Summary
After several quarters of losses, GMAC's automotive finance and dealer-related insurance businesses were profitable in the third quarter.
Analysis
GMAC, the traditional lender to GM dealers and customers, reduced its Q3 net loss to $767 million from $2.5 billion for the same period last year and from $3.9 billion in the previous quarter this year, but red ink continued to flow from its ailing mortgage unit.
The company, which is taking over the auto loan business of Chrysler Group, reportedly has been talking with the Treasury Department about a third cash infusion as it approaches a deadline to carry out a plan to enhance its capital. GMAC already has received $12.5 billion in taxpayer support.
GMAC wrote $7.7 billion in consumer finance contracts in Q3, down 42% from the $13.3 billion in consumer auto loans, leases, and balloon notes a year ago. The company attributers the drop to the decline in new car sales and its discontinuance of auto leases.
The consumer finance business gained momentum from the federal cash for clunkers program this summer and growing business from Chrysler dealers.
GMAC wrote $720 million in Chrysler retail loans, up from $200 million in the previous quarter. The lenders penetration of U.S. retail sales for Chrysler rose to 21% of vehicles sold from 10% in June.
And GMAC's outstanding balance for financing Chrysler dealers floorplan loans was $3.3 billion on September 30. GMAC penetration of Chrysler dealers floorplan financing grew to 67% in the U.S. and 85% in Canada.
General Motors and Chrysler dealers are looking to GMAC to provide floorplan loans if they have any hope of survival as banks and other lenders have pulled out of the dealer inventory market.
