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General Motors General Motors Company ProfileCompany Profile

Prepared for:Prepared for:BAA605BAA605

Marketing Concepts and PracticesMarketing Concepts and Practices

By:By:Jose Alvares Jose Alvares

J. Sándor ChekaJ. Sándor ChekaJohn KalengaiiJohn Kalengaii

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Table of ContentsTable of ContentsHistory of GMHistory of GM

GM SegmentsGM Segments

New OfferingsNew Offerings

Philanthropic Endeavors Philanthropic Endeavors

FinancialFinancial

StrengthsStrengths

WeaknessesWeaknesses

NewsNews

SummarySummary

ReferencesReferences

Appendix A: Chart DataAppendix A: Chart Data

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History of GMHistory of GMGeneral Motors began on September 16, General Motors began on September 16, 1908.1908.

General motors began by bringing General motors began by bringing together a few companies under one together a few companies under one umbrella: including: Buick; Cadillac; umbrella: including: Buick; Cadillac; Oakland, which became Pontiac; Oakland, which became Pontiac; Oldsmobile; and other small automotive Oldsmobile; and other small automotive companies.companies.

GM was always in the business of buying GM was always in the business of buying other companies to incorporate. It other companies to incorporate. It believed by bringing in companies with believed by bringing in companies with different attributes, then they would be different attributes, then they would be able to reach a broader market. able to reach a broader market.

GM began to get into the defense GM began to get into the defense contracting market during World War I. contracting market during World War I.

GM had purchased 30 automotive GM had purchased 30 automotive companies by 1920.companies by 1920.

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History of GMHistory of GMIn 1923, GM began its In 1923, GM began its dominance over the automotive dominance over the automotive world by becoming the leading world by becoming the leading producer of automobiles. producer of automobiles. During this era, GM began a During this era, GM began a decentralized management decentralized management concept which saved the concept which saved the company from financial ruin. company from financial ruin. The decentralized management The decentralized management enabled the smaller division enabled the smaller division tailor their product to each tailor their product to each segment of the market which segment of the market which they were targeting. they were targeting. The 1950’s proved to be the The 1950’s proved to be the hay day for GM where it was hay day for GM where it was able to capture 44% of the able to capture 44% of the market. market.

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History of GMHistory of GMIn the 1970’s, the company was able to respond to the need for In the 1970’s, the company was able to respond to the need for more gas efficient automobiles. more gas efficient automobiles.

In the 1980’s, GM began to acquire businesses which were outside In the 1980’s, GM began to acquire businesses which were outside the realm of automobile manufacturing companies.the realm of automobile manufacturing companies.

The 1990’s required a more conservative strategy for a declining The 1990’s required a more conservative strategy for a declining market. market.

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Automotive Divisions:Automotive Divisions:High EndHigh End

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Automotive Divisions:Automotive Divisions:Low EndLow End

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Automotive Divisions:Automotive Divisions:OverseasOverseas

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GM Companies:GM Companies:PartsParts

Genuine Gm PartsGenuine Gm PartsACDelcoACDelcoGM Performance GM Performance PartsPartsGM AccessoriesGM AccessoriesGM Fleet Alternative GM Fleet Alternative fuelsfuelsGM Supplier GM Supplier DiscountDiscountGM XM Satellite GM XM Satellite RadioRadioOnstarOnstar

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GM Companies: GM Companies: ServicesServices

GMAC Financial GMAC Financial ServicesServices

GM Cardmember GM Cardmember services. services.

Supply Power Supply Power Commercial Commercial FinanceFinance

GM Business GM Business Card Card

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GM NetworkGM NetworkCompanies in which GM is a majority stock holder

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GM ComponentsGM ComponentsAutomotive Parts Manufacturing Automotive Parts Manufacturing

Engine DivisionEngine Division Transmission Transmission DivisionDivision

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New OfferingsNew Offerings

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Philanthropic EndeavorsPhilanthropic EndeavorsHummer and the Red Hummer and the Red Cross start a Cross start a partnershippartnership

GM GlobalAid teams GM GlobalAid teams with CARE and UNICEF with CARE and UNICEF to start a disaster to start a disaster relief fundrelief fund

GM is also a major GM is also a major corporate sponsor of corporate sponsor of the of MLK Jr. the of MLK Jr. Memorial Memorial

GM started Volunteer GM started Volunteer Plus which gives $250 Plus which gives $250 per hour for employee per hour for employee involvement with involvement with charities charities

GM is a corporate GM is a corporate sponsor of Make-a-sponsor of Make-a-Wish foundation. Wish foundation.

