The fourth-quarter loss compared with a profit of $1.02bn
(£523m) in Q4 2006, but declined from a $1.6bn (£820m) net loss in
the third quarter.
For full-year 2007, GMAC lost $2.3bn (£1.2bn), compared with a
$2.1bn (£1.1bn) profit the previous year.
General Motors owns 49 per cent of GMAC while private equity
firm, Cerberus Capital Management owns 51 per cent.
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In the fourth quarter 2007 ResCap posted a net loss of $921m
(£467) against $128m (£66m) a year ago. ResCap was hit by
write-downs, higher funding costs and restructuring charges,
partially offset by a $521m (£262m) gain from debt retirements.
ResCap will undergo restructuring to stem further losses, GMAC
Automotive warning signs
Net profit at GMAC’s global automotive finance business fell 77
percent to $137m (£70m) during the quarter, down from $593m in Q4
2006. GMAC attributed this to lower gains on debt sold and
US consumer weakness also caused the level of accounts which are
more than 30 days behind with payments to rise to 2.77 per cent at
its auto finance division, with the comparable figure in 2006 2.62
per cent – an indication that troubles in the residential mortgage
market are beginning to spill over into other lending areas.
However, credit performance at GMAC’s international auto finance
division help offset higher defaults in the US.
The company said it has tightened underwriting standards and
expanded collection resources by approximately 40 per cent over the
past four months. GMAC said it expects to be profitable in
CEO of GMAC, Eric
Feldstein commented: “Losses in the fourth quarter decreased
compared to the prior quarter. However, GMAC’s performance
throughout 2007 was severely affected by the ongoing challenges in
the mortgage, credit and capital markets.”