Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smallfiler,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
The aggregate market value of the voting stock held by non-affiliates of the registrant (assuming only for purposes of this computation that directors and executive officers may be affiliates) was approximately $51.2$85.8 billion as of June 30, 2017.2021.
Portions of the registrant's definitive Proxy Statement related to the Annual Stockholders Meeting to be filed subsequently are incorporated by reference into Part III of this Form 10-K.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
PART I
Item 1. Business
General Motors Company (sometimes referred to as we, our, us, ourselves, the Company, General Motors, or GM) was incorporated as a Delaware corporation in 2009. We design, build and sell cars, trucks, crossovers, cars and automobile parts and provide software-enabled services and subscriptions worldwide. We also provide automotive financing services through General Motors Financial Company, Inc. (GM Financial). Except for per share amounts or as otherwise specified, amounts presented within tables are stated in millions.
On July 31, 2017 we closed the sale of the Opel and Vauxhall businesses and certain other assets in Europe (the Opel/Vauxhall Business) to Peugeot, S.A. (PSA Group). On October 31, 2017 we closed the sale of the European financing subsidiaries and branches (the Fincos, and together with the Opel/Vauxhall Business, the European Business) to Banque PSA Finance S.A. and BNP Paribas Personal Finance S.A. The European Business was previously reported as our GM Europe (GME) segment and part of GM Financial. The European Business is presented as discontinued operations in our consolidated financial statements for all periods presented. The assets and liabilities of the European Business are presented as held for sale in our consolidated financial statements as of December 31, 2016. Unless otherwise indicated, information in this report relates to our continuing operations.
Segment Reporting Data During the three months ended December 31, 2017, we changed our automotive segments as a result of changes in our organizational structure and the evolution of our business resulting from the sale of the Opel/Vauxhall Business and the various strategic actions taken in the GM International Operations (GMIO) region. As a result, our GM South America (GMSA) and GMIO operating segments are now reported as one, combined reportable international segment, GM International (GMI). Our GM North America (GMNA) and GM Financial segments were not impacted. All periods presented have been recast to reflect the changes. Operating segment data and principal geographic area data for the years ended December 31, 2017, 2016 and 2015 are summarized in Note 24 to our consolidated financial statements.
Automotive Our automotive operations meet the demands of our customers through our automotive segments: GMNAGM North America (GMNA) and GMI. GMNA meets the demands of customers in North AmericaGM International (GMI) with vehicles developed, manufactured and/or marketed under the Buick, Cadillac, Chevrolet and GMC brands. GMI primarily meets the demands of customers outside North America with vehicles developed, manufactured and/or marketed under the Buick, Cadillac, Chevrolet, GMC and Holden brands. We also have equity ownership stakes in entities that meet the demands of customers in other countries, primarily in China, with vehicles developed, manufactured and/or marketed under the Baojun, Buick, Cadillac, Chevrolet Jiefang and Wuling brands. Cruise is our global segment responsible for the development and commercialization of autonomous vehicle technology. We provide automotive financing services through our General Motors Financial Company, Inc. (GM Financial) segment. Refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) and Note 23 to our consolidated financial statements for financial information about our segments. Except for per share amounts or as otherwise specified, amounts presented within tables are stated in millions. Forward-looking statements in this Business section are not guarantees of future performance and may involve risks and uncertainties that could cause actual results to differ materially from those projected. Refer to Item 1A. Risk Factors and the "Forward-Looking Statements" section of Part II, Item 7. MD&A for a discussion of these risks and uncertainties.
Our vision for the future is a world with zero crashes, zero emissions and zero congestion, which guides our growth-focused strategy to invest in electric vehicles (EVs) and autonomous vehicles (AVs), software-enabled services and subscriptions and new business opportunities, while strengthening our market position in profitable internal combustion engine (ICE) vehicles, such as trucks and sport utility vehicles (SUVs). We have committed to an all-electric future with a core focus on zero emission battery EVs as part of our long-term strategy to reduce petroleum consumption and greenhouse gas (GHG) emissions. As a result, we have committed to making total EV and AV investments of more than $35.0 billion from 2020 through 2025.
We have an opportunity to grow our vehicle and financing revenue by continuing to capitalize on the strength of our franchises and scaling our EV production and customer base over the next decade. We also have the potential of growing our revenue through our software-enabled services and subscriptions, including OnStar, our advanced driver-assistance system (ADAS), Super Cruise, and future offerings, such as our next-generation ADAS, Ultra Cruise, and Ultifi. Additionally, we are incubating several new businesses with a start-up mindset that we believe will enable us to attract new customers and generate revenues in new areas.
Electric Vehicles We plan to launch more than 30 EVs globally by 2025. A key element in our EV strategy is Ultium, our all-new dedicated battery electric platform. Our first Ultium-based products launched with the GMC HUMMER EV and BrightDrop EV600 in 2021, to be followed by the Cadillac LYRIQ in 2022. This all-new platform is flexible and will be leveraged across multiple brands and vehicle sizes, styles and drive configurations, allowing for quick response to customer preferences and a shorter design and development lead time compared to our ICE vehicles.
In additionSeptember 2021, we announced three new drive assist motors as part of Ultium Drive, calibrated in-house to ensure the highest level of performance in Ultium-based EVs. We designed the motors as a scalable family, sharing design principles as well as similar tooling and manufacturing strategies.
In November 2021, we began production at GM’s Factory ZERO Detroit-Hamtramck Assembly Center (Factory ZERO), which was re-tooled into a fully dedicated EV facility to produce the GMC HUMMER EV and the upcoming Cruise Origin and Chevrolet Silverado EV, which we revealed in January 2022 at the Consumer Electronics Show in Las Vegas, Nevada. In January 2022, we announced that we will convert our assembly plant in Orion Township, Michigan for production of the Chevrolet Silverado EV and the electric GMC Sierra. Additionally, we have announced plans to mass-produce battery cells for these and other future EVs through Ultium Cells LLC (an equally owned joint venture with LG Energy Solution) in Lordstown, Ohio, Spring Hill, Tennessee and Lansing, Michigan. A fourth U.S.-based battery cell plant is also planned by mid-decade.
To support mass market adoption of EVs, we are working to ensure that our customers will have access to comprehensive charging solutions. For personal vehicles, we sell throughthis means strategically addressing charging needs at home, the workplace and in public locations. For fleet vehicles, this means turnkey charging solutions and fleet and facility energy management services. We have announced collaborative work with several charge network operators to filter real-time data on their respective
GENERAL MOTORS COMPANY AND SUBSIDIARIES
networks and charge station health into Ultium Charge 360, a holistic charging approach that integrates charging networks, GM vehicle mobile apps and other products and services to simplify the overall charging experience for GM EV owners.
Ultium Charge 360 is also available to our dealer network to retailfleet and BrightDrop customers we also sell vehicles directly or through our dealer network toand offers fleet customers, including daily rental car companies, commercialand facility management tools, integration with GM’s fleet customers, leasing companiesmanagement offerings and governments. Our customers can obtainsupport across a wide range of aftersale vehiclefleet sizes. In October 2021, we announced a new Dealer Community Charging Program to install up to 40,000 Level 2 EV chargers across the U.S. and Canada. Working with our dealers, we intend to expand access to charging in local communities, including in underserved, rural and urban areas where EV charging access is often limited. This initiative, which is expected to begin in 2022, is part of our commitment to invest nearly $750 million to expand home, workplace and public charging infrastructure through the Ultium Charge 360 ecosystem through 2025.
OnStar and Vehicle Connectivity We offer OnStar and connected services to more than 22 million connected vehicles globally through subscription-based and complimentary services. We are among the leaders in the industry, with significant global real-world experience in delivering connected services and advanced safety features. OnStar provides safety and security services for retail and fleet customers, including automatic crash response, emergency services, roadside assistance, crisis assist, stolen vehicle assistance and turn-by-turn navigation. Additionally, we offer OnStar Guardian, a mobile app that allows customers to access key OnStar safety and security services from anywhere and in any vehicle. Fleet customers leverage OnStar Vehicle Insights, our telematics solution across their entire fleet, regardless of vehicle make or model. We also offer a variety of connected services, including mobile apps for owners to remotely control certain vehicle features and EV owners to locate charging stations, on-demand vehicle diagnostics, GM Smart Driver, GM Marketplace in-vehicle commerce, Amazon Alexa in-vehicle voice, Google's Voice Assistant, navigation and app ecosystem, connected navigation and SiriusXM with 360L and 4G LTE wireless connectivity. In August 2021, we announced plans to roll out 5G connectivity in select model year 2024 vehicles.
Super Cruise and Ultra Cruise We offer Super Cruise, the industry's first hands-free driver assistance feature for enabled roads in the U.S. and Canada, which is powered by vehicle connectivity by means of a Super Cruise subscription. Super Cruise capabilities will be available on eight model year 2022 vehicles in the beginning of 2022 and will expand to be included on more than 20 models by 2023. In October 2021, we announced Ultra Cruise, a significant next step in hands-free advanced driving-assistance technology that we anticipate will be available on select models in 2023. It will create a virtually door-to-door hands-free driving experience as it will be designed to handle 95 percent of all driving scenarios on every paved road in the U.S. and Canada over time.
Ultifi Our end-to-end software platform Ultifi will provide our customers with software-defined features, apps and services over-the-air starting in 2023. Ultifi and the apps it enables will empower customers to update their ownership experiences continuously with desirable features such as vehicle performance, ADAS, safety and security features, climate and comfort options, personal themes and EV ownership experience elements, including battery and charging details.
