Ford Credit Auto Owner Trust 2018-REV1

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1 Presale: Ford Credit Auto Owner Trust 2018-REV1 This presale report is based on information as of Jan. 18, The ratings shown are preliminary. This report does not constitute a recommendation to buy, hold, or sell securities. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. Preliminary Ratings Class Preliminary rating(i) Type Interest rate Preliminary amount (mil. $)(ii) Legal final maturity date(iii) A AAA (sf) Senior Fixed 1, July 15, 2031 B AA (sf) Subordinate Fixed July 15, 2031 C A (sf) Subordinate Fixed July 15, 2031 (i)the rating on each class of securities is preliminary and subject to change at any time. (ii)the actual size of these tranches will be determined on the pricing date. The notes' total principal amount may be increased, with any increase resulting in a proportionate increase in each class' initial principal amount but not greater than $2.0 billion for the class A notes. (iii)the expected legal final maturity date accounts for the maximum seven-year revolving period. Profile Expected closing date Jan. 30, Expected final payment date Jan. 15, Legal final maturity date July 15, Collateral Prime auto loan receivables. Originator, servicer, and sponsor Ford Motor Credit Co. LLC (BBB/Stable/A-2). Depositor Ford Credit Auto Receivables Six LLC. Indenture trustee and bank account The Bank of New York Mellon. Owner trustee U.S. Bank Trust N.A. Lead underwriter Bank of America Merrill Lynch. Primary Credit Analyst: Jennie P Lam, New York (1) ; jennie.lam@spglobal.com See complete contact list on last page(s) JANUARY 18,

2 Credit Enhancement Summary FCOAT 2018-REV1 FCOAT 2017-REV2(i) FCOAT 2017-REV1 Subordination (% of the initial adjusted receivables balance) Class A Class B Class C Reserve account (% of the initial adjusted receivables balance) Initial, target, and floor (during the revolving period) Initial, target, and floor (during the amortization period)(ii) Overcollateralization (excluding the YSOA)(iii) Initial (% of the initial adjusted pool balance) Target (% of the initial adjusted pool balance) Revolving period: 0.00; amortization period: full turbo(iv) Revolving period: 0.00; amortization period: full turbo(iv) Total initial hard credit enhancement (% of the initial adjusted receivables balance) During revolving period Class A Class B Class C During amortization: full turbo(iv) Class A Class B Class C Minimum YSOA discount rate(v) Estimated minimum excess spread (including YSOA) per year(vi) Aggregate gross pool balance ($) Aggregate adjusted pool balance ($) When pool composition tests are met: 8.80%; when floor credit enhancement composition tests are met: 8.10% When pool composition tests are met: 4.64%; when floor credit enhancement composition tests are met: 3.98% When pool composition tests are met: 8.20%; when floor credit enhancement composition tests are met: 7.50% When pool composition tests are met: 4.82%; when floor credit enhancement composition tests are met: 4.12% 1,224,221,403 1,500,999,388 1,520,800,027 1,092,897,000 1,351,352,000 1,351,352,000 Total securities issued ($) 1,092,897,000 1,351,352,000 1,351,352,000 Revolving period: 0.00; amortization period: full turbo(iv) When pool composition tests are met: 8.50%; when floor credit enhancement composition tests are met: 7.80% When pool composition tests are met: 4.92%; when floor credit enhancement composition tests are met: 4.25% (i)not rated by S&P Global Ratings. (ii)at amortization, the reserve account amount will step down to 0.50% of the initial adjusted pool balance from 2.00%. On the first payment date during amortization, the reserve account step-down amounts will be deemed as available collections and will be used to pay amounts according to the amortization payment waterfall, for the noteholders' benefit. (iii)overcollateralization is the amount by which the adjusted pool balance plus the amount in the accumulation account exceeds the notes' principal. (iv)full turbo: During the amortization period, after paying senior fees, note interest, priority principal payments, and any reserve deposit amount, all remaining available funds will be paid as principal to the noteholders, resulting in the build-up of overcollateralization. (v)if the net losses test is not met, the minimum YSOA discount rate will be 11.8% (for series 2017-REV2, it is 11.2%; for series 2017-REV1, it is 11.5%). (vi)estimated minimum excess spread is before note pricing for series 2018-REV1. FCAOT--Ford Credit Auto Owner Trust. YSOA--Yield supplement overcollateralization amount. JANUARY 18,

