GMAC – the lending arm of General Motors and now Chrysler – reported worse-than-expected first quarter results earlier on Tuesday. GMAC’s net losses for the first quarter ballooned to $675 million on the back of a weakening economy.
Although still in the black, GMAC’s profit from auto finance tumbled 13 percent to $225 million in the quarter, according to Automotive News. Those figures could improve during the second quarter as GMAC is slated to replace Chrysler Financial as the preferred lending arm of Chrysler.
GMAC’s lending division – Residential Capital – improved its performance over the first quarter of 2008, but still posted a loss of $125 million. Residential Capital lost $859 million during the first quarter of last year, according to Automotive News. Residential Capital has reported a loss for the last 10 quarters.
“The effects of a soft economy and weaker credit performance on legacy assets continued to put pressure on GMAC’s financial performance,” GMAC CEO Alvaro de Molina said in a statement. GMAC lost $589 million during Q1 of 2008.
GMAC could be forced to seek more capital over the next six months, pending a government review due out later this week.
