NEW YORK — Reporting its preliminary third-quarter results, GMAC Financial Services indicated that its auto finance division experienced pressure from lower used-vehicle prices, in addition to weaker consumer and dealer credit performance, which contributed to a loss for the period.

Overall, GMAC said its third-quarter net loss came in at $2.5 billion, compared to $1.6 billion in the same time frame of last year.

According to officials, the results were mainly due to a significant loss at its Residential Capital division, as adverse market conditions domestically and internally continued to impact the mortgage business.

The period was also impacted by losses and valuation adjustments on assets held for sale and "certain other investment securities as a result of the illiquidity in the credit and capital markets," officials explained. However, they noted that the challenges were partially offset by profitable results in the company's insurance business.

"The economic and market conditions created an unrelenting environment for our business and the financial services sector overall," said Alvaro de Molina, GMAC chief executive officer. "Clearly, this weighed heavily on financial results in the third quarter.

"In this climate, our primary objective is to make prudent use of our resources and take the steps needed to address the reduced access to liquidity," he continued. "In this regard, we've limited originations to match funding sources and are streamlining operations and evaluating opportunities to shed operations that are not essential to the core business."

Furthermore, he stated, "In addition, we are pursuing strategies to increase flexibility and access to funding, such as participating in the Federal Reserve's commercial paper purchase program via our asset-backed credit facility and engaging in discussions with regulatory authorities regarding bank holding company status."

Looking specifically at the global auto finance division, the company reported a third-quarter net income loss of $294 million, compared to net income of $554 million in the previous year.

"The decline in performance was primarily driven by an increase in credit reserves as a result of the continued deterioration in used-vehicle prices, which affected certain retail balloon contracts," officials indicated.

"Also affecting results was an impairment on operating leases related to the truck vehicle portfolio in Canada, weaker consumer and dealer credit performance and valuation adjustments on securitization retained interests," they added.

New-vehicle financing originations for the third quarter of 2008 decreased to $11.3 billion of retail and lease contracts from $14.5 billion in the third quarter of 2007. This change was mostly due to tighter underwriting standards and lower industry sales.

Moreover, the company pointed out that due to the current volatility in the global capital and credit markets, GMAC recently took steps to more closely align auto financing activities with available funding.

For instance, in October, the company implemented pricing and underwriting adjustments in the U.S. and select international markets. In addition, in Asia-Pacific, GMAC announced it would cease retail and wholesale originations in Australia and New Zealand by the end of the year.

The company also ceased retail originations in seven European markets as of Nov. 1, 2008.

Moving on, GMAC reported that credit losses increased in the third quarter to 1.55 percent of managed retail assets, versus 1.01 percent in the third quarter of 2007. The sharp increase is related to higher loss severity in North America and increased losses in Latin America due to weaker economic conditions, according to the company.

Delinquencies remained almost flat with the year-ago period at 2.62 percent. Increased loan servicing efforts and tighter underwriting aided in keeping delinquencies from increasing during this weaker economic environment, executives noted.

Looking ahead, GMAC indicated that it is focused on pursuing strategies to increase flexibility and access to liquidity with the primary focus of continuing to support auto dealers and customers.