Item 3. Quantitative and Qualitative Disclosures About Market Risk
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
Company Excluding Ford Credit
Foreign Currency Risk. The net fair value of foreign exchange forward contracts (including adjustments for credit risk) as of September 30, 2025, was an asset of $95 million, compared with an asset of $410 million as of December 31, 2024. The potential change in the fair value from a 10% change in the underlying exchange rates, in U.S. dollar terms, would have been $2.9 billion at September 30, 2025, unchanged from December 31, 2024.
Commodity Price Risk. The net fair value of commodity forward contracts (including adjustments for credit risk) as of September 30, 2025, was an asset of $48 million, compared with a liability of $8 million at December 31, 2024. The potential change in the fair value from a 10% change in the underlying commodity prices would have been $178 million at September 30, 2025, compared with $189 million at December 31, 2024.
Ford Credit Segment
Interest Rate Risk . To provide a quantitative measure of the sensitivity of its pre-tax cash flow to changes in interest rates, Ford Credit uses interest rate scenarios that assume a hypothetical, instantaneous decrease or increase 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 Ford Credit’s pre-tax cash flow . Under this model, Ford Credit estimates that at September 30, 2025, all else constant, such a decrease in interest rates would decrease its pre-tax cash flow by $69 million over the next 12 months, compared with a decrease of $107 million at December 31, 2024 . 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 Ford Credit’s analysis. As a result, the actual impact to pre-tax cash flow could be higher or lower than the results detailed above.
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