gm_events & presentations_2008 gm bank & insurance conference
TRANSCRIPT
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
1© 2008 General Motors Corporation. All Rights Reserved
Forward Looking StatementsForward Looking StatementsIn this presentation and in related comments by our management, our use of the words “expect,” “anticipate,”“estimate,” “goal,” “target,” “believe,” “improve,” “intend,” “potential,” “continue,” “designed,” “opportunity,”“risk,” “may,” “would,” “could,” “should” or similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results, and our actual results may differ materially due to a variety of important factors. Such factors include, among others: our ability to realize production efficiencies, to achieve reductions in costs and to implement capital expenditures at levels and times planned by management; market acceptance of our products; shortages of and price increases for fuel; significant changes in the competitive environment and the effect of competition in our markets, including on our pricing policies; our ability to maintain adequate liquidity and financing sources and an appropriate level of debt; labor strikes or work stoppages at our facilities or at our key suppliers; financial difficulties of our key suppliers; adoption of new laws or changes in existing laws that may affect the production, licensing, distribution, cost or sale of our products; the final results of investigations and inquiries by the SEC; court approval of the settlement agreement with the UAW and UAW retirees related to the 2007 National Agreement; satisfaction of the conditions to the effectiveness of the post-retirement healthcare benefit plan contemplated by the 2007 National Agreement; changes in economic conditions, commodity prices, currency exchange rates or political stability in the markets in which we operate; possible downgrades for GMAC or ResCap by rating agencies; GMAC’s inability to maintain adequate financing sources for its capital needs; and recent developments in the residential mortgage market, especially in the nonprime sector.
The most recent reports on SEC Forms 10-K, 10-Q and 8-K filed by us or GMAC provide information about these and other factors, which may be revised or supplemented in future reports to the SEC on those forms.
In this presentation and in related comments by our management, our use of the words “expect,” “anticipate,”“estimate,” “goal,” “target,” “believe,” “improve,” “intend,” “potential,” “continue,” “designed,” “opportunity,”“risk,” “may,” “would,” “could,” “should” or similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results, and our actual results may differ materially due to a variety of important factors. Such factors include, among others: our ability to realize production efficiencies, to achieve reductions in costs and to implement capital expenditures at levels and times planned by management; market acceptance of our products; shortages of and price increases for fuel; significant changes in the competitive environment and the effect of competition in our markets, including on our pricing policies; our ability to maintain adequate liquidity and financing sources and an appropriate level of debt; labor strikes or work stoppages at our facilities or at our key suppliers; financial difficulties of our key suppliers; adoption of new laws or changes in existing laws that may affect the production, licensing, distribution, cost or sale of our products; the final results of investigations and inquiries by the SEC; court approval of the settlement agreement with the UAW and UAW retirees related to the 2007 National Agreement; satisfaction of the conditions to the effectiveness of the post-retirement healthcare benefit plan contemplated by the 2007 National Agreement; changes in economic conditions, commodity prices, currency exchange rates or political stability in the markets in which we operate; possible downgrades for GMAC or ResCap by rating agencies; GMAC’s inability to maintain adequate financing sources for its capital needs; and recent developments in the residential mortgage market, especially in the nonprime sector.
The most recent reports on SEC Forms 10-K, 10-Q and 8-K filed by us or GMAC provide information about these and other factors, which may be revised or supplemented in future reports to the SEC on those forms.
