GMAC Plans Cuts to Auto Finance Unit’s Workforce
DETROIT — GMAC Financial Services announced Wednesday that it is restructuring its North American auto finance business, which includes trimming about 15 percent of its workforce.
The goal of this plan is to reduce costs, streamline operations and position the business for scalable growth.
Overall, about 930 employees will be impacted by this restructuring. This represents about 15 percent of the company's 6,275 associates. However, GMAC said dealers should not notice any changes in their relationship with the company.
"Most dealers will see no change in the GMAC representative servicing their dealership, as we believe that a deep understanding of local markets is one of our competitive advantages," pointed out Bill Muir, GMAC president.
More specifically, the workforce reductions are expected to include a range of auto finance positions in the U.S. and Canadian field offices, the Nuvell subsidiary and GMAC's central office in Detroit, Mich.
Moreover, officials indicated that the restructuring will include merging a number of separate business offices into five regional business centers located in the areas of Atlanta, Chicago, Dallas, Pittsburgh and Toronto.
In addition, GMAC representatives will continue to be strategically located throughout the U.S. and Canada to service auto dealers, executives reported.
These actions are planned to be mostly concluded by the end of 2008.
"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," explained Muir.
"Our new structure will further enhance our operational efficiency and allow our field personnel to spend more time supporting our dealer customers," he continued.
GMAC indicated that it expects to incur restructuring charges of about $65 to $85 million, which includes costs related to severance and other employee-related costs of about $60 to $70 million and the closure of facilities of about $5 to $15 million.
These charges will be incurred over the course of 2008, with the majority of the charges occurring in the second half of the year, according to the company.
The charges are expected to result in future cash expenditures of approximately $65 to $85 million. As a result of the restructuring, GMAC said it expects an annual run rate savings of about $175 million.
GMAC and its companies said they will continue to service retail customers and provide dealer customers with a complete range of financing products and services.
"Servicing our dealers and customers remains our top priority. We are committed to continuing to offer a full range of leading automotive finance products as we transform the organization," concluded Muir.