Cruise Cruise is driving leadership in the development and commercialization of AV technology. We believe that building all-electric vehicles with autonomous capabilities integrated from the beginning, rather than through retrofits, is the most efficient way to unlock the tremendous potential societal benefits of self-driving cars. The Cruise Origin, a purpose-built, all-electric, self-driving vehicle that is being co-developed by GM, Cruise and Honda Motor Company, Ltd. (Honda), will be built on General Motors’ all-new modular architecture, powered by the Ultium platform, at Factory ZERO starting in early 2023, pending government approvals. In October 2020, Cruise received a driverless test permit from the California Department of Motor Vehicles to remove test drivers from Cruise autonomous test vehicles in San Francisco and subsequently began fully driverless testing. In October 2020, GM and Cruise also announced they will file an exemption petition with the National Highway Traffic Safety Administration (NHTSA) seeking regulatory approval for the Origin’s deployment, and withdrew an earlier exemption petition that was limited to the Cruise AV derived from the Chevrolet Bolt platform.
In June 2021, Cruise received a driverless test permit from the California Public Utilities Commission (CPUC) to provide unpaid rides to the public in driverless vehicles. In September 2021, Cruise received approval of its Autonomous Vehicle Deployment Permit from the California Department of Motor Vehicles to commercially deploy driverless AVs. Cruise will need one additional permit from the CPUC to charge the public for driverless rides in California. Given the potential of all-electric self-driving vehicles to help save lives, reshape our cities and reduce emissions, the goal of Cruise is to deliver its self-driving services as soon as possible, but as Cruise continues to expand and scale its operations safety will continue to be the gating metric — supported by Cruise's Safety Management System and its other risk identification, assessment and mitigation processes.
BrightDrop BrightDrop is building an ecosystem of all-electric and connected first-to-last mile products and services, including light commercial vehicles, smart containers and a software platform for fleet and asset management designed to help delivery and logistics companies deliver goods more efficiently. We are converting our CAMI manufacturing plant in Ingersoll,
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Ontario to produce the all new BrightDrop EV600 and BrightDrop EV410 electric light commercial vehicles. In December 2021, we started deliveries of the BrightDrop EV600 to FedEx Express, our launch customer. Additionally, we announced that Verizon will be the first customer for the BrightDrop EV410.
HYDROTEC We are developing hydrogen fuel cell applications across transportations and industries, including mobile power generation, class 7/8 truck, locomotive, aerospace and marine applications. The development of HYDROTEC is another element of our long-term strategy and commitment toward the reduction of petroleum consumption and GHG emissions. We believe hydrogen fuel cells will play an important role in many automotive and other mobility applications where customers will derive additional benefits from the ability to refuel quickly, an extended range, suitability for heavier payloads and central refueling of large fleets. GM and Honda, through our dealer network, such as maintenance, light repairs, collision repairs,long-term strategic alliance to collaborate in research and advanced engineering efforts, are developing and commercializing fuel cell systems. In 2021, GM announced it will supply HYDROTEC to Navistar, Inc., which is developing hydrogen-powered heavy trucks to launch in 2024, and to Liebherr-Aerospace, which is developing hydrogen-powered auxiliary power units for aircraft. In June 2021, we announced a collaboration with Wabtec Corporation to develop and commercialize the Ultium platform and HYDROTEC fuel systems for their locomotives.
OnStar Insurance Services OnStar Insurance is currently available in 46 states and Washington, D.C. and is expected to be available in all 50 states by the second quarter of 2022. In the future, we plan to integrate insurance products into the vehicle accessoriesexperience and extended service warranties.offer premiums based on personal driving behaviors by leveraging, with customer consent, data coming from GM vehicles.
GM Defense Providing commercially developed solutions, including purpose-built vehicles, for government and military customers. GM Defense's growth strategy is focused on building a portfolio of products, including the Infantry Squad Vehicle and the purpose-built Heavy Duty Suburban, by leveraging our manufacturing and innovation capabilities.
Competitive Position and Vehicle Sales The principal factors that determine consumer vehicle preferences in the markets in which we operate include overall vehicle design, price, quality, available options, safety, reliability, fuel economy and functionality. Market leadership in individual countries in which we compete varies widely.
We present both wholesale and retailtotal vehicle sales data to assist in the analysis of our revenue and our market share. Wholesale vehicle sales data which representsconsists of sales directly to GM's dealers and others, includingdistributors as well as sales to fleet customers, is the measure thatU.S. Government and excludes vehicles sold by our joint ventures. Wholesale vehicle sales data correlates to our revenue recognized from the sale of vehicles, which is the largest component of Automotive net sales and revenue. Wholesale vehicle sales exclude vehicles sold by joint ventures. In the year ended December 31, 2017 39%2021, 30% of our wholesale vehicle sales volume was generated outside the U.S. The following table summarizes total wholesale vehicle sales of new vehicles by automotive segment (vehicles in thousands):
|
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2017 |
| 2016 |
| 2015 |
GMNA(a) | 3,511 |
|
| 73.5 | % |
| 3,958 |
|
| 75.9 | % |
| 3,558 |
|
| 72.2 | % |
GMI(b) | 1,267 |
|
| 26.5 | % |
| 1,255 |
|
| 24.1 | % |
| 1,372 |
|
| 27.8 | % |
Total | 4,778 |
|
| 100.0 | % |
| 5,213 |
|
| 100.0 | % |
| 4,930 |
|
| 100.0 | % |
| | | | | | | | | | | |
Discontinued operations | 696 |
| |
| | 1,199 |
| |
| | 1,140 |
| |
|
__________ | |
(a) | Wholesale vehicle sales related to transactions with the European Business were insignificant for the years ended December 31, 2017, 2016 and 2015. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
GMNA | 2,308 | | | 80.7 | % | | 2,707 | | | 80.3 | % | | 3,214 | | | 76.4 | % |
GMI | 551 | | | 19.3 | % | | 663 | | | 19.7 | % | | 995 | | | 23.6 | % |
Total | 2,859 | | | 100.0 | % | | 3,370 | | | 100.0 | % | | 4,209 | | | 100.0 | % |
| | | | | | | | | | | |
GENERAL MOTORS COMPANY AND SUBSIDIARIES
| |
(b) | Wholesale vehicle sales include 131, 128 and 181 vehicles related to the transactions with the European Business for the years ended December 31, 2017, 2016 and 2015. |
RetailTotal vehicle sales data which representsrepresents: (1) retail sales (i.e., sales to end customers based upon the good faith estimates of management, includingconsumers who purchase new vehicles from dealers or distributors); (2) fleet sales, such as sales to fleet customers, does not correlate directly to the revenue we recognize during the period. However retail vehicle sales data is indicative of the underlying demand for ourlarge and small businesses, governments, and daily rental car companies; and (3) vehicles used by dealers in their businesses, including courtesy transportation vehicles. Market share information is based primarily on retail vehicle sales volume. In countries where retail vehicle sales data is not readily available, other data sources such as wholesale or forecast volumes are used to estimate retail vehicle sales to end customers.
RetailTotal vehicle sales data includes all sales by joint ventures on a total vehicle basis, not based on theour percentage of ownership interest in the joint venture. Certain joint venture agreements in China allow for the contractual right to report vehicle sales of non-GM trademarked vehicles by those joint ventures. Retailventures, which are included in the total vehicle sales we report for China. While total vehicle sales data includes vehicles used by dealers under courtesy transportation programs and vehicles sold throughdoes not correlate directly to the dealer registration channel, primarily in Europe. This sales channel consists primarilyrevenue we recognize during a particular period, we believe it is indicative of dealer demonstrator, loaner and self-registered vehicles which are not eligible to be sold as new vehicles after being registered by dealers. Certain fleet sales that are accountedthe underlying demand for as operating leases are included in retailour vehicles. Total vehicle sales at the timedata represents management's good faith estimate based on sales reported by GM's dealers, distributors, and joint ventures, commercially available data sources such as registration and insurance data, and internal estimates and forecasts when other data is not available.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
The following table summarizes industry and GM total industry retailvehicle sales or estimated sales where retail sales volume is not available, of vehicles and our related competitive position by geographic region (vehicles in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
| Industry | | GM | | Market Share | | Industry | | GM | | Market Share | | Industry | | GM | | Market Share |
North America | | | | | | | | | | | | | | | | | |
United States | 15,383 | | | 2,218 | | | 14.4 | % | | 14,892 | | | 2,547 | | | 17.1 | % | | 17,499 | | | 2,887 | | | 16.5 | % |
Other | 3,083 | | | 356 | | | 11.5 | % | | 2,804 | | | 377 | | | 13.4 | % | | 3,645 | | | 480 | | | 13.2 | % |
Total North America | 18,466 | | | 2,574 | | | 13.9 | % | | 17,696 | | | 2,924 | | | 16.5 | % | | 21,144 | | | 3,367 | | | 15.9 | % |
Asia/Pacific, Middle East and Africa | | | | | | | | | | | | | | | | | |
China(a) | 25,878 | | | 2,892 | | | 11.2 | % | | 24,926 | | | 2,901 | | | 11.6 | % | | 25,398 | | | 3,094 | | | 12.2 | % |
Other | 19,389 | | | 431 | | | 2.2 | % | | 18,094 | | | 530 | | | 2.9 | % | | 21,457 | | | 584 | | | 2.7 | % |
Total Asia/Pacific, Middle East and Africa | 45,267 | | | 3,323 | | | 7.3 | % | | 43,020 | | | 3,431 | | | 8.0 | % | | 46,855 | | | 3,678 | | | 7.9 | % |
South America | | | | | | | | | | | | | | | | | |
Brazil | 2,119 | | | 242 | | | 11.4 | % | | 2,055 | | | 338 | | | 16.4 | % | | 2,787 | | | 476 | | | 17.1 | % |
Other | 1,488 | | | 151 | | | 10.2 | % | | 1,105 | | | 132 | | | 12.0 | % | | 1,531 | | | 193 | | | 12.6 | % |
Total South America | 3,607 | | | 393 | | | 10.9 | % | | 3,160 | | | 470 | | | 14.9 | % | | 4,318 | | | 669 | | | 15.5 | % |
Total in GM markets | 67,340 | | | 6,290 | | | 9.3 | % | | 63,876 | | | 6,825 | | | 10.7 | % | | 72,317 | | | 7,714 | | | 10.7 | % |
Total Europe | 15,080 | | | 1 | | | — | % | | 14,946 | | | 1 | | | — | % | | 19,021 | | | 4 | | | — | % |
Total Worldwide(b) | 82,420 | | | 6,291 | | | 7.6 | % | | 78,822 | | | 6,826 | | | 8.7 | % | | 91,338 | | | 7,718 | | | 8.4 | % |
United States | | | | | | | | | | | | | | | | | |
Cars | 3,262 | | | 138 | | | 4.2 | % | | 3,341 | | | 239 | | | 7.1 | % | | 4,632 | | | 389 | | | 8.4 | % |
Trucks | 4,125 | | | 1,223 | | | 29.6 | % | | 4,050 | | | 1,257 | | | 31.0 | % | | 4,494 | | | 1,332 | | | 29.7 | % |
Crossovers | 7,996 | | | 857 | | | 10.7 | % | | 7,501 | | | 1,051 | | | 14.0 | % | | 8,373 | | | 1,166 | | | 13.9 | % |
Total United States | 15,383 | | | 2,218 | | | 14.4 | % | | 14,892 | | | 2,547 | | | 17.1 | % | | 17,499 | | | 2,887 | | | 16.5 | % |
China(a) | | | | | | | | | | | | | | | | | |
SGMS | | | 1,277 | | | | | | | 1,407 | | | | | | | 1,482 | | | |
SGMW | | | 1,615 | | | | | | | 1,494 | | | | | | | 1,612 | | | |
Total China | 25,878 | | | 2,892 | | | 11.2 | % | | 24,926 | | | 2,901 | | | 11.6 | % | | 25,398 | | | 3,094 | | | 12.2 | % |
__________
(a) Includes sales by our Automotive China Joint Ventures (Automotive China JVs): SAIC General Motors Sales Co., Ltd. (SGMS) and SAIC GM Wuling Automobile Co., Ltd. (SGMW).
