifetime expected credit losses inherent in finance receivables as of the balance sheet date. The adequacy of the allowance for credit losses is assessed quarterly.

Adjustments to the allowance for credit losses are made by recording charges to the Provision for/(Benefit from) credit losses on our consolidated income statements. The uncollectible portion of a finance receivable is charged to the allowance for credit losses at the earlier of when an account is deemed to be uncollectible or when an account is 120 days delinquent, taking into consideration the financial condition of the customer or borrower, the value of the collateral, recourse to guarantors, and other factors.

Charge-offs on finance receivables include uncollected amounts related to principal, interest, late fees, and other allowable charges. Recoveries on finance receivables previously charged off as uncollectible are credited to the allowance for credit losses. In the event we repossess the collateral, the receivable is charged off and the collateral is recorded at its estimated fair value less costs to sell and reported in Other assets on our consolidated balance sheets.



11
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 4. FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

An analysis of the allowance for credit losses related to finance receivables for the periods ended June 30 was as follows (in millions):
Second Quarter 2022Second Quarter 2023
ConsumerNon-ConsumerTotal ConsumerNon-ConsumerTotal
Allowance for credit losses
Beginning balance$826 $19 $845 $863 $7 $870 
Charge-offs (61)(1)(62)(78)— (78)
Recoveries44 1 45 38 — 38 
Provision for/(Benefit from) credit losses(48)(8)(56)40 — 40 
Other (a)(7)(2)(9)3 — 3 
Ending balance$754 $9 $763 $866 $7 $873 
First Half 2022First Half 2023
ConsumerNon-ConsumerTotalConsumerNon-ConsumerTotal
Allowance for credit losses
Beginning balance$903 $22 $925 $838 $7 $845 
Charge-offs(123)(1)(124)(174)— (174)
Recoveries87 2 89 76 1 77 
Provision for/(Benefit from) credit losses(107)(13)(120)118 (1)117 
Other (a)(6)(1)(7)8 — 8 
Ending balance$754 $9 $763 $866 $7 $873 
__________
(a)Primarily represents amounts related to translation adjustments.

During the second quarter and first half of 2023, the allowance for credit losses increased $3 million and $28 million, respectively, driven by an increase in finance receivables. Net charge-offs increased from a year ago, reflecting normalization from extraordinarily low levels. The impact of higher inflation and higher interest rates on future credit losses remains uncertain. We will continue to monitor economic trends and conditions and portfolio performance and will adjust the reserve accordingly.


12
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 5. NET INVESTMENT IN OPERATING LEASES

Net investment in operating leases consists primarily of lease contracts for vehicles with individuals, daily rental companies, and fleet customers with terms of 60 months or less. Included in Net investment in operating leases are net investment in operating leases that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements. See Note 6 for additional information.

Net investment in operating leases was as follows (in millions):
December 31,
2022		June 30,
2023
Vehicles, at cost (a)$26,055 $24,657 
Accumulated depreciation(4,234)(4,017)
Net investment in operating leases$21,821 $20,640 
__________
(a)Includes interest supplements and residual support payments we receive on certain leasing transactions under agreements with Ford and affiliated companies, and other vehicle acquisition costs.


NOTE 6. TRANSFERS OF RECEIVABLES AND VARIABLE INTEREST ENTITIES

We securitize finance receivables and net investment in operating leases through a variety of programs using amortizing, variable funding, and revolving structures. We also sell finance receivables, or pledge them as collateral in certain transactions outside of the United States, in other types of structured financing transactions. Due to the similarities between securitization and structured financing, we refer to structured financings as securitization transactions. Our securitization programs are targeted to institutional investors in both public and private transactions in capital markets primarily in the United States, Canada, Germany, Italy, the United Kingdom, and China.

The finance receivables sold for legal purposes and net investment in operating leases included in securitization transactions are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions. They are not available to pay our other obligations or the claims of our other creditors. The debt is the obligation of our consolidated securitization entities and not the obligation of Ford Credit or our other subsidiaries. We hold the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions.

We use special purpose entities (“SPEs”) to issue asset-backed securities in our securitization transactions. We have deemed most of these SPEs to be VIEs of which we are the primary beneficiary, and therefore, are consolidated. The SPEs are established for the sole purpose of financing the securitized financial assets. The SPEs are generally financed through the issuance of notes or commercial paper into the public or private markets or directly with conduits.

We continue to recognize our financial assets related to our sales of receivables when the financial assets are sold to a consolidated VIE or a consolidated voting interest entity. We derecognize our financial assets when the financial assets are sold to a non-consolidated entity and we do not maintain control over the financial assets.

We have the power to direct significant activities of our SPEs when we have the ability to exercise discretion in the servicing of financial assets, issue additional debt, exercise a unilateral call option, add assets to revolving structures, or control investment decisions. We generally retain a portion of the economic interests in the asset-backed securitization transactions, which could be retained in the form of a portion of the senior interests, the subordinated interests, cash reserve accounts, residual interests, and servicing rights. The transfers of assets in our securitization transactions do not qualify for accounting sale treatment.

We have no obligation to repurchase or replace any securitized asset that subsequently becomes delinquent in payment or otherwise is in default, except when representations and warranties about the eligibility of the securitized assets are breached, or when certain changes are made to the underlying asset contracts. Securitization investors have no recourse to us or our other assets and have no right to require us to repurchase the investments. We generally have no obligation to provide liquidity or contribute cash or additional assets to the VIEs and do not guarantee any asset-backed securities. We may be required to support the performance of certain securitization transactions, however, by increasing cash reserves.

13
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 6. TRANSFERS OF RECEIVABLES AND VARIABLE INTEREST ENTITIES (Continued)

Certain of our securitization entities may enter into derivative transactions to mitigate interest rate exposure, primarily resulting from fixed-rate assets securing floating-rate debt. In certain instances, the counterparty enters into offsetting derivative transactions with us to mitigate its interest rate risk resulting from derivatives with our securitization entities. These related derivatives are not the obligations of our securitization entities. See Note 7 for additional information regarding the accounting for derivatives.

Most of these securitization transactions utilize VIEs. The following tables show the assets and debt related to our securitization transactions that were included in our consolidated financial statements (in billions):
December 31, 2022
Cash and Cash EquivalentsFinance Receivables and Net Investment in Operating Leases (a)Related Debt
(c)
Before Allowance
for Credit Losses		Allowance for
Credit Losses		After Allowance
for Credit Losses
VIE (b)
Retail financing$1.5 $31.7 $0.3 $31.4 $26.6 
Wholesale financing0.2 17.7 — 17.7 10.6 
Finance receivables1.7 49.4 0.3 49.1 37.2 
Net investment in operating leases0.6 12.5 — 12.5 8.2 
Total VIE$2.3 $61.9 $0.3 $61.6 $45.4 
Non-VIE
Retail financing$0.5 $12.2 $0.2 $12.0 $10.7 
Wholesale financing— 0.5 — 0.5 0.3 
Finance receivables0.5 12.7 0.2 12.5 11.0 
Net investment in operating leases— — — — — 
Total Non-VIE$0.5 $12.7 $0.2 $12.5 $11.0 
Total securitization transactions
Retail financing$2.0 $43.9 $0.5 $43.4 $37.3 
Wholesale financing 0.2 18.2 — 18.2 10.9 
Finance receivables2.2 62.1 0.5 61.6 48.2 
Net investment in operating leases0.6 12.5 — 12.5 8.2 
Total securitization transactions$2.8 $74.6 $0.5 $74.1 $56.4 
__________
(a)Unearned interest supplements and residual support are excluded from securitization transactions.
(b)Includes assets to be used to settle the liabilities of the consolidated VIEs.
(c)Includes unamortized discount and debt issuance costs.

14
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 6. TRANSFERS OF RECEIVABLES AND VARIABLE INTEREST ENTITIES (Continued)

June 30, 2023
Cash and Cash EquivalentsFinance Receivables and Net Investment in Operating Leases (a)Related Debt
(c)
Before Allowance
for Credit Losses		Allowance for
Credit Losses		After Allowance
for Credit Losses
VIE (b)
Retail financing$1.7 $35.1 $0.3 $34.8 $29.4 
Wholesale financing0.3 17.7 — 17.7 12.2 
Finance receivables2.0 52.8 0.3 52.5 41.6 
Net investment in operating leases0.4 8.9 — 8.9 6.3 
Total VIE$2.4 $61.7 $0.3 $61.4 $47.9 
Non-VIE
Retail financing$0.4 $8.5 $0.1 $8.4 $7.4 
Wholesale financing— 0.6 — 0.6 0.3 
Finance receivables0.4 9.1 0.1 9.0 7.7 
Net investment in operating leases— — — — — 
Total Non-VIE$0.4 $9.1 $0.1 $9.0 $7.7 
Total securitization transactions
Retail financing$2.1 $43.6 $0.4 $43.2 $36.8 
Wholesale financing0.3 18.3 — 18.3 12.5 
Finance receivables2.4 61.9 0.4 61.5 49.3 
Net investment in operating leases0.4 8.9 — 8.9 6.3 
Total securitization transactions$2.8 $70.8 $0.4 $70.4 $55.6 
__________
(a)Unearned interest supplements and residual support are excluded from securitization transactions.
(b)Includes assets to be used to settle the liabilities of the consolidated VIEs.
(c)Includes unamortized discount and debt issuance cost.