GM also donates to GM also donates to America’s Promise America’s Promise

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GM 2004 GM 2004 Financial Highlights Financial Highlights

Record consolidated net sales and revenues Record consolidated net sales and revenues

Record net income at GMAC Record net income at GMAC

Record net income and market shares at GMAP Record net income and market shares at GMAP

Profitability at GMLAAM Profitability at GMLAAM

Increase of GME losses Increase of GME losses

$5.2 Billion health care cost$5.2 Billion health care cost

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GM Consolidated Sales & GM Consolidated Sales & Revenues 2000 - Est. 2006Revenues 2000 - Est. 2006

Net sales & Revenues as of Net sales & Revenues as of December,31 2004 were $193.5 December,31 2004 were $193.5 billion, up 4.1% from December billion, up 4.1% from December 20032003

2005 sales Q1,2,3 = $141.468B2005 sales Q1,2,3 = $141.468B GM expected annual sales & GM expected annual sales &

revenues as of December 31, revenues as of December 31, 2005 are $184.8B 2005 are $184.8B

GM 2006 Expected Sales GM 2006 Expected Sales growth rate is 5% growth rate is 5%

Continue on the next slideContinue on the next slide

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GM Consolidated Sales & GM Consolidated Sales & Revenues 2000 - Est. 2006Revenues 2000 - Est. 2006

The decrease in 2001 was due primarily to pricing pressures and a decrease in wholesale sales volume in North America and Europe, largely to the currency devaluation in Argentina and pricing pressures throughout the GM’s Latin America, Africa, and Mid-East regions.The increased in 2002 is due to increased in market share in three of GM’s four regions around the world, favorable product mix and cost reduction. Also, GM had record sales for of SUV’s and trucks.In 2003, the increase is also due to increased in market share in three of GM’s four regions, favorable product mix and a weaker of the dollar in US.The continue growth at GM Asia-Pacific and the higher wholesale volume at GM Latin America/Africa/Mid-East and GM Europe were the factors to increase the net sales and revenues in 2004. In 2005, the expected decrease in sales and revenues is due to higher row material prices and strong competition in US.

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GM Global Sales ProductionGM Global Sales Production

GMGM total unit sales total unit sales production keep production keep growing, mainly due growing, mainly due to the growth of to the growth of Latin and Asian Latin and Asian markets.markets.

GMNAGMNA car division car division sales production is sales production is jeopardized by the jeopardized by the market share market share growth of Japanese growth of Japanese automakersautomakers..

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GM ProfitGM Profit

GM's 2004 profits have GM's 2004 profits have been crushed by excess been crushed by excess capacity, high union capacity, high union wages, and massive wages, and massive employee-retirement employee-retirement obligations. obligations.

GM tries to restructure as GM tries to restructure as high raw-materials costs high raw-materials costs and weak demand for and weak demand for high-margin sport utility high-margin sport utility vehicles crushes profits vehicles crushes profits by 36%by 36%

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GM ROE and ROAGM ROE and ROA

GM ability to manage GM ability to manage investor money and investor money and assets has been assets has been inconsistent and inconsistent and inefficient.inefficient.