(b) Cuba, Iran, North Korea, Sudan and Syria are subject to broad economic sanctions. Accordingly, these countries are excluded from industry sales data and corresponding calculation of market share.
4
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2017 |
| 2016 |
| 2015 |
| Industry |
| GM |
| Market Share |
| Industry |
| GM |
| Market Share |
| Industry |
| GM |
| Market Share |
North America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States | 17,567 |
|
| 3,002 |
|
| 17.1 | % |
| 17,886 |
|
| 3,043 |
|
| 17.0 | % |
| 17,864 |
|
| 3,082 |
|
| 17.3 | % |
Other | 3,981 |
|
| 574 |
|
| 14.4 | % |
| 3,993 |
|
| 587 |
|
| 14.7 | % |
| 3,666 |
|
| 530 |
|
| 14.5 | % |
Total North America(a) | 21,548 |
|
| 3,576 |
|
| 16.6 | % |
| 21,879 |
|
| 3,630 |
|
| 16.6 | % |
| 21,530 |
|
| 3,612 |
|
| 16.8 | % |
Asia/Pacific, Middle East and Africa |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China(b) | 28,250 |
|
| 4,041 |
|
| 14.3 | % |
| 28,274 |
|
| 3,914 |
|
| 13.8 | % |
| 25,050 |
|
| 3,730 |
|
| 14.9 | % |
Other(c) | 21,067 |
|
| 629 |
|
| 3.0 | % |
| 20,599 |
|
| 720 |
|
| 3.5 | % |
| 21,391 |
|
| 899 |
|
| 4.2 | % |
Total Asia/Pacific, Middle East and Africa(a) | 49,317 |
|
| 4,670 |
|
| 9.5 | % |
| 48,873 |
|
| 4,634 |
|
| 9.5 | % |
| 46,441 |
|
| 4,629 |
|
| 10.0 | % |
South America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazil | 2,239 |
|
| 394 |
|
| 17.6 | % |
| 2,050 |
|
| 346 |
|
| 16.9 | % |
| 2,568 |
|
| 388 |
|
| 15.1 | % |
Other | 1,927 |
|
| 275 |
|
| 14.3 | % |
| 1,623 |
|
| 237 |
|
| 14.6 | % |
| 1,619 |
|
| 257 |
|
| 15.9 | % |
Total South America(a) | 4,166 |
|
| 669 |
|
| 16.1 | % |
| 3,673 |
|
| 583 |
|
| 15.9 | % |
| 4,187 |
|
| 645 |
|
| 15.4 | % |
Total in GM markets | 75,031 |
|
| 8,915 |
|
| 11.9 | % |
| 74,425 |
|
| 8,847 |
|
| 11.9 | % |
| 72,158 |
|
| 8,886 |
|
| 12.3 | % |
Total Europe | 19,149 |
|
| 685 |
|
| 3.6 | % |
| 18,620 |
|
| 1,161 |
|
| 6.2 | % |
| 17,463 |
|
| 1,099 |
|
| 6.3 | % |
Total Worldwide(d) | 94,180 |
|
| 9,600 |
|
| 10.2 | % |
| 93,045 |
|
| 10,008 |
|
| 10.8 | % |
| 89,621 |
|
| 9,985 |
|
| 11.1 | % |
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cars | 6,145 |
|
| 709 |
|
| 11.5 | % |
| 6,897 |
|
| 890 |
|
| 12.9 | % |
| 7,475 |
|
| 931 |
|
| 12.5 | % |
Trucks | 5,039 |
|
| 1,328 |
|
| 26.4 | % |
| 4,911 |
|
| 1,325 |
|
| 27.0 | % |
| 4,675 |
|
| 1,274 |
|
| 27.2 | % |
Crossovers | 6,383 |
|
| 965 |
|
| 15.1 | % |
| 6,078 |
|
| 828 |
|
| 13.6 | % |
| 5,714 |
|
| 877 |
|
| 15.4 | % |
Total United States | 17,567 |
|
| 3,002 |
|
| 17.1 | % |
| 17,886 |
|
| 3,043 |
|
| 17.0 | % |
| 17,864 |
|
| 3,082 |
|
| 17.3 | % |
China(b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SGMS |
|
|
| 1,906 |
|
|
|
|
|
|
|
| 1,806 |
|
|
|
|
|
|
|
| 1,711 |
|
|
|
|
SGMW and FAW-GM |
|
|
| 2,135 |
|
|
|
|
|
|
|
| 2,108 |
|
|
|
|
|
|
|
| 2,019 |
|
|
|
|
Total China | 28,250 |
|
| 4,041 |
|
| 14.3 | % |
| 28,274 |
|
| 3,914 |
|
| 13.8 | % |
| 25,050 |
|
| 3,730 |
|
| 14.9 | % |
__________
| |
(a) | Sales of Opel/Vauxhall outside of Europe were insignificant in the years ended December 31, 2017, 2016 and 2015. |
GENERAL MOTORS COMPANY AND SUBSIDIARIES
| |
(b) | Our China sales include the Automotive China JVs SAIC General Motors Sales Co., Ltd. (SGMS), SAIC GM Wuling Automobile Co., Ltd. (SGMW) and FAW-GM Light Duty Commercial Vehicle Co., Ltd. (FAW-GM). In the three months ended March 31, 2017 we began using estimatedAs discussed above, total vehicle registrations data as the basis for calculating industry volume and market share in China. In the years ended December 31, 2016 and 2015 wholesale volumes were used for Industry, GM and Market Share. Our retail sales in China were 3,871 and 3,613 in the years ended December 31, 2016 and 2015. |
| |
(c) | Includes Industry and GM sales in India and South Africa. As of December 31, 2017 we have ceased sales of Chevrolet for the domestic markets in India and South Africa.
|
| |
(d) | We do not currently export vehicles to Cuba, Iran, North Korea, Sudan or Syria. Accordingly these countries are excluded from industry sales data and corresponding calculation of market share.
|
In the year ended December 31, 2017 we estimate we had the largest market share in North America and South America, and the number three market share in the Asia/Pacific, Middle East and Africa region, which included the number two market share in China. Refer to the Overview in Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) for discussion on changes in market share by region.
The sales and market share data provided in the table above includes both fleet vehicle salesvehicles. We sell vehicles directly or through our dealer network to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies and sales to retail customers.governments. Certain fleet transactions, particularly sales to daily rental car companies, are generally less profitable than retail sales to retailend customers. A significant portion of the sales to daily rental car companies are recorded as operating leases under U.S. GAAP with no recognition of revenue at the date of initial delivery due to guaranteed repurchase obligations. The following table summarizes estimated fleet sales and those sales as a percentage of total retail vehicle sales (vehicles in thousands):
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
GMNA | 399 | | | 493 | | | 741 | |
GMI | 311 | | | 351 | | | 498 | |
Total fleet sales | 710 | | | 844 | | | 1,239 | |
| | | | | |
Fleet sales as a percentage of total vehicle sales | 11.3 | % | | 12.4 | % | | 16.1 | % |
|
| | | | | | | | |
| Years Ended December 31, |
| 2017 | | 2016 | | 2015 |
GMNA | 691 |
|
| 707 |
|
| 795 |
|
GMI | 541 |
|
| 527 |
|
| 468 |
|
Total fleet sales | 1,232 |
|
| 1,234 |
|
| 1,263 |
|
|
|
|
|
|
|
|
|
|
Fleet sales as a percentage of total retail vehicle sales | 13.8 | % |
| 13.9 | % |
| 14.2 | % |
The following table summarizes United States fleet sales (vehicles in thousands):
|
| | | | | | | | |
| Years Ended December 31, |
| 2017 | | 2016 | | 2015 |
Daily rental sales | 282 |
| | 327 |
| | 400 |
|
Other fleet sales | 296 |
| | 269 |
| | 278 |
|
Total fleet sales | 578 |
| | 596 |
| | 678 |
|
Product Pricing Several methods are used to promote our products, including the use of dealer, retail and fleet incentives, such as customer rebates and finance rate support. The level of incentives is dependent upon the level of competition in the markets in which we operate and the level of demand for our products.