15
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 7. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

In the normal course of business, our operations are exposed to global market risks, including the effect of changes in interest rates and foreign currency exchange rates. To manage these risks, we enter into highly effective derivative contracts. We have elected to apply hedge accounting to certain derivatives. Derivatives that are designated in hedging relationships are evaluated for effectiveness using regression analysis at the time they are designated and throughout the hedge period. Some derivatives do not qualify for hedge accounting; for others, we elect not to apply hedge accounting.

Income Effect of Derivative Financial Instruments

The gains/(losses), by hedge designation, reported in income for the periods ended June 30 were as follows (in millions):
Second QuarterFirst Half
2022202320222023
Fair value hedges
Interest rate contracts
Net interest settlements and accruals on hedging instruments$25 $(130)$101 $(270)
Fair value changes on hedging instruments(336)(316)(1,322)(66)
Fair value changes on hedged debt 385 292 1,376 13 
Cross-currency interest rate swap contracts
Net interest settlements and accruals on hedging instruments(6)(19)(9)(33)
Fair value changes on hedging instruments(61)(24)(98)(2)
Fair value changes on hedged debt65 22 106 3 
Derivatives not designated as hedging instruments
Interest rate contracts89 109 212 97 
Foreign currency exchange contracts (a)27 (7)25 (29)
Cross-currency interest rate swap contracts(443)(60)(670)25 
Total$(255)$(133)$(279)$(262)
__________
(a)Reflects forward contracts between us and an affiliated company.



16
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 7. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

Balance Sheet Effect of Derivative Financial Instruments

Derivative assets and liabilities are reported on the balance sheets at fair value and are presented on a gross basis. The notional amounts of the derivative instruments do not necessarily represent amounts exchanged by the parties and are not a direct measure of our financial exposure. We also enter into master agreements with counterparties that may allow for netting of exposures in the event of default or breach of the counterparty agreement. Collateral represents cash received or paid under reciprocal arrangements that we have entered into with our derivative counterparties, which we do not use to offset our derivative assets and liabilities.

The fair value of our derivative instruments and the associated notional amounts were as follows (in millions):
December 31, 2022June 30, 2023
NotionalFair Value of AssetsFair Value of LiabilitiesNotionalFair Value of AssetsFair Value of Liabilities
Fair value hedges
Interest rate contracts$16,883 $— $1,653 $16,454 $— $1,266 
Cross-currency interest rate swap contracts885 — 161 2,078 5 145 
Derivatives not designated as hedging instruments
Interest rate contracts63,210 931 483 64,142 938 908 
Foreign currency exchange contracts (a)4,219 41 76 10,400 57 81 
Cross-currency interest rate swap contracts6,635 15 653 6,416 54 476 
Total derivative financial instruments, gross (b) (c) $91,832 $987 $3,026 $99,490 $1,054 $2,876 
__________
(a)Includes forward contracts between us and an affiliated company, including offsetting forward contracts with our consolidated entities, totaling $5.8 billion in notional amounts and $33.7 million in both assets and liabilities at June 30, 2023.
(b)At December 31, 2022 and June 30, 2023, we held collateral of $210 million and $174 million, respectively, and we posted collateral of $193 million and $220 million, respectively.
(c)At December 31, 2022 and June 30, 2023, the fair value of assets and liabilities available for counterparty netting was $166 million and $279 million, respectively. All derivatives are categorized within Level 2 of the fair value hierarchy.

17
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 8. OTHER ASSETS AND OTHER LIABILITIES AND DEFERRED REVENUE

Other assets and other liabilities and deferred revenue consist of various balance sheet items that are combined for financial statement presentation due to their respective materiality compared with other individual asset and liability items.

Other assets were as follows (in millions):
December 31,
2022		June 30,
2023
Prepaid reinsurance premiums and other reinsurance recoverables$779 $798 
Accrued interest and other non-finance receivables576 544 
Property and equipment, net of accumulated depreciation (a)233 253 
Collateral held for resale, at net realizable value233 233 
Deferred charges - income taxes158 175 
Investment in non-consolidated affiliates177 163 
Restricted cash127 131 
Operating lease assets64 60 
Other229 290 
Total other assets $2,576 $2,647 
__________
(a)Accumulated depreciation was $415 million and $438 million at December 31, 2022 and June 30, 2023, respectively.

Other liabilities and deferred revenue were as follows (in millions):
December 31,
2022		June 30,
2023
Unearned insurance premiums and fees$891 $910 
Interest payable683 797 
Income tax and related interest (a)115 191 
Operating lease liabilities66 63 
Other280 292 
Total other liabilities and deferred revenue$2,035 $2,253 
__________
(a)Includes income tax and interest payable to affiliated companies of $36 million and $109 million at December 31, 2022 and June 30, 2023, respectively.





18
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 9. DEBT

Debt outstanding and interest rates were as follows (in millions):
 Interest Rates
DebtAverage ContractualAverage Effective
 December 31,
2022		June 30,
2023		2022202320222023
Short-term debt
Unsecured debt
Floating rate demand notes$10,303 $10,779 
Other short-term debt6,515 5,302 
Asset-backed debt (a)2,806 3,324 
Total short-term debt19,624 19,405 3.8 %4.7 %3.8 %4.8 %
Long-term debt
Unsecured debt
Notes payable within one year7,980 9,447 
Notes payable after one year39,620 44,377 
Asset-backed debt (a)
Notes payable within one year21,839 20,077 
Notes payable after one year31,840 32,280 
Unamortized (discount)/premium23 15 
Unamortized issuance costs(197)(246)
Fair value adjustments (b)(1,690)(1,698)
Total long-term debt99,415 104,252 3.6 %4.3 %3.6 %4.3 %
Total debt$119,039 $123,657 3.6 %4.3 %3.6 %4.3 %
Fair value of debt (c)$117,214 $122,954 
__________
(a)Asset-backed debt issued in securitizations is the obligation of the consolidated securitization entity that issued the debt and is payable only out of collections on the underlying securitized assets and related enhancements. This asset-backed debt is not the obligation of Ford Credit or our other subsidiaries.
(b)These adjustments are related to hedging activity and include discontinued hedging relationship adjustments of $31 million and $(339) million at December 31, 2022 and June 30, 2023, respectively. The carrying value of hedged debt was $33.3 billion and $38.0 billion at December 31, 2022 and June 30, 2023, respectively.
(c)At December 31, 2022 and June 30, 2023, the fair value of debt includes $16.9 billion and $16.2 billion of short-term debt, respectively, carried at cost, which approximates fair value. All other debt is categorized within Level 2 of the fair value hierarchy.






19
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 10. RESTRUCTURING ACTIONS

In June 2021, we announced that our subsidiaries in Brazil and Argentina would cease originating receivables and wind down operations. During the fourth quarter of 2021, we completed the sale of our wholesale and dealer receivables portfolio in Brazil and ceased originations of wholesale and dealer receivables in Argentina. In the second quarter and first half of 2022, we liquidated three of our investments in Brazil and reclassified accumulated foreign currency translation losses of $36 million and $155 million, respectively, to Other income/(loss), net.

In December 2021, we received a capital contribution from a subsidiary of Ford in exchange for a minority interest share in one of our Argentina-based subsidiaries. As a result, we recorded $22 million in Shareholder’s interest attributable to noncontrolling interests on our consolidated balance sheets. During the first quarter of 2022, we reacquired Ford’s minority interest share and, in exchange, transferred assets associated with an Argentina-based subsidiary to Ford. In addition, during the first quarter of 2022, we sold our shares in a second Argentina-based subsidiary to Ford. The difference between the carrying value of the net assets transferred and sold to Ford and the consideration received from Ford was $61 million, reported as a reduction to Shareholder’s interest. As a result of the transfer and sale, Ford Credit reclassified $75 million of accumulated foreign currency translation losses to net income, included in Other income/(loss), net.

Accumulated foreign currency translation losses associated with our remaining investments in Brazil and Argentina included in Accumulated other comprehensive income/(loss) at June 30, 2023 were $223 million. We expect to reclassify these losses to income upon substantially complete liquidation of our investments, which may occur over multiple reporting periods. Although the timing for the completion of these actions is uncertain, we expect the majority of losses to be recognized in 2024 or later.

