GMAC Financial Services reported a third quarter 2009 net loss of $767 million, an improvement from the net loss of $2.5 billion in the year-ago period.
While overall third-quarter results were adversely affected by losses in GMAC’s mortgage operations, the company made improvements in its automotive finance division and continues to focus its efforts in that segment.
"Our focus is on growing operations where we can leverage our strengths," said GMAC CEO Alvaro G. de Molina. "We have made major strides in bringing the Chrysler business on line, we launched a competitive dealer program that leverages our full suite of auto products, and Ally Bank continues to attract customers."
GMAC's global automotive finance business reported third quarter 2009 pre-tax income from continuing operations of $395 million, compared to a pre-tax loss from continuing operations of $379 million year-ago period. Continuing operations in the segment were driven by the continued normalization of origination volumes, credit improvement and used vehicle prices.
Total consumer financing originations were $7.7 billion in the third quarter, which included $6.8 billion of new originations, approximately $800 million of used originations and approximately $100 million of new leases. The captive finance company said originations were lower than the $13.3 billion reported in the third quarter 2008, because of a decrease in U.S. vehicle sales and lower leasing levels.
However, origination levels continued to trend upward as they increased 26 percent from $6.1 billion in the second quarter 2009. The increase from last quarter includes improved pricing competitiveness, an increase in Chrysler originations and the effect of the Cash for Clunkers program, according to GMAC.
Credit losses increased in the third quarter to 3.29 percent of managed retail assets, versus 1.56 percent in the year-ago period. The increase is primarily due to a standardization of GMAC’s charge-off policy to conform to regulatory requirements, the effect of a smaller asset base, and the underlying performance of certain subprime portfolios.
Delinquencies, which are contracts more than 30-days past due, also increased to 3.76 percent in the third quarter, compared to 2.77 percent in the third quarter 2008 and 3.48 percent in the second quarter 2009. Delinquency trends have been negatively affected by higher unemployment and a smaller asset portfolio in North America and Europe.