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General Motors (GM) swung to a net adjusted loss of $23 million (£11.8 million) in 2007 as the US subprime crisis hit the automotive maker's financial arm, GMAC.

Including an accounting charge booked in the third quarter, the company reported a loss of $38.7 billion (£19.8 billion), or $68.45 (£35.1) per diluted share, compared to a reported loss of $2 billion (£1 billion), or $3.50 (£1.80) per diluted share in 2006.

Automotive earnings improved over the year, generating record revenues of $178 (£91.2) billion in 2007, a $7 billion (£3.6 billion) improvement over 2006, aided by explosive growth in emerging markets and favourable foreign exchange against a weaker US dollar.

But GMAC Financial Services reported a net loss of $2.3 billion (£1.8 billion) in 2007, compared with net income of $2.1 billion (£1.1 billion) in 2006.

The car maker owns 49 per cent of GMAC, while 51 per cent is owned by the private equity firm Cerberus Capital Management (CCM).

Profitable results in the global automotive and insurance businesses were more than offset by the significant loss at Residential Capital (ResCap), which specialises in subprime housing loans.

In a statement, GM said: "While market conditions remain uncertain, GMAC has taken aggressive actions in 2007 across all its businesses in an effort to mitigate future risk, rationalize the cost structure and position the company for growth.

"As a result, GMAC currently expects to be profitable in 2008."

Despite the uncertainty in the US market, the company announced it expects improved pre-tax automotive earnings in 2008 versus 2007, largely driven by continued strong performance in emerging markets.