We continue to review our global businesses and may take additional restructuring actions to improve our cost structure and competitiveness.

NOTE 11. OTHER INCOME/(LOSS)

Other income/(loss) consists of various line items that are combined on the consolidated income statements due to their respective materiality compared with other individual income and expense items.

The amounts included in Other income/(loss), net for the periods ended June 30 were as follows (in millions):
Second QuarterFirst Half
2022202320222023
Interest and investment income (a)$1 $108 $(4)$243 
Currency revaluation gains/(losses) 417 (23)569 (132)
Gains/(losses) on derivatives(383)33 (506)101 
Gains/(losses) on changes in investments in affiliates (b)(36)— (231)— 
Other 22 8 24 14 
Total other income/(loss), net$21 $126 $(148)$226 
__________
(a)Includes impairment losses of non-consolidated investments of $9 million in the second quarter of 2023.
(b)Includes 2022 losses related to our restructuring in South America described in Note 10.



20
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 12. SEGMENT INFORMATION

We conduct our financing operations directly and indirectly through our subsidiaries and affiliates. We offer substantially similar products and services throughout many different regions, subject to local legal restrictions and market conditions. Our segments are: the United States and Canada, Europe, and All Other. Our All Other segment includes China, India, Mexico, Brazil, Argentina, and our joint venture in South Africa.

We measure the performance of our segments primarily on an income before income taxes basis, after excluding market valuation adjustments to derivatives and exchange-rate fluctuations on foreign currency-denominated transactions, which are reflected in Unallocated Other. These adjustments are excluded when assessing our segment performance because they are carried out at the corporate level.

Beginning in the third quarter of 2022, consistent with how our Chief Operating Decision Maker assesses performance of the segments and makes decisions about resource allocations, we changed the measurements used in allocating interest and governance expenses among the operating segments. Prior period amounts have been adjusted retrospectively to reflect the foregoing changes.


21
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 12. SEGMENT INFORMATION (Continued)

Key financial information for our business segments for the periods ended or at June 30 was as follows (in millions):
United States and CanadaEuropeAll OtherTotal
Segments		Unallocated Other Total
Second Quarter 2022
Total revenue$2,029 $221 $98 $2,348 $— $2,348 
Income before income taxes 680 106 (8)778 125 903 
Depreciation on vehicles subject to operating leases
559 (10)— 549 — 549 
Interest expense648 48 46 742 (85)657 
Provision for/(Benefit from) credit losses(57)(2)3 (56)— (56)
Second Quarter 2023
Total revenue$2,305 $344 $106 $2,755 $— $2,755 
Income before income taxes 271 113 27 411 (30)381 
Depreciation on vehicles subject to operating leases
551 4 — 555 — 555 
Interest expense1,258 162 57 1,477 53 1,530 
Provision for/(Benefit from) credit losses36 (2)6 40 — 40 
First Half 2022
Total revenue$4,058 $416 $200 $4,674 $— $4,674 
Income before income taxes1,446 182 (172)1,456 201 1,657 
Depreciation on vehicles subject to operating leases
1,085 (21)— 1,064 — 1,064 
Interest expense1,206 96 94 1,396 (128)1,268 
Provision for/(Benefit from) credit losses(124)(5)9 (120)— (120)
Net finance receivables and net investment in operating leases94,291 16,212 5,124 115,627 — 115,627 
Total assets103,289 19,158 5,803 128,250 — 128,250 
First Half 2023
Total revenue$4,475 $628 $208 $5,311 $— $5,311 
Income before income taxes544 191 49 784 (100)684 
Depreciation on vehicles subject to operating leases
1,108 6 — 1,114 — 1,114 
Interest expense2,453 292 108 2,853 69 2,922 
Provision for/(Benefit from) credit losses99 2 16 117 — 117 
Net finance receivables and net investment in operating leases100,626 20,546 4,902 126,074 — 126,074 
Total assets114,114 24,245 5,431 143,790 — 143,790 


22
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 13. COMMITMENTS AND CONTINGENCIES

Commitments and contingencies primarily consist of guarantees and indemnifications as well as litigation and claims.

Guarantees and Indemnifications

Guarantees and indemnifications are recorded at fair value at their inception. For financial guarantees, subsequent to initial recognition, the guarantee liability is adjusted at each reporting period to reflect the current estimate of expected payments resulting from possible default events over the remaining life of the guarantee. The probability of default is applied to the expected exposure at the time of default less recoveries to determine the expected payments. Factors to consider when estimating the probability of default include the obligor’s financial position, forecasted economic environment, historical loss rates, and other communications. For non-financial guarantees, we regularly review our performance risk under these arrangements, and in the event it becomes probable we will be required to perform under a guarantee or indemnity, the amount of probable payment is recorded.

The maximum potential payments under these guarantees and limited indemnities totaled $83 million and $44 million at December 31, 2022 and June 30, 2023, respectively. Of these values, $17 million at both December 31, 2022 and June 30, 2023, were counter-guaranteed by Ford to us. There were no recorded liabilities related to guarantees and limited indemnities at December 31, 2022 or June 30, 2023.

In some cases, we have guaranteed debt and other financial obligations of outside third parties and unconsolidated affiliates, including Ford. Expiration dates vary, and guarantees will terminate on payment and/or cancellation of the underlying obligation. A payment by us would be triggered by the failure of the third party to fulfill its obligation covered by the guarantee. In some circumstances, we are entitled to recover from a third party amounts paid by us under the guarantee. However, our ability to enforce these rights is sometimes stayed until the guaranteed party is paid in full and may be limited in the event of insolvency of the third party or other circumstances.

In the ordinary course of business, we execute contracts involving indemnifications standard in the industry and indemnifications specific to a transaction. These indemnifications might include and are not limited to claims relating to any of the following: environmental, tax, and shareholder matters; intellectual property rights; governmental regulations and employment-related matters; dealer and other commercial contractual relationships; and financial matters, such as securitizations. Performance under these indemnities generally would be triggered by a breach of the contract brought by a counterparty or a third-party claim. While some of these indemnifications are limited in nature, many of them do not limit potential payment. Therefore, we are unable to estimate a maximum amount of future payments that could result from claims made under these unlimited indemnities.

Litigation and Claims

Various legal actions, proceedings, and claims (generally, “matters”) are pending or may be instituted or asserted against us. These include, but are not limited to, matters arising out of governmental regulations; tax matters; alleged illegal acts resulting in fines or penalties; financial services; employment-related matters; dealer and other contractual relationships; personal injury matters; investor matters; and financial reporting matters. Certain of the pending legal actions are, or purport to be, class actions. Some of the matters involve or may involve claims for compensatory, punitive, or antitrust or other treble damages in very large amounts, sanctions, assessments, or other relief, which, if granted, would require very large expenditures.

The extent of our financial exposure to these matters is difficult to estimate. Many matters do not specify a dollar amount for damages, and many others specify only a jurisdictional minimum. To the extent an amount is asserted, our historical experience suggests that in most instances the amount asserted is not a reliable indicator of the ultimate outcome.

We accrue for matters when losses are deemed probable and reasonably estimable. In evaluating matters for accrual and disclosure purposes, we take into consideration factors such as our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood that we will prevail, and the severity of any potential loss. We reevaluate and update our accruals as matters progress over time.



23
Item 1. Financial Statements (Continued)

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS


NOTE 13. COMMITMENTS AND CONTINGENCIES (Continued)

For nearly all matters where our historical experience with similar matters is of limited value (i.e., “non-pattern matters”), we evaluate the matters primarily based on the individual facts and circumstances. For non-pattern matters, we evaluate whether there is a reasonable possibility of a material loss in excess of any accrual that can be estimated. It is reasonably possible that some of the matters for which accruals have not been established could be decided unfavorably and could require us to pay damages or make other expenditures. We do not reasonably expect, based on our analysis, that such matters would have a material effect on future financial statements for a particular year, although such an outcome is possible.

As noted, the litigation process is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. Our assessments are based on our knowledge and experience, but the ultimate outcome of any matter could require payment substantially in excess of the amount that we have accrued and/or disclosed.

24

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Definitions and Information Regarding Causal Factors

In general, we measure year-over-year changes in EBT using the causal factors listed below:

•Volume and Mix – Volume and Mix are primarily reflected within Net financing margin on the consolidated income statements.
◦Volume primarily measures changes in net financing margin driven by changes in average net receivables excluding the allowance for credit losses at prior period financing margin yield (defined below in financing margin) at prior period exchange rates. Volume changes are primarily driven by the volume of new and used vehicles sold and leased, the extent to which we purchase retail financing and operating lease contracts, the extent to which we provide wholesale financing, the sales price of the vehicles financed, the level of dealer inventories, Ford-sponsored special financing programs available exclusively through us, and the availability of cost-effective funding.
◦Mix primarily measures changes in net financing margin driven by period-over-period changes in the composition of our average net receivables excluding the allowance for credit losses by product within each region.

