GMAC Posts 17.8 Percent Profit Gain
DETROIT (AP) _ General Motors Acceptance Corp. on Tuesday reported a 17.8 percent gain in third-quarter net income over last year, spurred by the financing incentives offered by the nation’s largest automaker.
GMAC, a subsidiary of General Motors Corp., said net income for the three months ended Sept. 30 came to $313.7 million compared with $266.2 million in the same period a year ago.
General Motors launched an industry-wide incentives war with financing rates as low as 2.9 percent in late August to clear a backlog of 1986 models. GM stopped offering the incentives Oct. 8.
GM is expected to report its results on Wednesday.
More than 1.277 million new GM vehicles were financed or leased by GMAC in the United States in the third quarter, establishing a record for any quarter in the company’s history, GMAC said.
In the month of September, GMAC financed a record 629,000 new GM vehicles, it said.
GMAC Chairman Robert Murphy attributed the quarterly profit increase to lower interest rates and growth in earning assets, which averaged $82 billion for the third quarter.
GMAC’s short-term U.S. borrowing costs averaged 6.47 percent for third- quarter 1986, compared with 7.75 percent for the same period last year. Average cost of all borrowing for the quarter was 8.06 percent, down 1 percent from a year ago.
For the first nine months of the year, GMAC reported earnings of $888.9 million, up 21.5 percent from $731.4 million in the same period of last year.
Earning assets averaged $77.3 billion for the first nine months of 1986.
GMAC loaned $48 billion in retail installment and lease-financing contracts so far this year, $14.5 billion more than in the first three quarters of 1985.
As of Sept. 30, total GMAC receivables outstanding were $96.8 billion, compared with $71.4 billion a year ago.