GMAC - the financial services wing of General Motors - have just reported a huge drop in profits. Again, the subprime market is to blame.

"The slump in the US property market has hit General Motors hard, with first-quarter profits dropping 90 per cent as losses at its mortgage lending business offset improved sales of cars.

Profits of $62 million (£31 million) at the world's second-largest carmaker for the first three months of the year were sharply down from $602 million in the same period a year earlier.

The company attributed the decline to a $305 million loss by GMAC Financial Services, compared with a profit of $495 million a year earlier. The main factor behind the deficit was the fallout from a collapse in the US sub-prime mortgage market.

GM sold a 51 per cent stake in GMAC to private equity investors last year, but still owns 49 per cent of the business. The group said in a statement: “The decline in reported GM earnings is more than accounted for by losses in the residential mortgage business of GMAC Financial Services (GMAC), driven by continued weakness in the US non-prime mortgage sector.”