•Financing Margin – Financing Margin is reflected within Net financing margin on the consolidated income statements.
◦Financing margin variance is the period-to-period change in financing margin yield multiplied by the present period average net receivables excluding the allowance for credit losses at prior period exchange rates. This calculation is performed at the product and country level and then aggregated. Financing margin yield equals revenue, less interest expense and scheduled depreciation for the period, divided by average net receivables excluding the allowance for credit losses for the same period.
◦Financing margin changes are driven by changes in revenue and interest expense. Changes in revenue are primarily driven by the level of market interest rates, cost assumptions in pricing, mix of business, and competitive environment. Changes in interest expense are primarily driven by the level of market interest rates, borrowing spreads, and asset-liability management.

•Credit Loss – Credit Loss is reflected within Provision for/(Benefit from) credit losses on the consolidated income statements.
◦Credit loss is the change in the provision for credit losses at prior period exchange rates. For analysis purposes, management splits the provision for credit losses into net charge-offs and the change in the allowance for credit losses.
◦Net charge-off changes are primarily driven by the number of repossessions, severity per repossession, and recoveries. Changes in the allowance for credit losses are primarily driven by changes in historical trends in credit losses and recoveries, changes in the composition and size of our present portfolio, changes in trends in historical used vehicle values, and changes in forward looking macroeconomic conditions. For additional information, refer to the “Critical Accounting Estimates - Allowance for Credit Losses” section of Item 7 of Part II of our 2022 Form 10-K Report.

•Lease Residual – Lease Residual is reflected within Depreciation on vehicles subject to operating leases on the consolidated income statements.
◦Lease residual measures changes to residual performance at prior period exchange rates. For analysis purposes, management splits residual performance primarily into residual gains and losses, and the change in accumulated supplemental depreciation.
◦Residual gain and loss changes are primarily driven by the number of vehicles returned to us and sold, and the difference between the auction value and the depreciated value (which includes both base and accumulated supplemental depreciation) of the vehicles sold. Changes in accumulated supplemental depreciation are primarily driven by changes in our estimate of the expected auction value at the end of the lease term and changes in our estimate of the number of vehicles that will be returned to us and sold. Depreciation on vehicles subject to operating leases includes early termination losses on operating leases due to customer default events. For additional information, refer to the “Critical Accounting Estimates – Accumulated Depreciation on Vehicles Subject to Operating Leases” section of Item 7 of Part II of our 2022 Form 10-K Report.

•Exchange – Reflects changes in EBT driven by the effects of converting functional currency income to U.S. dollars.



25
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
•Other – Primarily includes Operating expenses, Other revenue, Insurance expenses, and Other income/(Loss), net on the consolidated income statements at prior period exchange rates.
◦Changes in operating expenses are primarily driven by salaried personnel costs, facilities costs, and costs associated with the origination and servicing of customer contracts.
◦In general, other income/(loss) changes are primarily driven by changes in earnings related to market valuation adjustments to derivatives (primarily related to movements in interest rates), which are included in unallocated risk management, and other miscellaneous items.

In addition, the following definitions and calculations apply to the charts contained in Item 2 of this Report:

•    Cash (as shown in the Funding and Liquidity section) – Cash and cash equivalents and Marketable securities reported on Ford Credit’s balance sheets, excluding amounts related to insurance activities.

•    Debt (as shown in the Key Metrics and Leverage tables) – Debt on Ford Credit’s balance sheets. Includes debt issued in securitizations and payable only out of collections on the underlying securitized assets and related enhancements. Ford Credit holds the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions.

•    Earnings Before Taxes (“EBT”) – Reflects Income before income taxes as reported on our consolidated income statements.

•Loss-to-Receivables (“LTR”) Ratio (as shown in Credit Loss tables) – LTR ratio is calculated using net charge-offs divided by average finance receivables, excluding unearned interest supplements and the allowance for credit losses.

•    Reserve as a % of EOP Receivables Ratio (as shown in the Credit Loss tables) – The reserve as a percentage of EOP receivables ratio is calculated as the credit loss reserve amount, divided by end of period finance receivables, excluding unearned interest supplements and the allowance for credit losses.

•    Return on Equity (“ROE”) (as shown in the Key Metrics table) – Reflects return on equity calculated by annualizing net income for the period and dividing by monthly average equity for the period.

•Securitization and Restricted Cash (as shown in the Liquidity table) – Securitization cash is held for the benefit of the securitization investors (for example, a reserve fund). Restricted cash primarily includes cash held to meet certain local governmental and regulatory reserve requirements and cash held under the terms of certain contractual agreements.

•    Securitizations (as shown in the Public Term Funding Plan table) – Public securitization transactions, Rule 144A offerings sponsored by Ford Credit, and widely distributed offerings by Ford Credit Canada.

•    Term Asset-Backed Securities (as shown in the Funding Structure table) – Obligations issued in securitization transactions that are payable only out of collections on the underlying securitized assets and related enhancements.
•Total Net Receivables (as shown in the Key Metrics and Financial Condition tables) – Includes finance receivables (retail financing and wholesale) sold for legal purposes and net investment in operating leases included in securitization transactions that do not satisfy the requirements for accounting sale treatment. These receivables and operating leases are reported on Ford Credit’s balance sheets and are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions; they are not available to pay the other obligations of Ford Credit or the claims of Ford Credit’s other creditors.

•    Unallocated Other (as shown in the Segment Results table) – Items excluded in assessing segment performance because they are managed at the corporate level, including market valuation adjustments to derivatives and exchange-rate fluctuations on foreign currency-denominated transactions.




26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Results of Operations

Key Metrics
Second QuarterFirst Half
GAAP Financial Measures20222023H / (L)20222023H / (L)
Total Net Receivables ($B)$115.6 $126.1 9 %$115.6 $126.1 9 %
Loss-to-Receivables (bps) (a)5 21 16 7 28 21 
Auction values (b)$34,620 $31,830 (8)%$34,485 $31,445 (9)%
EBT ($M)$903 $381 $(522)$1,657 $684 $(973)
ROE (%) 26.4 %9.3 %(17.1) ppts24.0 %8.7 %(15.3) ppts
Other Balance Sheet Metrics
Debt ($B)$109.5 $123.7 13 %
Net liquidity ($B)$25.0 $28.8 15 %
Financial statement leverage (to 1) 9.1 9.9 0.8 
__________
(a)United States retail financing only.
(b)United States 36-month off-lease second quarter auction values at Q2 2023 mix and YTD amounts at 2023 YTD mix.

Second Quarter 2023 Compared with Second Quarter 2022

The following table shows the factors that contributed to second quarter 2023 EBT (in millions):
Change in EBT by Causal Factor
Second quarter 2022 EBT$903 
Volume / Mix47 
Financing margin(196)
Credit loss(96)
Lease residual(112)
Exchange(1)
Other(164)
Second quarter 2023 EBT$381 

Our second quarter 2023 EBT of $381 million was $522 million lower than a year ago, explained primarily by lower financing margin due to higher borrowing costs, the non-recurrence of prior year credit loss reserve releases and higher credit losses, unfavorable lease residual performance, and unfavorable market valuation adjustments to derivatives (included in Other). ROE was 9.3%, 17.1 percentage points lower than a year ago, driven by lower net income. Total net receivables were $126.1 billion, $10.5 billion or 9% higher than a year ago, reflecting the impact of increased non-consumer financing and consumer financing, partially offset by fewer operating leases. The U.S. LTR ratio remained at a low level in the second quarter of 2023, at 21 basis points, though higher than a year ago as losses begin to normalize from historic lows. U.S. auction values in the second quarter of 2023 were lower compared to a year ago. At the end of the second quarter of 2023, we had $28.8 billion in net liquidity.



27
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Segment Results

Results of operations by segment and Unallocated Other for the periods ended June 30 are shown below (in millions):
Second QuarterFirst Half
20222023H / (L) 20222023H / (L)
Results (a)
United States and Canada segment$680 $271 $(409)$1,446 $544 $(902)
Europe segment106 113 7 182 191 9 
All Other segment(8)27 35 (172)49 221 
   Total segments earnings before taxes$778 $411 $(367)$1,456 $784 $(672)
Unallocated other125 (30)(155)201 (100)(301)
   Earnings before taxes$903 $381 $(522)$1,657 $684 $(973)
Provision for/(Benefit from) income taxes99 95 (4)184 158 (26)
     Net Income $804 $286 $(518)$1,473 $526 $(947)
__________
(a)Beginning in the third quarter of 2022, there were changes in the allocation of interest and governance expenses among the operating segments. Prior periods have been adjusted retrospectively to reflect these changes.