3 Rationale The preliminary ratings assigned to Ford Credit Auto Owner Trust 2018-REV1's (FCAOT 2018-REV1's) $1.093 billion asset-backed notes series 2018-REV1 reflect: The transaction's initial revolving phase (up to seven years), during which loan collections may be used to purchase additional receivables. The structure includes pool composition requirements, a credit enhancement test, and amortization triggers intended to limit deterioration in pool quality and credit enhancement during this period (see Revolving Period section for more information). The availability, when the receivables pool meets the pool composition tests, of approximately 18.7%, 14.6%, and 11.5% credit support to the class A, B, and C notes, respectively, based on stressed break-even cash flow scenarios. These credit support levels provide coverage of 4.75x, 4.00x, and 3.00x to the class A, B, and C notes, respectively, our expected net loss of 2.85% assuming a worst-case pool mix (see the S&P Global Ratings' Expected Loss Assuming A Worst-Case Pool Mix section for more information). The availability, when the receivables pool meets the floor credit enhancement composition tests, of approximately 17.4%, 13.2%, and 10.0% credit support to the class A, B, and C notes, respectively, based on stressed break-even cash flow scenarios. These credit support levels provide coverage of 4.75x, 4.00x, and 3.00x our expected net loss of 2.50% (assuming a worst-case pool mix) to the class A, B, and C notes, respectively. The floor credit enhancement composition tests are met when the receivables pool meets a higher credit quality threshold compared with the pool composition tests (see the S&P Global Ratings' Expected Loss Assuming A Worst-Case Pool Mix section for more information). Our expectation that during the amortization phase and under a moderate ('BBB') stress scenario, the ratings on the class A and B notes would remain within one rating category of our preliminary 'AAA (sf)' and 'AA (sf)' ratings, respectively, and the rating on the class C notes would remain within two rating categories of our preliminary 'A (sf)' rating within one year. These potential rating movements are consistent with our credit stability criteria (see "Methodology: Credit Stability Criteria," published May 3, 2010). The credit enhancement in the form of subordination, a reserve account, the yield supplement overcollateralization amount (YSOA), and excess spread (see the Credit Enhancement Summary table above for more information). The net loss test, which increases the required credit enhancement in the form of the YSOA as long as three-month annualized net losses exceed 2.50% during the revolving period. The timely interest and full principal payments made under stressed cash flow modeling scenarios appropriate to the assigned preliminary ratings. The characteristics of the revolving pool being securitized, including a weighted average minimum FICO score of 700 at time of origination. Ford Motor Credit Co. LLC's (Ford Credit's) extensive securitization performance history dating back to The transaction's pool composition tests, credit enhancement test, amortization triggers, turbo payment structure when in any amortization period, and legal structure. The preliminary ratings assigned to FCAOT 2018-REV1's asset-backed notes do not address whether the cash flows generated by the pool of receivables will be sufficient to pay the step-up amounts or make-whole payments, which may become payable to noteholders if certain events occur (see the Transaction Overview section below for a description of the step-up amounts and make-whole payments). JANUARY 18,

4 Changes From The Series 2017-REV2 And Series 2017-REV1 Transactions The structural and credit enhancement changes from the series 2017-REV2 (not rated by S&P Global Ratings) and series 2017-REV1 transactions are as follows: The revolving period increased to seven years from five years. Subordination for the class A notes increased by 1.00%, to 8.50% from 7.50%, resulting in an increase in total hard credit enhancement at closing for the class A notes to 10.50% from 9.50%. The pool composition test concentration limit for receivables with commercial obligors that did not have FICO scores increased to 22.50% of the pool balance from 20.00%. Other structural and credit enhancement changes from the series 2017-REV2 transaction include: The minimum YSOA discount rate used to calculate the required yield supplement overcollateralization is 8.8% when the pool composition tests are met and 8.1% when the floor credit enhancement composition tests are met, compared with 8.2% and 7.5%, respectively, for series 2017-REV2. The estimated minimum excess spread (including the YSOA) per year is 4.64% when the pool composition tests are met and 3.98% when the floor credit enhancement composition tests are met, compared with 4.82% and 4.12%, respectively, for series 2017-REV2. The minimum excess spread percentages for series 2018-REV1 are estimated before actual note pricing but the estimated minimum excess spread percentages for series 2017-REV2 reflects final pricing. Other structural and credit enhancement changes from the series 2017-REV1 transaction include: The minimum YSOA discount rate used to calculate the required yield supplement overcollateralization is 8.8% when the pool composition tests are met and 8.1% when the floor credit enhancement composition tests are met, compared with 8.5% and 7.8%, respectively, for series 2017-REV1. The estimated minimum excess spread (including the YSOA) per year is 4.64% when the pool composition tests are met and 3.98% when the floor credit enhancement composition tests are met, compared with 4.92% and 4.25%, respectively, for series 2017-REV1. The minimum excess spread percentages for series 2018-REV1 are estimated before actual note pricing but the estimated minimum excess spread percentages for series 2017-REV1 reflects final pricing. Material changes in the statistical pool composition as of the statistical calculation date for the series 2018-REV1 initial receivables from the series 2017-REV2 pool as of the related closing date include: The weighted average FICO increased to 740 from 736. Series 2018-REV1 statistical pool is the highest weighted average FICO FordREV pool to date. The percentage of long-term contracts (those with an original term greater than 60 months but less than or equal to 72 months) increased to 60.0% from 56.1%, but the weighted average FICO score of these contracts increased to 724 from 714. The weighted average seasoning decreased to 8.1 months from 10.3 months. The pool's weighted average annual percentage rate (APR) increased to 3.22% from 2.84%. The weighted average loan-to-value (LTV) at origination decreased to 96.9% from 98.2%. Material changes in the statistical pool composition as of the statistical calculation date for the series 2018-REV1 initial JANUARY 18,