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GM Operating Margin & Net GM Operating Margin & Net Operating MarginOperating Margin

GM ability to generate GM ability to generate more profit per dollars of more profit per dollars of sales has steadily decline sales has steadily decline over the last 2 years over the last 2 years

Toyota Motor Corp. (One of Toyota Motor Corp. (One of the main competitor) has the main competitor) has reported an increase of reported an increase of 10.51% for its Operating 10.51% for its Operating Margin and 14.29% for its Margin and 14.29% for its Net Operating Margin Net Operating Margin

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GM Regional ResultsGM Regional ResultsGMAP vehicle sales increase more GMAP vehicle sales increase more than 14% market share increased than 14% market share increased by 0.7% to 9.3%. The expected by 0.7% to 9.3%. The expected 2006 Asia & Pacific industry 2006 Asia & Pacific industry vehicle growth rate is 7%.vehicle growth rate is 7%.GMLAAM vehicle unit sales up GMLAAM vehicle unit sales up 26%; market share increased by 26%; market share increased by 1.1% to 17.4%. The expected 2006 1.1% to 17.4%. The expected 2006 LAAM market growth rate is 15%.LAAM market growth rate is 15%.GME increased its market share GME increased its market share by 0.2% to 9.5%; A continued by 0.2% to 9.5%; A continued weak price and US$/EUR rate weak price and US$/EUR rate forced GME to report a loss of forced GME to report a loss of $976 Million. The industry vehicle $976 Million. The industry vehicle is expected to grow by 5% in year is expected to grow by 5% in year 2006.2006.GMNA net Income totaled 1.6 GMNA net Income totaled 1.6 Billion; market share declined by Billion; market share declined by 0.8% to 27.2%.The unit sales of 0.8% to 27.2%.The unit sales of cars decreased by 0.8% while the cars decreased by 0.8% while the truck’s sales unit increased by 1%. truck’s sales unit increased by 1%.

(Truck’s sale represents 60% of (Truck’s sale represents 60% of GM’s total U.S. vehicle unit sales)GM’s total U.S. vehicle unit sales)

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News: Health Care CostNews: Health Care Cost

Health care cost in the United States average Health care cost in the United States average 15% of gross domestic product15% of gross domestic product

GM spends 5 Billion on health care cost for 1.1 GM spends 5 Billion on health care cost for 1.1 million employee, retirees and independents million employee, retirees and independents throughout the United states.throughout the United states.

Those costs amounted to about $1500 for each Those costs amounted to about $1500 for each vehicles manufactured in the United States.vehicles manufactured in the United States.

GM competitors governments cover a large GM competitors governments cover a large portion of employee and retiree health-care cost.portion of employee and retiree health-care cost.

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StrengthsStrengthsWorld’s number one carmakerWorld’s number one carmaker

GM has 325,000 employees around the world.GM has 325,000 employees around the world.

Manufacturing plants in 32 countries. Manufacturing plants in 32 countries.

Sells in 200 countries. Sells in 200 countries.

Strong brands.Strong brands.

In 2004, nearly 9 million Autos sold, up 4%, 2In 2004, nearly 9 million Autos sold, up 4%, 2ndnd highest total in GM’s history.highest total in GM’s history.

Profitable Markets are the Asia-Pacific and Latin Profitable Markets are the Asia-Pacific and Latin America/Africa/Mid-East regions. America/Africa/Mid-East regions.

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Strengths (Continued)Strengths (Continued)Significant Progress to reduce cost since 2000.Significant Progress to reduce cost since 2000.

Developing partnerships around the world.Developing partnerships around the world.

New products such as Hummer H3 and Chevy New products such as Hummer H3 and Chevy HHRHHR

GM has a good product offering in China, with a GM has a good product offering in China, with a small, cheap and fuel-economy cars, minivans small, cheap and fuel-economy cars, minivans and pick-up trucks. and pick-up trucks.

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WeaknessesWeaknessesMarket share is down to 14.4 globally.Market share is down to 14.4 globally.

Capacity Utilization.Capacity Utilization.– Too many plants and workers in North America.Too many plants and workers in North America.– 111,000 employees and contracts that forbid 111,000 employees and contracts that forbid

permanent layoffs.permanent layoffs.

Rebates and Sales Incentives in order to keep the Rebates and Sales Incentives in order to keep the plants running.plants running.

Health care burden.Health care burden.