For additional information, see Note 12 of our Notes to the Financial Statements.

United States and Canada Segment

The United States and Canada segment second quarter 2023 EBT of $271 million was $409 million lower than second quarter 2022. The United States and Canada segment first half 2023 EBT of $544 million was $902 million lower than first half 2022. Both are explained primarily by unfavorable net financing margin, lease residual performance, non-recurrence of credit loss reserve releases, and higher credit losses.

Europe Segment

The Europe segment second quarter 2023 EBT of $113 million was $7 million higher than second quarter 2022. The Europe segment first half 2023 EBT of $191 million was $9 million higher than first half 2022. Both are explained by favorable changes in volume and net financing margin, partially offset by the non-recurrence of residual gains.

All Other Segment

The All Other segment second quarter 2023 EBT of $27 million was $35 million higher than second quarter 2022. The All Other segment first half 2023 EBT of $49 million was $221 million higher than first half 2022. Both are explained primarily by the non-recurrence of South America restructuring losses.

For additional information on our restructuring in South America, refer to Note 10 of our Notes to the Financial Statements.

Unallocated Other

Unallocated Other was a $30 million loss for second quarter 2023, a $155 million deterioration from second quarter 2022. Unallocated Other was a $100 million loss for first half 2023, a $301 million deterioration from first half 2022. Both reflect the unfavorable market valuation adjustments to derivatives due to higher interest rates.

28
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Financing Shares and Contract Placement Volume

Our focus is on supporting Ford and Lincoln dealers and customers. This includes going to market with Ford and our dealers to support vehicle sales with financing products and marketing programs. Ford’s marketing programs may encourage or require Ford Credit financing and influence the financing choices customers make. As a result, our financing share, volume, and contract characteristics vary from period to period as Ford’s marketing programs change.

The following table shows our retail financing and operating lease share of new Ford and Lincoln brand sales, wholesale financing share of new Ford and Lincoln brand vehicles acquired by dealers (in percent), and contract placement volume for new and used vehicles (in thousands) in several key markets:
Second QuarterFirst Half
2022202320222023
Share of Ford and Lincoln Sales (a)
United States37 %51 %40 %49 %
Canada68 67 65 71 
United Kingdom35 35 35 34 
Germany38 32 35 31 
China45 39 44 41 
Wholesale Share
United States73 %71 %73 %71 %
United Kingdom100 100 100 100 
Germany87 89 90 87 
China70 71 67 71 
Contract Placement Volume - New and Used (000)
United States150 211 312 397 
Canada38 29 58 57 
United Kingdom24 23 46 46 
Germany15 13 29 27 
China30 25 60 47 
__________
(a)United States and Canada exclude Fleet sales, other markets include Fleet sales.

United States contract placement volumes in the second quarter of 2023 were higher than a year ago, reflecting higher Ford Credit share and Ford deliveries. Canada contract placement volumes in the second quarter of 2023 were lower than a year ago, reflecting lower Ford Credit share and Ford deliveries. United Kingdom contract placement volumes in the second quarter of 2023 were relatively flat year over year. Germany contract placement volumes in the second quarter of 2023 were lower compared to a year ago, reflecting lower Ford deliveries and Ford Credit share. China contract placement volumes in the second quarter of 2023 were lower than a year ago, reflecting lower Ford deliveries and Ford Credit share.

29
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Financial Condition

Our receivables, including finance receivables and operating leases, were as follows (in billions):
June 30,
2022		December 31,
2022		June 30,
2023
Net Receivables
United States and Canada Segment
   Consumer financing$53.5 $55.8 $58.8 
   Non-Consumer financing17.5 21.4 21.4 
   Net investment in operating leases23.3 21.7 20.5 
     Total United States and Canada Segment$94.3 $98.9 $100.7 
Europe Segment
   Consumer financing$11.1 $11.0 $11.3 
   Non-Consumer financing5.0 7.3 9.0 
   Net investment in operating leases0.1 0.1 0.2 
     Total Europe Segment$16.2 $18.4 $20.5 
All Other Segment
   Consumer financing$4.0 $3.9 $3.6 
   Non-Consumer financing1.1 1.1 1.3 
   Net investment in operating leases— — — 
     Total Other Segment$5.1 $5.0 $4.9 
         Total net receivables$115.6 $122.3 $126.1 

At June 30, 2022, December 31, 2022, and June 30, 2023, total net receivables includes consumer receivables before allowance for credit losses of $36.5 billion, $43.9 billion, and $43.6 billion, respectively, and non-consumer receivables before allowance for credit losses of $13.6 billion, $18.2 billion, and $18.3 billion, respectively, that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements. In addition, at June 30, 2022, December 31, 2022, and June 30, 2023, total net receivables includes net investment in operating leases of $10.5 billion, $12.5 billion, and $8.9 billion, respectively, that have been included in securitization transactions but continue to be reported in our consolidated financial statements. The receivables and net investment in operating leases are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions; they are not available to pay the other obligations or the claims of our other creditors. We hold the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions. For additional information on our securitization transactions, refer to the “Securitization Transactions” and “On-Balance Sheet Arrangements” sections of Item 7 of Part II of our 2022 Form 10-K Report and Note 6 of our Notes to the Financial Statements herein.

Total net receivables at June 30, 2023 were $10.5 billion and $3.8 billion higher compared with June 30, 2022 and December 31, 2022, respectively, resulting from higher non-consumer and consumer financing, offset partially by lower operating leases.

Our operating lease portfolio was 16% of total net receivables at June 30, 2023. Leasing is an important product, and our leasing strategy balances sales, share, residuals, and long-term profitability. Operating leases in the United States and Canada represent 99% of our total operating lease portfolio.


30
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Credit Risk

Credit risk is the possibility of loss from a customer’s or dealer’s failure to make payments according to contract terms. Credit losses are a normal part of a lending business, and credit risk has a significant impact on our business. We manage the credit risk of our consumer (retail financing) and non-consumer (dealer financing) receivables to balance our level of risk and return using our consistent underwriting standards, effective proprietary scoring system (discussed below), and world-class servicing. The allowance for credit losses (also referred to as the credit loss reserve) represents our estimate of the expected credit losses inherent in our finance receivables for the lifetime of those receivables as of the balance sheet date. The allowance for credit losses is estimated using a combination of models and management judgment and is based on such factors as historical loss performance, portfolio quality, receivable levels, and forward-looking macroeconomic scenarios. The adequacy of our allowance for credit losses is assessed quarterly and the assumptions and models used in establishing the allowance are evaluated regularly.

Most of our charge-offs are related to retail financing. Net charge-offs are affected by the number of vehicle repossessions, the unpaid balance outstanding at the time of repossession, the auction price of repossessed vehicles, and other amounts owed. We also incur credit losses on our dealer financing, but default rates for these receivables historically have been substantially lower than those for retail financing.

In purchasing retail financing contracts, we use a proprietary scoring system that measures credit quality using information from sources including the credit application, proposed contract terms, credit bureau data, and other information. After a proprietary risk score is generated, we decide whether to purchase a contract using a decision process based on a judgmental evaluation of the applicant, the credit application, the proposed contract terms, credit bureau information (e.g., FICO score), proprietary risk score, and other information. Our evaluation emphasizes the applicant’s ability to pay and the applicant’s creditworthiness with a focus on payment, affordability, applicant credit history, and stability as key considerations. While FICO is a part of our scoring system, our models enable us to more effectively determine the probability that a customer will pay than using credit scores alone. When we originate business, our models project expected losses and we price accordingly. We ensure the business fits our risk appetite.

For additional information on our allowance for credit losses and the quality of our receivables, see Note 4 of our Notes to the Financial Statements.

United States Origination Metrics

The following table shows United States retail financing and operating lease average placement FICO and higher risk portfolio mix metrics. Also shown are extended term mix and United States retail financing average placement terms.
Second QuarterFirst Half
2022202320222023
Origination Metrics
Average placement FICO748 757 749 754 
Higher risk portfolio mix 5 %4 %5 %4 %
Greater than or equal to 84 months placement mix 6 %9 %5 %8 %
Average placement term (months)62 62 62 62 

Our second quarter 2023 average placement FICO score increased compared with the same period a year ago, and remains strong. We support customers across the credit spectrum. Our higher risk business, as classified at contract inception, represents 4% of our portfolio and has been stable for over 15 years.

During the second quarter of 2023, our average retail financing placement term remains unchanged from a year ago. Retail financing contracts of 84 months and longer increased compared to a year ago and continue to be a small part of our business. We remain focused on managing the trade cycle – building customer relationships and loyalty while offering financing products and terms that customers want. Our origination and risk management processes deliver robust portfolio performance.