5 receivables from the series 2017-REV1 pool as of the related closing date include: The weighted average FICO increased to 740 from 736. Series 2018-REV1 statistical pool is the highest weighted average FICO FordREV pool to date. The percentage of long-term contracts (those with an original term greater than 60 months but less than or equal to 72 months) increased to 60.0% from 54.4%, but the weighted average FICO score of these contracts increased to 724 from 712. The weighted average seasoning decreased slightly to 8.1 months from 8.6 months. The pool's weighted average annual percentage rate (APR) increased to 3.22% from 2.66%. The weighted average loan-to-value (LTV) at origination decreased to 96.9% from 98.2%. In our view, the overall credit quality of the series 2018-REV1 statistical pool is similar to that of series 2017-REV2 and series 2017-REV1. Our expected net loss of 2.85% and 2.50% when the pool meets the pool composition tests or floor credit enhancement composition tests, respectively, is unchanged from series 2017-REV1, the last FordREV transaction we rated. In deriving our expected net loss, our worst-case pool mix assumptions incorporated the receivables composition tests thresholds and our expected cumulative net loss assumptions for the various cohorts factors in performance experienced over the past 10 years, including during the period when losses were higher (see the S&P Global Ratings' Expected Loss Assuming A Worst-Case Pool Mix: 2.85% [Pool Composition Tests], 2.50% [Floor Credit Enhancement Composition Tests] section for more information). Transaction Overview FCAOT 2018-REV1 is Ford Credit's ninth issuance from the FordREV program. The FordREV Program offers auto loan-backed securities secured by a revolving pool of prime retail sales contracts, which are in turn secured by new and used vehicles originated in the U.S. by Ford Credit. FCAOT 2018-REV1, a newly created special-purpose entity (SPE), will issue the notes and use the proceeds to purchase the initial receivables from Ford Credit Auto Receivables Six LLC, the depositor (see chart 1 for the transaction structure). JANUARY 18,

6 During the revolving period, the trust must fund an accumulation account with collections from the receivables and may use funds on deposit in the accumulation account to purchase additional receivables. To limit deterioration in pool quality and credit enhancement while the pool revolves, the transaction includes pool composition tests, a credit enhancement test, early amortization triggers, and a net losses test. In addition, a negative carry account must be funded with excess spread to protect against negative carry (the difference between the weighted average note interest rate and the expected investment earnings on any accumulation account balance). Although no principal payments are due on the notes during the revolving period, interest is due monthly. The trust may also sell receivables to the depositor, another Ford Credit SPE, or a third-party purchaser on any payment date during the revolving period. The receivables pool must still meet the pool composition and credit enhancement tests after the sales, and there is a 10% cumulative limit on receivables sold from the trust to the depositor or another Ford Credit SPE, which are subsequently sold back to Ford Credit. The revolving period will continue until an amortization event (including when the maximum seven-year revolving period expires) occurs, resulting in the pool and notes' amortization (see the Amortization events section below for these events). If an amortization event occurs, additional asset purchases cease, and the trust must pay interest and principal to the notes monthly with the cash flows received from the underlying pool of auto loan receivables. However, the issuer may sell the entire pool of receivables to the depositor, another Ford Credit SPE, or a third-party purchaser on any payment date occurring one year after the closing date (including during the amortization period) if the purchase price is sufficient to pay the outstanding note balance, all accrued interest, and certain other amounts that may be due to the noteholders as well as all fees and expenses of the trust. JANUARY 18,

7 The other amounts that may become payable on the notes include step-up amounts and make-whole payments. If the amortization period begins because the transaction has been in the revolving period for the full seven years, step-up amounts accrue on the notes. In addition, if the amortization period begins before the note redemption period (the six months preceding the expected final payment date) because the negative carry account is not funded to the required amount or because the adjusted pool balance declines to 50% of the notes' initial balance, make-whole payments will be payable to the noteholders. An optional redemption of the notes before the note redemption period will also cause make-whole payments to accrue. Make-whole payments aim to compensate noteholders for the early return of principal. Step-up amounts and make-whole payments are subordinate to interest and principal payments to the notes, and nonpayment of these amounts before the legal final maturity date will not be an event of default. S&P Global Ratings' preliminary ratings do not address the likelihood that step-up amounts or make-whole payments will be paid. Revolving Period Pool composition tests Because the underlying asset pool could be in a revolving period for up to seven years, several pool composition tests must be met after any purchase or sale of receivables to maintain a minimum overall pool quality. The pool composition tests include: A weighted average FICO score at origination of at least 700 (excluding receivables that have obligors who do not have FICO scores); Receivables with individual obligors that did not have FICO scores are limited to 2% of the pool; Receivables with commercial obligors that did not have FICO scores are limited to 22.5% of the pool; Receivables with an original term of more than 60 months are limited to 75% of the pool; Receivables from used vehicles are limited to 20% of the pool; Receivables from used vehicles and with an original term of more than 60 months are limited to 10% of the pool; Receivables from new vehicles with an original term of more than 60 months and with obligors that did not have FICO scores are limited to 5% of the pool; and Receivables from used vehicles with obligors that have FICO scores less than 625 are limited to 5% of the pool. In addition, Ford Credit will not include in the pool receivables from used vehicles with an original term of more than 60 months and with no FICO score, according to its selection criteria. The transaction's selection criteria also include, as of the applicable cut-off date, each receivable: Has an original term no greater than 72 months; Is currently not more than 30 days delinquent; Has not been granted a payment extension or been rewritten; and Is not with an obligor involved in a bankruptcy proceeding. The transaction also has a second layer of quality thresholds known as the "floor credit enhancement composition tests," which generally have stricter limits on higher-risk segments and require a higher weighted average FICO score compared with the pool composition tests and include: A weighted average FICO score at origination of at least 715 (excluding receivables that have obligors who do not have FICO scores); JANUARY 18,