Cyclical and Seasonal Nature of Business Retail sales areThe market for vehicles is cyclical and productiondepends in part on general economic conditions, credit availability and consumer spending. Vehicle markets are also seasonal. Production varies from month to month. Vehicle model changeovers occur throughout the year as a result of new market entries. The market for vehicles depends in part on general economic conditions, credit availability and consumer spending.
Relationship with Dealers We market vehicles and automotive parts worldwide primarily through a network of independent authorized retail dealers. These outlets include distributors, dealers and authorized sales, service and parts outlets.
Our customers can obtain a wide range of after-sale vehicle services and products through our dealer network, such as maintenance, light repairs, collision repairs, vehicle accessories and extended service warranties. The following table summarizes the number of authorized dealerships:dealerships and other agents performing similar functions were 4,670 in GMNA and 7,670 in GMI at December 31, 2021.
|
| | | | | | | | |
| December 31, 2017 | | December 31, 2016 | | December 31, 2015 |
GMNA | 4,809 |
| | 4,857 |
| | 4,886 |
|
GMI | 7,641 |
| | 8,598 |
| | 9,177 |
|
Total | 12,450 |
| | 13,455 |
| | 14,063 |
|
GENERAL MOTORS COMPANY AND SUBSIDIARIES
We and our joint ventures enter into a contract with each authorized dealer agreeing to sell to the dealer one or more specified product lines at wholesale prices and granting the dealer the right to sell those vehiclesproducts to retail customers from an approved location. Our dealers often offer more than one GM brand at a single dealership in a number of our markets. Authorized dealers offer parts, accessories, service and repairs for GM vehicles in the product lines that they sell using GM parts and accessories. Our dealers are authorized to service GM vehicles under our limited warranty, program and those repairs are made onlyalmost exclusively with GM parts. Our dealers generally provide their customers with access to credit or lease financing, vehicle insurance and extended service contracts, which may be provided by GM Financial and other financial institutions.
The quality of GM dealerships and our relationship with our dealers and distributors are critical to our success as dealersgiven that they maintain the primary sales and service interface with the end consumer of our products. In addition to the terms of our contracts with our dealers, we are regulated by various country and state franchise laws and regulations that may supersede those contractual terms and impose specific regulatory requirements and standards for initiating dealer network changes, pursuing terminations for cause and other contractual matters.
Research, Product and Business Development and Intellectual Property Costs for research, manufacturing engineering, product engineering and design and development activities primarily relate primarily to developing new products or services or improving existing products or services, including activities related to vehicle and greenhouse gas (GHG)GHG emissions control, improved fuel economy, electrification, autonomous vehicles,EVs, AVs and the safety of drivers and passengers, and urban mobility.passengers. Research and development expenses were $7.3$7.9 billion, $6.6$6.2 billion and $6.0$6.8 billion in the years ended December 31, 2017, 20162021, 2020 and 2015.2019.
Product Development The Global Product Development organization is responsible for designing, developing and integrating vehicleall global products and powertraintheir components while aiming to maximize part sharing across multiple vehicle segments. Global teams in Design, Program Management & Execution, Component & Subsystem Engineering, Product Integrity, Safety, Propulsion SystemsControls and Software Engineering and Purchasing & Supply Chain collaborate to meet customer requirements and maximize global economies of scale.
Our global vehicle architecture development is headquartered at our Global Technical Center in Warren, Michigan. Cross-segment part sharing is an essential enabler to optimize our Vehicle Set Strategy, designedvehicle portfolio, with more than 75% of our global internal combustion vehicle sales volume expected to reduce our overall number of globalcome from five internal combustion vehicle architectures to four major vehicle sets. As we implement the four vehicle sets, we through this decade. We
GENERAL MOTORS COMPANY AND SUBSIDIARIES
will continue to leverage our current architecture portfolio to accommodate our customers around the world while achieving our financial goals.
Hybrid, Plug-In, Extended RangeWe invested in construction of the Wallace Battery Cell Innovation Center, an all-new facility that will significantly expand the Company's battery technology operations and Battery Electric Vehicles accelerate development and commercialization of longer range, more affordable EV batteries. The Wallace Center will be located on the campus of the Global Technical Center in Warren, Michigan.
Intellectual PropertyWe are investing in multiple technologies offering increasing levels of vehicle electrification including eAssist, plug-in hybrid, full hybrid, extended range and zero emission battery electric vehicles that are part of our long-term strategy to reduce petroleum consumption and GHG emissions. We currently offer seven models in the U.S. featuring some form of electrification and continue to develop plug-in hybrid electric vehicle technology and extended range electric vehicles such as the Chevrolet Volt and Bolt EV. In October 2017 we announced our plans to launch more than 20 new Zero Emission Vehicles (ZEVs) in global markets by 2023, including two in the next 18 months.
Car- and Ride-Sharing Our car-sharing brand Maven gives customers access to highly personalized, on-demand mobility services. Maven is available in 18 cities across the U.S. and Canada and has started first pilot operations in Australia. Maven offers three different types of consumer and commercial services. Maven Gig allows members to earn money on their own terms by providing a vehicle that can be used to deliver goods or ride-sharing services provided by Lyft, Inc. (Lyft) and Uber Technologies Inc. Maven City offers vehicles with dedicated parking spots for easy city driving with the cost of gas or electric charging included. Vehicles are available by the hour, day, week or month. Maven Home provides on-site car sharing for residential communities. Through December 31, 2017 Maven has accumulated over 230 million miles driven, 5 million all-electric miles driven, 114,000 reservations and has 104,000 members.
Autonomous Technology We see autonomous technology leading to a future of zero congestion, zero emissions and zero crashes, since more than 90% of crashes are caused by driver error, according to the National Highway Traffic Safety Administration (NHTSA). We are among the leaders in the industry with significant global real-world experience in delivering connectivity, safety and security services to millions of customers through OnStar, LLC (OnStar) and advanced safety features that are the building blocks to more advanced automation features that are driving our leadership position in the development of autonomous technology. An example of advanced automation is Super Cruise, a hands-free driving customer convenience feature that is available on the 2018 Cadillac CT6 sedan.
We are actively testing autonomous vehicles on public roads in San Francisco, California; Scottsdale, Arizona; and Warren, Michigan. Additionally, we plan to develop an integrated network of on-demand autonomous vehicles in the U.S. In November
GENERAL MOTORS COMPANY AND SUBSIDIARIES
2017 we announced that our growing fleet of test vehicles will accumulate a significant number of miles in 2018, and based on our current rate of change we expect commercial launch at scale in dense urban environments in 2019.
Alternative Fuel Vehicles We believe alternative fuels offer significant potential to reduce petroleum consumption and resulting GHG emissions in the transportation sector. By leveraging experience and capability developed around these technologies in our global operations we continue to develop FlexFuel vehicles that can run on ethanol-gasoline blend fuels as well as technologies that support compressed natural gas and liquefied petroleum gas.
We offer a variety of FlexFuel vehicles in the U.S. for the 2018 model year to retail and commercial customers capable of operating on gasoline, E85 ethanol or any combination of the two. In Brazil, a substantial majority of vehicles sold are FlexFuel vehicles capable of running on high ethanol blends. We also market FlexFuel vehicles in other global markets where biofuels are in the marketplace. We support the development of biodiesel blend fuels, which are alternative diesel fuels produced from renewable sources.
Hydrogen Fuel Cell Technology Another part of our long-term strategy to reduce petroleum consumption and GHG emissions is our commitment to the development of our hydrogen fuel cell technology. Our Chevrolet Equinox fuel cell electric vehicle demonstration programs, such as Project Driveway, have accumulated more than 3 million miles of real-world driving. These programs are helping us identify consumer and infrastructure needs to understand the business case for potential production of vehicles with this technology. We are exploring non-traditional automotive uses for fuel cells in several areas, including demonstrations with the U.S. Army and U.S. Navy.
We signed a co-development agreement and established a nonconsolidated JV with Honda Motor Company in 2016 for a next-generation fuel cell system and hydrogen storage technologies, aiming for the 2020 timeframe for commercialization. The collaboration expects to succeed by sharing expertise, economies of scale and common sourcing strategies and builds upon GM's and Honda Motor Company's strengths as leaders in hydrogen fuel cell technology.
OnStar OnStar is a wholly-owned subsidiary of GM serving more than 7 million subscribers. OnStar is a provider of connected safety, security and mobility solutions and advanced information technology and is available on the majority of our 2018 model year vehicles. OnStar's key services include automatic crash response, stolen vehicle assistance, remote door unlock, turn-by-turn navigation, vehicle diagnostics, hands-free calling and 4G LTE wireless connectivity.
Intellectual Property We generateconstantly innovating and hold a significant number of patents, copyrights, trade secrets and other intellectual property that protect those innovations in a numbernumerous countries. While no single piece of countries in connection with the operation of our business. While none of these patents areintellectual property is individually material to our business as a whole, these patents areour intellectual property is important to our operations and continued technological development. WeAdditionally, we hold a number of trademarks and service marks that are very important to our identity and recognition in the marketplace.
Raw Materials, Services and SuppliesWe purchase a wide variety of raw materials, parts, supplies, energy, freight, transportation and other services from numerous suppliers to manufacture our products. The raw materials primarily include steel, aluminum, resins, copper, lead and platinum groupprecious metals. We havedo not experienced any significant shortages of raw materials and normally do not carry substantial inventories of suchthese raw materials in excess of levels reasonably required to meet our production requirements.requirements, and we have not experienced any significant shortages of raw materials. Costs are expected to remain elevated due to the price of commodities and the continuing existence of tariffs. We also purchase systems, components and parts from suppliers. The global semiconductor supply shortage has had, and is continuing to have, wide-ranging effects across multiple industries, particularly the automotive industry. Refer to Item 1A. Risk Factors and to Part II, Item 7. MD&A for further discussion on the effect the global semiconductor supply shortage has had on our results of operations.
