GM Exec Says Subprime Crisis Won?t Spread to Auto Loans

The leading finance executive at General Motors told the Associated Press that the subprime mortgage crisis shouldn’t spread to loans made by GMAC, the auto giant’s finance arm.

Delinquencies on auto loans made by GMAC rose in the third quarter to 2.6 percent, from 2.4 percent in the third quarter of 2006. But GM’s Chief Financial Officer Fritz Henderson said at the North American International Auto Show in Detroit that the increase is part of a normal economic cycle.

"Yes they’ve ticked up, but viewed in any sort of historical way, they were still at quite acceptable levels," Henderson told the AP. "I think it’s more sort of normal credit behavior over the course of a cycle than what we’ve seen in housing, for example," Henderson said.

Henderson noted that GMAC has $100 billion in its auto loan portfolio worldwide, so the loans "are something we need to watch, but not at all like what we’ve seen in mortgages.”

GM sold a 51 percent stake in GMAC in November 2006 to Cerberus Capital Management LP and other private-equity firms. GMAC reported a $1.6 billion loss for its fiscal third quarter in November. That was worsened by a $2.3 billion loss at ResCap, GMAC’s mortgage arm. Auto maker GM reported a third quarter loss of $757 million from its 49 percent stake in GMAC.