8 Receivables with an original term of more than 60 months are limited to 70% of the pool; Receivables from used vehicles are limited to 15% of the pool; Receivables from used vehicles and with an original term of more than 60 months are limited to 9% of the pool; Receivables from new vehicles with an original term of more than 60 months and with obligors that did not have FICO scores are limited to 4% of the pool; and Receivables from used vehicles with obligors that have FICO scores less than 625 are limited to 3% of the pool. If the receivables pool meets the pool composition tests, the minimum YSOA discount rate will be 8.80%, but if the receivables pool meets the floor credit enhancement composition tests, the minimum YSOA discount rate will be 8.10%. S&P Global Ratings has a lower expected loss assuming a worst-case pool mix for the floor credit enhancement composition tests versus the pool composition tests to reflect the resulting hypothetical pool's higher credit quality. The transaction also includes a net losses test that steps up credit enhancement during the revolving period by causing the minimum YSOA discount rate to increase to 11.80% upon the trust's next receivables purchase as long as three-month annualized net losses exceed 2.50%. On each purchase and sale date, the servicer will determine whether the pool, including receivables purchased by the trust on a purchase date and excluding receivables sold by the trust on a sale date, satisfies the pool composition tests. If they are not satisfied, the servicer will identify certain receivables (ineligible receivables) to exclude from the pool so that the remaining receivables meet the pool composition tests. Ineligible receivables will stay in the pool, and the cash flows that they generate will be counted as collections available to the transaction. Credit enhancement test On each purchase or sale date, the servicer will also determine if the credit enhancement test is satisfied. To satisfy this test, the adjusted pool balance (excluding any ineligible receivables) plus the amount in the accumulation account must be at least equal to the notes' balance. Amortization events The transaction also includes several amortization events intended to address the risks of collateral performance deterioration, negative carry, and servicer termination during the revolving period. If any of the following events occur, the revolving period ends and the pool and notes amortize: Monthly interest due is not paid on the notes. The issuer fails to deposit the reserve deposit amount, accumulation deposit amount (see the accumulation account discussion below), or the negative carry deposit amount on any payment date. The maximum seven-year revolving period expires while the notes are outstanding. The three-month annualized net loss rate exceeds 3.50%. The rolling three-month average rate of delinquencies 61 days or more past due exceeds 1.50%. The adjusted pool balance is less than 50% of the principal amount of the notes. A servicer termination event occurs and is continuing. An event of default occurs and is continuing. An accumulation account will hold collections in between purchases of additional receivables as well as a portion of the proceeds equal to the adjusted pool balance of any receivables sold by the trust. Per the transaction's payment priority, the issuer must pay the accumulation deposit amount, equal to the monthly change in the adjusted pool JANUARY 18,

9 balance, into the accumulation account each month from available collections. The failure to do so will result in amortization, which serves a similar purpose as the credit enhancement test but is performed every month. Reinvestment earnings on the funds in the accumulation account constitute available funds for the trust. The yield on the investments may be less than the interest payable on the notes, which could result in negative carry. To address this risk, whenever there is a balance in the accumulation account, a negative carry account must be funded--using excess spread--to cover the difference between the notes' interest rate and the investment earnings. As noted above, the trust's failure to make the negative carry deposit in full when required will result in amortization. If any amortization event occurs, it will cause all funds in the accumulation account and negative carry account to be deposited into the collection account, and the transaction will enter amortization. In addition, on the first payment date in amortization, amounts in the reserve account exceeding 0.50% of the adjusted pool balance as of the closing date will be deposited into the collection account. Then noteholders will receive monthly interest and principal until they are paid in full, and amounts in the collection account will be applied per the transaction's payment priority. Transaction Structure The series 2018-REV1 transaction incorporates the following structural features: A seven-year revolving period subject to certain amortization events; No initial overcollateralization (when excluding the YSOA), although during any amortization period, overcollateralization grows as the transaction pays all funds remaining after paying senior fees, interest, priority principal, and any reserve deposit as principal to the noteholders. During any amortization period, a sequential-pay waterfall that is expected to result in increased credit enhancement for the senior notes. A YSOA that amortizes according to a predetermined schedule. When new receivables are purchased during the revolving period, the YSOA schedule is recalculated using a discount rate of at least 8.80% if pool composition tests are met, at least 8.10% if the floor credit enhancement composition tests are met, and at least 11.80% while the net losses test is not met. A nonamortizing reserve account equal to 2.00% of the adjusted pool balance as of the closing date during the revolving period. At amortization, the reserve account target amount will decrease to 0.50% of the adjusted pool balance as of the closing date, and any excess amounts above 0.50% will be released and deposited into the collection accounts on the first payment date following amortization and will be used to make payments per the transaction's payment waterfall. During the amortization period, the reserve account will equal 0.50% of the adjusted pool balance as of the closing date and is nonamortizing. The use of excess spread, to the extent available after covering net losses, to maintain parity between the adjusted pool balance (plus amounts in the accumulation account) and the notes during the revolving period, and, during any amortization period, to pay principal to the outstanding notes. Pool composition tests, the credit enhancement test, the net losses test, and amortization events that are designed to maintain a minimum pool quality and credit enhancement level during the revolving period. The YSOA is sized to elevate the yield on the contracts with APRs below the YSOA discount rate to the YSOA discount rate. The YSOA for each month will be calculated at closing and on each purchase and sale date, assuming zero prepayments and zero defaults, and will amortize according to a schedule. During any amortization period, the JANUARY 18,