31
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
United States Retail Financing Credit Losses

The following table shows the primary drivers of credit losses in the United States retail financing business, which comprised 69% of our worldwide consumer finance receivables at June 30, 2023.
Second QuarterFirst Half
2022202320222023
Credit Loss Drivers
Over-60-Day delinquencies (excl. bankruptcies)0.14 %0.15 %0.14 %0.16 %
Repossessions (000)3 4 7 8 
Repossession ratio0.69 %0.75 %0.71 %0.79 %
Loss severity (000) (a)$7.9 $10.9 $8.0 $10.7 
Net charge-offs ($M)$6 $27 $16 $71 
LTR ratio (%) (b)0.05 %0.21 %0.07 %0.28 %
__________
(a)The expected difference between the amount a customer owes when the finance contract is charged off and the amount received, net of expenses, from selling the repossessed vehicle.
(b) See Definitions and Information Regarding Causal Factors section for calculation.

Delinquencies have normalized to pre-pandemic levels. While increasing from a year ago, repossessions, net charge-offs, and LTR ratio continue to be low by historical standards. Loss severity increased from a year ago and is beginning to normalize from historically low levels. While credit performance has remained strong, high inflation and interest rates have caused economic uncertainty and could have an unfavorable impact on our future retail credit losses.

Worldwide Credit Losses

The following table shows key metrics related to worldwide credit losses:
Second QuarterFirst Half
2022202320222023
Net charge-offs ($M)$17 $40 $35 $97 
LTR ratio (%) (a)0.07 %0.15 %0.07 %0.19 %
Credit loss reserve ($M)$763 $873 $763 $873 
Reserve as percent of EOP Receivables (a)0.80 %0.80 %0.80 %0.80 %
__________
(a)See Definitions and Information Regarding Causal Factors section for calculation.

Our worldwide credit loss metrics remain strong. Net charge-offs and the worldwide LTR ratio in the second quarter of 2023 increased from a year ago reflecting normalization from extraordinary low levels. Our credit loss reserve is higher than a year ago, primarily reflecting the impact of higher receivable balances.

Our credit loss reserve is based on such factors as historical loss performance, portfolio quality, receivables level, and forward-looking macroeconomic scenarios. The reserve reflects lifetime expected losses as of the balance sheet date and is adjusted accordingly based on our assessment of the portfolio and economic trends and conditions. Our credit loss reserve at June 30, 2023 considers a range of potential scenarios that include the economic uncertainty of higher inflation and interest rates. See Note 4 of our Notes to the Financial Statements for more information.

32
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Residual Risk

Leasing is an important product that many customers want and value, and operating lease customers also are more likely to buy or lease another Ford or Lincoln vehicle. We manage our lease share with an enterprise view to support sales, protect residual values, and manage the trade cycle. Ford Credit and Ford work together under a leasing strategy that considers share, term, model mix, geography, and other factors.

We are exposed to residual risk on operating leases and similar balloon payment products where the customer may return the financed vehicle to us. Residual risk is the possibility that the amount we obtain from returned vehicles will be less than our estimate of the expected residual value for the vehicle. We estimate the expected residual value by evaluating recent auction values, return volumes for our leased vehicles, industry wide used vehicle prices, marketing incentive plans, and vehicle quality data. For operating leases, changes in expected residual values impact depreciation expense, which is recognized on a straight-line basis over the life of the lease.

For additional information on our residual risk on operating leases, refer to the “Critical Accounting Estimates – Accumulated Depreciation on Vehicles Subject to Operating Leases” section of Item 7 of Part II of our 2022 Form 10-K Report.

United States Ford and Lincoln Brand Operating Leases

The following table shows share of Ford and Lincoln brand retail financing and operating lease sales, placement volume, and residual performance metrics for our United States operating lease portfolio, which represents 78% of our total net investment in operating leases at June 30, 2023.
Second QuarterFirst Half
2022202320222023
Lease Share of Retail Sales
Ford Credit13 %12 %13 %11 %
Industry (a)17 %20 %18 %20 %
Placement Volume (000)
24-Month13 8 25 15 
36-Month25 27 49 44 
39-Month / Other8 9 16 22 
   Total46 44 90 81 
Residual Performance
Return rates9 %19 %10 %21 %
Return volume (000)9 14 18 30 
Off-lease auction values (b)$34,620 $31,830 $34,485 $31,445 
__________
(a)Source: J.D. Power PIN.
(b)36-month off-lease auction values; quarterly amounts at Q2 2023 mix; first half amounts at first half 2023 mix.

Our United States operating lease share of retail sales in the second quarter of 2023 was lower compared with a year ago and remains below the industry average. Our second quarter 2023 total lease placement volume was down compared with a year ago, reflecting lower Ford Credit lease share of Ford retail sales.

Lease return volume and return rate in the second quarter of 2023 were up from a year ago, reflecting lower auction values. Our second quarter 2023 36-month off-lease auction values were 8% lower year-over-year. Industry auction values are expected to decline as the supply of new and used vehicles improves. We expect return rates to increase as auction values decline.



33
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Credit Ratings

Our short-term and long-term debt is rated by four credit rating agencies designated as nationally recognized statistical rating organizations (“NRSROs”) by the United States Securities and Exchange Commission (“SEC”): DBRS, Fitch, Moody’s, and S&P.

In several markets, locally recognized rating agencies also rate us. A credit rating reflects an assessment by the rating agency of the credit risk associated with a corporate entity or particular securities issued by that entity. Rating agencies’ ratings of us are based on information provided by us and other sources. Credit ratings assigned to us from all of the NRSROs are closely associated with their opinions on Ford. Credit ratings are not recommendations to buy, sell, or hold securities and are subject to revision or withdrawal at any time by the assigning rating agency. Each rating agency may have different criteria for evaluating company risk and, therefore, ratings should be evaluated independently for each rating agency.

The following rating actions were taken by these NRSROs since the filing of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023:

•On June 14, 2023, DBRS upgraded the credit ratings for Ford Credit’s long-term senior unsecured debt to BBB (low) from BB (high), upgraded the credit ratings for short-term unsecured debt to R-2 (low) from R-4, and revised the outlook to stable from positive.
•On July 13, 2023, Moody’s upgraded the credit ratings for Ford Credit’s long-term senior unsecured debt to Ba1 from Ba2 with a stable outlook.

The following table summarizes certain of the credit ratings and outlook presently assigned by these four NRSROs:

NRSRO RATINGS
Ford CreditNRSROs
Long-Term Senior UnsecuredShort -Term UnsecuredOutlook/TrendMinimum
Long-Term Investment Grade Rating
DBRSBBB (low)R-2 (low)StableBBB (low)
FitchBB+BPositiveBBB-
Moody’sBa1NPStableBaa3
S&PBB+BPositiveBBB-


34
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Funding and Liquidity

We remain well capitalized with a strong balance sheet and funding diversified across platforms and markets. We saw sequential improvement in liquidity and securitized funding mix during the quarter, and ended the second quarter of 2023 with $28.8 billion of liquidity, up $7.8 billion from year-end. We continue to have robust access to capital markets, completing $18 billion of public term issuances through July 26, 2023.

Key elements of our funding strategy include:

•Maintain strong liquidity and funding diversity;
•Prudently access public markets;
•Continue to leverage retail deposit funding in Europe;
•Flexibility to increase ABS mix as needed; preserving assets and committed capacity;
•Target financial statement leverage of 9:1 to 10:1; and
•Maintain self-liquidating balance sheet.

Our liquidity profile continues to be diverse, robust, and focused on maintaining liquidity levels that meet our business and funding requirements. We regularly stress test our balance sheet and liquidity to ensure that we continue to meet our financial obligations through economic cycles.

The following table shows funding for our net receivables (in billions):
Funding StructureJune 30,
2022		December 31,
2022		June 30,
2023
Term unsecured debt $49.9 $48.3 $52.2 
Term asset-backed securities47.1 56.4 55.6 
Retail Deposits / Ford Interest Advantage12.5 14.3 15.9 
Other 1.9 2.6 2.3 
Equity 12.0 11.9 12.5 
Adjustments for cash(7.8)(11.2)(12.4)
   Total Net Receivables$115.6 $122.3 $126.1 
Securitized Funding as a percent of Total Debt43.0 %47.4 %45.0 %

Net receivables of $126.1 billion as of June 30, 2023, were funded primarily with term unsecured debt and term asset-backed securities. Securitized funding as a percent of total debt was 45.0% as of June 30, 2023.

Public Term Funding Plan

The following table shows our issuances for full year 2021 and 2022, planned issuances for full year 2023, and our global public term funding issuances through July 26, 2023, excluding short-term funding programs (in billions):
2021 Actual2022 Actual2023 ForecastThrough
July 26
Unsecured$5 $6  $ 11 - 14$9 
Securitizations9 10              12 - 149 
   Total public$14 $16  $ 23 - 28$18 

For 2023, we project full year public term funding in the range of $23 billion to $28 billion.


