Global Auto Industry

Franklin Guo
Dat Hong
Rex Liu
Reya Lu

Auto Manufacturing Industry Agenda

Auto Manufacturing History & Regulation

Business Strategy & Characteristics
Global Auto Supply Chain
Global Auto Sales & Production Analysis
Industry Future Forecast

Auto Manufacturing History

Eras of Invention (late 17th century 1890s):
A small steam car was demonstrated in 1678
The early automobiles manufacturing companies: Panhard et
Levassor, Oldsmobile, Cadillac, Winton, Ford, etc.
After 1930, the number of auto manufacturers declined sharply as
the industry consolidated and matured.
By 1960s, foreign competition arose as Japanese appeared as a
serious auto manufacturing nation.
Captive imports and badge engineering swept through the U.S.
and UK, resulting in major acquisitions and merges by the end of
1960s.

Auto Manufacturing History

As the 1973 oil crisis, automobile emissions control rules,

Japanese and European imports, and stagnant innovation
changed American industry.
Small imported cars outperformed large American ones, and
the domestic auto industry began to fail. Small performance
cars from BMW, Toyota, and Nissan took the place of bigengined cars from America and Italy.
Major M & A, alliance:
GM---SAAB, Daewoo; Isuzu, Subaru, Suzuki
Ford---Jaguar, Land Rover, Volvo; Mazda
Benz---Chrysler
Renault---Nissan

Regulation History

Emission Regulation Act

Since 1970, emissions from motor vehicles were regulated by
Transport Canada under the authority of the Motor Vehicle Safety Act
(MVSA) and it was later amended in 1993.
In 1999, with the passage of the proposed amendment to the
Canadian Environmental Protection Act (CEPA), automotive emissions
regulations have become the responsibility of Environment Canada.
In 2001, Canadian government published the Canada Gazette Part I
to develop and implement services and measures over the next
decade to further protect the health of Canadians and the environment
by reducing emissions from vehicles, engines and fuels.

Industry Overview

The Automobile Design and Development Process

Auto Industry Business Strategy

Global Auto Ownership

Porters Model for Automakers

Barriers to entry
Weak supplier power
The threats to substitute products is low
However, are offset by
Strong rivalry among competitors
Bargaining power of consumers

Supply Chain

Auto Suppliers

Facing a number of challenges including:

A lack

of pricing power, high labor costs, decreasing

volume and increasing raw material costs;
NAFTA-only suppliers are losing market shares to
global suppliers.
Suppliers are trying to increase value-added
content, supply systems instead of components,
technology innovations, etc.
Acquisitions, joint ventures, etc.

M & A of Auto Suppliers

Gasoline Prices Impact on Auto

Changes in Gas Price vs. SUV & Hybrid Auto

Sales

Gasoline price has a positive correlation with the sales of hybrid

auto and a negative correlation with the sales of SUV

Global Auto Sales

http://www.scotiacapital.com/English/bns_econ/bns_auto.pdf

Global Auto Production

Current Auto Manufacturing

Manufacturers Unit Price Comparison

On average, vehicles from US car makers

were sold for $21,597 in 2005, which was
13% below the comparable sales price for
the Japanese car makers. It was mainly due
to:
Missed

design opportunities
Heavy employee-level discounting
Higher labor costs

Manufacturers Operating Margins

Comparison

US automakers operating margins are lower than their

major competitors.

Manufacturers Profits Per Unit Comparison

Cost Structure - CAPEX

Cost Structure R&D

Cost Structure Health & Pension

The U.S. Big Three reported that pension and health

cost them $1,500 per vehicle produced currently.

Interoperability Costs

Imperfect interoperability impose costs due to higher

costs of design and production and slower
implementation of design changes.

Vehicle Ownership Forecast

U.S. Market Forecast

Auto Market Forecast

Global Auto Sales Forecast

Asia Pacific will lead in

production volumes by 2011

European production
levels will grow at 2% and
most of it in Central
Europe, Turkey and
Russia.
North American growth will
be coming from transplant
operations of Korean,
Japanese and German
OEMs.
China will expand its
production base at an
average annual rate of
12%. Exports of Chinese
cars to Europe and US will
commence by 2008- 2009.
South America will see
recovery and growth
specifically in Brazil.