In some instances, we purchase systems, components, parts and supplies from a single source, andwhich may be at an increasedincrease risk forto supply disruptions. The inability or unwillingness of these sources to supplyprovide us with parts and supplies could have a material adverse effect on our production capacity.production. Combined purchases from our two largest suppliers were approximately 12% of total purchases in the year ended December 31, 2021, and approximately 11% of our total purchases in each of the years ended December 31, 2020 and 2019. Refer to Item 1A. Risk Factors for further discussion of these risks. Combined purchases from
Our transition to EVs includes a resilient, scalable and more sustainable North America-focused EV supply chain. Certain of the initiatives we have advanced in 2021 include sourcing silicon carbide power device solutions for GM’s EV programs, processing cathode active material, sourcing U.S. lithium with more sustainable extraction methods and sourcing permanent magnets using locally sourced raw materials.
Automotive Financing - GM Financial GM Financial is our two largest suppliersglobal captive automotive finance company and our global provider of automobile finance solutions. GM Financial conducts its business in North America, South America and through joint ventures in China.
GM Financial provides retail loan and lease lending across the credit spectrum to support vehicle sales. Additionally, GM Financial offers commercial lending products to dealers including floorplan financing, which is lending to finance new and used vehicle inventory; and dealer loans, which are loans to finance improvements to dealership facilities, to provide working capital, or to purchase and/or finance dealership real estate. Other commercial lending products include financing for parts and accessories, dealer fleets and storage centers.
In North America, GM Financial offers a sub-prime lending program. The program is primarily offered to consumers with a FICO score or its equivalent of less than 620 who have been approximately 12%limited access to automobile financing through banks and credit unions and is expected to sustain a higher level of credit losses than prime lending.
GM Financial generally seeks to fund its operations in each country through local sources of funding to minimize currency and country risk. GM Financial primarily finances its loan, lease and commercial origination volume through the use of secured and unsecured credit facilities, securitization transactions and the issuance of unsecured debt in the capital markets.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Human Capital
The foundation of GM’s business is our Purpose: We pioneer the innovations that move and connect people to what matters. It's why we exist. Our Purpose, growth strategy and culture all help us on our path towards achieving our vision of — a world with zero crashes, zero emissions and zero congestion. Our people are our most valuable asset, and we must continue to attract and retain the best talent in the world in order to achieve this vision. As a result, we strive to create a Workplace of Choice to attract, retain and develop top talent by adhering to a responsible employer philosophy, which includes, among other things, commitments to create job opportunities, pay workers fairly, ensure safety and well-being, and promote diversity, equity and inclusion. Fundamental to these commitments are our company values.
Our eight GM behaviors are the foundation of our total purchasesculture; and how we behave encompasses key measures of our performance, including the visible ways we conduct ourselves as we work with one another.
Diversity, Equity and Inclusion At GM, we are committed to fostering a culture of diversity, equity and inclusion. In every moment, we must decide what we can do — individually and collectively — to drive meaningful, deliberate and long-lasting change. GM’s unwavering commitment in eachthis regard includes taking steps to ensure that all areas of our business are
GENERAL MOTORS COMPANY AND SUBSIDIARIES
supportive of a world-class inclusive, equitable and diverse organization. Our ability to meet the needs of a diverse and global customer base is tied closely to the behaviors of the years endedpeople within our company, which is why we are committed to fostering a culture that celebrates our differences. This commitment is embraced at all levels of the organization, including our diverse Board of Directors, which is currently made up of more than 50% women (7 out of 13 members) and is more than 30% racially or ethnically diverse (4 out of 13 members). In alignment with these commitments, GM publicly disclosed its EEO-1 Consolidated Report for the first time in 2021.
Based on these longstanding values, our Chair and CEO, Mary Barra, chairs an Inclusion Advisory Board (IAB) of internal and external leaders who guide our work to improve diversity and inclusion in our Company. The purpose of the IAB is to consult with GM’s Senior Leadership Team with the long-term goal of inspiring the Company to be inclusive through our words, deeds and culture. We also have a number of programs and partnerships aimed at enhancing our culture of inclusion throughout the Company. For example, we have 11 voluntary, employee-led resource groups that provide a forum for diverse employees and allies from a variety of different backgrounds to share experiences and express concerns. Each group also works to attract new talent to our company and offers employees opportunities to support our company’s diversity initiatives within the community.
In addition, we are expanding our partnerships with organizations aimed at supporting our ongoing efforts to increase the representation of women and underrepresented groups in our workplace. Through our participation in the Business Roundtable Multiple Pathways Initiative and OneTen, for example, we are specifically aiming to build more robust pipelines for skills-based hiring into our company while ensuring long-term developmental opportunity.
Develop and Retain Talented People Today, we compete for talent against other automotive companies and against businesses in other sectors, such as technology. To win and keep top talent, we must provide a workplace culture that encourages employee behaviors aligned with our values, fulfills their long-term individual aspirations and provides experiences that make individuals feel valued, included and engaged. In furtherance of this goal, we invest significant resources to retain and develop our talent. In addition to mentoring and networking opportunities, we offer a vast array of career development resources to help develop, grow and enable employees to make the most of their careers at GM. Formal resources include, among other things, the Technical Education Program, which offers our employees an opportunity to complete corporate strategically aligned degrees and certificate programs at leading universities, and our Degreed Learning Platform, which brings forth a variety of external and in-house content in learning pathways and other micro learnings. It is also tied to our GM Competency and skills model. Employees in some of our technical roles also have the opportunity to participate in the GM Technical Learning University — a training and upskilling program designed to expand and update the technical prowess of our workforce.
GM recognizes that leadership effectiveness is a critical business need. All new managers in the Company are automatically entered into a six-month immersive learning program and all new executives come together annually for a week-long upskilling and targeted development program designed around the GM leadership profile.
Safety and Well-Being The safety and well-being of our employees is also a critical component of our ability to transform the future of personal mobility. At GM, we pride ourselves on our commitment to live values that return people home safely — Every Person, Every Site, Every Day. Our unwavering commitment to safety is manifested through empowering employees to “Speak Up for Safety” through various means without fear of retaliation. The well-being of our employees is equally as important to entice and stimulate creativity and innovation. In addition to traditional healthcare, paid time off, paid parental leave, wellness programs, flextime scheduling and telecommuting arrangements and retirement benefits, including a 401(k) matching program, GM offers a variety of benefits and resources to support employees' physical and mental health, including access to fitness facilities in certain locations, which help us both attract talent and reap the benefits of a healthier workforce. In addition, leveraging our experience with remote work during the COVID-19 pandemic, GM recently instituted “Work Appropriately,” a policy whereby, depending on the nature of their work, our employees have the flexibility to work where they can have the greatest impact to achieve their goals and for their individual success.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Employees At December 31, 2017, 20162021, we employed approximately 83,000 (53%) hourly employees and 2015.approximately 74,000 (47%) salaried employees. At December 31, 2021, approximately 45,000 (46%) of our U.S. employees were represented by unions, a majority of which were represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW). The following table summarizes worldwide employment (in thousands):
| | | | | |
| December 31, 2021 |
GMNA(a) | 115 | |
GMI | 33 | |
GM Financial | 9 | |
Total Worldwide | 157 | |
| |
U.S. - Salaried | 53 | |
U.S. - Hourly | 45 | |
__________
(a)Includes Cruise.
Information About our Executive Officers As of February 2, 2022, the names and ages of our executive officers and their positions with GM are as follows:
| | | | | | | | | | | | | | |
Name (Age) | | Present GM Position (Effective Date) | | Positions Held During the Past Five Years (Effective Date) |
Mary T. Barra (60) | | Chair and Chief Executive Officer (2016) | |
|
Julian Blissett (55) | | Executive Vice President and President, GM China (2020) | | Senior Vice President, International Operations (2019) Vice President, Executive Shanghai GM (2014) |
Stephen K. Carlisle (59) | | Executive Vice President and President, North America (2020) | | Senior Vice President and President, Cadillac (2018) President and Managing Director, GM Canada (2015) |
Craig B. Glidden (64) | | Executive Vice President, Global Public Policy, General Counsel and Corporate Secretary (2021) | | Executive Vice President and General Counsel (2015) |
Christopher T. Hatto (51) | | Vice President, Global Business Solutions and Chief Accounting Officer (2020) | | Vice President, Controller and Chief Accounting Officer (2018) Chief Financial Officer, U.S. Sales Operations (2016) |
Paul A. Jacobson (50) | | Executive Vice President and Chief Financial Officer (2020) | | Delta Air Lines, Executive Vice President — Chief Financial Officer (2013) |
Gerald Johnson (59) | | Executive Vice President, Global Manufacturing and Sustainability (2019) | | Vice President, North America Manufacturing and Labor Relations (2017) Vice President of Operational Excellence (2014) |
| | | | |
Douglas L. Parks (60) | | Executive Vice President, Global Product Development, Purchasing and Supply Chain (2019) | | Vice President, Autonomous and Electric Vehicles (2017) Vice President, Autonomous Technology and Vehicle Execution (2016) |
Mark L. Reuss (58) | | President (2019) | | Executive Vice President and President, Global Product Development Group and Cadillac (2018) Executive Vice President, Global Product Development, Purchasing & Supply Chain (2014) |
There are no family relationships between any of the officers named above and there is no arrangement or understanding between any of the officers named above and any other person pursuant to which he or she was selected as an officer. Each of the officers named above was elected by the Board of Directors to hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal.
