Ford Motor Company (NYSE:F) stock has tanked since I last wrote about the companys unavoidable bankruptcy. After reporting depressing fourth-quarter earnings, the stock is trading near 11-year lows.

The automakers revenue fell 5% to $39.7 billion and losses for the quarter were $1.7 billion. Ford struggled to grow market share in all of its key regions. Its expansion plans didnt bear fruit, and the failed execution led to massive losses.

Yet Ford Credit Company, the companys financial arm, posted its best results in nine years. Profits jumped to $3 billion before taxes, meaning its responsible for 50% of Fords profits up from 15 to 20% in the past.

Ford Credit Company has subsidized Fords losses and enabled the company to maintain a high dividend yield.

But judging by the data released by the New York Fed, the superior performance of Fords financial arm may not last long.

The damning data released by the New York Fed showed that the volume of 90+ days delinquent loans had risen sharply.

The value of the overall auto loan and lease balances has surged to $1.33 trillion. Worse, subprime loans reached $66 billion in the final quarter of 2019.

Ford Motor Credit Company doesnt lend to high-risk subprime borrowers. So, it doesnt have a high delinquency rate. But Ford Motors increasing dependence on its financial arm is a cause for concern.

Since not all Ford debtors are prime borrowers, the imminent pop of the sub-prime bubble will hurt the company. The auto loan lending business has thin margins. Even a slight increase in delinquencies can have a severe impact on profits.

Many investors buy Ford for its high dividend yield. But the high yield has been unable to prevent the stocks free fall. This may be because investors know Fords dividend is unsustainable, and a dividend cut is right around the corner.

And a subprime loan crisis, combined with an auto industry recession, can trigger a steep dividend cut.

U.S. car sales have witnessed no growth over the last few years. For 2019, sales topped 17 million units, but still edged lower compared to 2018.

Whats worth noting is that car sales have remained flat despite the rise in auto-loans.

It seems like the only thing supporting car sales and automaker profit margins is the rise in subprime loans. The situation is reminiscent of the subprime mortgage crisis of 2007.

Clearly, the U.S. auto market is in terrible shape. Lenient lending practices have kicked the can further down the road, but that wont last forever.

In addition, the situation in China, which is another key market for auto manufacturers, is dire. To contain the spread of coronavirus, hundreds of millions of people in China have been living under some form of quarantine.

This has taken a toll on the Chinese car market. Sales plunged 92% for the first two weeks of February. The situation forced the hand of carmakers, who are set to cut production by 15%.

The outlook for the automobile industry looks gloomy. And with subprime loans already at record levels, the next downcycle in the automobile industry will be worse than the last one.

Given that Ford barely survived the last recession, the chances of it surviving the next one are close to zero.

This article was edited by Josiah Wilmoth.

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Heres Why Ford Motor Company Still Cant Avoid Bankruptcy - CCN.com