Source: CSM Auto Production Forecast

2004

Global Production
59.8 million

2011

Global Production
74.6 million

Emission Standards Comparison

Emission Standards Comparison

ACEA agreement is a voluntary agreement between European

automobiles manufacturers association and the European
Commissions. Its goal is to reduce 25% of 1995s level of vehicle
CO2 emissions by 2008. Automakers are questioned for failing to
deliver the emissions cut.
- Japan automakers joined the agreement later and aimed to reduce
23% in vehicle CO2 emissions by 2010 (from 1995 levels).
Australia: voluntary commitment to improve fuel economy by 18%
by 2010.
Canada: has proposed a 25% improvement in fuel economy by
2010.
China: Introduced new fuel economy standards in 2004; weightbased standards to be introduced in 2 phases (2005 and 2008).
California: CARB approved GHG emissions reductions for
automobiles, currently under legislative review.
New York: Clean Cars Bill proposing to follow California standards is
currently in committee. Several other NE states have indicated they
will follow CAs lead.

Emission Standards Comparison

However, automakers are questioned for failing to
deliver the emissions cut.
Nissan, Suzuki, Mazda, Audi, Volvo, BMW and
Volkswagen are the worst performers among a
group of 20 manufacturers surveyed by the
Institute for European Environmental Policy
(IEEP) for T&E, the European Federation for
Transport and the Environment.
There will be additional manufacturing associated
with CO2 emission constraints.

BMW Group

BMW Group
Symbol : Common [BMW] Preferred [BMW3]
Primary Exchange: Frankfurt
Currency: Euro ($1 EUR = $1.27 USD)
Key Share Information:

Common Stock Price (BMW)

[Price in Euros]
Last: $43.92

Change: $ -0.16

Date: Nov. 23, 2006

Open: 44.10
Bid: N/A
High: 44.36
Ask: N/A
Low: 43.86
EPS: 4.23
Volume: 21,311
P/E: 10.43
52 Week
52 Week
High: 45.97
Low: 35.68
Yield: 1.45%
Beta: 0.80
Dividend per share: 0.64

%Change: -0.36

BMW Common Stock 5 Year Performance

Source: Deutsche Brse AG / Interactive Data Managed Solutions

BMW Common Stock 1 Year Performance

Source: Deutsche Brse AG / Interactive Data Managed Solutions

Preferred Stock Price (BMW3)

[Price in Euros]
Last: $43.64

Change: -$0.25 %Change: -0.56

Date: Nov. 23, 2006

Open: 44.00 Bid: N/A
High: 44.04 Ask: N/A
Low: 43.28 EPS: 4.23
Volume: 3,367
P/E: 10.71
52 Week
52 Week
High: 45.01 Low: 31.95
Yield: 1.50% Beta: N/A
Dividend per share: 0.66

BMW Preferred Stock 5 Year Performance

Source: Deutsche Brse AG / Interactive Data Managed Solutions

BMW Preferred Stock 1 Year Stock Performance

Source: Deutsche Brse AG / Interactive Data Managed Solutions

Company Overview

Established in 1916, originally founded as an aircraft engine manufacturer

Head offices located in Munich, Germany
One of the top 10 largest vehicle manufacturers in the world
Produces automobiles and motorbikes under the following premium brands:

BMW also operates successfully in the areas of financial services such as financing/leasing and
asset management
Conducts sales in approximately 40 international markets
Has 15 production facilities spanning 7 countries
Employs over 100,000 people globally

Important Company Milestones

1972 - BMW ventures into South Africa and sets up first production plant
outside Germany
1992 BMW ventures into North American and sets up first production
plant
in South Carolina
1994 BMW acquires the British based Rover Group, landing the brands
Rover, Land Rover, MINI, and MG
1998 BMW acquires the Rolls-Royce brand from Volkswagen Group;
however, vehicle production is prohibited until 2003
2000 BMW sells the Rover brands at a loss; however, holds onto the MINI brand
2001 BMW successfully introduces the MINI brand into the market
2003 BMW re-launches the Rolls-Royce brand with the introduction of the
$330,000 USD Phantom
2004 BMW ventures into Asia and builds production plant in
Shenyang,
China

Company Management

Dr. Norbert Reithofer

Current Chairman of the Board of Management as of September 1, 2006
Born in 1956
- 1991 - 1994 Director of the Body-in-White Production Division
- 1994 - 1997 Technical Director BMW South Africa
- 1997 - 2000 President BMW Manufacturing Corporation, USA (South
Carolina)
- 2000 - 2006 Member of the Board of Management; Production