Third Quarter Losses are $1.6 Billion compared to Third Quarter Losses are $1.6 Billion compared to $88 million one year ago.$88 million one year ago.

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Weaknesses (Continued)Weaknesses (Continued)Unprofitable Markets include the North America and Unprofitable Markets include the North America and Europe.Europe.

GM does not have a hybrid vehicle on the US GM does not have a hybrid vehicle on the US market. market.

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SummarySummaryGM is the world’s number one carmaker. GM is the world’s number one carmaker.

GM has been profitable in the Asia-Pacific/Latin GM has been profitable in the Asia-Pacific/Latin America/Africa/Mid-East regions, while America/Africa/Mid-East regions, while unprofitable in North America and Europe.unprofitable in North America and Europe.

China is the biggest GM’s center of auto profit.China is the biggest GM’s center of auto profit.

GM’s largest market is US, and second largest GM’s largest market is US, and second largest market is China.market is China.

Health care cost is equal to $5 Billion.Health care cost is equal to $5 Billion.

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Summary (Continued)Summary (Continued)Lately, GM has been offering rebates and sales Lately, GM has been offering rebates and sales incentives, in order to keep manufacturing plants incentives, in order to keep manufacturing plants in operation in US. in operation in US.

GM has committed to achieve 100% of capacity GM has committed to achieve 100% of capacity utilization by 2008.utilization by 2008.

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ReferencesReferencesGM – Company from: GM – Company from: http://www.gm.com/company/corp_info/http://www.gm.com/company/corp_info/GM – Company Profiles from: GM – Company Profiles from: http://www.gm.com/company/corp_info/profiles/http://www.gm.com/company/corp_info/profiles/Business Week Article: Business Week Article: http://www.businessweek.com/bwdaily/dnflash/oct2005/nf20051017_7171_db0http://www.businessweek.com/bwdaily/dnflash/oct2005/nf20051017_7171_db035.35.htmhtmBBC Article: BBC Article: http://news.bbc.co.uk/1/hi/business/1101500.stmhttp://news.bbc.co.uk/1/hi/business/1101500.stmhttp://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gmhttp://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewmonthlyreleasedetail.do?domain=74&docid=19344.com/gmnews/viewmonthlyreleasedetail.do?domain=74&docid=19344GM – Letter to Stockholders 2001 from: GM – Letter to Stockholders 2001 from: http://www.gm.com/company/investor_information/docs/fin_data/gm01ar/downhttp://www.gm.com/company/investor_information/docs/fin_data/gm01ar/download/ltr01ar.load/ltr01ar.pdfpdfGM – Letter to Stockholders 2002 from: GM – Letter to Stockholders 2002 from: http://www.gm.com/company/investor_information/docs/fin_data/gm02ar/downhttp://www.gm.com/company/investor_information/docs/fin_data/gm02ar/download/gm02arletters.pdfload/gm02arletters.pdf GM – Letter to Stockholders 2003 from: GM – Letter to Stockholders 2003 from: http://www.gm.com/company/investor_information/docs/fin_data/gm03ar/http://www.gm.com/company/investor_information/docs/fin_data/gm03ar/download/gm03arletters.pdfdownload/gm03arletters.pdfGM – Letter to Stockholders 2004 from: GM – Letter to Stockholders 2004 from: http://www.gm.com/company/investor_information/docs/fin_data/gm04ar/http://www.gm.com/company/investor_information/docs/fin_data/gm04ar/download/gm04arletter.pdfdownload/gm04arletter.pdf

