General Motors Company · NYSE:GM
General Motors — Automotive Analysts of New York Conference 2005
75 slides from General Motors's conference presentation, Jan 14, 2005
Slide 1: Safe Harbor
Safe Harbor In the presentation that follows and in related comments by General Motors management, our use of the words “expect”, “anticipate”, “estimate”, “forecast”, “objective”, “plan”, “goal”, “project”, “priorities/targets,” “outlook“and similar expressions is intended to identify forward looki
Slide 2: Financial Outlook & Business Objectives
Financial Outlook & Business Objectives John Devine Vice Chairman & CFO
Slide 3: Agenda
Agenda • 2004 Review • 2005 Industry Outlook • 2005 Targets & Objectives
Slide 4: 2004 Year in Review
2004 “Year in Review Wins ........ Challenges —— — • Expect to meet 2004 • Insufficient core earnings target Automotive profitability • Record GMAC performance • Rising health care costs • Despite tougher market, • U.S. market share record GMAP profitability performance and market share • LAAM back
Slide 5: 2004 CY Priorities/Targets
2004 CY Priorities/Targets • Priorities — $6.00-$6.50 EPS* — Operating cash flow of $5B — Grow share in all regions • Regional/Sector Income Targets — North America: $1,000-$l,400M — Europe:$0-$100M — LAAM:$(200)M-$(100)M — Asia-Pacific $700-$800M — GMAC:>$2,000M • Other Metrics — Structural cost: >
Slide 6: Agenda
Agenda • 2004 Review • 2005 Industry Outlook • 2005 Targets & Objectives
Slide 7: 2005 Global Economic Outlook
2005 Global Economic Outlook • Global GDP growth projected at 3.0% — 3.5% • Some moderation in U.S. economic growth — 3.5% GDP growth vs. 4.4% in 2004 • Europe growth rate consistent with 2004 (2.0%-2.5%) • Asia-Pacific growth remains a positive • LAAM’s strong recovery should continue
Slide 8: 2005 Industry Outlook
2005 Industry Outlook • Global industry sales flat to up slightly • Sales growth in China/other emerging markets continue to outpace developed markets •Consumer affordability conditions to remain favorable - - Pricing pressures still challenging in major markets - - Oil prices expected to remain in
Slide 9: Agenda
Agenda • 2004 Review • 2005 Industry Outlook • 2005 Targets & Objectives
Slide 10: 2005 Priorities
2005 Priorities • $4.00-$5.00 EPS* • Operating cash flow of $2 billion** - Capital spending of $8B • Grow global volume
Slide 11: GMNA 2005 Industry Overview
CMNA — 2005 Industry Overview • Industry assumptions - - U.S. industry roughly flat with ‘04 - - U.S. industry mix continues to richen - - Canada to grow slightly, while Mexico holds steady • GM mix/volume assumptions - - Expect 25% of volume to be new vehicles* - - Negative mix because of product c
Slide 12: U.S. Pension Expense
U.S. Pension Expense 2003 2004 2005 $BillionsActual Actual Outlook —— —— — U.S. Pension Expense 1 2.6 1.4 1.2 Related Interest Expense 0.5 1.0 1.0 Total Expense 3.1 2.4 2.2 YE Funded Status 2 0.3 3.0 YE Discount Rate (%) 6.00% 5.75% Actual Asset Returns (%) 22% 14% 9% 3 Contributions 18.5 0.0 0.0
Slide 13: U.S. Health Care Spending and OPEB Expense
U.S. Health Care Spending and OPEB Expense 2003 2004 2005 $Billions Actual Estimate Outlook U.S. OPEB Expense 4.3 4.3 5.3 Assumptions — Y-E Discount Rate 6.25% 5.75% OPEB Health Care Trend Rate 1 7.25% 8.50% 10.50% OPEB Liability 64.5 73.8 VEBA Assets 10.0 20.0 2 - Net Liability 54.5 53.8 U.S. Healt
Slide 14: GMNA 2005 Earnings Outlook
CMNA — 2005 Earnings Outlook • Expect 2005 net income of $500 million • Lower earnings driven primarily by increase in health care expenses and lower mix • Continued focus on cost reduction/performance improvements - -Facilities rationalization/employee attrition - -Positive material performance but
Slide 15: GME 2005 Outlook
