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Discussion Starter · #1 ·
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.
 

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Hindsight is 20/20!!
When the deal was announced that GM was selling a portion of GMAC, folks on this board was moaning and goaning that GM was giving away the Golden Goose!!
Well in the current environemtn you are correct with the goose portion, the golden part, maybe not so much :). Fools gold maybe?
 

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The TATA's come a close second.
Why? Land Rover have just said that they offset sales drops in the USA with sales increases in Russia and China. Apparantly they are the number 1 premium car brand in Russia now. Jag is also seeing big increases in sales thanks to the XF which still has a 3 month waiting list roughly 9 months after launch!
 

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Jag is also seeing big increases in sales thanks to the XF which still has a 3 month waiting list roughly 9 months after launch!
Wagner Jaguar near me will sell the XF today for $5K off. They have plenty on the lot. I don't think the XF has a 3 month waiting list in the northeast. Maybe in fashionista CA or TX or FL, but not in the markets up north where the Financial Services meltdown is happening. Luxury car sales are discretionary purchases and not much discretionary income is floating around people working in Financial Services.
 

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Discussion Starter · #12 ·
Between GMAC and Chrysler, Cerberus is my candidate for the Worst-Timed Acquisitions in History.

Wow.
Yes but "Cerberus" is looking at today, and today only. The lease end values will hurt for the next 3 years anyways.

Then there is the "Now" timing of pulling away from All Leasing. The bleeding will not stop for 3+ years, but there will be no influcs of selling through it.

This is a bandaid, that is suppose to last 3 years, because they will not be able to afford another one till then.

Grab your life vests boys, this ship is sinking.
 

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If Cerberus goes down what happens to GMAC, GM and Chrysler? It's like the auto version of the bank sub-prime problem. Maybe the Government will have to step in and help the auto companies as the Treasury helped the brokerages or we might all have to start learning to say "yes please" in Japanese.
 

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If Cerberus goes down what happens to GMAC, GM and Chrysler? It's like the auto version of the bank sub-prime problem. Maybe the Government will have to step in and help the auto companies as the Treasury helped the brokerages or we might all have to start learning to say "yes please" in Japanese.
Chrysler and GMAC cannot bring down Cerberus. Chrysler and GMAC represent a tiny fraction of Cerberus's portfolio, and even if both companies go completely bankrupt, it would barely be a blip on their radar.
 

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Funny ain't it? Buickman was still saying less than a week ago the GMAC was a bad move to sell off.
the bad move is too far removed for most to realize. the incompetent management that allowed no doc loans and/or shaky credit extensions is the trouble. for decades GMAC was the cash cow. to simply think selling it off after management corrupted the loan portfolio is just another example of GM's lack of accountability. once again, no one is held responsible and excuses galore appear to justify the insane decision making.

WAKE UP PEOPLE!
 

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Here we go again...
glad you're here.

who's Batman without the Joker, Superman without Lex Luther, or for that matter...Bullwinkle without Boris?
 
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