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http://biz.yahoo.com/rb/080731/gmac.html?.v=1
NEW YORK (Reuters) - Finance company GMAC posted a $2.48 billion second-quarter loss on Thursday, as rising gas prices forced write-downs of truck and sport-utility vehicle leases, and losses in its mortgage lending unit soared.
"A soft economic environment and continued volatility in the mortgage and credit markets have significantly affected results," Chief Executive Alvaro de Molina said. "Higher fuel prices and weaker consumer credit prove to be headwinds."
GMAC's loss compared with a profit of $293 million a year earlier. Its Residential Capital LLC mortgage unit lost $1.86 billion, its seventh straight unprofitable quarter, after losing $254 million a year earlier. Auto finance operations lost $717 million, compared with a year-earlier $395 million profit.
Results will hurt those of General Motors Corp (NYSE:GM - News), which kept a 49 percent stake in GMAC after selling the rest in 2006 to private equity firm Cerberus Capital Management LP (CBS.UL).
GM is scheduled to report quarterly results on Friday. Its shares fell 57 cents to $10.83 in pre-market trading.
GMAC is based in Detroit, and ResCap in Minneapolis.
Results at GMAC included a $716 million write-down of vehicle leases, reflecting lower demand for and prices of used SUVs and trucks in the United States and Canada.
GMAC said it ended June with about $18 billion of SUV and truck leases in those countries on its books, out of a total $32.8 billion of leases.
In typical leasing transactions, automakers or lenders retain ownership of vehicles that customers rent, often for two to five years. But record gas prices have driven consumers to more fuel-efficient vehicles, forcing lenders to write down the value of leases on these once-popular vehicles.
GMAC this week said it stopped offering leasing incentives in Canada, and is increasing pricing on other lending.
Last week, Cerberus-controlled Chrysler LLC said its finance unit would end vehicle leases to U.S. consumers.
ResCap's loss stemmed in part from asset sales designed to reduce risk, and higher credit losses in European markets.
NEW YORK (Reuters) - Finance company GMAC posted a $2.48 billion second-quarter loss on Thursday, as rising gas prices forced write-downs of truck and sport-utility vehicle leases, and losses in its mortgage lending unit soared.
"A soft economic environment and continued volatility in the mortgage and credit markets have significantly affected results," Chief Executive Alvaro de Molina said. "Higher fuel prices and weaker consumer credit prove to be headwinds."
GMAC's loss compared with a profit of $293 million a year earlier. Its Residential Capital LLC mortgage unit lost $1.86 billion, its seventh straight unprofitable quarter, after losing $254 million a year earlier. Auto finance operations lost $717 million, compared with a year-earlier $395 million profit.
Results will hurt those of General Motors Corp (NYSE:GM - News), which kept a 49 percent stake in GMAC after selling the rest in 2006 to private equity firm Cerberus Capital Management LP (CBS.UL).
GM is scheduled to report quarterly results on Friday. Its shares fell 57 cents to $10.83 in pre-market trading.
GMAC is based in Detroit, and ResCap in Minneapolis.
Results at GMAC included a $716 million write-down of vehicle leases, reflecting lower demand for and prices of used SUVs and trucks in the United States and Canada.
GMAC said it ended June with about $18 billion of SUV and truck leases in those countries on its books, out of a total $32.8 billion of leases.
In typical leasing transactions, automakers or lenders retain ownership of vehicles that customers rent, often for two to five years. But record gas prices have driven consumers to more fuel-efficient vehicles, forcing lenders to write down the value of leases on these once-popular vehicles.
GMAC this week said it stopped offering leasing incentives in Canada, and is increasing pricing on other lending.
Last week, Cerberus-controlled Chrysler LLC said its finance unit would end vehicle leases to U.S. consumers.
ResCap's loss stemmed in part from asset sales designed to reduce risk, and higher credit losses in European markets.
. Fools gold maybe?
