GM Accelerates its Reinvention as a Leaner, More Viable Company



    
    Updated Viability Plan Speeds, Deepens Restructuring of U.S. Operations

    
    DETROIT, April 27 /CNW/ -- General Motors (NYSE:   GM) today presented an
updated Viability Plan that will speed the reinvention of GM's U.S. operations
into a leaner, more customer-focused, and more cost-competitive automaker.
    

    
    The Viability Plan is included in an exchange offer whereby GM is
offering certain bondholders shares of GM common stock and accrued interest in
exchange for certain outstanding notes.
    

    Revised Viability Plan goes further and faster

    
    The Viability Plan announced today builds on the February 17 Viability
Plan submitted to the U.S. Treasury.
(<a href="http://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewpressreldetail.do?domain=2&docid=52168">http://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com
/g mnews/viewpressreldetail.do?domain=2&docid=52168</a>)  The revised Plan
accelerates the timeline for a number of important actions and makes deeper
cuts in several key areas of GM's operations, with the objective to make us a
leaner, faster, and more customer-focused organization going forward.
    

    Significant changes include:
    --  A focus on four core brands in the U.S. - Chevrolet, Cadillac, Buick
        and GMC - with fewer nameplates and a more competitive level of
        marketing support per brand.
    --  A more aggressive restructuring of GM's U.S. dealer organization to
        better focus dealer resources for improved sales and customer service.
    --  Improved U.S. capacity utilization through accelerated idling and
        closures of powertrain, stamping, and assembly plants.
    --  Lower structural costs, which GM North America (GMNA) projects will
        enable it to breakeven (on an adjusted EBIT basis) at a U.S. total
        industry volume of approximately 10 million vehicles, based on the
        pricing and share assumptions in the plan.  This rate is substantially
        below the 15 to 17 million annual vehicle sales rates recorded from
        1995 through 2007.

    
    "We are taking tough but necessary actions that are critical to GM's
long-term viability," said Fritz Henderson, GM president and CEO.  "Our
responsibility is clear - to secure GM's future - and we intend to succeed. 
At the same time, we also understand the impact these actions will have on our
employees, dealers, unions, suppliers, shareholders, bondholders, and
communities, and we will do whatever we can to mitigate the effects on the
extended GM team."
    


    Fewer U.S. brands, nameplates, and dealers

    
    As part of the revised Viability Plan and the need to move faster and
further, GM in the U.S. will focus its resources on four core brands,
Chevrolet, Cadillac, Buick and GMC.  The Pontiac brand will be phased out by
the end of 2010.  GM will offer a total of 34 nameplates in 2010, a reduction
of 29 percent from 48 nameplates in 2008, reflecting both the reduction in
brands and continued emphasis on fewer and stronger entries. This four-brand
strategy will enable GM to better focus its new product development programs
and provide more competitive levels of market support.
    

    
    The revised plan moves up the resolution of Saab, Saturn, and Hummer to
the end of 2009, at the latest.  Updates on these brands will be provided as
these initiatives progress.
    

    
    Working with its dealers, GM anticipates reducing its U.S. dealer count
from 6,246 in 2008 to 3,605 by the end of 2010, a reduction of 42 percent. 
This is a further reduction of 500 dealers, and four years sooner, than in the
February 17 Plan. The goal is to accomplish this reduction in an orderly,
cost-effective, and customer-focused way.  This reduction in U.S. dealers will
allow for a more competitive dealer network and higher sales effectiveness in
all markets.  More details on these initiatives will be provided in May.
    


    Sales volume and market share projections

    
    The Viability Plan anticipates improved financial results despite more
conservative U.S. sales volume expectations going forward.  The lower volume
expectations are the result of managing the business with fewer nameplates and
dealers, leaner inventories, and reduced market share. To address the
inventory issue, GM on April 23 announced U.S. production schedule reductions
of approximately 190,000 vehicles during the second and early third quarters
of 2009.
    

    
    The Viability Plan also reduces GM's market share projections to adjust
for the impact of the brand and dealer consolidation, as well as for the
short-term impact of speculation regarding a GM bankruptcy.  The plan assumes
a 19.5 percent share in 2009, with share stabilizing in the 18.4 to 18.9
percent range in subsequent years.
    

    
    "We have strong new product coming for our four core brands: the
Chevrolet Camaro, Equinox, Cruze and Volt; Buick LaCrosse; GMC Terrain; and
Cadillac SRX and CTS Sport Wagon and Coupe," said Henderson.  "A tighter focus
by GM and its dealers will help give these products the capital investment,
marketing and advertising support they need to be truly successful."
    



    Lower structural costs, lower breakeven point

    
    The Viability Plan also lowers GMNA's breakeven volume to a U.S. annual
industry volume of 10 million total vehicles, based on the pricing and share
assumptions in the plan. This lower breakeven point (at an adjusted EBIT
level) better positions GM to generate positive cash flow and earn an adequate
return on capital over the course of a normal business cycle, a requirement
set forth by the U.S. Treasury in its March 30 viability plan assessment.
    

