GMAC Loses $1.31b in Q4
Think about it. That’s AFTER the U.S. Treasury Department “invested” $6b of your hard-earned tax dollars into the failing auto and mortgage finance company. “Auto sales are in freefall,” Fifth Third Asset’s Mirko Mikelic told Bloomberg. The Michigan money manager (whose company holds a big chunk of GMAC debt) says the bailout “may keep them around at least until they need to restructure.” Confused. May . . . at least . . . until? Bottom line: GMAC’s Q4 new vehicle financing fell from last year’s $13.4b to ’08’s $2.7b. Despite Uncle Sam’s cash infusion and fire sale pricing and lowered FICO score loan eligibility, what’s the bet that the needle doesn’t budge on that number? Meanwhile, Rescap, GMAC’s mortgage unit, famous for its easy credit home loans, is also dying a death. On this subject, Mr. Mikelic leaves the sugar coating on the shelf. “Their mortgage business is basically closed.” With house sales going nowhere slowly, GMAC has a new strategy, related to their free pass bank status.
With the credit and securitization markets closed, GMAC boosted efforts to gain retail deposits at its bank by offering certificates of deposit with higher-than-average yields. Deposits increased to $19.3 billion in the quarter, including $7.2 billion of retail deposits, from $17.7 billion in the third quarter, GMAC said. The company also said today that it acquired all of ResCap’s non-voting interest in GMAC Bank.
So, is there another trip to the bailout buffet in GMAC’s future? Only if things get worse. Or stay the same.
[GMAC’s financial report here]
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How many leases does GMAC own? I ask because there might be a huge amount of pain to come that isn't listed on the books. Specifically, a car or truck that was leased a few years back is assumed to sell for a certain price when the vehicle is returned at the end of the lease, but the current resale values have dropped significantly below estimates from a few years ago when the leases were written. Someone is going to take a bath on that miscalculation.
Actually in GM's new target market (government bailouts), loss is the new profit. So this is good news!
People are DONE buying $30,000 cars. People want $15,000 cars. They’re better off buying used. Of course, you still have Hyundai and Kia willing to cater to the $15k market…… ********************************************************************************* Any car company that wants to sell cars in the next 5 years better damn well learn to cater to that market, or they'll be gone. Toyota, Nissan AND Honda ALL sell cars in the $15000 range, maybe a little more, but not much. Hyundai cars are now on a quality par with Honda and Toyota, KIA not so much. My point was that $10-15000 is the new market for many people. USED or NEW, GM and CHRYCO aint selling any cars anytime soon, and I'm really glad for that. They need to go away. I hope Ford survives, they're the only one that kind of gets it.