May 05, 2009
GMAC Auto Division Posts Profit; Extends Curtailment Waiver
NEW YORK —
GMAC Financial Services today reported a first quarter 2009 net loss of
$675 million, compared to a net loss of $589 million in the first quarter
2008.
"The effects of a soft economy and weaker credit performance
on legacy assets continued to put pressure on GMAC's financial performance in
the quarter. We continue to manage through this economic cycle and focus on
strengthening operations for the long-term," said GMAC Chief Executive
Officer Alvaro G. de Molina.
He also addressed the company’s announcement last week that
it was becoming the preferred provider for Chrysler LLC’s dealers and
customers. “This agreement leverages GMAC's strengths, diversifies our auto
finance business and provides new revenue opportunities for the company,” he
said.
In conjunction with last week’s announcement, the U.S. government
has indicated that it intends to support GMAC in promoting the availability of
credit for dealers and customers.
GMAC’s global automotive finance division posted a $225
million in net income in the first quarter 2009, down from $258 million
recorded in the year-ago period. Results were driven primarily by weaker credit
performance, which was partially offset by lower interest expense due to lower
debt balances.
New vehicle consumer financing originations during the first quarter 2009
significantly decreased to $3.4 billion from $13.1 billion in the first quarter
2008. However, in comparison to the prior period, origination levels in the
first quarter 2009 increased from low levels in the fourth quarter 2008, which
totaled $2.7 billion. After receiving funding from the U.S. Treasury's Troubled
Asset Relief Program (TARP) in December, GMAC expanded its new North American
retail auto financing activities from fourth quarter 2008 levels by $1.1
billion.
On April 1, 2009, GMAC eliminated all dealer curtailment payments for aged
inventory for the month of April. On April 30, the company extended the waiver for
the month of May and said it would begin accepting new applications for
wholesale financing from qualified U.S. dealers of GM and non-GM
franchises.
Credit losses increased in the first quarter 2009 to 2.41 percent of managed
retail assets, versus 1.34 percent in the first quarter 2008. The increase is due
to higher frequency of losses in North America and Europe and increased
severity in North America. The increase is
primarily attributable to weaker economic conditions and a smaller asset base.
While credit losses are also up on a quarter-over-quarter basis due to
frequency and an aging portfolio, severity in the first quarter 2009 has
improved compared to the fourth quarter 2008.
Delinquencies, which are contracts more than 30-days past due, also
increased to 3.08 percent in the first quarter 2009, compared to 2.42 percent
in the first quarter 2008. Driving the increase is weaker economic conditions
in certain international markets, such as Spain
and Colombia, and a smaller
asset portfolio in North America and Europe.