GMAC Cites High Interest, Financing Dip for Decline

DETROIT — Higher interest expenses and a drop in auto financing resulted in an 18.9% decline in second-quarter earnings for General Motors Acceptance Corp., the General Motors Corp. subsidiary said Wednesday.

Two other GM units reported their earnings rose in the second quarter. Electronic Data Systems Corp., GM’s Dallas-based computer and communications services company, reported a one-third jump in net income, and GM Hughes Electronics Corp. said its earnings rose 16.4%.

At GMAC, net income from financing, insurance and mortgage operations was $333.9 million for the three months ended June 30, down from $411.8 million in the second quarter of 1987.

The primary cause of the decline was narrower margins between the interest GMAC earned on its financing activities and the rates it paid for funds, the company said.

Subsidiaries Gain

In addition, GMAC said it financed or leased 560,000 new cars and trucks in the United States in the second quarter, down 13% from the year-earlier period, and 136,000 new vehicles outside the United States, down 8%.

GMAC’s worldwide retail installment and lease financing volume totaled $11.5 billion in the latest quarter, down from $12.6 billion in the second quarter of 1987.

The company did not offer low-interest incentive programs during the latest period, spokesman John S. Andrews said.

EDS had second-quarter earnings of $95.7 million on revenue of $1.20 billion, up from $72 million on revenue of $1.08 billion in the second three months of 1987.

The company cited growth in all areas, including an expanded data processing agreement with Shearson Lehman Hutton Inc.’s international division.

GM Hughes Electronics, comprising Hughes Aircraft Co. and Delco Electronics Corp., had net income of $163.9 million, up from $140.8 million in the same period a year ago.

Revenue increased to $2.87 billion from $2.62 billion.

For the first six months, GMAC reported earnings of $688.3 million, down 22.9% from $893.2 million a year earlier. Retail installment and lease financing volume totaled $22.4 billion, up from $21.4 billion in the first half of 1987.

EDS said it earned $184.8 million during the first half, up 35% from $136.6 million in the first six months of 1987. Revenue increased to $2.32 billion from $2.11 billion.

GM Hughes Electronics reported six-month earnings of $378.6 million, up 35.8% from $278.8 million.

The latest period includes an $18.7 million gain from an accounting change.