General Motors Company · NYSE:GM
General Motors — Corporate Update (July 2008)
29 slides from General Motors's corporate update, Jul 15, 2008
Slide 1: Aligning The Business With Current Market Conditions
Aligning The Business With Current Market Conditions July 15, 2008
Slide 2: Forward Looking Statements
Forward Looking Statements 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," "projec
Slide 3: Agenda
Agenda Planning For A Tougher U.S. Environment Operating and Other Actions Asset Sales and Financing Activities Looking Ahead 2
Slide 4: Planning For A Changed U.S. Industry
Planning For A Changed U.S. Industry For liquidity planning purposes, GM using U.S. industry volumes significantly below trend for the next several years, lower U.S. market share, and continued elevated oil prices (1) Note: U.S. Light Industry excludes ~300K units per year of medium- and heavy-duty
Slide 5: Conservative Planning For Large Truck Volumes
Conservative Planning For Large Truck Volumes Large pickup and SUV segments expected to shrink in U.S. as discretionary users switch to alternative vehicles However, large pickup segment should remain important for commercial and functional users 2006 2007 2008E 2009E Large PU: Commercial/Functional
Slide 6: Commodity Cost Impact & Mitigation Strategies
Commodity Cost Impact & Mitigation Strategies Following large increases in 2005-2007, GMNA forecast based on year-over-year commodity cost headwinds of ~$1B in each of 2008 and 2009 Mitigation strategies include thrifting of precious metals and global application of common material specifications to
Slide 7: Material Cost Outlook - Total Automotive
Material Cost Outlook - Total Automotive Despite commodity cost headwind, GM expects to deliver approximately $1B of net material performance in 2008 and 2009 6 Cost Decrease / (Increase) ($ billions) 2007 2008E 2009E Baseline Performance 2.5 2.2 2.5 Delphi Reductions 0.2 0.2 0.3 Commodities / Steel
Slide 8: Agenda
Agenda Planning For A Tougher U.S. Environment Operating and Other Actions Asset Sales and Financing Activities Looking Ahead 7
Slide 9: Operating And Other Actions
Operating And Other Actions In view of lower U.S. industry planning volumes, leaner truck mix and commodity price headwinds, GMNA in process of executing operating actions to mitigate negative impacts Operating actions focused on structural costs, salaried employment savings, capital spending and wo
Slide 10: Structural Cost Actions in GMNA (~$2.5B)
Structural Cost Actions in GMNA (~$2.5B) Further reductions in truck capacity and related component, stamping and powertrain capacity Approximately 300K unit reduction in manned truck capacity by YE2009, half of which is from acceleration of prior announcements and half of which are new capacity act
Slide 11: Salaried Employment Savings (~$1.5B)
Salaried Employment Savings (~$1.5B) More than 20% reduction in salaried employment cash costs, predominantly through: Salaried headcount reductions in U.S. and Canada through early retirements, mutual separation programs, normal attrition and other separation tools Post-65 salaried retiree health c
Slide 12: Capital Expenditure Reductions (~$1.5B)
Capital Expenditure Reductions (~$1.5B) Planning capital expenditures of $8B(1) in 2008 and $7B in 2009, plus $1B per year through 2009 in China (self-funded by China JVs) 2009 spending of $7B is a ~$1.5B reduction from prior plan Major part of reduction related to delaying next generation large pic
Slide 13: Working Capital Improvements (~$2B)
Working Capital Improvements (~$2B) Aggressive actions to improve working capital by approximately $2B in North America and Europe, primarily related to inventory GMNA and GME inventories to be reduced by $1.5B and $0.5B, respectively, from planned YE2008 levels Comprehensive review of inventory lev
Slide 14: UAW 2008-09 VEBA Payments (~$1.7B)
UAW 2008-09 VEBA Payments (~$1.7B) GM will defer approximately $1.7B of payments that had been scheduled to be made to a Temporary Asset Account over the balance of 2008 and 2009 Such deferrals accrue interest at 9%, per the settlement agreement UAW and class counsel agree this does not represent a
Slide 15: Board Actions (~$0.8B)
Board Actions (~$0.8B) GM Board of Directors has decided to suspend future dividends, effective immediately 14
Slide 16: Summary Of Operating And Other Actions
