GM finance chief: Mortgage woes not spreading to auto loans
DETROIT -- General Motors Corp.'s top finance executive said Sunday he doesn't see the subprime mortgage mess spreading into auto loans at the company's former credit arm, GMAC financial services.
Chief Financial Officer Fritz Henderson said that although GMAC auto loan delinquencies were up slightly in the third quarter compared with the same time in 2006, the problems are nowhere near the troubles due to real estate loans made to people with less-than-stellar credit.
GMAC's auto loan delinquencies rose from 2.4 percent in the third quarter of 2006 to 2.6 percent in the same period of 2007, Henderson said.
"Yes they've ticked up, but viewed in any sort of historical way, they were still at quite acceptable levels," Henderson said in an interview at the North American International Auto Show in Detroit.
"I think it's more sort of normal credit behavior over the course of a cycle than what we've seen in housing, for example," Henderson said. "But we'll all have to stay tuned."
GMAC formerly was controlled by GM. Cerberus Capital Management LP and other private-equity firms bought a 51 percent stake in GMAC in November 2006, before weakness in the mortgage industry became widely known.
GMAC in November posted a $1.6 billion loss for the third quarter. It included a $2.3 billion loss at ResCap, its mortgage arm, which offset profits elsewhere.
GMAC has more than $100 billion in its auto loan portfolio worldwide, so the loans "are something we need to watch, but not at all like what we've seen in mortgages," Henderson said.
In the third quarter, GM reported a loss of $757 million from its 49 percent stake in GMAC, due largely to losses at ResCap.
The battered U.S. mortgage industry has suffered billions in losses due to problems with subprime loans. Last week, it led to Bank of America's $4.1 billion rescue of Countrywide Financial.