CME - 2005 Outlook • Industry assumptions - - Industry volume expected to be 20.2M-20.4M (down 2%) • GM volume assumptions - - Increased volume driven by new Opel/Vauxhall and Chevrolet products • Pricing/FX assumptions - - Continued pricing pressure in key markets - - Weaker U.S. $vs. SEK and Euro,
Slide 16: GMAP 2005 Industry Overview
CMAP — 2005 Industry Overview • Economic growth coming off a peak - - Stronger currencies/moderating total export growth - - China’s soft landing - - Japan’s expansion to slow, South Korea’s domestic demand continues to struggle • Industry expected to be 17.6M vehicles (up 4%) - - China industry of
Slide 17: China 2005 Industry Overview
China — 2005 Industry Overview • China remains largest growth market • Vehicle sales growth slowed since Q2 ‘04 - - Government’s decision to cool economy - - Auto financing restricted - - Repeated price cuts prompted consumer “wait-and-see” attitude - - Gasoline prices up significantly • Stronger in
Slide 18: GMAP 2005 Earnings Outlook
CMAP — 2005 Earnings Outlook • Expect net income of $600 million • Continue to build on successful China growth - - China very profitable though with reduced earnings - - Continue to expand capacity/product development capabilities along with Cadillac/Chevrolet brands • Continue expansion of GMDAT p
Slide 19: GMLAAM 2005 Industry Overview
CMLAAM — 2005 Industry Overview • Industry expected to be 4.4M vehicles (up 3%) - - Political and economic uncertainties remain • Expect 4.0% GDP growth • Brazilian market key to GM’s performance - - Stable market of 1.6M - - Moderation of inflation/interest rates - - Expect 3.5% GDP growth (4.3% in
Slide 20: GMLAAM 2005 Earnings Outlook
CMLAAM — 2005 Earnings Outlook • Expect 2005 net income of $100 million - -Second year of positive net income • All operating units targeted to be profitable • Major new products introduced in Brazil/Andean region • Continue to grow sales in the Middle East/Africa - - Leverage GMDAT products (Aveo,
Slide 21: GM Net Income 2005 Earnings Walk
CM Net Income — 2005 Earnings Walk $6.00-$6.50 EPS* $4.00-$5.00 OPEB EPS* CMAC All Other 2004 CY 2005 CY
Slide 22: 2005 Operating Cash Flow
2005 Operating Cash Flow •Auto Operating Cash Flow target of $2 billion* - - Continue to generate strong automotive cash flow •Reduction from 2004 operating cash flow primarily due to: - - Higher capital expenditures ($8 billion) driven by full-size utilities/truck launches - -Higher health care spe
Slide 23: $10 EPS Remains Goal, But Beyond 2006
$10 EPS Remains Coal — But Beyond 2006 GMNA New Products $10.00* GME Recovery China Brazil $4.00- OPEB GME Other GMAC Auto EPS 2005 Future Target
Slide 24: 2005 CY Priorities/Targets
2005 CYPriorities/Targets • Priorities - - $4.00-$5.00 EPS* - - Operating cash flow of $2B** - - Capital spending of $8B - - Grow global volume • Regional/Sector Income Targets - - North America: $500M - - Europe: $(500)M - - LAAM: $100M - - Asia-Pacific: $600M - - GMAC: >$2,500M
Slide 25: Summary
Summary • 2004 earnings on track to current guidance and original target • 2005 earnings lower primarily due to increased health care expense and lower GMAC earnings • Project strong profit recovery in 2006/2007
Slide 26: Safe Harbor
Safe Harbor In the presentation that follows and in related comments by General Motors management, our use of the words “expect”, “anticipate”, “estimate”, “forecast”, “objective”, “plan”, “goal”, “project”, “priorities/targets,” “outlook“and similar expressions is intended to identify forward looki
Slide 27: Europe Business Update
Europe Business Update Fritz Henderson Chairman, GM Europe
Slide 28: GM Europe Business Update
