troubles
Finance house GMAC has released its Q3 2007 results, showing a
consolidated net loss of $1.6bn (£770m) for the quarter, up from a
net loss of $173m (£83m) in the same period in 2006. The finance
house’s ResCap mortgage division reported an operating loss of
$1.8bn (£863m), down from operating income of $83m (£40m) in Q3
2006, due to “unprecedented disruptions in the mortgage financing
markets and adverse trends in home price appreciation”, GMAC
said.
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The US was not the only market affected, the financier reported:
“ResCap’s international business also experienced a loss in the
third quarter as mortgage finance markets in the UK and continental
Europe tightened abruptly.”
In an effort to cut costs, GMAC is to lay off around 3,000
employees – around a quarter of its workforce. The job losses
follow the elimination of 2,000 positions in the first half of
2007.
Auto finance “strong”
However, there was more to celebrate in the former General Motors
captive’s automotive division results, where a “continued strong
performance” was reported. Altogether, net income from GMAC’s
global auto finance operations was $519m (£249m), up 62 per cent
from $320m (£153m) in Q3 2006, thanks to “an increase in gains from
the sale of automotive receivables and lower credit provisions,
primarily as a result of increased whole loan sales,” GMAC
said.
New vehicle financing originations fell 23 per cent to
$14.5bn (£7bn) – although GMAC noted that Q3 2006 had seen
“exceptionally high origination levels” after a General Motors-led
marketing push.
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By GlobalDataUsed vehicle originations grew 64 per cent year on year to $2.3bn
(£1.1bn) during the third quarter.
Delinquencies grew slightly to 2.53 per cent in Q3 2007,
compared with 2.47 per cent in the year-ago period; GMAC added that
losses remained “contained”.
New regions outside GMAC’s home North American market offer
the company further room to expand (see key figures, below), with
positive portfolio growth in the international operations division.
It was reported that GMAC is now present in 135 cities in China and
partners with 450 dealers, and the finance house set up operations
in Russia in the third quarter of 2007.