10 YSOA will not be recalculated. In rating this transaction, S&P Global Ratings will review the relevant legal matters outlined in its criteria. Payment Structure The payment priority that Ford Credit presented to us provides that the auto receivables collections will be used to make the distributions shown in table 1. In addition, the funds in the reserve account will be available to cover senior fees and interest shortfalls during the revolving period and to make priority principal payments during any amortization period. The reserve account is also available to make principal payments that are due on the notes' legal final maturity date. During the revolving period, funds in the negative carry account will be available to cover senior fees, interest shortfalls, reserve replenishment, and the accumulation deposit amount. Table 1 Payment Waterfall Priority Payment 1 Indenture trustee fees, owner trustee fees, and issuer expenses, capped at $150,000 per year. 2 The 1.00% servicing fee. 3 Class A note interest. 4 During the amortization period, first-priority principal payment (if the class A notes' balance is greater than the adjusted pool balance). 5 Class B note interest. 6 During the amortization period, second-priority principal payment (if the class A and B notes' balance is greater than the adjusted pool balance after any first-priority principal payments are made). 7 Class C note interest. 8 Restore the reserve account to its required amount(i). 9 During the revolving period, the accumulation deposit amount to the accumulation account(ii). During the amortization period, all remaining amounts to pay principal to the noteholders, sequentially by class. 10 During the revolving period, the required negative carry amount to the negative carry account. 11 Any make-whole payments due on the notes, and after Feb. 15, 2022, any step-up amounts due on the notes(iii). 12 Any unpaid trustee fees and expenses. 13 Any remainder to the residual interestholder. (i)during the revolving period, the reserve account required amount is 2.00% and during the amortization period, the reserve account required amount is 0.50%, both as a percentage of the adjusted pool balance as of the closing date. (ii)the accumulation deposit amount: for a payment date during the revolving period, an amount equal to the adjusted pool balance minus the adjusted pool balance each for the preceding payment date. (iii)s&p Global Ratings' preliminary ratings do not address make-whole payments or step-up amounts. During the revolving period, interest is scheduled to be paid monthly on the notes, no principal is due, and an amount equal to the accumulation deposit amount must be paid to the accumulation deposit account. Amounts in the accumulation account may be used to purchase additional receivables at a later date. In addition, an amount equal to the negative carry deposit amount must be paid to the negative carry account if there are amounts in the accumulation account. If the notes are still outstanding when the transaction reaches the expected final payment date on Jan. 15, 2025, step-up amounts will accrue on the notes. Make-whole payments are due if certain amortization events (failure to fund JANUARY 18,

11 the negative carry account or the adjusted pool balance falls below 50% of note the balance) occur or an optional redemption occurs before the note redemption period. Our preliminary ratings do not address whether step-up amounts or make-whole payments will be made. Origination, Servicing, And Collections Ford Credit's underwriting and purchasing strategy includes internal scoring models that are used to assess a potential obligor's creditworthiness and ability to pay. These scoring models consider the customer's characteristics, the retail installment sale contract's proposed terms, and a national credit bureau report. Ford Credit frequently reviews the predictability of its scoring models and makes updates in response to changing economic factors, market conditions, and loss/delinquency experiences. Ford Credit's current origination scoring models for consumer credit applicants were launched in December 2013 and for commercial credit applicants in April Electronic decisioning models automatically evaluate the submitted applications and either approve or reject them. In 2014, Ford Credit began nationwide origination of 75-month contracts. In 2015, Ford Credit began a limited pilot program to purchase 84-month contracts, and in April 2016 began nationwide origination of 84-month contracts. The 75-month and 84-month contracts are not included in this securitization. Ford Credit has been servicing the receivables in each of its U.S. public retail securitizations since it first securitized in As part of its servicing strategy, Ford Credit uses an internally developed behavior scoring model to determine the default probability for current receivables and reduce credit losses by focusing collections efforts on the higher-risk accounts. This behavior scorecard considers each account's origination characteristics, the customer's payment history, and updated credit bureau information. To maintain an optimal collection strategy, Ford Credit frequently updates its behavioral scorecard and tests new servicing practices. Ford Credit currently conducts its servicing activities across four centralized business centers located in the U.S. In addition, it operates specialty centers for bankrupt and charged-off accounts as well as a centralized customer service center for inbound customer inquiries. Managed Portfolio Ford Motor Credit's managed portfolio shows continued improvement in delinquency and repossession experience; however, its net loss experience has increased slightly (see table 2). The average number of delinquent contracts as a percentage of the average number of contracts outstanding for the nine months ended Sept. 30, 2017, decreased to 1.57% from 1.59% for the same period a year earlier. Repossessions as a percentage of the average number of contracts outstanding increased to 1.27% for the nine months ended Sept. 30, 2017, from 1.18% a year earlier. In addition, the number of contracts charged off as a percentage of the average number of contracts outstanding for the nine months ended Sept. 30, 2017, increased to 1.86% from 1.67% a year earlier. The average amount of net loss on charged-off contracts has steadily increased since Net losses as a percentage of the average portfolio outstanding increased to 0.58% for the nine months ended Sept. 30, 2017, from 0.48% a year JANUARY 18,