CM Europe Business Update • Olympia — retrospective look • Margin evolution and Opel/Vauxhall brand health • 2004-2005 Restructuring Plan • Restructuring Plan status • GME turnaround priorities
Slide 29: Project Olympia Cost Reductions
Project Olympia Cost Reductions Short Term Long Term
Slide 30: CME Structural Cost Overview
CME Structural Cost Overview 1999 2000 2001 2002 2003 2004 Estimate
Slide 31: Headcount
Headcount 1999 2000 2001 2002 2003 2004 Estimate
Slide 32: Annual Net Material Cost Performance
Annual Net Material Cost Performance More than $1B Savings 1999 2000 2001 2002 2003 2004 Estimate
Slide 33: CME Contribution Margin and Structural Cost
CME Contribution Margin and Structural Cost 1999 2000 2001 2002 2003 2004 Estimate
Slide 34: Overall European Market Observations
Overall European Market Observations • Leading company share 16.6% (VW Group) • Leading brand share 11.3% (Renault), with 7 brands between 5-10% • Aggregate: Western European demand stagnant, from 17.2M units in 1999 to 16.7M in 2004 • Regulatory/policy pressures remain intense: fuel economy, emissi
Slide 35: Opel/Vauxhall Brand Health Requires Urgent Action
Opel/Vauxhall Brand Health Requires Urgent Action • New product launches best opportunity • While current quality improved, must deal with prior owner dissatisfaction • Must continue to exercise true design innovation as we did with the Astra in all future product programs • Continue work to build t
Slide 36: Margin Pressures
Margin Pressures • Intensifying price pressure industry-wide — List prices down nearly 10% in WE since 1996 in real, equipment-adjusted terms • Opel/Vauxhall also experienced “mix” pressures — Selling more small Corsas than larger Vectras (with Vectra segment shrinking) — Selling more to fleets (mor
Slide 37: CME Market Share - Total Europe
CME Market Share — Total Europe 1998 1999 2000 2001 2002 2003 2004
Slide 38: CME Net Income 1998-2004
CME Net Income 1998-2004 Q3 YTD YTD Profit Margin: 1.8% 1.6% (0.9)% (2.7)% (1.9)% (1.0)% (1.9)%
Slide 39: Competitiveness Restructuring Plan
Competitiveness Restructuring Plan • Manufacturing restructuring • Engineering and design integration • Sales and marketing functional reorganization • Warehousing operation restructuring • Administration reductions
Slide 40: Framework Agreement Reached on CME Restructuring Program
Framework Agreement Reached on CME Restructuring Program • Reduce structural costs by at least Euro 500 Million • Reduction of General Motors workforce in Europe by 12,000 — Over next two years — Majority of savings in 2005 — Primary impact in Germany • German program consists of: — Establishment of
Slide 41: Revenue/Margin Building Measures
Revenue/Margin Building Measures • Manage multi-brand opportunities, with Chevrolet growth at entry level — Position Opel/Vauxhall squarely in middle market segments - -Saab entry premium - -Cadillac at top end • Systematic assessment of fleet business and diesel opportunities • Brand rejuvenation i
Slide 42: Astra Success Story
Astra Success Story • Astra 5-door (launched in Mar/Apr 2004) received enthusiastic reaction by the public — Many segment/industry first innovations — Astra Hatch segment share in W/C Europe went up from 10.3% to 12.9% (+25%) - -Positive press results • Astra Wagon successfully launched in Oct/Nov 2
Slide 43: Six Key Priorities
Six Key Priorities • Opel/Vauxhall brand health and market performance • Determine medium to long term GM plan for Saab • Right-size GME cost structure, including footprint • Improve organizational alignment, speed and clarity • Pursue growth initiatives • Resolve GM/Fiat future relationship
Slide 44: Summary
Summary • Competitive pressures and GME performance delivering unsatisfactory results despite significant Olympia savings • Further restructuring begun and on track • For 2005 - - Stabilize contribution margin as % of net sales at 2004 levels for future improvements in 2006 - - On cost side, impleme