35
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Liquidity

We define gross liquidity as cash, cash equivalents, and marketable securities (excluding amounts related to insurance activities) and committed capacity (which includes our asset-backed facilities and unsecured credit facilities), less utilization of liquidity. Utilization of liquidity is the amount funded under our liquidity sources and also includes the cash required to support securitization transactions and restricted cash. Net liquidity available for use is defined as gross liquidity plus certain adjustments as described in the table below.

The following table shows our liquidity sources and utilization (in billions):
June 30,
2022		December 31,
2022		June 30,
2023
Liquidity Sources
Cash$7.8 $11.2 $12.4 
Committed asset-backed facilities34.3 37.4 42.3 
Other unsecured credit facilities2.5 2.3 2.6 
   Total liquidity sources$44.6 $50.9 $57.3 
Utilization of Liquidity
Securitization and restricted cash$(2.7)$(2.9)$(2.9)
Committed asset-backed facilities(15.3)(26.6)(23.1)
Other unsecured credit facilities(0.5)(0.8)(1.2)
   Total utilization of liquidity$(18.5)$(30.3)$(27.2)
Gross liquidity$26.1 $20.6 $30.1 
Asset-backed capacity in excess of eligible receivables and other adjustments(1.1)0.4 (1.3)
   Net liquidity available for use$25.0 $21.0 $28.8 

Our net liquidity available for use will fluctuate quarterly based on factors including near-term debt maturities, receivable growth and decline, and timing of funding transactions. At June 30, 2023, our net liquidity available for use was $28.8 billion, $7.8 billion higher than year-end 2022, reflecting strong access to public funding markets and the addition of $4.9 billion in committed asset-backed capacity. At June 30, 2023, our liquidity sources totaled $57.3 billion, up $6.4 billion from year-end 2022.

Cash.  At June 30, 2023, our cash totaled $12.4 billion, compared with $11.2 billion at year-end 2022.  In the normal course of our funding activities, we may generate more proceeds than are required for our immediate funding needs.  These excess amounts are held primarily in highly liquid investments, which provide liquidity for our anticipated and unanticipated cash needs and give us flexibility in the use of our other funding programs. Our cash primarily includes United States Department of Treasury obligations, federal agency securities, bank time deposits with investment-grade institutions, investment-grade commercial paper, debt obligations of a select group of non-U.S. governments, non-U.S. governmental agencies, supranational institutions, non-U.S. central banks, and money market funds that carry the highest possible ratings.

The average maturity of these investments ranges from approximately three to six months and is adjusted based on market conditions and liquidity needs.  We monitor our cash levels and average maturity on a daily basis.  Cash includes restricted cash and amounts to be used only to support our securitization transactions of $2.9 billion at both December 31, 2022 and June 30, 2023.

Material Cash Requirements. Our material cash requirements include: (1) the purchase of retail financing and operating lease contracts from dealers and providing wholesale financing for dealers to finance new and used vehicles; and (2) debt repayments (for additional information on debt, see the “Aggregate Contractual Obligations” table in Item 7 and Note 9 of the Notes to the Financial Statements in our 2022 Form 10-K Report). In addition, subject to approval by our Board of Directors, shareholder distributions may require the expenditure of a material amount of cash. Moreover, we may be subject to additional material cash requirements that are contingent upon the occurrence of certain events, e.g., legal contingencies, uncertain tax positions, and other matters.

We plan to utilize our liquidity (as described above) and our cash flows from business operations to fund our material cash requirements.


36
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Committed Capacity. At June 30, 2023, our committed capacity totaled $44.9 billion, compared with $39.7 billion at December 31, 2022. Our committed capacity is primarily comprised of committed ABS facilities from bank-sponsored commercial paper conduits and other financial institutions and committed unsecured credit facilities with financial institutions.

Committed Asset-Backed Facilities. We and our subsidiaries have entered into agreements with a number of bank-sponsored asset-backed commercial paper conduits and other financial institutions. Such counterparties are contractually committed, at our option, to purchase from us eligible retail financing receivables or to purchase or make advances under asset-backed securities backed by retail financing or wholesale finance receivables or operating leases for proceeds of up to $42.3 billion ($25.3 billion of retail financing, $8.7 billion of operating leases, and $8.3 billion of wholesale financing) at June 30, 2023. In the United States, we are able to obtain funding within two days of our unutilized capacity in some of our committed asset-backed facilities. These committed facilities have varying maturity dates, with $18.2 billion having maturities within the next twelve months and the remaining balance having maturities through third quarter 2025. We plan capacity renewals to protect our global funding needs and to optimize capacity utilization.

Our ability to obtain funding under these facilities is subject to having a sufficient amount of eligible assets as well as our ability to obtain interest rate hedging arrangements for certain facilities. At June 30, 2023, $23.1 billion of these commitments were in use and we had $1.8 billion of asset-backed capacity that was in excess of eligible receivables. These programs are free of material adverse change clauses, restrictive financial covenants (for example, debt-to-equity limitations and minimum net worth requirements), and generally, credit rating triggers that could limit our ability to obtain funding. However, the unused portion of these commitments may be terminated if the performance of the underlying assets deteriorates beyond specified levels. Based on our experience and knowledge as servicer of the related assets, we do not expect any of these programs to be terminated due to such events.

As of June 30, 2023, Ford Bank GmbH (“Ford Bank”) had liquidity of €297 million (equivalent to $322 million) in the form of eligible collateral available for use in the monetary policy programs of the European Central Bank.

Unsecured Credit Facilities. At June 30, 2023, we and our majority-owned subsidiaries had $2.6 billion of contractually committed unsecured credit facilities with financial institutions, including the FCE Credit Agreement and the Ford Bank Credit Agreement. At June 30, 2023, $1.4 billion was available for use.

At June 30, 2023, £49 million (equivalent to $62 million) was available for use under FCE Bank plc’s (“FCE”) £685 million (equivalent to $866 million) syndicated credit facility (the “FCE Credit Agreement”) and all €210 million (equivalent to $228 million) was available for use under Ford Bank’s syndicated credit facility (the “Ford Bank Credit Agreement”). Both the FCE Credit Agreement and Ford Bank Credit Agreement mature in 2026.

Both the FCE Credit Agreement and Ford Bank Credit Agreement contain certain covenants, including an obligation for FCE and Ford Bank to maintain their ratio of regulatory capital to risk-weighted assets at no less than the applicable regulatory minimum. The FCE Credit Agreement requires the support agreement between FCE and Ford Credit to remain in effect (and enforced by FCE to ensure that its net worth is maintained at no less than $500 million). The Ford Bank Credit Agreement requires a guarantee of Ford Bank’s obligations under the agreement, provided by Ford Credit, to remain in effect. In addition, both the FCE Credit Agreement and the Ford Bank Credit Agreement include certain sustainability-linked targets, pursuant to which the applicable margin may be adjusted if Ford Motor Company achieves, or fails to achieve, the specified targets related to global manufacturing facility greenhouse gas emissions, renewable electricity consumption, and Ford Europe CO2 tailpipe emissions.

Ford is party to, and Ford Credit is a designated subsidiary borrower under a 364-Day Revolving Credit Agreement, under which the lenders thereto provided $1.8 billion of commitments maturing on April 24, 2024 (the “364-Day Revolving Credit Agreement”). At June 30, 2023, the 364-Day Revolving Credit Agreement was not utilized by Ford Credit.

Funding and Liquidity Risks

Our funding plan is subject to risks and uncertainties, many of which are beyond our control, including disruption in the capital markets, that could impact both unsecured debt and asset-backed securities issuance and the effects of regulatory changes on the financial markets. Refer to the “Funding and Liquidity Risks” section of Item 7 of Part II of our 2022 Form 10-K Report for more information.



37
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Leverage

We use leverage, or the debt-to-equity ratio, to make various business decisions, including evaluating and establishing pricing for finance receivable and operating lease financing, and assessing our capital structure. We refer to our shareholder’s interest as equity.
 
The following table shows the calculation of our financial statement leverage (in billions):
June 30,
2022		December 31,
2022		June 30,
2023
Leverage Calculation
Debt$109.5 $119.0 $123.7 
Equity $12.0 $11.9 $12.5 
Financial statement leverage (to 1) 9.1 10.0 9.9 

We plan our leverage by considering market conditions and the risk characteristics of our business. At June 30, 2023, our financial statement leverage was 9.9:1. We target financial statement leverage in the range of 9:1 to 10:1.

Outlook

We continue to expect full year 2023 EBT to be about $1.3 billion.