12 earlier. The average net loss on charged-off loans increased to $6,401 for the nine months ended Sept. 30, 2017, from $5,755 a year earlier. According to Ford Motor Credit, this increase is attributed to higher balances at repossession and higher loss severity at vehicle disposition due to lower recoveries. Also, starting in 2015, the net loss calculation changed to include repossession expenses incurred before charge off, which increased the average net loss on contracts charged off. Table 2 Managed Portfolio Avg. portfolio outstanding during the period (mil. $) Avg. number of contracts outstanding Nine months ended Sept. 30 Year ended Dec ,101 42,064 42,651 38,601 34,646 32,475 31,693 2,137,614 2,092,050 2,106,026 2,004,606 1,895,546 1,866,480 2,000,202 Delinquencies (%)(i) days days days Over 120 days Total delinquencies Delinquencies (%)(ii) days days days Over 120 days Total delinquencies Repossessions as a % of the average no. of contracts outstanding Aggregate net losses (mil. $) Net losses as a % of gross liquidations(iii) Net losses as a % of the average portfolio outstanding(iv) No. of contracts charged off as a % of the average number of contracts outstanding Average net loss on charged-off contracts ($) ,401 5,755 6,245 4,445 3,292 2,798 2,197 (i)average number of delinquencies as a percentage of the average number of contracts outstanding. (ii)average principal balance of delinquent contracts as a percentage of the portfolio outstanding. (iii)gross liquidations are cash payments and charge-offs that reduce a receivables' outstanding balance. Pool Analysis Table 3 shows the statistical FCAOT 2018-REV1 pool's initial characteristics, which are similar to Ford Credit's JANUARY 18,

13 previous REV pools as well as to recent nonrevolving pools from Ford Credit's U.S. retail installment sale contract securitization program. Table 3 Collateral Comparison(i) Pool size (bil. $) No. of receivables Avg. principal balance ($) APR excluding the YSOA (%) original term (mos.) remaining (mos.) Seasoning (mos.) Total % of loans with an original term of months New vehicle (%) Used vehicle (%) original FICO score(iii) FICO score of pools with an original term of months (iii) LTV at origination (%) PTI at origination (%) 2018-REV1 statistical pool 2017-REV2 (ii) 2017-REV REV REV C 2017-B 2017-A(ii) 2016-C(ii) 2016-B ,832 60,184 58,484 60,144 47,729 78,146 55,385 66,537 55,788 56,550 26,995 24,940 26,007 24,871 25,140 25,559 25,465 25,821 25,633 25, FICO distribution (%) Less than JANUARY 18,

14 Table 3 Collateral Comparison(i) (cont.) 2018-REV1 statistical pool 2017-REV2 (ii) 2017-REV REV REV C 2017-B 2017-A(ii) 2016-C(ii) 2016-B plus Consumer (no FICO) Commercial (no FICO) Top five state concentrations (%) TX=15.85 TX=11.53 TX = TX = TX=15.58 TX=16.53 TX=15.22 TX=15.20 TX=14.97 TX=14.96 CA=10.41 CA=11.35 CA = 9.93 CA = 9.70 CA=9.27 CA=9.91 CA=10.91 CA=9.64 CA=9.80 CA=9.50 FL=8.24 FL=8.31 FL = 7.42 FL = 7.25 FL=6.73 IL=4.02 FL=7.86 FL=7.57 FL=6.98 FL=6.89 GA=3.75 IL=4.13 IL=4.04 IL=4.23 IL=4.03 OH=3.82 GA=3.93 IL=3.92 IL=4.22 IL=4.01 IL=3.61 GA=3.78 MI=3.65 PA=3.82 MI=3.60 GA=3.69 IL=3.87 GA=3.58 OH=3.84 MI=3.72 (i)all percentages are of the initial gross receivables balance. (ii)not rated by S&P Global Ratings. (iii)excludes receivables that represent commercial accounts or obligors with little credit history. APR--Annual percentage rate. YSOA--Yield supplement overcollateralization amount. PTI--Payment to income. LTV--Loan to value. Securitization Performance We maintain ratings on 13 active public retail FCAOT transactions that closed between 2014 and 2017; seven have amortizing structures; and six (2014-REV1, 2015-REV1, 2015-REV2, 2016-REV1, 2016-REV2, and 2017-REV1) are revolving. Each outstanding transaction currently remains adequately enhanced to support the current ratings. We will continue to monitor their performance to determine if the assigned ratings are sufficient, and we will take any rating actions we deem appropriate. FCAOT revolving transactions Ford Credit's eight retail term revolving transactions--series 2014-REV1, 2014-REV2, 2015-REV1, 2015-REV2, 2016-REV1, 2016-REV2, 2017-REV1, and 2017-REV2--are currently in their scheduled revolving periods. Table 4 below shows the current losses and delinquencies of the six FordREV transactions we've rated: series 2014-REV1, 2015-REV1, 2015-REV2, 2016-REV1, 2016-REV2, and 2017-REV1. Chart 2 shows the loss performance of these six FordREV transactions since closing. The loss performance in chart 2 is shown as a percentage of the total funded receivables balance (initial aggregate pool balance at closing plus initial aggregate pool balance of each subsequent pool additions). The 60+ day delinquencies shown in chart 2 are as a percentage of the current pool balance. To date, all interest payments have been made, and principal collections have been used to purchase additional receivables each month. In addition, credit enhancement remains at its respective target levels. JANUARY 18,

