Ford CautiouslyCheckingCreditClosely

March 11, 2002 Dearborn, Mich. Bloomberg News is reporting that Ford Motor Co.'s consumer-finance unit, Ford Motor Credit, is stepping up credit reviews of customers in an attempt to avoid defaults, Ford Credit Chief Operating Officer Greg Smith said.

The credit arm of the world's second-largest automaker performs checks when consumers apply for loans. The unit may carry out additional checks of a "very small segment" of buyers after receiving initial approval to avoid loan delinquencies before they occur.

"It's (taking) a more of an active role earlier," Smith said.

Ford in December said it set aside "several hundred million" dollars for potential bad loans at the unit after the recession raised unemployment and bankruptcies. Ford Credit reported a $297 million loss for the fourth-quarter. The Dearborn, Michigan-based automaker installed Smith to lead the finance unit in December after Don Winkler resigned.

The financial unit said yesterday it will close its Fairlane LLC subprime auto-loan subsidiary as the automaker focuses on loans to customers with better credit. Many of Fairlane's loans are to buyers of older used cars, Smith said. "It is not a target we want to prioritize," he said.

Ford Motor reported a $5.45 billion loss in 2001. As part of a plan to cut losses and return to profitability, Ford Credit is concentrating on loans to buyers of new cars and trucks produced by Ford Motor. Under Winkler, the unit had tried to expand into other markets.