    
    GM will lower its breakeven point by cutting its structural costs faster
and deeper than had previously been planned:
    

    --  Manufacturing:  Consistent with the mandate to accelerate
        restructuring, we plan to reduce the total number of assembly,
        powertrain, and stamping plants in the U.S. from 47 in 2008 to 34 by
        the end of 2010, a reduction of 28 percent, and to 31 by 2012.  This
        would reflect the planned acceleration of six plant idling/closures
        from the February 17 plan, and one additional plant idling. 
Throughout
        this transition, GM will continue to implement its flexible global
        manufacturing strategy (GMS), which allows multiple body styles and
        architectures to be built in one plant.  This enables GM to use its
        capital more efficiently, increase capacity utilization, and respond
        more quickly to market shifts.
    --  Employment:  U.S. hourly employment levels are projected to be reduced
        from about 61,000 in 2008 to 40,000 in 2010, a 34 percent reduction,
        and level off at about 38,000 starting in 2011.  This further planned
        reduction of an additional 7,000 to 8,000 employees from the February
        17 Plan is primarily the result of the previously discussed
operational
        efficiencies, nameplate reductions, and plant closings.  GM also
        anticipates a further decline in salaried and executive employment as
        it continues to assess its structure and execute the Viability Plan. 
        More details will be announced as soon as they are finalized with the
        various stakeholders.

    --  Labor costs:  The Viability Plan assumes a reduction of U.S. hourly
        labor costs from $7.6 billion in 2008 to $5 billion in 2010, a 34
        percent reduction. GM will continue to work with its UAW partners to
        accomplish this through a reduction in total U.S. hourly employment as
        well as through modifications in the collective bargaining agreement.

    
    As a result of these and other actions, GMNA's structural costs are
projected to decline 25 percent, from $30.8 billion in 2008 to $23.2 billion
in 2010, a further decline of $1.8 billion by 2010 versus the February 17
Plan.
    



    Strengthening GM's balance sheet

    
    Another key element of GM's restructuring will be taking the necessary
actions to strengthen its balance sheet.  GM today took an important step in
improving its balance sheet by launching a bond exchange offer for
approximately $27 billion of its unsecured public debt.  If successful, the
bond exchange would result in the conversion of a large majority of this debt
to equity.
    

    
    "A stronger balance sheet would free the company to invest in the
products and technologies of the future," Henderson said. "It will also help
provide stability and security to our customers, our dealers, our employees,
and our suppliers."
    

    
    Another important part of improving the balance sheet will be the ongoing
discussions with the UAW to modify the terms of the Voluntary Employee Benefit
Association (VEBA), and with the U.S. Treasury regarding possible conversion
of its debt to equity.  The current bond exchange offer is conditioned on the
converting to equity of at least 50 percent of GM's outstanding U.S. Treasury
debt at June 1, 2009, and at least 50 percent of GM's future financial
obligations to the new VEBA.  GM expects a debt reduction of at least $20
billion between the two actions.
    

    
    In total, the U.S. Treasury debt conversion, VEBA modification and bond
exchange could result in at least $44 billion in debt reduction.
    

    
    Throughout the Plan, GM will continue to make significant investment in
future products and new technologies, with an investment of $5.4 billion in
2009, and investments ranging from $5.3 to $6.7 billion from 2010 to 2014.
Very importantly, development and testing of the Chevy Volt extended-range
electric car remains on track for start of production by the end of 2010 and
arrival in Chevrolet dealer showrooms soon thereafter.
    

    
    "The Viability Plan reflects the direction of President Obama and the
U.S. Treasury that GM should go further and faster on our restructuring,"
Henderson said. "We appreciate their support and direction.  This stronger,
leaner business model will enable GM to keep doing what it does best - provide
great new cars, trucks and crossovers to our customers, and continue to
develop new advanced propulsion technologies that are vital for our country's
economy and environment."
    


    
    About GM - General Motors Corp. (NYSE:   GM), one of the world's largest
automakers, was founded in 1908, and today manufactures cars and trucks in 34
countries.  With its global headquarters in Detroit, GM employs 243,000 people
in every major region of the world, and sells and services vehicles in some
140 countries.  In 2008, GM sold 8.35 million cars and trucks globally under
the following brands:  Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden,
Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling.  GM's largest
national market is the United States, followed by China, Brazil, the United
Kingdom, Canada, Russia and Germany.  GM's OnStar subsidiary is the industry
leader in vehicle safety, security and information services.  More information
on GM can be found at www.gm.com.
    


    
    Forward-Looking Statements - In this press release and in related
comments by our management, our use of the words "plan," "expect,"
"anticipate," "ensure," "promote," "believe,"  "improve," "intend," "enable,"
"continue," "will," "may," "would," "could," "should," "project," "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. Among other items, such factors might
include: our ability to comply with the requirements of our credit agreement
with the U.S. Treasury; our ability to execute the restructuring plans that we
have disclosed, our ability to maintain adequate liquidity and financing
sources and an appropriate level of debt; the ability of our foreign
subsidiaries to restructure and receive financial support from their local
governments or other sources; our ability to restore consumers' confidence in
our viability and to continue to attract customers, particularly for our new
products; our ability to sell, spin-off or phase out some of our brands, to
manage the distribution channels for our products, and to complete other
planned asset sales; and the overall strength and stability of general
economic conditions and of the automotive industry, both in the U.S. and
globally.
    

    
    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.
    

    NOTE TO EDITORS:  For additional media information visit
http://media.gm.com .





    




For further information:

For further information: Tom Wilkinson, GM Communications,
+1-313-667-0366 (o), +1-313-378-6233 (c), tom.wilkinson@gm.com, or Renee
Rashid-Merem, GM Communications, +1-313-665-3128 (o), +1-313-701-8560 (c), 
renee.rashid-merem@gm.com  Web Site: http://www.gm.com

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