Gm Events & Presentations Gm Analyst Briefing Gm Plan For Long Term Viability


Published on

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Gm Events & Presentations Gm Analyst Briefing Gm Plan For Long Term Viability

  1. 1. Restructuring Plan for Long-term Viability December 3, 2008
  2. 2. 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,” “ensure,” “continue,” “designed,” “opportunity,” “risk,” “may,” “will,” “would,” “could,” “should,” “project,” “projected,” “positioned” 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. Our most recent reports on SEC Forms 10-K, 10-Q and 8-K provide information about these and other factors, which may be revised or supplemented in future reports to the SEC on those forms. Unless specifically required by law, we assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances. 1
  3. 3. Restructuring Plan Overview • On December 2, 2008 GM submitted its detailed restructuring plan including rationale for and use of temporary Government funding • Proposed restructuring plan will create lean, profitable, self- sustaining and fully competitive GM, committed to: – Full compliance with the 2007 Energy Independence and Security Act – Advanced vehicle technologies to reduce petroleum dependency and greenhouse gas emissions • Major principles of the restructuring plan include accelerated emphasis on: – Reduction in brands, nameplates & retail dealers – Full labor cost competitiveness with foreign manufacturers in the U.S. by 2012 – Changes to VEBA related obligations – Balance sheet deleveraging / restructuring 2
  4. 4. Refocused Brand, Nameplate and Distribution Strategy • Plan to focus substantially all product development and marketing resources to support 4 core brands - Chevrolet, Cadillac, Buick and GMC – Resulting in improved awareness, sales and customer satisfaction • Continue recent efforts to combine Buick, Pontiac and GMC brands into single dealer distribution network – Approximately 80% of combined sales currently sold through BPG- branded stores – Pontiac will serve as specialty niche vehicle with reduced offerings intended to complement Buick and GMC models • In addition to previously announced HUMMER strategic review, GM will undertake and expedite strategic review of the Saab brand globally • Plan to accelerate discussion with Saturn retailers and explore alternatives for the Saturn brand 3
  5. 5. Retail and Distribution Strategy • Number of U.S. dealers has declined by ~1,700 since 2000 • Consistent with focus on 4 core brands, further consolidations in U.S. dealer network planned – Plan additional reduction in U.S. dealers by 2012 of ~1,800 – Reductions primarily focused on those dealers operating in metropolitan and suburban areas – Distribution strength in rural areas will be largely preserved • Annual throughput for remaining U.S. dealers expected to increase – More competitive with other high-volume manufacturers – Facilitating more profitable and stronger U.S. dealer network 2000 2004 2008 2012 U.S. Marketing & Dealer Operations Actual Actual Fcst Plan GM Dealer Count (Locations) 8,138 7,497 6,450 4,700 4
  6. 6. Product Strategy • Focus on fuel efficient passenger cars and crossovers in future product portfolio – 22 of next 24 new vehicle introductions in 2009 – 2012 will be cars and crossovers – 15 hybrid models by 2012, versus 6 in 2008 • $2.9B investment in alternative fuel and advanced propulsion technologies in 2009 – 2012 – Involve partnerships – Use of Section 136 funding • Focus on global product development and global vehicle architectures – 68% of GM U.S. sales volume derived from new global architectures by 2012 5
  7. 7. U.S. Hourly Manufacturing Cost • Reduced U.S. hourly manufacturing cost by ~$10.3 billion from 2003 to 2008 – Cost reductions result from productivity improvements and reductions in post-employment health care expense, as well as volume declines • Expect additional $3.6 billion reduction by 2012 – Effect of UAW 2007 VEBA / health care agreement – Further assembly plant consolidations, attrition and productivity improvements – Additional wage & benefit changes to be negotiated including current job security provisions, paid time off and other operating measures • Under current plan, GM’s wages and benefits for both current workers and new hires will be fully competitive with Toyota in the U.S. by 2012 – Comprehends recently negotiated wage rates, workforce turnover, planned assembly plant consolidations, further productivity improvements included in the plan and additional changes to be negotiated 6
  8. 8. Balance Sheet & VEBA Restructuring • In addition to liquidity measures, plan includes and is conditioned upon significant deleveraging of GM’s balance sheet • Proposed restructuring of balance sheet will significantly improve GM’s creditworthiness and enable access to non-government funding once credit markets open • Plan preserves the status of existing trade creditors and honors terms and provisions of all outstanding warranty obligations to both consumers and dealers • GM will immediately engage current lenders and bondholders and its unions to satisfactorily negotiate the changes necessary to achieve planned capital structure Projected Pro-Forma $ Billions Dec 31, 2008 Dec 31, 2008 Total Debt, Incl. VEBA-Related @ 9% Disc Rate 62.0 ~30.0 Book Equity (65.1) ~(32.0) U.S. Government Funding 4.0 4.0 Trade Payables 27.8 27.8 Warranty Obligations (Global) 9.0 9.0 7
  9. 9. Proposed Governmental Support • $4B immediate loan to provide minimum liquidity levels through December 31, 2008 • Second draw in January 2009, of up to $4B to provide adequate liquidity balance through January 31, 2009 • Total term loan facility of up to $12B, including initial December and January draws to provide minimum liquidity in baseline scenario through December 31, 2009 • $6B committed line of credit to provide adequate liquidity under more severe U.S. industry conditions • Creation of Federal Oversight Board to: – Monitor and authorize draws, including timing, amounts and performance metrics consistent with the plan – Support and facilitate an expedited, successful restructuring, while protecting taxpayer investments 8
  10. 10. Summary • Plan encompasses operational and financial restructuring – Reduction in brands, nameplates & retail outlets – Full labor cost competitiveness with foreign manufacturers in the U.S. by 2012 – Changes to VEBA related obligations – Balance sheet deleveraging / restructuring • Expect GMNA breakeven on EBIT basis to be between 12.5 – 13.0 million unit U.S. industry after restructuring actions • Forecast GM Automotive earnings before tax to be positive by 2011 post-restructuring actions, assuming baseline industry volume assumptions 9