GMAC plans to cut 15% of its auto-loan workforce and close several offices as the finance firm struggles under the weight of tightened credit conditions and rising delinquencies.
The company, majority owned by private-equity firm Cerberus Capital Management, said Wednesday that it will reduce its North American auto finance workforce by about 930 employees. It will also merge its local offices into five regional centers in Atlanta, Chicago, Dallas, Pittsburgh and Toronto.
"Although it is difficult to reduce staffing levels, we need to position GMAC with a more competitive cost structure and greater operational flexibility for future growth," said GMAC President Bill Muir in a statement Wednesday.
GMAC recorded a loss of $2.3 billion last year as it was slammed by troubles at its mortgage division, Residential Capital. The auto-finance unit reported a $1.49 billion profit, up 19% from 2006, but GMAC warned in its fourth-quarter report of rising delinquencies amid U.S. consumer weakness.
The ongoing troubles for GMAC come as Cerberus is also dealing with weakness with another big purchase, Chrysler Group. GMAC has also weighed on former parent
, which still owns 49% of the firm.
GMAC expects to incur restructuring charges of $65 to $85 million this year, with the majority occurring in the second half.
Shares of GM recently were down 40 cents, or 1.5%, to $25.60.
This article was written by a staff member of TheStreet.com.