troubles
Finance house GMAC
has released its Q3 results, which show that the company has taken
a significant hit from its exposure to the ongoing turmoil in the
US sub-prime mortgage sector, and from “disruptions” in global
capital markets.
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GMAC reported a Q3 2007 consolidated net loss of $1.6bn (£770m),
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.
The US was not the only market affected, GMAC said: “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.
GMAC chief executive officer Eric
Feldstein said: “The third quarter financial performance of
ResCap is a major disappointment.
“We are moving aggressively to restructure our real estate
finance business as weakness in the housing market and mortgage
industry continues to prevail.”
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By GlobalDataAuto 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.
Used vehicle originations grew 64 per cent year on year to $2.3bn
(£1.1bn) during the third quarter.
Delinquencies grew slightly to 2.53 per cent in Q3 2007,
compared with 2.47 per cent in the year-ago period; GMAC added that
losses remained “contained”.
New regions outside GMAC’s home North American market offer the
company further room to expand (see key figures, below), with
positive portfolio growth in the international operations division.
It was reported that GMAC is now present in 135 cities in China and
partners with 450 dealers, and the finance house set up operations
in Russia in the third quarter of 2007.
GMAC Automotive Finance operations: Key
figures
| Q3 07 | Q3 06 | % change | |
| North American operations net income ($m) | 403 | 237 | 70 |
| International operations net income ($m) | 116 | 83 | 39.8 |
| Total net income | 519 | 320 | 62.2 |
| North American operations: | |||
| Value of contracts originated ($bn) | 13.9 | 17.7 | -21.5 |
| Value of outstandings at end of quarter ($bn) | 65.2 | 83.9 | -22.3 |
| Share of new GM retail sales in North America (%) | 45 | 62 | -27.4 |
| International operations: | |||
| Value of contracts originated ($bn) | 3 | 2.6 | 15.4 |
| Value of outstandings at end of quarter ($bn) | 29.5 | 25.2 | 17.1 |
| Jan-Sep 07 | Jan-Sep 06 | % change | |
| North American operations net income ($m) | 1010 | 355 | 184.5 |
| International operations net income ($m) | 289 | 289 | 0 |
| Total net income | 1299 | 644 | 101.7 |
| North American operations: | |||
| Value of contracts originated ($bn) | 38.6 | 40.8 | -5.4 |
| Value of outstandings at end of quarter ($bn) | n/a | n/a | n/a |
| Share of new GM retail sales in North America (%) | 45 | 51 | -11.8 |
| International operations: | |||
| Value of contracts originated ($bn) | 8.7 | 7.6 | 14.5 |
| Value of outstandings at end of quarter ($bn) | 85.9 | 75.5 | 13.8 |
