Back on offense
GMAC enters 2007 as a fundamentally stronger company with an improved credit profile and greater flexibility to pursue broader growth opportunities in the future. We are back on offense.
While much has changed, one thing has not: the strength and importance of our relationship with General Motors. The mutually beneficial relationship which GM and GMAC have enjoyed in the past will be reinforced going forward by a 10-year operating agreement.
Now as always, GM’s success is our success. We intend to utilize our improved financial wherewithal to become an even more valuable partner to GM. We also will continue to develop new strategies to take full advantage of our access to the extended GM family—a million-person customer base comprising loyal, credit-worthy employees, dealers, retirees and suppliers that represents a huge market for a variety of auto finance, insurance and mortgage products.
While we move to deepen our GM relationship, we also are focused on diversifying our revenue base in automotive finance, extended service contracts and dealer vehicle inventory insurance beyond the GM network. GMAC will also continue to seek expansion overseas across all major lines of business.
For our other businesses, from insurance personal lines to mortgage to commercial finance, there is significant growth potential in market, channel and geographic expansion as we increase efforts to improve penetration of existing markets. On all fronts, we are stepping up efforts to realize our many opportunities to grow and diversify profitable revenue. Despite continued pressure in the U.S. residential mortgage market, ResCap is well positioned for the long term given its large-scale prime mortgage lending and servicing operations, its profitable investments in home building and resort finance, and expanding international business.
A more efficient, global GMAC
As we pursue growth initiatives, we have also embarked on creating a more unified organization that operates more efficiently, more effectively and more profitably.
GMAC will continue implementing changes at our U.S. mortgage operations to address the changing market. We will reduce nonprime originations and expand remediation activities on delinquencies. ResCap will also seek to capitalize on opportunities arising from the current market downturn. In addition, we will be exploring ways to better utilize GMAC’s global scale, resources and collective knowledge.
Major business functions such as finance, information technology, communications, human resources and legal will be managed globally going forward. We are also establishing two new centralized support functions—procurement and facilities—to develop efficiencies and economies of scale.
Aside from the obvious cost synergies, our objective is to enable our business units to focus more on building the real foundation of profitable, sustainable growth: stronger customer relationships.
A new GMAC, a new future
During the past decade or so, GMAC has been on a path of continuous transformation. As we have evolved from the captive finance arm of the world’s largest automaker to a global leader in finance, insurance and mortgage services, we have created a culture that thrives on change and drives rapid adaptation and innovation in the face of challenge.
It is this innovative culture that gives me confidence that we will continue to achieve our long-term objectives. With our newfound independence and financial strength, GMAC is a healthier company, better positioned than ever to realize our strategic vision: to become one of the world’s premier global finance companies.
Sincerely,
Eric A. Feldstein
Chief Executive Officer