38
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Cautionary Note on Forward-Looking Statements

Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:

•Ford and Ford Credit’s financial condition and results of operations have been and may continue to be adversely affected by public health issues, including epidemics or pandemics such as COVID-19;
•Ford is highly dependent on its suppliers to deliver components in accordance with Ford’s production schedule and specifications, and a shortage of or inability to acquire key components, such as semiconductors, or raw materials, such as lithium, cobalt, nickel, graphite, and manganese, can disrupt Ford’s production of vehicles;
•To facilitate access to the raw materials necessary for the production of electric vehicles, Ford has entered into, and expects to continue to enter into, multi-year commitments to raw material suppliers that subject Ford to risks associated with lower future demand for such materials as well as costs that fluctuate and are difficult to accurately forecast;
•Ford’s long-term competitiveness depends on the successful execution of Ford+;
•Ford’s vehicles could be affected by defects that result in delays in new model launches, recall campaigns, or increased warranty costs;
•Ford may not realize the anticipated benefits of existing or pending strategic alliances, joint ventures, acquisitions, divestitures, restructurings, or new business strategies;
•Operational systems, security systems, vehicles, and services could be affected by cyber incidents, ransomware attacks, and other disruptions and impact Ford and Ford Credit as well as their suppliers and dealers;
•Ford’s production, as well as Ford’s suppliers’ production, and/or the ability to deliver products to consumers could be disrupted by labor issues, natural or man-made disasters, adverse effects of climate change, financial distress, production difficulties, capacity limitations, or other factors;
•Ford’s ability to maintain a competitive cost structure could be affected by labor or other constraints;
•Ford’s ability to attract and retain talented, diverse, and highly skilled employees is critical to its success and competitiveness;
•Ford’s new and existing products and digital, software, and physical services are subject to market acceptance and face significant competition from existing and new entrants in the automotive and digital and software services industries and its reputation may be harmed if it is unable to achieve the initiatives it has announced;
•Ford’s results are dependent on sales of larger, more profitable vehicles, particularly in the United States;
•With a global footprint, Ford’s results could be adversely affected by economic or geopolitical developments, including protectionist trade policies such as tariffs, or other events;
•Industry sales volume can be volatile and could decline if there is a financial crisis, recession, or significant geopolitical event;
•Ford may face increased price competition or a reduction in demand for its products resulting from industry excess capacity, currency fluctuations, competitive actions, or other factors;
•Inflationary pressure and fluctuations in commodity and energy prices, foreign currency exchange rates, interest rates, and market value of Ford or Ford Credit’s investments, including marketable securities, can have a significant effect on results;
•Ford and Ford Credit’s access to debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts could be affected by credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors;
•The impact of government incentives on Ford’s business could be significant, and Ford’s receipt of government incentives could be subject to reduction, termination, or clawback;
•Ford Credit could experience higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles;
•Economic and demographic experience for pension and other postretirement benefit plans (e.g., discount rates or investment returns) could be worse than Ford has assumed;
•Pension and other postretirement liabilities could adversely affect Ford’s liquidity and financial condition;
•Ford and Ford Credit could experience unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, services, perceived environmental impacts, or otherwise;
•Ford may need to substantially modify its product plans and facilities to comply with safety, emissions, fuel economy, autonomous driving technology, environmental, and other regulations;
•Ford and Ford Credit could be affected by the continued development of more stringent privacy, data use, and data protection laws and regulations as well as consumers’ heightened expectations to safeguard their personal information; and
•Ford Credit could be subject to new or increased credit regulations, consumer protection regulations, or other regulations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized.  It is to be expected that there may be differences between projected and actual results.  Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise. For additional discussion, see “Item 1A. Risk Factors” in our 2022 Form 10-K Report, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Accounting Standards Issued But Not Yet Adopted

For a discussion of recent accounting standards, see Note 2 of our Notes to the Financial Statements.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

In our 2022 Form 10-K Report, we discuss in greater detail our market risk, counterparty risk, credit risk, residual risk, liquidity risk, and operating risk.

To provide a quantitative measure of the sensitivity of our pre-tax cash flow to changes in interest rates, we use interest rate scenarios that assume a hypothetical, instantaneous increase or decrease of one percentage point in all interest rates across all maturities (a “parallel shift”), as well as a base case that assumes that all interest rates remain constant at existing levels. Maturing assets and liabilities are also instantaneously reinvested, capturing 100% of any hypothetical change in interest rates. The differences in pre-tax cash flow between these scenarios and the base case over a 12 month period represent an estimate of the sensitivity of our pre-tax cash flow. Under this model, we estimate that at June 30, 2023, all else constant, such an increase in interest rates would increase our pre-tax cash flow by $117 million over the next 12 months, compared with an increase of $127 million at December 31, 2022. In reality, new assets and liabilities may not immediately capture changes in interest rates, and interest rate changes are rarely instantaneous, parallel, or move exactly the one percentage point assumed in our analysis. As a result, the actual impact to pre-tax cash flow could be higher or lower than the results detailed above.

ITEM 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. Marion B. Harris, our President and Chief Executive Officer (“CEO”), and Eliane S. Okamura, our Chief Financial Officer (“CFO”), Treasurer and Executive Vice President, Strategy, have performed an evaluation of the Company’s disclosure controls and procedures, as that term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of June 30, 2023, and each has concluded that such disclosure controls and procedures are effective to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by SEC rules and forms, and that such information is accumulated and communicated to the CEO and CFO to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting. As previously reported, in 2021 we began a multi-year implementation of a new global integrated enterprise resource planning (“I-ERP”) system to replace a number of our existing core financial systems. Implementation of I-ERP began with the launch of our Canada market in May 2021, and implementation is progressing in phased launches across our remaining markets over the next several years. In May 2023, I-ERP was launched in the rest of North America. Additionally, a new general ledger system was launched globally. Our processes, procedures, and controls continue to be refined as appropriate during the phased implementation of the I-ERP system.

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PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings.

We have no legal proceedings arising under any federal, state, or local provisions that have been enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the environment, in which (i) a governmental authority is a party, and (ii) we believe there is the possibility of monetary sanctions (exclusive of interest and costs) in excess of $1 million.

ITEM 5. Other Information.

None.

ITEM 6. Exhibits.
DesignationDescriptionMethod of Filing
Rule 15d-14(a) Certification of CEO.Filed with this Report.
Rule 15d-14(a) Certification of CFO.Filed with this Report.
Section 1350 Certification of CEO.Furnished with this Report.
Section 1350 Certification of CFO.Furnished with this Report.
Exhibit 101.INSInteractive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language (“Inline XBRL”).*
Exhibit 101.SCHXBRL Taxonomy Extension Schema Document.*
Exhibit 101.CALXBRL Taxonomy Extension Calculation Linkbase Document.*
Exhibit 101.LABXBRL Taxonomy Extension Label Linkbase Document.*
Exhibit 101.PREXBRL Taxonomy Extension Presentation Linkbase Document.*
Exhibit 101.DEFXBRL Taxonomy Extension Definition Linkbase Document.*
Exhibit 104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).*
__________
*Submitted electronically with this Report in accordance with the provisions of Regulation S-T.

Instruments defining the rights of holders of certain issues of long-term debt of Ford Credit have not been filed as exhibits to this Report because the authorized principal amount of any one of such issues does not exceed 10% of the total assets of Ford Credit. Ford Credit will furnish a copy of each such instrument to the SEC upon request.

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SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, Ford Motor Credit Company LLC has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

FORD MOTOR CREDIT COMPANY LLC

 
By:/s/ Eliane S. Okamura
 Eliane S. Okamura
 Chief Financial Officer, Treasurer, and
 Executive Vice President, Strategy
Date: July 27, 2023




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Exhibit 31.1
CERTIFICATION
I, Marion B. Harris, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 of Ford Motor Credit Company LLC;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: July 27, 2023 /s/ Marion B. Harris                           
Marion B. Harris
President and Chief Executive Officer

Exhibit 31.2
CERTIFICATION
I, Eliane S. Okamura, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 of Ford Motor Credit Company LLC;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: July 27, 2023/s/ Eliane S. Okamura                           
Eliane S. Okamura
Chief Financial Officer, Treasurer, and Executive
Vice President, Strategy

Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Marion B. Harris, President and Chief Executive Officer of Ford Motor Credit Company LLC (the “Company”), hereby certify pursuant to Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, to which this statement is furnished as an exhibit (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: July 27, 2023 /s/ Marion B. Harris                           
Marion B. Harris
President and Chief Executive Officer

  Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Eliane S. Okamura, Chief Financial Officer and Treasurer of Ford Motor Credit Company LLC (the “Company”), hereby certify pursuant to Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, to which this statement is furnished as an exhibit (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: July 27, 2023/s/ Eliane S. Okamura                           
Eliane S. Okamura
Chief Financial Officer, Treasurer, and Executive
Vice President, Strategy