Company Management

Dr. Helmut Panke

Current Chairman of the Board of Management 2002-2006

Born in 1946

- 1976 1978 Researcher at the Swiss Institute of Nuclear Research

- 1978 1982 Consultant at McKinsey & Co

- 1982 1985 Head of planning & control at BMW

- 1993 1995 CEO and Chairman of BMW (USA)

- 2002 2006 Chairman of the Board of Management

- 2006 Current member of the Board of Directors at Microsoft

Education : University of Munich, B.Sc, 1968; MS, 1972; PhD, 1976

BMW Group Shareholder Structure Overview

STEFAN QUANT

JOHANNA QUANDT

SUSANNE KLATTEN

BMW Group Shareholder Structure Overview

BMW Share Buyback Program

Approved by shareholders on May 12, 2005

BMW to buyback common shares up to a maximum of 10% of the company

share capital

By the end 2005, 13,488,400 common shares have been bought back
(equivalent to 2% of the companys share capital)

Average price paid per share $37.49

Approximate total cost for the share buyback program in 2005: $506 million

In 2006, up to 1.5 millions shares of preferred stock will be bought back for
employee stock plan

BMW Group Production Figures

BMW Group Vehicle Model Analysis

BMW Group Key Motorcycle Markets 2005

Sales of motorcycles are down 2% from last year
Inconsistent market development throughout 2005
Large increase in sales throughout most of Western Europe
Sales up 48% in Spain, 22% U.K. and 12% Italy
Sales down 9% in Germany

Dividend Payout 1999-2005

Factors Affecting Profitability

Sharp rise in crude oil prices

Reduced consumer buying power and demand
Elevated price of raw materials such as steel and other metals

Intense competition from Asian competitors

Fluctuating currency exchange rate
Large capital expenditure costs

BMW Group Capital Expenditure and

Cash Flow Data

Financial Statements

BMW Group Income

Statement for the period
of January 1 to September
30, 2006

BMW Group Income

Statement for 3rd Quarter

BMW Group
Cash Flow
Statement
for the period
January 1 to
September
30, 2006

BMW Group Balance

Sheet

BMW Group Balance

Sheet

BMW Group Growth Strategies

Objective: increase volume of automobiles sold

Producing more fuel efficient vehicles

BMW Group Growth Strategies

Increasing consumer demand with by producing safer and more

reliable vehicles

BMW NightVision

BMW Group Growth Strategies

Introduction of the first luxury hydrogen hybrid car 745hL

September 2005, BMW joins hybrid technology sharing partnership with

GM and Mercedes to build gas-electric engines

BMW Group Growth Strategies

Continued sales network expansion to meet the needs and demands of

local consumer
Continue to penetrate the dynamic Asian markets
Beginning preparation to enter the Indian market
Starting 2007, BMW will build a production plant in Chennai, India

Move down market and target a younger demographic with less

income with the 1 series

1 Series arriving in N. America in

late 2007

BMW Group Growth Strategies

Continued roll out of new updated versions of existing vehicle

models
BMW
New redesigned 3 series launched late 2005
New redesigned X5 launches late November 2006
New redesigned 7 series launches 2008

MINI

New redesigned MINI Cooper launches late November 2006

Rolls Royce

New convertible and coupe version of Phantom available late 2007

Fishers Analysis
1) Financial Skill
-

Great financial performance with increasing profits

Industry product leadership

2) People Factor
-

Great management team; relatively good employee relationship

3) Investment Characteristics
-

Limited growth space due to intense competition

Low industry profit margin

4) Investment Price
- P/E ratio is relatively low

Recommendation

HOLD

Honda Motor Co., Ltd.

Agenda
Current Financial Position
Company Analysis
Financial Analysis

Semi-annual

Financial Statements
Annual Financial Statements

Fishers Analysis
Recommendation

Company Snap Shot

Industry: Consumer Products (Automotive)

Listed: NYSE (HMC-N)
TSE (7267)
Share price: US $34.870
P/E: 12.00
EPS: US $2.90
Dividend: US $0.51
Yield: 1.50%
# of shares outstanding: 1,834,828,000

Chart: 1 Year (Daily)

Source: Globeinvestor.com

Chart: 10 Years (Weekly)

Source: http://money.cnn.com/

Chart: 3 Year Stock Performance

Compared to DJTA

Source: Globeinvestor.com

Credit Ratings

As of March 31, 2006

Credit Ratings
Agencies

Short-term
Long-term
unsecured
unsecured
debt securities debt securities

Moody's Investors S
ervice

P-1

A1

Standard & Poor's R

ating Services

A-1

A+

Company Analysis

Overview

Established in 1948
Four lines of business:
Motorcycles
Automobiles
Power

products and others

Financial services

Over 61 principal subsidiaries

~32 manufacturing facilities in 19 countries
Total of about 144,785 full-time employees

