GMAC SEES SHARPLY BETTER 2008

GMAC, the funding arm that finances General Motors’ dealers and retail customers, expects to be profitable in 2008, according to Fritz Henderson, GM’s chief financial officer.

Speaking to automotive securities analysts yesterday, Henderson said substantially reduced losses at ResCap, GMAC’s mortgage subsidiary, will allow the company to return to profitability. Once viewed as the major profit generator at GMAC, ResCap sustained large losses over the last two years from its substantial subprime mortgage business line. A number of risk mitigation actions, including the write-down of loans, office closures, and new leadership, have brought GMAC to what it expects to be a sharply improved 2008. GMAC’s liquidity remains strong, and both automotive finance and insurance have continued to perform well, despite ResCap’s woes.

Henderson also indicated that common dividend distributions from GMAC to its parents would not occur in 2008 in the interest of building GMAC’s capital base.

GMAC is jointly owned by Cerberus Capital and General Motors.

01/17/2008