Business Week describes GM becoming almost entirely dependent on its finance unit. I recall seeing something similar about Ford. Does anyone recall a source?
Welch, David. 2003. “For GM, Mortgages Are the Motor: But How Long Can It Rely On Profits From Its Finance Unit?” Business Week (4 August): p. 36. But hang on a second: GM isn't making all that money selling cars. In fact, the auto maker's all-important North American vehicle operation made a paltry $83 million, down from $1.3 billion a year earlier. So where did the other $818 million in second-quarter profits come from? Try General Motors Acceptance Corp., GM's lending arm. And it's not primarily car loans that helped GM bring home the bacon. Half of those finance profits came from GMAC's mortgage business, including its fast-growing Ditech.com online mortgage subsidiary. These days, GM looks a lot more like a financial institution that happens to sell cars and trucks than a successful auto maker.” -- Michael Perelman Economics Department California State University michael at ecst.csuchico.edu Chico, CA 95929 530-898-5321 fax 530-898-5901