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
2© 2008 General Motors Corporation. All Rights Reserved
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
3© 2008 General Motors Corporation. All Rights Reserved
AgendaAgenda
Key Priorities and GM Operating Strategies
GM Product Strategies
Other Key Issues
Global Technology Leadership
Key Priorities and GM Operating Strategies
GM Product Strategies
Other Key Issues
Global Technology Leadership
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
4© 2008 General Motors Corporation. All Rights Reserved
Financial Accomplishments: 2005-2007Financial Accomplishments: 2005-2007
Grew aggressively and profitably in emerging markets
$9B structural cost taken out
Tackled tough risk factors
UAW labor agreement largely eliminates health care inflation risk
Continued reduction of GMNA capacity
Improved adjusted earnings and cash flow
Grew aggressively and profitably in emerging markets
$9B structural cost taken out
Tackled tough risk factors
UAW labor agreement largely eliminates health care inflation risk
Continued reduction of GMNA capacity
Improved adjusted earnings and cash flow
Stage set for significant mid-term earnings improvement
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
5© 2008 General Motors Corporation. All Rights Reserved
2005-2007 Adjusted Financial Results2005-2007 Adjusted Financial Results$ Billions 2005 2006 2007$ Billions 2005 2006 2007
GMNA (7.4) (1.6) (1.5)GME (0.5) 0.4 0.1GMLAAM 0.2 0.6 1.3GMAP 0.4 0.4 0.7
Total Auto Earnings Before Tax (7.3) (0.3) 0.6GMAC Earnings Before Tax 4.2 2.2 (1.1)Corp. Other Earnings Before Tax (1.4) (1.2) (0.8)
Total Earnings Before Tax (4.5) 0.6 (1.4)Taxes 1.0 1.1 1.1
Total Net Income from Cont. Ops. (3.5) 1.7 (0.3)Discontinued Ops. – Allison Transmission 0.3 0.4 0.3
Total GM Net Income (3.2) 2.2 (0.0)
Worldwide Production (000’s) 9.1 9.2 9.3Global Market Share 14.1% 13.5% 13.3%
GMNA (7.4) (1.6) (1.5)GME (0.5) 0.4 0.1GMLAAM 0.2 0.6 1.3GMAP 0.4 0.4 0.7
Total Auto Earnings Before Tax (7.3) (0.3) 0.6GMAC Earnings Before Tax 4.2 2.2 (1.1)Corp. Other Earnings Before Tax (1.4) (1.2) (0.8)
Total Earnings Before Tax (4.5) 0.6 (1.4)Taxes 1.0 1.1 1.1
Total Net Income from Cont. Ops. (3.5) 1.7 (0.3)Discontinued Ops. – Allison Transmission 0.3 0.4 0.3
Total GM Net Income (3.2) 2.2 (0.0)
Worldwide Production (000’s) 9.1 9.2 9.3Global Market Share 14.1% 13.5% 13.3%
Refer to Supplemental Charts in our earnings presentation on GM’s Investor website for reconciliation to GAAP figures
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
6© 2008 General Motors Corporation. All Rights Reserved
2008 Key Priorities2008 Key PrioritiesContinue to execute great products
Build strong brands and distribution channels
Execute additional cost reduction initiatives
Emerging markets growth
Advanced propulsion leadership
Running the business globally
Continue to execute great products
Build strong brands and distribution channels
Execute additional cost reduction initiatives
Emerging markets growth
Advanced propulsion leadership
Running the business globally
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
7© 2008 General Motors Corporation. All Rights Reserved
GM Operating StrategiesGM Operating StrategiesDeveloped MarketsDeveloped Markets Emerging MarketsEmerging Markets
Perfect launchesLeading qualityStrong brands
Perfect launchesLeading qualityStrong brands
Product execution/quality
Lower cost portfolioStrong brands &
distribution
Product execution/quality
Lower cost portfolioStrong brands &
distribution
Manage “bad” costsCapacity/supplier footprint changes
Manage “bad” costsCapacity/supplier footprint changes
Cost efficient capacity expansion
Lower structural cost as % of revenue
Cost efficient capacity expansion
Lower structural cost as % of revenue
Leverage global architectures and global sourcingLead in advanced technology development
Leverage global architectures and global sourcingLead in advanced technology development
Revenue & Contribution
Margin
Revenue & Contribution
Margin
Cost Management
Cost Management
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
8© 2008 General Motors Corporation. All Rights Reserved
North America TurnaroundNorth America TurnaroundGMNA financial results deteriorated in Q1 2008 due to significant weakness in the U.S. Industry and impact of the American Axle strike
Strong acceptance of new product launches
Key turnaround strategies remain unchanged– Execute great products Leading design & quality is key
– Build strong brands Special focus on key car segments
– Strengthen distribution Accelerate 4 channel strategy
– Additional cost reduction Implement labor contracts
GMNA financial results deteriorated in Q1 2008 due to significant weakness in the U.S. Industry and impact of the American Axle strike