History
1948 Honda Motor Co., Ltd. incorporated (capital: 1 million yen)
1949 First motorcycle manufactured
1953 H-type engine, Hondas first power product, produced
1957 Listed on the Tokyo Stock Exchange
1962 ADRs issued at market price.
Adopts consolidated accounting using U.S. SEC standards
1963 Hondas first sports car (S500) and light truck (T360)

released

History
1977 ADRs listed on the New York Stock Exchange (NYSE)
Consolidated financial disclosure begins
1983 Cumulative automobile production reaches 10 million units
1995 Cumulative automobile production reaches 30 million units
2004 Honda enter cooperative agreement with GE to jointly market
the independently developed HF118 jet engine
2006 Implementation of two-for-one stock split for common shares

Corporate Governance

Corporate Governance
Takeo Fukui
President, CEO, and Rep Director
An engineer
Joined Honda since 1969
President since 1998
CEO since 2003

Satoshi Aoki
Executive VP and Rep Director
Joined Honda since 1969
Promoted to Executive VP in summer 2005

Lines of Business
Motorcycles
Automobiles
Power products and Others
Financial services

Fields of Business

Research & Development

ASIMO
HondaJet
Next

generation powertrains

Manufacturing & Distribution

Local

production plants to meet local demand

Sales & Services

Emphasis

on customer satisfaction

R&D Efforts

Key Regions of Operation

Japan
Centers

North America
Hondas

for R&D, manufacturing, and customer service

overall largest market

Europe
Increasing

Asia
China

brand popularity

increasing production facilities

Others
Honda

has over 80% market share in Brazilian

motorcycle industry

Unit Sales Breakdown

~53% from motorcycles, ~17% from automobiles, and ~30% from

power products

Revenue and Operating Margin

Business Segment Information

Revenue Breakdown by
Business Segments (%)
90.00%
80.00%

Motorcycle Business

70.00%
60.00%

Automobile Business

50.00%
40.00%

Financial Services

30.00%
20.00%

Power Products and

Others

10.00%
0.00%
2002

2003

2004

2005

2006

Geographic Segment Information

Revenue Breakdown by
Geographic Segments (%)
70.00%
60.00%
Japan

50.00%

North America

40.00%

Europe

30.00%

Asia

20.00%

Others

10.00%
0.00%
2002

2003

2004

2005

2006

Risk Factors

Exchange and interest rate risks

Market condition/Intensity of competition
Political condition
Relationship with suppliers of raw materials
Legal and regulatory risks
Environmental

and governmental regulations

Patents and trademarks

Growth Strategies

Motorcycles
Equipping

scooters with automatic transmission

Equipping more models with PGM-FI and other features
that provide superior environmental performance
Launching new models
Offering the first motorcycles with airbags
Increasing production capacity in Asia
Beginning production in Argentina

2007 Sales forecast: 10,840,000 units

Growth Strategies

Automobiles
Launching

new model of SUV and refine existing

models
Expanding light truck models
Expanding sales and services centers in Asia to
meet increasing demand
Expanding production capacity to meet demand in
Brazil

2007 Sales forecast: 3,720,000 units

Growth Strategies

Power products
Supplying

cost-competitive general-purpose
engines from Asia
Extending sales of compact, home-use
cogeneration system from Japan to the US

2007 Sales forecast: 5,880,000 units

News

Nov. 21, 2006

2007 Honda CR-V and Pilot Earn Insurance
Institute for Highway Safety TOP SAFETY PICK
Award
2007 Acura RDX Earns an Insurance Institute for
Highway Safety TOP SAFETY PICK Award
Nov. 7, 2006
HondaJet Named Winner of Popular Science's
2006
Sept. 27, 2006
HondaJet Goes on Sale at National Business
Aviation Association Convention

Financial Analysis

Financial Highlights

2006 Capital Expenditure Breakdown

by Business Segments

Forecasted 2007 Cap. Ex. Breakdown

by Business Segments

Semi-annual
Financial
Statements

Semi-annual Financial Highlights

Financial Results

Important Factors

Annual Financial
Statements

Fishers Analysis

Superiority in Financial skills,

Production, Marketing, Research

Clear, easy to read annual reports and financial

statement
Financial statements not prepared in accordance
with the US GAAP
Steady increase of capital expenditure
Over 30 principal manufacturing facilities
About 145,000 full-time employees
~5% of total revenue used toward R&D