15 Table 4 Performance Data For Outstanding Ford Credit Auto Owner Trust REV Transactions Rated By S&P Global Ratings (As of the January 2018 distribution date) Transaction/series Month CNL (% of total funded receivables balance) 60+ day delinq. (% of current pool balance) 2014-REV REV REV REV REV REV CNL--Cumulative net loss. Chart 2 Table 5 compares each S&P Global Ratings-rated transaction's initial pool at closing to the current pool composition as of the December 2017 distribution date. The collateral composition each month has remained relatively similar to the initial pool. Some significant differences between the current pools and the related initial pools include greater seasoning as the pools amortize and a higher percentage of 61- to 72-month term loans. The series 2014-REV1, JANUARY 18,

16 2015-REV1, and 2015-REV2 pools do not meet the floor credit enhancement composition tests; however, they do meet the collateral quality thresholds specified under the pool composition tests. As a result, per the transactions' structures, the applicable higher yield supplement discount rate has been applied to these outstanding series, resulting in greater yield supplement overcollateralization. Series 2016-REV1, 2016-REV2, and 2017-REV1 pools continue to meet the collateral quality thresholds specified under the floor credit enhancement composition tests. Table 5 Collateral Comparison Series Aggregate principal balance (mil $) No. of receivables Avg. principal balance ($) APR excluding the YSOA (%) original term (mos.) remaining (mos.) Seasoning (mos.) Total % of loans with an original term of months New vehicle (%) Used vehicle (%) FICO score(i) FICO score of pools with an original term of months 2014-REV1 initial pool 2014-REV1 current pool 2015-REV1 initial pool 2015-REV1 current pool 2015-REV2 initial pool 2015-REV2 current pool 2016-REV1 initial pool 2016-REV1 current pool 1, , , , , , ,301 71,691 81, ,408 39,026 50,495 47,729 60,754 20,621 16,515 21,458 16,988 22,594 17,619 25,140 19, Top five state concentrations (%) TX= TX=13.68 TX=14.55 TX=13.43 TX=15.31 TX=13.79 TX = TX=14.16 CA= 8.74 CA=10.38 CA=8.68 CA=10.37 CA=9.29 CA=10.20 CA = 9.27 CA=10.29 FL= 6.52 FL=6.58 FL=6.25 FL=6.59 FL=6.18 Fl=6.72 FL = 6.73 FL=6.74 IL= 3.81 IL=4.20 MI=4.28 IL=4.17 MI=3.95 MI=3.85 IL=4.03 IL=4.27 MI= 3.72 MI=3.82 IL=4.03 MI=3.91 IL=3.89 IL=4.07 MI=3.60 MI= JANUARY 18,

17 Table 5 Collateral Comparison (cont.) Aggregate principal balance (mil $) No. of receivables Avg. principal balance ($) APR excluding the YSOA (%) original term (mos.) remaining (mos.) Seasoning (mos.) Total % of loans with an original term of months New vehicle (%) Used vehicle (%) FICO score(i) FICO score of pools with an original term of months 2016-REV2 initial pool 2016-REV2 current pool 2017-REV1 initial pool 2017-REV1 current pool 2017-REV2 initial pool 2017-REV2 current pool 1, , , , , , ,144 73,108 58,484 65,783 60,184 61,735 24,871 20,187 26,007 22,883 24,940 24, Top five state concentrations (%) TX = TX=12.56 TX=14.62 TX=14.33 TX=11.53 TX=11.78 CA = 9.70 CA=10.13 CA=9.92 CA=10.33 CA=11.35 CA=11.47 FL = 7.25 FL=6.85 FL=7.38 FL=7.15 FL=8.31 FL=7.89 IL=4.23 IL=4.23 IL=4.03 IL=4.11 IL=4.13 IL=4.16 PA=3.82 OH=3.93 MI=3.64 MI=3.60 GA=3.78 GA=3.76 (i)excludes receivables that represent commercial accounts or obligors with little credit history. APR--Annual percentage rate. YSOA--Yield supplement overcollateralization amount. FCAOT nonrevolving transactions Ford Credit's FCAOT securitizations by vintage experienced cumulative net losses of 0.90%-2.27% (see chart 3). The 2007 and 2008 vintages incurred relatively high losses (2.17% and 1.84%, respectively), but these levels were below the peak loss level of 2.27% experienced in the 2001 vintage. JANUARY 18,