Strong acceptance of new product launches
Key turnaround strategies remain unchanged– Execute great products Leading design & quality is key
– Build strong brands Special focus on key car segments
– Strengthen distribution Accelerate 4 channel strategy
– Additional cost reduction Implement labor contracts
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
9© 2008 General Motors Corporation. All Rights Reserved
U.S. Market ChallengesU.S. Market ChallengesCredit market environment continues to evolve, and banks continue to tightenlending standards
High gasoline prices driving mix shift from trucks to cars
Overall industry clearly under pressure– GM revised outlook for 2008 U.S. total industry to
mid-to-high 15 million units– Q1 industry consistent with GM outlook and plan, but
see more 2008 downside risk than upside opportunity
Credit market environment continues to evolve, and banks continue to tightenlending standards
High gasoline prices driving mix shift from trucks to cars
Overall industry clearly under pressure– GM revised outlook for 2008 U.S. total industry to
mid-to-high 15 million units– Q1 industry consistent with GM outlook and plan, but
see more 2008 downside risk than upside opportunity
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
10© 2008 General Motors Corporation. All Rights Reserved
Strategies in Other MarketsStrategies in Other Markets
Europe– New assembly plant in Russia to support growth
– Fully leverage GMDAT to support growthof Chevrolet
– Continued focus on multi-brand strategy and quality of share
– Further progress on shifting manufacturing footprint to low-cost
Europe– New assembly plant in Russia to support growth
– Fully leverage GMDAT to support growthof Chevrolet
– Continued focus on multi-brand strategy and quality of share
– Further progress on shifting manufacturing footprint to low-cost
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
11© 2008 General Motors Corporation. All Rights Reserved
Strategies in Other MarketsStrategies in Other Markets
Latin America/Africa/Middle East– Grow!
– New powertrain plant in Brazil to increase capacity of existing assembly plants
– Continue to fill portfolio gaps andoptimize pricing
– Maximize capacity to cost efficientlysupport growth
Latin America/Africa/Middle East– Grow!
– New powertrain plant in Brazil to increase capacity of existing assembly plants
– Continue to fill portfolio gaps andoptimize pricing
– Maximize capacity to cost efficientlysupport growth
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
12© 2008 General Motors Corporation. All Rights Reserved
Strategies in Other MarketsStrategies in Other Markets
Asia Pacific– Rapidly grow in India and pursue growth in
ASEAN markets; new powertrain plant there
– New powertrain plant in China
– Continue to grow in China via multi-brand strategy
– Improve material cost via increased localization
– Expand “lower cost” product portfolio
– Work with partners to increase capacity
Asia Pacific– Rapidly grow in India and pursue growth in
ASEAN markets; new powertrain plant there
– New powertrain plant in China
– Continue to grow in China via multi-brand strategy
– Improve material cost via increased localization
– Expand “lower cost” product portfolio
– Work with partners to increase capacity
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
13© 2008 General Motors Corporation. All Rights Reserved
AgendaAgenda
Key Priorities and GM Operating Strategies
GM Product Strategies
Other Key Issues
Global Technology Leadership
Key Priorities and GM Operating Strategies
GM Product Strategies
Other Key Issues
Global Technology Leadership
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
14© 2008 General Motors Corporation. All Rights Reserved
AgendaAgenda
Key Priorities and GM Operating Strategies
GM Product Strategies
Other Key Issues
Global Technology Leadership
Key Priorities and GM Operating Strategies
GM Product Strategies
Other Key Issues
Global Technology Leadership
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
15© 2008 General Motors Corporation. All Rights Reserved
GMAC – Q2 2008 InitiativesGMAC – Q2 2008 InitiativesRefinancing existing GMAC and ResCap bank facilities and pursuing strategic alternatives to ensure liquidity
– GMAC negotiating 2-year $3.5B senior secured credit facility to ResCap, conditioned on successful completion of ResCap’scurrent debt tender and exchange offer
– GM and Cerberus are in discussions to acquire pro rata shared $750M first loss participation in proposed facility
Restructuring of North American Auto Finance operations
Restructuring and divesting assets at ResCap
Restructuring ownership of GMAC Insurance
Formalizing and growing GMAC Bank
Refinancing existing GMAC and ResCap bank facilities and pursuing strategic alternatives to ensure liquidity