People Factor
Experienced management team
Promote from within
CEO is customer-oriented
Executives and managers make up the
board of directors, this may decrease the
effectiveness of corporate governance and
increase risk for stakeholders

Investment Characteristics of Some

Business
Strong market position
Diversified into related businesses where
there are strategic fits and benefited from
economies of scope

P/E Ratio
P/E ratio: 12.00
Competitor P/E ratios:

General

Motors: 40.00
BMW: 10.43
Ford Motors: 0.00 (negative EPS)
Toyota: 14.70
Nissan: 0.00 (0 EPS)

Recommendation

BUY

General Motors

Table of Contents

Stock price
Company Background
Company Analysis
Financial Highlight
(06 3rd Quarter report 05 Annual report)

Income

statement
Balance sheet
Cash flow statement

Conclusion & Recommendation

Current Position on
Nov. 24, 2006

Industry:
Ticker Symbol:
Share Price:
52 week range:
P/E:
EPS:
Dividend:
Shares Outstanding:
Market Capital:

Global Automobile
GM-N (NYSE)
$31.23
$18.33 - 36.56
40.00
$0.78
$1 (3.2%)
565,611,157
$20,096,164,408

Globeinvestor.com and merchantonline.com

5-Year Stock Price

(from bigcharts.com)

1-Year Stock Price

(from bigcharts.com)

GM vs. S&P/TSX Composite Index

Globeinvestor.com

Definitions

GMA GM Auto
GMNA - GM North America
GME - GM Europe
GMLAAM - GM Latin America / Africa / Mid-East
GMAP - GM Asia Pacific

GMAC General Motors Acceptance Corporation

Background

The world's largest automaker

Founded in 1908
Global industry sales leader for 75 years
GM today employs 327,000 people in the world

Huge labor pension cost

Global headquarters in Detroit, Michigan, USA

GM manufactures its cars and trucks in 33
countries

GMs Products

In 2005, 9.17 million GM cars and trucks were sold globally under the
following brands:
Buick
Cadillac
Chevrolet
GMC

Opel

Pontiac
Saab
Saturn
Vauxhall

GM operates one of the world's leading finance companies

GM
Daewoo
Holden
HUMMER

GMAC Financial Services, which offers

automotive, residential and commercial financing and insurance.

GM's OnStar subsidiary is the industry leader in

vehicle safety, security and information services.

GMA & GMAC Revenue Share

- Nine months ended September 30, 2006
GMAC
17%

GMA
Other Auto

Other
Auto
1%

Other
Financ
ing
0%

GMA
GMAC
82%
Other Financing

Global Partnerships

Majority shareholder of GM Daewoo Auto & Technology Co. of

South Korea

Has product, powertrain and purchasing collaborations with

Suzuki Motor Corp. and Isuzu Motors Ltd. of Japan.

Advanced technology collaborations with

DaimlerChrysler AG
BMW AG of Germany
Toyota Motor Corp. of Japan

Vehicle manufacturing ventures with

Toyota
Suzuki
Shanghai Automotive Industry Corp. of China
AVTOVAZ of Russia
Renault SA of France

Type of Vehicle and Market Share

Management

Key people

G. Richard Wagoner, Jr.

Chairman & CEO since May 1, 2003

Frederick (Fritz) A. Henderson

Vice Chairman and CFO since Jan. 1, 2006

Joined GM since 1977

BA in economics from Duke University
MBA from Harvard Business School

Joined GM since 1984

BBA from the University of Michigan
MBA from Harvard Business School

Robert A. Lutz

Vice Chairman, Global Product Development since Sept. 1, 2001

Former CEO of Excide Technologies & Vice Chairman of Chrysler Corporation

BA in production management from the University of California-Berkeley
MBA from the University of California-Berkeley
Degree of doctor of management from Kettering University

The World's Largest Automaker

GM's largest national market in order:

1.
2.
3.
4.

the United States

China
Canada
the United Kingdom and Germany.