18 Chart 3 Ford Credit's public securitization performance began to improve in The paid-off vintages experienced cumulative net losses in the range of 0.69%-1.10%. Outstanding FCAOT transactions from are currently performing better than our original expectations and are projected to experience cumulative net losses in the range of 0.60%-0.95%. We partly attribute this to the more favorable economy, the strong used vehicle market since the recession (resulting in higher recovery rates), and used vehicles representing a smaller percentage of the pool. While the 2015 vintage is performing slightly worse than the 2014 vintage, it is still performing better than our initial expectations. Early cumulative net loss performance for the 2016 vintage shows that it is also performing in line with to slightly better than our initial expectations (see charts 4 and 5). JANUARY 18,

19 Chart 4 Chart 5 In our view, the FordREV pools are currently performing in line with the outstanding FCAOT nonrevolving transactions. However, due to FordREV's long revolving period and the possibility that the existing pool could migrate to a lower credit quality based on the transactions' receivables eligibility criteria, our expected loss assumptions for the FordREV pools are higher compared to our initial expected lifetime net loss of 1.00%-1.20% on the outstanding FCAOT nonrevolving pools. S&P Global Ratings' Expected Loss Assuming A Worst-Case Pool Mix: 2.85% (Pool Composition Tests), 2.50% (Floor Credit Enhancement Composition Tests) In typical amortizing transactions, we determine whether credit enhancement is sufficient to cover a multiple of base-case losses that is commensurate with the preliminary ratings. We used a similar approach for this transaction, but because the auto loan pool could revolve for up to seven years before amortizing, we assumed that the pool's composition will migrate to the lowest credit quality allowable by the pool composition tests. We believe the potential length of the revolving period warrants this approach. As a result, our analysis examined if there is sufficient credit enhancement to cover a multiple of losses that is commensurate with the preliminary ratings, assuming a worst-case pool mix. To determine an expected loss assuming a worst-case mix for the auto loan receivables pool, we first analyzed historical origination net loss data Ford Credit provided, segmented by FICO score band, consumer obligor loans with no FICOs, commercial obligor loans with no FICOs, new/used vehicles, and original term for 36 individual segments. Our cumulative net loss assessments factored in Ford Credit's performance on their originations from for each of the 36 individual segments, which included performance for their vintages, which may have been more severely affected by the economic recession. We also assessed the early performance of the 2017 vintages for any material differences. Also, in our analysis we used an actuarial approach to assess the individual segments' JANUARY 18,

20 expected loss performance, including the commercial obligor loans. In our view, the origination static pool data showed that loss performance on the commercial obligor loans was generally better than that of consumer loans with FICO scores less than 676. In our base-case expected loss analysis, we also considered FCAOT's historical securitization performance, Ford Credit's managed portfolio performance, use of a FICO score in the pool composition tests, and the transaction's relatively long exposure period to the macroeconomic cycle. Once we determined a base-case expected loss for each segment, we then determined a hypothetical pool mix that would maximize the overall loss on the pool while still satisfying the pool composition limits. The pool composition tests specify limits to various combinations of these segments during the revolving period (for details on the pool concentration limits, please see the Revolving Period section above). In addition, the transaction's collateral eligibility criteria exclude any receivable for a used vehicle with an original term greater than 60 months and with a consumer or commercial obligor that did not have a FICO score at origination. We aimed to simulate the worst-possible deterioration of the pool's credit quality, in our view, given the pool composition tests and our expected loss for the individual segments. Three of the 36 segments accounted for approximately 78% of each of the hypothetical worst-case pool under the pool composition tests: New, original term greater than 60 months, and FICO score of 751 or greater; New, original term less than or equal to 60 months, and FICO score less than or equal to 624; and New, original term greater than 60 months, and FICO score less than or equal to 624. Under the floor credit enhancement composition tests, three of the 36 segments accounted for approximately 83% of each of the hypothetical worst-case pool: New, original term greater than 60 months, and FICO score of 751 or greater; New, original term less than or equal to 60 months, and FICO score less than or equal to 624; and New, original term greater than 60 months, and FICO score of Based on our expected losses for each of the 36 segments and assuming the worst-possible pool quality under the pool composition tests, we believe the pool could experience cumulative net losses of approximately 2.85%. We have a lower expected loss assuming a worst-case pool mix of 2.50% when the floor credit enhancement composition tests apply because they have stricter limits on higher-risk segments and a higher minimum weighted average FICO score. Cash Flow Modeling Assumptions And Results We modeled the series 2018-REV1 transaction to simulate 'AAA', 'AA', and 'A' rating stress scenarios (see tables 6 and 7). We modeled the transaction at the beginning of the amortization period with excess spread levels that declined from initial to minimum levels. Because Ford Credit pools typically include a significant portion of contracts with APRs less than the interest rate on the notes plus fees, we used a bifurcated pool method in which the subvened contracts (for cash flow purposes, subvened means loans with APRs of 4% or less) prepay at much slower rates than nonsubvened contracts. Performance data also indicate that lower-apr contracts tend to prepay less than higher-apr contracts. In addition, our stress cash flow scenarios include an APR cap based on the YSOA discount rate, as applicable, at 8.8% under the pool composition tests and 8.1% under the floor credit enhancement composition tests. JANUARY 18,