Environmental and Regulatory Matters
Automotive Criteria Emissions Control WeOur products are subject to laws and regulations globally that require us to control certain non-GHG automotive emissions, including vehicle and engine exhaust emission standards, vehicle evaporative emission standards and onboard diagnostic (OBD) system requirements. Advanced OBD systems are used to identify and diagnose problems with emission control systems. Problems detected by the OBD system and other in-use compliance monitoring activities may increase warranty costs and the likelihood of recall. Emission and OBD requirements have become more stringent as a result of lower emissionstricter standards and new diagnostic requirements whichthat have come into force in many markets around the world, driven by policy priorities such as air quality, energy security and climate change, often with very little harmonizationharmonization. Regulatory authorities may conduct ongoing evaluations of the regulations. While we believeproducts from all of our products are designed and manufactured
manufacturers. For additional information, refer to Item 1A. Risk Factors.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
in material compliance with substantially all vehicle emissions requirements, regulatory authorities may conduct ongoing evaluations of the emissions compliance of products from all manufacturers. This includes vehicle emissions testing, including CO2 and nitrogen oxide emissions testing, and review of emission control designs and strategies.
The U.S. federal government, through the Environmental Protection Agency (EPA), imposes stringent exhaust and evaporative emission control requirements on vehicles sold in the U.S., and various state governments impose additional emission requirements established by California. Canada’s federal government vehicle emission requirements are generally aligned with the U.S. federal requirements. Each model year we must obtain certification for each test group that our vehicles will meet emission requirements from the U.S. Environmental Protection Agency (EPA) before we can sell vehicles in the U.S. and Canada, and from the The California Air Resources Board (CARB) before we can sell vehicles in California and other states that have adopted the California emissions requirements.
CARB's latest emission requirements include morelikewise imposes stringent exhaust emission and evaporative emission standards including an increase in ZEVs which must be offered for sale in California. CARB has adopted 2018 model year and later requirements for increasing volumes of ZEVs to achieve GHG as well as criteria pollutant emission reductions to help achieve the state's long-term GHG reduction goals. The Canadian Province of Quebec also plans to adopt ZEV requirements starting with the 2018 model year largely based on California program requirements. There is a possibility that additional jurisdictions could adopt ZEV requirements in the future. The EPA has adopted similar exhaust emission and evaporative emission standards which began a multi-year phase-in with the 2017 model year, but do not include ZEV requirements. These new requirements will also increase the time and mileage periods over which manufacturers are responsible for a vehicle's emission performance.
standards. The Clean Air Act permits states that have areas with air quality compliance issues to adopt the California emission standards in lieu of the federal requirements. ThirteenSeventeen states currently have these standards in effect and 10the District of these 13 statesColumbia have adopted California emission standards, and there is a possibility that additional U.S. jurisdictions could adopt California emission requirements in the ZEVfuture.
For each model year we must obtain certification that our vehicles and heavy-duty engines will meet emission requirements of the EPA before we can sell vehicles in the U.S. and Canada, and of CARB before we can sell vehicles in California and the states that have adopted California emission requirements.
China implemented the China 5 emission standard nationwide at the beginning of 2017. China 5 is more stringent than the previous program on all levels including overallThe Canadian federal government's current vehicle pollutant emission requirements andare generally aligned with U.S. federal requirements.
In 2019, certain areas within China began implementation of the time and mileage period for which vehicles need to meet China 5 level performance. China will implement a unique China 6 emission standard that(China 6) requirements. China 6 combines elements of both European Union (EU) and U.S. standards includes more stringent emission requirements and increases the time and mileage periods over which manufacturers are responsible for a vehicle's emission performance. Nationwide implementation of China 6a for new registrations is expectedoccurred in July 2020 for China 6aJanuary 2021, and July 2023 for the more stringent China 6b standard. However, localities can pull ahead China 6 requirements if certain criteria are met. Some cities may implement China 6is expected to be implemented in July 2023.
Brazil has approved a set of national emission standards referred to as early as January 2019.
In South America certain countries follow the U.S. test procedures,L7, to be implemented in 2022, and L8, to be implemented from 2025 onward. L7 standards cover tailpipe exhaust gases, durability for emissions, evaporative emissions and noise limits, and include additional OBD requirements and others followa phase-in for onboard refueling vapor recovery systems. L8 standards include targets for vehicle emissions and reduce corporate exhaust limits every two years until 2031. Some of the European Union test procedures, standards and OBD requirements are aligned with different levelsthose of stringency. Brazil implemented national L6 standards for light diesel vehicles in 2012 and OBD installation for light diesel vehicles in 2015. L6 standards for light gasoline vehicles were implemented in 2015 for all models.the EPA.
As a result of the sale of the Opel/Opel and Vauxhall Business,businesses and certain other assets in Europe (Opel/Vauxhall Business), GM’s vehicle presence in Europe will beis smaller, but GM may still be affected by actions taken by regulators related both to productsOpel/Vauxhall vehicles sold before the sale of the Opel/Vauxhall Business and future products sold byas well as to other vehicles GM continues to sell in Europe. For example, in Germany, a number of automotive manufacturers, including our former German subsidiary, have participated in continuing discussions with German and European Union authorities concerning emissions control systems. In the European Union,EU, increased scrutiny of compliance with emissionsemission standards may result in changes to these standards, including implementation of “real world driving” emissions (RDE) tests, as well as stricter interpretations or redefinition of these standards and more rigorous enforcement. This may leadFor example, our former German subsidiary has participated in continuing discussions with German and European authorities concerning emissions control systems. Beyond this, as a part of the EU’s desire to increased costs, penalties,accelerate the shift to sustainable mobility, the EU is looking to develop stricter emission standards (Euro 7) for all petrol and lack of certainty related to product portfolio planning, negative publicity or reputation impact for us. In the long-term, we expect that the European Commission will continue devising regulatorydiesel cars, vans, lorries and buses, as well as reform CO2 standards, and place requirements on the emission test cycle, RDE, low temperature testing, fuel evaporation and OBD.batteries to be used in EVs. For additional information, refer to Note 16 to our consolidated financial statements.
Automotive Fuel Economy and GHG EmissionsIn theU.S., NHTSA promulgates and enforces Corporate Average Fuel Economy (CAFE) standards for three separate fleets: domestically produceddomestic cars, importedimport cars and light-duty trucks. Manufacturers are subject to substantial civil penalties if they fail to meet the applicable CAFE standard in any model year, after taking into accountconsidering all available credits for the preceding five model years, and expected credits for the three succeeding model years.years and credits obtained from other manufacturers. In addition to federal CAFE reporting,standards, the EPA promulgates and enforces GHG emission standards, which are effectivelystandards. In March 2020, NHTSA and the EPA issued a rule setting fuel economy and GHG emission standards becausefor light-duty vehicles through the majority of vehicle2026 model year. Those actions are currently being challenged through litigation; however, the litigation is currently held in abeyance as the agencies have since proposed new, more stringent light-duty CAFE and GHG standards. Though NHTSA and the EPA have previously issued joint CAFE and GHG standards, the agencies have now separately proposed, and the EPA has finalized, standards with differing stringency levels and affected model years, with the proposed CAFE standards addressing the 2024-2026 model years and the GHG standards addressing the 2023-2026 model years. NHTSA and the EPA also regulate the fuel efficiency and GHG emissions are the result of fuel combustion. medium- and heavy-duty vehicles, imposing more stringent standards over time.
In addition, CARB has asserted the right to promulgate and enforce its own state GHG standards for motor vehicles, and other states have asserted the right to adopt the CaliforniaCARB's standards. However, CARB has agreedregulations previously stated that compliance with the federallight-duty EPA light duty GHG program is deemed compliance with CARB standards. However, in December 2018 CARB amended this regulation to bestate that, in the event the EPA were to alter federal GHG stringency, which it now has, compliance with the EPA's GHG emission standards will no longer be deemed compliance with CARB's separate requirements. In September 2019, NHTSA issued a rule asserting that California standards throughis preempted from regulating GHG emissions. Litigation challenging that rule is currently being held in abeyance, as the 2025 model year.
EPA has since proposed, and NHTSA has finalized, actions that could result in a restoration of California’s ability to promulgate and enforce its own state GHG standards. Depending on the outcome of the
GENERAL MOTORS COMPANY AND SUBSIDIARIES
federal CAFE and GHG rulemakings and related litigation and the finality of CARB's regulatory amendment, in the future GM might be required to meet differing EPA GHG, California GHG and CAFE standards.
CARB has also imposed the requirement that increasing percentages of Zero Emission Vehicles (ZEVs) must be sold in California. The Clean Air Act permits states to adopt California emission standards, and 14 have adopted the ZEV requirements. In September 2019, the EPA revoked the waiver it had granted to California that permitted its ZEV program, and NHTSA also asserted preemption of California's ZEV program. Litigation over EPA and NHTSA's actions is currently being held in abeyance, as EPA and NHTSA have since proposed actions that could result in a restoration of California’s ability to promulgate and enforce ZEV standards. Depending on any final agency action taken by the EPA and NHTSA, and/or the outcome of the related litigation, there is a possibility that additional U.S. jurisdictions could adopt California ZEV requirements in the future.
In Canada, light- and heavy-duty GHG regulations are currently patterned after the EPA GHG emission standards given the integrated nature of the auto sector between Canada and the United States. The Canadian government is conducting a mid-term review of its 2022 to 2025 model year light-duty GHG standards and is considering regulatory developments of the U.S. in this regard. In addition, the Canadian province of Quebec has ZEV requirements regulating the 2018 to 2025 model years largely based on California program requirements and the province of British Columbia’s similar ZEV regulations that were completed in July 2020 and cover the 2020 to 2039 model years. Both provinces are further updating their ZEV regulations and the Canadian federal government recently proposed to ban the sale of ICE vehicles in Canada beginning in 2035, although no specific draft regulations have been shared at this time.
