Ford Credit’s earnings before taxes dropped 96 percent in the first quarter as the lender clocked $600 million in credit losses as a result impacts from the coronavirus pandemic.

The Dearborn, Mich., captive finance arm attributes the drop to efforts to bolster credit-loss reserves — the funds it sets aside for auto loans it doesn’t expect will be repaid — higher depreciation on off-lease vehicles awaiting sale at auction and anticipated operating lease defaults.

Ford Credit posted $30 million in first-quarter earnings before taxes, executives said Tuesday, down $771 million compared with one year ago. The added reserves and estimates for lease performance projections reflect the likely worsening financial situation caused by coronavirus closures and impacted consumers.

Ford Motor Co. CFO Tim Stone told investors Tuesday that the lender expected used-vehicle markets to rally, although he couldn’t establish a timeline until auctions reopen.

“At present most vehicle auctions in the U.S. are closed,” Stone said. “Sales volume is very low, and prices are disrupting. … We expect market prices to be disrupted for some period. And it is difficult to say how badly or for how many months.”

As with many other U.S. auto-lender captives, Ford Credit quickly mobilized support for customers impacted by the pandemic through payment relief and loan-extension offerings.

Ford Credit ended the first quarter with $28 billion in liquidity, above company targets, Stone said. He emphasized that the captive lender’s self-liquidizing structure allows it to reduce funding requirements as the automaker’s sales shrink. Ford’s U.S. vehicle sales fell 12 percent in the first quarter, with most of the damage coming in late March as the pandemic swept across the country.

On March 18, the automaker agreed to close all of its U.S. factories to protect workers and help stop the spread of the virus.

Ford expects an operating loss of more than $5 billion in the second quarter.

“Ford Credit is an important source of support for customers and dealers during this crisis. And Ford Credit remains an important strategic asset,” Stone said.

Michael Martinez contributed to this report.