– GMAC negotiating 2-year $3.5B senior secured credit facility to ResCap, conditioned on successful completion of ResCap’scurrent debt tender and exchange offer
– GM and Cerberus are in discussions to acquire pro rata shared $750M first loss participation in proposed facility
Restructuring of North American Auto Finance operations
Restructuring and divesting assets at ResCap
Restructuring ownership of GMAC Insurance
Formalizing and growing GMAC Bank
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
16© 2008 General Motors Corporation. All Rights Reserved
DelphiDelphiDelphi unable to emerge under its Plan of Reorganization,as Plan Investors terminated their investment agreementon April 4
– GM-Delphi Settlement Agreements and agreements with Delphi’s labor unions remain in place but are not generally effective
GM will agree to advance up to $650M to Delphi during2008 in anticipation of effectiveness of the GM-Delphi Settlement Agreements
– Within amount GM would have paid had Delphi emergedfrom bankruptcy
– Would be concurrent with Delphi DIP extension– GM would receive an administrative claim for advances
GM continues to work with Delphi and its stakeholders to facilitate Delphi’s efforts to emerge from bankruptcy
Delphi unable to emerge under its Plan of Reorganization,as Plan Investors terminated their investment agreementon April 4
– GM-Delphi Settlement Agreements and agreements with Delphi’s labor unions remain in place but are not generally effective
GM will agree to advance up to $650M to Delphi during2008 in anticipation of effectiveness of the GM-Delphi Settlement Agreements
– Within amount GM would have paid had Delphi emergedfrom bankruptcy
– Would be concurrent with Delphi DIP extension– GM would receive an administrative claim for advances
GM continues to work with Delphi and its stakeholders to facilitate Delphi’s efforts to emerge from bankruptcy
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
17© 2008 General Motors Corporation. All Rights Reserved
American Axle StrikeAmerican Axle StrikeThrough end of April, GMNA incurred production losses related to American Axle strike of approximately 230K units– Q1 financial impact of approximately $0.8B EBT
To date, strike has had minimal impact on GM’s ability to meet customer demands
GM will continue to proactively manage schedules across plants to maintain production to the extent possible
GM recently agreed to fund up to $200M to help facilitate a settlement of the work stoppage
Through end of April, GMNA incurred production losses related to American Axle strike of approximately 230K units– Q1 financial impact of approximately $0.8B EBT
To date, strike has had minimal impact on GM’s ability to meet customer demands
GM will continue to proactively manage schedules across plants to maintain production to the extent possible
GM recently agreed to fund up to $200M to help facilitate a settlement of the work stoppage
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
18© 2008 General Motors Corporation. All Rights Reserved
AgendaAgenda
Key Priorities and GM Operating Strategies
GM Product Strategies
Other Key Issues
Global Technology Leadership
Key Priorities and GM Operating Strategies
GM Product Strategies
Other Key Issues
Global Technology Leadership
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
19© 2008 General Motors Corporation. All Rights Reserved
Global Technology Leadership Advanced PropulsionGlobal Technology Leadership Advanced Propulsion
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
20© 2008 General Motors Corporation. All Rights Reserved
Why an Extended-Range Electric Vehicle?Why an Extended-Range Electric Vehicle?
Based on OmniStats Data posted by the U.S. Bureau of Transportation
Typical One-Way Miles from Home to WorkTypical One-Way Miles from Home to Work
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
21© 2008 General Motors Corporation. All Rights Reserved
Project DrivewayLargest fuel cell vehicle market test
100+ vehicles in the hands of customers
Project DrivewayLargest fuel cell vehicle market test
100+ vehicles in the hands of customers
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
22© 2008 General Motors Corporation. All Rights Reserved
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
23© 2008 General Motors Corporation. All Rights Reserved
SummarySummary
Stay focused on our key priorities, operating strategies, and business results
Mitigate risks associated with GMAC/ ResCap, Delphi and American Axle
Drive global technology leadership
Stay focused on our key priorities, operating strategies, and business results
Mitigate risks associated with GMAC/ ResCap, Delphi and American Axle
Drive global technology leadership
F. Henderson May 13, 20082008 GM Banker & Insurance Conference
24© 2008 General Motors Corporation. All Rights Reserved