Slide 45: Safe Harbor
Safe Harbor In the presentation that follows and in related comments by General Motors Acceptance Corporation's management, our use of the words "expect", "anticipate", "project", "estimate", "forecast", "objective", "plan", "goal", "outlook", "target", "pursue" and similar expressions is intended t
Slide 46: GMAC Consolidated Net Income
GMAC Consolidated Net Income
Slide 47: GMAC 2004 Financial Results
GMAC 2004 Financial Results • Achieved in a difficult environment - - Credit rating downgrades - - Rising market interest rates - - Widening GMAC borrowing spreads - - Declining mortgage volume
Slide 48: GMAC Sustainable Net Income
GMAC Sustainable Net Income Prelim. • 2003 not an aberration • GMAC earnings power going forward more in line with 2003/2004 than with historical results
Slide 49: GMAC 2005 Objectives
GMAC 2005 Objectives • Net income — Earn at least $2.5 billion • Dividends to GM — Remit in excess of $2.0 billion • Strong liquidity position — Ensure ample funding under downside scenarios
Slide 50: GMAC 2005 Net Income
GMAC 2005 Net Income Financing Operations Insurance Operations Mortgage Operations At least $2.5 Billion
Slide 51: GMAC 2005 Mortgage Outlook
GMAC 2005 Mortgage Outlook Industry Volume GMAC Mortgage Profitability
Slide 52: GMAC Mortgage Operations
GMAC Mortgage Operations • Volume up 46% in 2003 ^ Profits up 130% • Volume down 30% in 2004 ^ Profits down only 10%
Slide 53: GMAC 2005 Mortgage Outlook
GMAC 2005 GMAC Mortgage Outlook • Growing market share in residential - -Expect 8th year in a row of market share gains • Mortgage servicing income tends to increase in a rising interest rate environment - -Natural hedge to mortgage lending business • Growing investment/asset management business - -
Slide 54: GMAC 2005 Net Income
GMAC 2005 Net Income Financing Operations Insurance Operations Mortgage Operations At least $2.5 Billion
Slide 55: GMAC Insurance Operations 2003-2004
GMAC insurance Operations 2003-2004 • Insurance premium growth ( G ) • Underwriting performance ( G ) • Investment portfolio performance ( G )
Slide 56: GMAC Insurance Operations 2005 Outlook
GMAC insurance Operations 2005 Outlook •Insurance premium growth ( G ) •Underwriting performance ( G ) •Growth in international markets ( G ) •Income from investment portfolio ( G ) $Millions 1/1/03 1/1/04 9/30/04 Market value of $5,080 $6,248 $6,625 investment portfolio
Slide 57: GMAC 2005 Net Income
GMAC 2005 Net Income Financing Operations Insurance Operations Mortgage Operations At least $2.5 Billion
Slide 58: GMAC 2005 Challenges: Rising Interest Rates
GMAC 2005 Challenges Challenge • Rising interest rates - - Cost of floating rate debt will increase Mitigating Factor • GMAC has rebalanced its debt portfolio - - Replaced a large portion of floating rate debt with fixed rate debt at attractive levels
Slide 59: GMAC 2005 Challenges: Widening Borrowing Spreads
GMAC 2005 Challenges Challenge • Widening borrowing spreads on GMAC unsecured debt Mitigating Factor • GMAC has reduced its reliance on “expensive” unsecured debt - - Tapping many forms of lower-cost secured funding
Slide 60: GMAC U.S. Funding Mix
GMAC U.S. Funding Mix Institutional Unsecured Retail Asset Backed Securities Whole Loan Sales
Slide 61: GMAC Change in Auto Finance Business Model
GMAC change in Auto Finance Business Model • Transition from “Storage Business” to “Moving Business” • Historical model: “Storage Business” — Originate auto loans — Store on GMAC balance sheet • New model: “Moving Business” — Originate auto loans — Sell auto loans to financial institutions — GMAC re