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References (Continued)References (Continued)GM – Financials 2001 from: GM – Financials 2001 from: http://www.gm.com/company/investor_information/docs/fin_data/gm01ar/http://www.gm.com/company/investor_information/docs/fin_data/gm01ar/download/fin01ar.pdfdownload/fin01ar.pdfGM – Financials 2002 from: GM – Financials 2002 from: http://www.gm.com/company/investor_information/docs/fin_data/gm02ar/http://www.gm.com/company/investor_information/docs/fin_data/gm02ar/download/gm02arfinancials.pdfdownload/gm02arfinancials.pdfGM – Financials 2003 from: GM – Financials 2003 from: http://www.gm.com/company/investor_information/docs/fin_data/gm03ar/http://www.gm.com/company/investor_information/docs/fin_data/gm03ar/download/gm03arfinancials.pdfdownload/gm03arfinancials.pdfGM – Financials 2004 from: GM – Financials 2004 from: http://www.gm.com/company/investor_information/docs/fin_data/gm04ar/http://www.gm.com/company/investor_information/docs/fin_data/gm04ar/download/gm04arfinancials.pdfdownload/gm04arfinancials.pdfGeneral Motors Corporation 2001-2004 Annual Report: General Motors Corporation 2001-2004 Annual Report: http://www.gm.com/company/investor_information/stockholder_info/http://www.gm.com/company/investor_information/stockholder_info/GM – GM and UAW reach tentative agreement on health care: GM – GM and UAW reach tentative agreement on health care: http://media.gm.com/http://media.gm.com/servletservlet//GatewayServletGatewayServlet?target=http://image.emerald.gm.com/?target=http://image.emerald.gm.com/gmnewsgmnews//viewmonthlyreleasedetailviewmonthlyreleasedetail.do?domain=74&.do?domain=74&dociddocid=19615=19615 Article by Keith Bradsher - NYTimes.com – Article by Keith Bradsher - NYTimes.com – G.M. Thrives in China With Small, G.M. Thrives in China With Small, Thrifty Vans Thrifty Vans (August 9, 2005).(August 9, 2005).Article by Danny Hakim – NYTimes.com – G.M. and Ford Lose Ground in Sales Article by Danny Hakim – NYTimes.com – G.M. and Ford Lose Ground in Sales Again (March 2, 2005).Again (March 2, 2005).Article by Matthew L. Wald – NYTimes.com - Article by Matthew L. Wald – NYTimes.com - Hybrid Cars Burning Gas in the Hybrid Cars Burning Gas in the Drive for Power (July 17, 2005).Drive for Power (July 17, 2005).

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Appendix A: Chart DataAppendix A: Chart Data

GM CONSOLIDATED SALES & REVENUES

Annual Income Statement 12/31/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/31/2005 12/31/2006Total Net Sales ($ Billions) 184.6 169 177.8 185.8 193.5 184.8 194

GM GLOBAL SALES PRODUCTION (Thousands Units)

Year 2000 2001 2002 2003 2004 2005 est.CAR GMNA 2,892 2,365 2,458 2,184 1,997 1,831TRUCK GMNA 2,880 2,745 3,182 3,277 3,223 3,045Total GMNA 5,772 5,110 5,640 5,461 5,220 4,876GME 1,993 1,842 1,770 1,818 1,829 1,864GMLAAM 544 575 561 547 716 777GMAP 185 256 307 420 1,333 1,588Worldwide 8,494 7,786 8,278 8,246 9,098 9,105

GM PROFITS

Year 2000 2001 2002 2003 2004Net income ($ Millions) 4,452 601 1,736 3,822 2,805

GM ROE and ROA

12/31/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004Return on Equity (%) 14.75 3.05 25.48 11.33 10.12Return on Assets (%) 1.47 0.19 0.47 0.64 0.58

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Appendix A: Chart Data Appendix A: Chart Data (Continued)(Continued)

GM x TOYOTA: OPERATING MARGIN and NET OPERATING MARGIN

Annual Income Statement 12/31/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004GM Operating Margin (%) 16.32 12.98 12.94 15.11 14.83GM Net Operating Margin (%) 2.41 0.34 0.93 2.06 1.45TOYOTA Operating Margin (%) 12.41 12.33 12.76 13.8 15.25TOYOTA Net Operating Margin (%) 3.16 3.51 4.08 5.88 6.72

GM REGION RESULTS: NET INCOME ($ Millions)

Year 2000 2001 2002 2003 2004GMAP -233 -57 188 577 729GMLAAM 26 85 -181 -331 85GME -676 -765 -1011 -504 -976GMNA 3174 1270 2992 811 1583