China has two fuel economy requirements for passenger vehicles: an individual vehicle pass-fail type approval requirement and a fleet average fuel consumption requirement. The current China Phase 4With a focus on the fleet average fuel consumption requirement, is effective from 2016-2020. China Phase 4 is based on curb weight with full compliance to 5.0L/100 km required by 2020. China Phase 4 has continued subsidies for plug-in hybrid, battery electric and fuel cell vehicles.the China Phase 5 is currently being developed with a planned startlaunched in 2021 withand full compliance to 4.0L/100kmis required by 2025. In addition, China recently announced the details of the New Energy Vehicle Mandate. This will requirehas established a mandate that requires passenger car manufacturers to produce a certain volume of plug-in hybrid, battery electric and fuel cellscell vehicles, which are referred to as New Energy Vehicles (NEVs), to generate "credits" equivalent to 10%credits in 2019 and 12% in 2020.beyond. The number of credits per car is based on the level of E-rangeelectric range and energy efficiency.
Regulators in other jurisdictions have already adopted or are developing fuel economy or carbon dioxide regulations. If regulators in these jurisdictions seek to imposeefficiency, with the goal of increasing NEV volume penetrations and enforce emission standards that are misaligned with market conditions, weimproving technological sophistication over time. Uncommitted NEV credits may be forcedused to takeassist compliance with the fleet average fuel consumption requirement. China has issued NEV credit targets between 2019 and 2023 and is setting new NEV credit targets aimed at further increasing volumes of NEVs in 2024 and 2025. China has provided various actionslevels of subsidies for NEVs, and certain subsidies have been extended to increase market support programsthe end of 2022.
In Brazil, the Secretary of Industry and Development promulgates and enforces CAFE standards and has enforced a new CAFE program for the period October 2020 to September 2026 and October 2026 to September 2032 for light-duty and mid-size trucks and SUVs, including diesel vehicles, imposing more fuel-efficientstringent standards for each period.
We have several options to comply with existing and potential new global regulations. Such options include increasing production and sale of certain vehicles, such as EVs, and curtailcurtailing production of certain high-performance cars, trucksless fuel efficient ICE vehicles; technology changes, including fuel consumption efficiency and sport utility vehicles (SUVs) in order to achieve compliance.engine upgrades; payment of penalties; and/or purchase of credits from third parties. We regularly evaluate our current and future product plans and strategies for compliance with fuel economy and GHG regulations.
We plan to be carbon neutral by 2040 in our global products and operations, supported by a commitment to science-based targets. In addition, the Company announced our vision of an all-electric future and our plan to eliminate tailpipe emissions from new light-duty vehicles by 2035. These targets align with our growth and transformation plan including our commitment to an all-electric future, which will be enabled by our Ultium platform and HYDROTEC technology as previously detailed. We also announced, in June 2021, our plans to increase our investment in EVs and AVs to more than $35.0 billion through 2025 to accelerate this transformation plan.
Industrial Environmental ControlOur operations are subject to a wide range of environmental protection laws including those regulating air emissions, water discharge, waste management and environmental cleanup. Certain environmental statutes require that responsible parties fund remediation actions regardless of fault, legality of original disposal or ownership of a disposal site. Under certain circumstances these laws impose joint and several liability as well as liability for related damages to natural resources.
To mitigate the effects of our worldwide operations on the environment, including climate change, we are converting as many of our worldwide operations as possible to landfill-free operations which reducesembracing sustainability programs focused on reducing operational GHG emissions, associatedwater consumption and discharge and waste disposal.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
In 2021, we launched our new global GM Zero Waste program, with a goal to divert waste disposal. Atfrom landfills and incinerators. For the year ended December 31, 2017, 80 (or approximately 50%) of our manufacturing operations were landfill-free. Additionally, 63 of our non-manufacturing operations are landfill-free. At our landfill-free manufacturing operations approximately 95% of waste materials are composted, reused, or recycled and approximately 4% are converted to energy at waste-to-energy facilities. In 2017 we estimate that our waste reduction2021, GM's facilities included in the global GM Zero Waste program diverted 1.5over 1.1 million metric tons of waste from landfill, resulting in approximately 6.6 million metric tons of GHG emissions avoided in global manufacturing operations, including construction, demolitionlandfills and remediation wastes.incinerators through composting, reusing and recycling.
In addition to minimizingreducing our impact on the environment, our landfill-free program and total waste reduction commitments generate revenueincome from the sale of production by-products, reduce our use of material, reduce our carbon footprintraw materials and help to reduce the risks and financial liabilities associated with waste disposal.
We continue to search for waysour efforts to increase our use of renewable energy, and improve our energy efficiency and work to drive growth and scale of renewables. WeTo that end, we have committed toset a goal of meeting the electricity needs of our operations worldwide with 100% renewable energy by 2050. At2025 in the U.S., a goal we recently accelerated from 2030, and by 2035 globally.
Through December 31, 20172021, we had implemented projects orand signed renewable energy contracts globally that had increasedbrought our total renewable energy capacity to over 400 megawatts.one gigawatt by 2023, which represents approximately 75% of our U.S. electricity use and approximately 40% of our global electricity use. In 2017 GM2019 and 2020, we executed two 100of our largest green tariffs to date with DTE Energy Company, sourcing 840,000 megawatt windhours of renewable energy that began supplying us in early 2021 in phase 1 with the remainder expected in mid-2023 in phase 2. Additionally, in 2020 we executed our largest power purchase agreementsagreement to matchdate, with 180 megawatts of solar electricity supplying our Ohio and Indiana manufacturing plant load when each of these projects come onlineU.S. operations starting in 2018.2023. We continue to seek opportunities for a diversified renewable energy portfolio including wind, solar and landfill gas.gas, including executing a 28 megawatts solar green tariff with TVA to supply our Bowling Green Assembly Plant. In 20172021, Energy Star certified three of ourtwo assembly plants and 17four buildings in the U.S. for superior energy management. We also met the EPA Energy Star Challenge for Industry (EPA Challenge) at eightfive additional sites globallyby reducing energy intensity an average of 18%15% at these sites.sites within two years. To meet the EPA Challenge, industrial sites must reduce energy intensity by 10% within a five year period. In total, 7169 GM-owned manufacturing sites have met the EPA Challenge, with many sites achieving the goal multiple times.times for a total of 132 recognitions. Additionally, we received recognition from the U.S. Department of Energy (DOE) of 50001 Ready status for 25 facilities. The U.S. DOE 50001 Ready program is a self-guided approach for facilities to establish an energy management system and self-attest to the structure of ISO 50001, a voluntary global standard for energy management systems in industrial, commercial and institutional facilities. These sustainability efforts minimizereduce our utilityoperational expenses and are part of our approach to addressing climate change through setting a GHG emissionsimprove the sustainability of our operations by aligning our business strategy with aggressive environmental goals and reduction target,targets, collecting accurate data, following our business plan and publicly reporting progress against our target.targets.
Chemical Regulations We continually monitor the implementation of chemical regulations to maintain compliance and evaluate their effect on our business, suppliers and the automotive industry.
Globally, governmental agenciesgovernments continue to introduce new legislation and regulations related to the selection and use of chemicals by mandating broad prohibitions or restrictions and implementing vehicle interior air quality, green chemistry, life cycle analysis and product stewardship initiatives. These initiatives give broad regulatory authority to ban or restrict the use of certain chemical substances and potentially affect automobile manufacturers' responsibilities for vehicle components at the end of a vehicle's life, as well as chemical selection for product development and manufacturing. Global treaties and initiatives such as the Stockholm, Basel and Rotterdam Conventions on Chemicals and Waste and the Minamata Convention on Mercury, are driving chemical regulations across signatory countries. In addition, more global jurisdictions are establishing substance standards with regardIncreases in the use of circuit boards and other electronics may require additional assessment under the Restriction on Hazardous Substances and Waste from Electrical and Electronic Equipment directives. New European requirements require suppliers of parts and vehicles to Vehicle Interior Air Quality.the European market to disclose Substances of Concern in Parts.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Chemical regulations are increasing in North America. In June the U.S., the EPA is moving forward with risk analysis and management of high priority chemicals under the authority of the 2016 the U.S. enacted theLautenberg Chemical Safety for the 21st21st Century ActAct. In addition, several U.S. states have chemical management regulations that grants the EPA increased authority to regulatecan affect vehicle design and restrictmanufacturing such as chemical restriction and use in the U.S. and is expected to increase the level of regulation of chemicals in vehicles.requirements. Chemical restrictions and export controls in Canada continue to steadily progress rapidly as a result ofunder the Environment and Climate Change Canada's Chemical Management Plan to assess existing substances and implement risk management controls on any chemical deemed toxic.
China prohibits the use of several chemical substances in vehicles. There are also various regulations in China stipulating the requirements for chemical management. Among other things, these regulations catalogue and restrict the use and the import and export of various chemical substances. The failure of our joint venture partners or our suppliers to comply with these regulations could disrupt production in China or prevent our joint venture partners from selling the affected products in the China market.
These emerging laws and regulations will potentially lead to increases in costs and supply chain complexity. Manufacturers, including joint venture partners and suppliers, that do not comply with global and specific country regulations could be subject to civil penalties, production disruptions, or limitations on the sale of affected products. We believe that we are materially in compliance with substantially all of these requirements or expect to be materially in compliance by the required dates.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Vehicle SafetyIn the
U.S. theRequirements The National Traffic and Motor Vehicle Safety Act of 1966 (the Safety Act) regulates the vehicles and items of motor vehicle equipment that we manufacture and sell. The Safety Act prohibits the sale in the United States of any new vehicle or equipment in the U.S. that does not conform to applicable federal motor vehicle safety standards established by NHTSA. Meeting or exceeding the NHTSA. Ifmany safety standards is costly as global compliance and non-governmental assessment requirements continue to evolve and grow more complex, and lack harmonization globally. The Safety Act further requires that if we or NHTSA determine that either a vehicle or an item of vehicle equipment does not comply with a safety standard, or ifthat vehicle or equipment contains a vehicle defect createsthat poses an unreasonable safety risk, the manufacturer is requiredwe must conduct a safety recall to notify owners and provide a remedy. We are required to report certain information relating to certain customer complaints, warranty claims, field reports and notices and claims involving property damage, injuries and fatalitiesremedy that condition in the U.S. and claims involving fatalities outsideaffected vehicles. Should we or NHTSA determine a safety defect or noncompliance issue exists with respect to any of our vehicles, the U.S. We are also required to report certain information concerning safety recalls and other safetycost of such recall campaigns outsidecould be substantial.