Slide 62: GMAC Originate Auto Finance Model
GMAC Originate Auto Finance Model CMAC Financial Institutions “Front-End” “Back-End” • Unique origination platform • Captive financing for • Low cost of funds GM’s subverted business u Balance sheet capacity • Auto loan underwriting expertise • Loan servicing expertise
Slide 63: GMAC Auto Finance Originate/Sell Model
GAMAC Auto Finance Originate/Sell Model • GMAC will remain “face” to dealer/customer - -GMAC originates loan - -GMAC services loan - -Sale of auto loan “irrelevant” to dealer/customer • GMAC will continue to provide strong strategic support for GM Vehicle Operations — Wholesale and retail auto finan
Slide 64: GMAC Financing Outlook
GMAC Financing Outlook 2005 Outlook • Rising interest rates ( Y ) • Widening borrowing spreads ( Y ) • Balance sheet capacity ( Y ) • Credit losses ( G )
Slide 65: GMAC 2005 Net Income
GMAC 2005 Net Income Financing Operations Insurance Operations Mortgage Operations At least $2.5 Billion
Slide 66: GMAC Dividends
GMAC Dividends Memo: Y-E Funding to 10.9:1 10.4:1 9.8:1 Equity Ratio
Slide 67: GMAC 2005 Objectives
GMAC 2005 Objectives • Net income - - Earn at least $2.5 billion • Dividends to GM - - Remit in excess of $2.0 billion • Strong liquidity position - - Ensure ample funding under downside scenarios
Slide 68: GMAC Strong Liquidity Position
GMAC strong Liquidity Position • Large cash balances - - $24.4 billion at end of September • Many new funding channels cultivated • Funding to equity ratio reduced • Term debt maturities extended
Slide 69: GMAC Liquidity Profile
GMAC Liquidity Profile Asset and Liability Scheduled Maturities* * As of September 30, 2004. Excludes on-balance sheet secured assets and on-balance sheet secured debt I
Slide 70: GMAC Residential Mortgage Operation Stand-alone Credit Rating
GMAC Residential Mortgage Operation Stand-alone Credit Rating GM GM/GMAC Automotive GMAC Credit Rating RFC Residential Residential Capital
Slide 71: GMAC Summary
GMAC Summary • GMAC continues to produce record earnings despite difficult challenges • GMAC implementing strategic changes to ensure sustainable earnings long term - -Funding strategies altered - -Shift to “originate/sell” model • GMAC providing support to GM Vehicle Operations with auto financing
Slide 72: Supplemental Information
Supplemental Information The following supplemental information is provided to reconcile adjusted financial data with GAAP-based data (per GM’s financial statements): Presented on January 13, 2005 at the Automotive Analysts of New York Conference in Detroit by Rick Wagoner, Chairman and CEO
Slide 73: Supplemental Information: 1992 Adjusted Net Income & EPS
Supplemental Information 1992 Adjusted Net Income & EPS excluding Hughes & EDS GM GMexcl. $Millions Consolidated Hughes & EDS Hughes EDS Reported Net Income (Loss) (23,498) (24,044) (90) 636 Special Items: - -Cumulative Effect of SFAS #106 Change 20,878 20,838 40 0 - -National Car Rental System Inc.
Slide 74: Supplemental Information: Operating Cash Flow 1990-1992
Supplemental Information Three Years of Operating Cash Flow (1990-1992) $Billions Less I 1992 . ConsolidatedGMAC Hughes EDS Total* Net Cash Provided by Operating Activities (GAAP) 9.85.2 1.2 1.1 2.3 Reclassificationsto/(from) U.S. GAAP: - -Expenditures for PPE and Special Tools (6.6)0.0 (0.5) (0.6)
Slide 75: Supplemental Information: Operating Cash Flow 2002-2004
Supplemental Information Three Years of Operating Cash Flow (2002-Q3 CYTD 2004) $Billions Q3 CYTD 2004 2003 2002 Total* Net Cash Provided by Operating Activities (GAAP) 1.3 (5.3) 8.0 4.0 Reclassificationsto/(from) U.S. GAAP: - -Expenditures for PPE and Special Tools (4.5) (6.6) (6.4) (17.5) - -Pensi
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