Summary Of Operating And Other Actions Cumulative cash impact of these operating and other actions through YE2009 targeted to be approximately $10B versus original plan Cash Impact Through YE2009 GMNA Structural Cost ~$2.5B Salaried Employment Savings ~$1.5B Capital Expenditure Reductions ~$1.5B Wor
Slide 17: Agenda
Agenda Planning For A Tougher U.S. Environment Operating and Other Actions Asset Sales and Financing Activities Looking Ahead 16
Slide 18: Asset Sales (~$2-4B)
Asset Sales (~$2-4B) Undertaking broad global assessment of assets for potential sale or monetization Significant liquidity possible from asset sales without impacting strategic direction of company Outside advisors currently engaged in analysis Will provide update at appropriate time With regard to
Slide 19: Capital Markets Activities (~$2-3B)
Capital Markets Activities (~$2-3B) Will continue to access global capital markets on an opportunistic basis Targeting at least $2-3B of financing Gross unencumbered assets of over $20B could support secured debt financing significantly in excess of this amount Examples of unencumbered assets includ
Slide 20: Summary Of Actions
Summary Of Actions We are confident that these actions totaling ~$15B, when combined with access to $4.5 billion of committed credit lines, will provide ample liquidity through 2009, even using conservative industry volume and mix assumptions Cash Impact Through YE2009 Operating and Other Actions ~$
Slide 21: Agenda
Agenda Planning For A Tougher U.S. Environment Operating and Other Actions Asset Sales and Financing Activities Looking Ahead 20
Slide 22: GM New / Major Product Launches
% of U.S. Industry GM New / Major Product Launches Segment 2010E / ^ from '07 2007 2008 2009 2010 Mid Car 15% / up 1 p.p. Compact Car 15% / up 1 p.p. Comp/Lux SUV/CUV 12% / up 2 p.p. Mid CUV 7% / up 2 p.p. Comp/Mid Lux Car 6% / flat Small Car 4% / up 1 p.p. Sport 3% / up 1 p.p. Total 62% / up 8 p.p.
Slide 23: Chevrolet Malibu and Cadillac CTS: Great Products Supporting Higher Prices
Chevrolet Malibu Cadillac CTS Comparison to NAIAS Motor Trend Prior Model Year Car of the Year Car of the Year Retail Sales Growth (CYTD thru June) +113% +33% Avg. Transaction Price + ~$4,000 + ~$8,000 Contribution Margin ($/unit) +40% +30% Residual Value +11 pts +5 pts Opinion (vs. prior model) +15
Slide 24: Advanced Propulsion Initiatives
Advanced Propulsion Initiatives GM strategy based on concept of energy diversity and simultaneously focused on multiple solutions: Advanced internal combustion engines Aggressive hybrid rollout Longer-term advanced technologies (e.g. fuel cells) Demonstrated leadership in several key areas Ethanol /
Slide 25: GMNA Structural Cost Outlook
GMNA Structural Cost Outlook Operating actions in North America, combined with benefits of 2007 UAW agreement, are targeted to reduce structural costs by $6-7B from 2007 to 2010 2005 2006 2007 2008E 2009E 2010E GMNA Structural Cost 40.4 35.1 33.2 31.1 29 26.5 Memo: ($ billions) Corp Sector / Legacy
Slide 26: UAW Agreement Transforms U.S. Business Model
UAW Agreement Transforms U.S. Business Model Competitiveness Enables appropriate employment levels and introduces wage and benefit structures that support efforts to close manufacturing cost gap Flexibility Mechanisms to help deploy labor force where required Ability to adjust workforce to reflect m
Slide 27: Strong Earnings Momentum in Rest of World
Strong Earnings Momentum in Rest of World GM makes substantial profit outside North America Refer to Supplemental Charts in our earnings presentation on GM's Investor website for reconciliation to GAAP figures http://www.gm.com/corporate/investor_information/ Adjusted Earnings Before Tax Q1 ($ billi
Slide 28: Growth in Emerging Markets
2002-2007 2007 2007-2012E GM Product Growth % of Global Est. Industry Launches Industry GM Industry Growth 2008 - 2010 China 151% 627% 12% 67% 25 Russia 124% 7,048% 4% 103% 23 Brazil 70% 49% 3% 17% 5 India 124% 653% 3% 86% 5 Total BRIC 126% 280% 22% 68% 58 Other Emerging 79% 65% 16% 25% Total Emergi
Slide 29: Summary
Summary Managing liquidity is top GM priority Operating and other actions (~$10B), asset sales (~$2-4B) and financing activities (~$2-3B) announced today, in conjunction with access to $4.5B of credit lines, will provide ample liquidity through 2009 We remain confident our strategy to deliver great