Global market share for vehicles sales:

14.2%(2005) from 14.4%(2004)

Declining Revenue
High oil price
GM produce high horse power vehicles

Used to be American consumers favorite

People switch to low oil consumption

vehicles
Japanese cars
Korean cars

Competitive Position

Financial Statement Analysis

The 2006 3rd Quarter Report
Ended at September 30, 2006

2006 Quarter Revenue Breakdown

- Auto & Financing and Insurance Operations

2006 Quarter GMA Net Income by Region

2006 Quarter GMAC Net Income by

Division

06~07 EPS Estimates

(Earning estimates from Zacks.com)

Segment Reporting

GMA Revenue Share by Region

- Nine months ended September 30, 2006
GM LAAM
8%

GMAP
9%

GME
19%
GMNA
64%

GMNA

GME

GM LAAM

GMAP

Financial Statement Analysis

2005 Annual Report

General Idea about the

Performance of GM in 2005

GM is losing big money in North America

GMAs global sales revenue is good (growth)
GMAC is making money
We can see that the auto division is dragging the
company performance

Breakdown of GMAs Loss by region in 2005

Breakdown of GMACs profit in 2005

Financial Highlights
(In USD as of 12/31/2005)

Total Revenue
EBITDA
Net Loss
Total Assets
Current Assets
Total Liabilities
Current Liabilities
Long Term Debt
Stockholders' Equity

192,604,000,000
31,516,000,000
(10,567,000,000)
476,078,000,000
99,414,000,000
461,481,000,000
117,963,000,000
202,177,000,000
14,597,000,000

GMs Main Challenges

Huge legacy cost burden

Inability to adjust structural costs in line

with falling revenue

GMs Legacy Challenge

Huge retiree population Huge cost for health care & pensions
11.5 active employees support 1 retiree in 1962
1 active employee supports 3.2 retirees in 2005
Health care bills totaled $5.3 billion in 2005
No other company has this much health-care obligation

(!!!Big competitive disadvantage)

Estimated Future Employee Benefit Payments

Consolidated Balance Sheet

- Asset

Consolidated Balance Sheet

- Liabilities and Stockholders Equity

Breakdown for Balance Sheet

- Asset

Breakdown for Balance Sheet

- Liabilities and Stockholders Equity

Consolidated Income Statement

Breakdown for Consolidated Income Statement

Loss from Continuing Operations

2005 to 2004 Comparison

Net sales fell to $192.6 billion from 193.5 billion

Net loss of $10.6 billion from Net income of $2.8
billions
Unfavorable results primarily due to losses at GMNA
GMAC net income declined to $2.4 from $3.0 billion

Reasons for Unfavorable results in 2005

GMNA market share and product mix

Delphi Chapter 11 Proceeding

Revenue declining
GM recorded a charge of $5.5 billion
Including the benefit guarantees for certain former GM U.S.
employees who transferred to Delphi

GMNA restructuring and global asset Impairments

Health-care cost escalation

Factors for Loss in GMNA

Unfavorable product mix ($2.2 billion loss)

Reduced in demand for higher margin large utility vehicles (reaching the end of
the life cycle)

Production volume decreases ($2.1 b. loss)

Market share decline

Reduction in dealer inventories

Unfavorable material costs ($700 mil. loss)

Increased health-care expenses ($600 mil. loss)

Escalating health care cost trends

Advertising and sales promotion cost increase ($500 mil. loss)

Restructuring charge ($1.7 b. loss)

After-tax impairment charge ($552 mil. loss)

North America Turnaround Plan

Keep raising the bar in the execution of great cars and

trucks

Revitalize sales and marketing strategy

Significantly improve cost competitiveness

Address health-care and pension legacy cost burden

GMNA Turnaround Plan Highlight

Cease production at 12 U.S. plans by 2008

Reduce 30,000 manufacturing positions
Work with United Auto Workers to reduce health-care
obligations by $15 billion
Modify pension benefits
Reduce salaries of top executives
Reduce dividend by 50%

Consolidated Cash Flow Statement (cont.)

Supplementary Information for Cash Flow Statement

(cont.)

GM Profitability Plan

Keep working on cost reduction

Growing revenue around the world

Invest in technology, better fuel efficiency

Revitalizing sales and marketing strategy

Significant Events

Delphi Bankruptcy

GMAC Pending Sale of 51% controlling interest

Discussions with Renault and Nissan

Sale of investments in Isuzu and Suzuki

Sale of Regional Homebuilder

GM-Fishers Analysis

1) Financial Skill

2) People Factor

Great management team

Relatively bad employee relationship (cutting pension
expense)

3) Investment Characteristics

Bad financial performance in GMA

Depending on profits from GMAC

Limited growth space due to intense competition

Low industry profit margin (negative profit)

4) Investment Price

P/E ratio is High

Increasing stock price if turn the Net loss around

Recommendation