Other National Requirements Outside of the U.S.
Outside the U.S., many countries have established vehicle safety standards and regulations and are likely to adopt additional, more stringent requirements in the future. The European General Safety Regulation has introduced United Nations Economic Commission for Europe (UN-ECE) regulations, which are required for the European Type Approval process. Globally, governments generally have been adopting UN-ECE based regulations with some variations to address local concerns. Any difference between North American and UN-ECE based regulations can add complexity and costs to vehicle development, and we continue to support efforts to harmonize regulations to reduce complexity. New safety and recall regulations often haverequirements in various countries around the same purpose asworld, including in China, Brazil, and Gulf Cooperation Council countries, also may add substantial costs and complexity to our safety and field action activities globally. In Canada, vehicle regulatory requirements are currently aligned with U.S. regulations; however, under the Canadian Motor Vehicle Safety Act, recall thresholds are different and the Minister of Transport has broad powers to order manufacturers to submit a notice of defect or non-compliance when the Minister considers it to be in the interest of safety. Further, various governments are beginning to mandate e-Call and other features that can be market-specific and add complexity and increase our cost of compliance globally.
Crash Test Ratings and New Car Assessment Programs Organizations in various regions around the world, including in the U.S. standards but may differ in their requirements, rate and test procedures, adding complexity to regulatory compliance.
Automotive Financing - GM Financial GM Financial is our global captive automotive finance company and our global provider of automobile finance solutions. GM Financial conducts its business in North America, South America andcompare motor vehicles through a joint venture in China.
GM Financial provides retail loan and lease lending across the credit spectrum. Additionally GM Financial offers commercial products to dealers that include new and used vehicle inventory financing and dealer loans, which are loans to finance improvements to dealership facilities,various New Car Assessment Programs (NCAPs) to provide working capital,consumers and to purchase and/or finance dealership real estate. Other commercial products include financing for parts and accessories, dealer fleets and storage centers.
In North America GM Financial's retail automobile finance programs include full credit spectrum lending and leasing. The sub-prime lending program is primarily offered to consumersbusinesses with FICO scores less than 620 who have limited access to automobile financing through banks and credit unions and is expected to sustain a higher leveladditional information about the safety of credit losses than prime lending. The leasing product is offered through our franchised dealers and primarily targets prime consumers leasing new vehicles. GM Financial has expanded its leasingNCAPs use crash tests and prime lending programs through our franchised dealers,other evaluations that are different than what is required by applicable regulations, and as a result, leasinguse stars to rate vehicle safety, with five stars awarded for the highest rating and prime lending have become a larger percentage of originationsone for the lowest. Achieving high NCAP ratings, which can vary by country and the retail portfolio balance.region, can add complexity and cost to vehicles.
Internationally GM Financial’s retail automobile finance programs focus on financing new GM vehicles and select used vehicles.
Generally GM Financial seeks to fund its operations in each country through local sources to minimize currency and country risk. GM Financial primarily finances its loan, lease and commercial origination volume through the use of secured and unsecured credit facilities, through securitization transactions where such markets are developed and through the issuance of unsecured debt in public markets.
Employees At December 31, 2017 we employed 103,000 (57%) hourly employees and 77,000 (43%) salaried employees. At December 31, 2017 51,000 (50%) of our U.S. employees were represented by unions, a majority of which were represented by the International Union, United Automobile, Aerospace and Agriculture Implement Workers of America (UAW). The following table summarizes worldwide employment (in thousands):
GENERAL MOTORS COMPANY AND SUBSIDIARIES
|
| | |
| December 31, 2017 |
GMNA | 124 |
|
GMI | 47 |
|
GM Financial | 9 |
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Total Worldwide | 180 |
|
| |
U.S. - Salaried | 52 |
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U.S. - Hourly | 51 |
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Executive Officers of the Registrant As of February 6, 2018 the names and ages of our executive officers and their positions with GM are as follows:
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| | | | |
Name (Age) | | Present GM Position (Effective Date) | | Positions Held During the Past Five Years (Effective Date) |
Mary T. Barra (56) | | Chairman and Chief Executive Officer (2016) | | Chief Executive Officer and Member of the Board of Directors (2014)
Executive Vice President, Global Product Development, Purchasing & Supply Chain (2013)
|
Daniel Ammann (45) | | President (2014) | | Executive Vice President and Chief Financial Officer (2013) |
Alan S. Batey (54) | | Executive Vice President and President, North America (2014) | | Senior Vice President, Global Chevrolet and Brand Chief and U.S. Sales and Marketing (2013) |
Alicia Boler-Davis (48) | | Executive Vice President, Global Manufacturing (2016) | | Senior Vice President, Global Connected Customer Experience (2014)
Vice President, Global Quality and U.S. Customer Experience (2012)
|
Carel Johannes de Nysschen (57) | | Executive Vice President and President, Cadillac (2014) | | Infiniti Motor Company, President (2012) |
Barry L. Engle (54) | | Executive Vice President and President, GM International (2018) | | Executive Vice President and President, South America (2015)
Agility Fuel Systems, CEO (2011)
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Craig B. Glidden (60) | | Executive Vice President and General Counsel (2015) | | LyondellBasell, Executive Vice President and Chief Legal Officer (2009) |
Mark L. Reuss (54) | | Executive Vice President, Global Product Development, Purchasing & Supply Chain (2014) | | Executive Vice President and President, North America (2013) |
Charles K. Stevens III (58) | | Executive Vice President and Chief Financial Officer (2014) | | Chief Financial Officer, GM North America (2010)
Interim Chief Financial Officer, GM South America (2011)
|
Matthew Tsien (57) | | Executive Vice President and President, GM China (2014) | | GM Consolidated International Operations Vice President, Planning, Program Management & Strategic Alliances China (2012) |
Thomas S. Timko (49) | | Vice President, Global Business Solutions and Chief Accounting Officer (2017) | | Vice President, Controller and Chief Accounting Officer (2013) |
There are no family relationships between any of the officers named above and there is no arrangement or understanding between any of the officers named above and any other person pursuant to which he or she was selected as an officer. Each of the officers named above was elected by the Board of Directors to hold office until the next annual election of officers and until his or her successor is elected and qualified or until his or her earlier resignation or removal. The Board of Directors elects the officers immediately following each annual meeting of the stockholders and may appoint other officers between annual meetings.
Website Access to Our Reports Our internet website address is https://www.gm.com. In addition to the information about us and our subsidiaries contained in this 20172021 Form 10-K, information about us can be found on our website including information on our corporate governance principles and practices. Our Investor Relations website at www.gm.com/investorshttps://investor.gm.com contains a significant amount of information about us, including financial and other information for investors. We encourage investors to visit our website, as we frequently update and post new information about our company on our website and it is possible that this information could be deemed to be material information. Our website and information included in or linked to our website are not part of this 20172021 Form 10-K.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act), are available free of charge through our website as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (SEC). The public may read and copy the materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally the SEC maintains an internet sitea website that contains reports, proxy and information statements, and other information. The address of the SEC's website is information regarding our filings at https://www.sec.gov.
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GENERAL MOTORS COMPANY AND SUBSIDIARIES
Item 1A. Risk Factors
We have listed below (notthe most material risk factors applicable to us. These risk factors are not necessarily in the order of importance or probability of occurrence) the most significant risk factors applicableoccurrence:
Risks related to us:our competition and strategy
If we do not deliver new products, services, technologies and customer experiences in response to new participantsincreased competition and changing consumer preferences in the automotive industry, our business could suffer. We believe that the automotive industry will continue to experience significant and continued change in the coming years.years, particularly as traditional automotive original equipment manufacturers shift resources to the development of EVs. In addition to our traditional competitors, we must also be responsive to the entrance of start-ups and other non-traditional participantscompetitors in the automotive industry. IndustryThese new competitors, as well as established industry participants, are seeking to disruptdisrupting the historic business model of theour industry through the introduction of new technologies, new products, or services, new business models or newdirect-to-consumer sales channels, methods of travel. It is strategically significant that we lead the technological disruption occurring in our industry.transportation and vehicle ownership. To successfully execute our long-term strategy, we must continue to develop new products and services, including products and services that are outside of our historically core ICE business, such as autonomousEVs and electricAVs, software-enabled connected services and other new businesses.
Our vehicles data monetization and transportation as a service.connected services increasingly rely on software and hardware that is highly technical and complex. The process of designing and developing new technology, products and services is complex, costly and uncertain and requires extensive capital investment and the ability to retain and recruit the best talent. In some casesIf our access to capital were to become significantly constrained, if costs of capital increased significantly, or if our ability to raise capital is challenged relative to our peers, in each case including as a result of any constraints on lending due to concerns about climate change, our ability to execute on our strategic plans could be adversely affected. Further, the technologies that we planmarket for highly skilled workers and leaders in our industry is extremely competitive. Failure to employ are not yet commercially practicalattract, hire, develop, motivate and depend on significant future technological advances by usretain highly qualified and bydiverse employees could disrupt our suppliers. operations and adversely affect our strategic plans.
There can be no assurance that advances in technology will occur in a timely or feasible way, orif at all, that others will not acquire similar or superior technologies sooner than we do, or that we will acquire technologies on an exclusive basis or at a significant price advantage. IfFurther, if we are unable to prevent or effectively remedy errors, bugs, vulnerabilities or defects in our software and hardware, or fail to deploy updates to our software properly, or if we do not accurately predict,adequately prepare for and respond to new kinds of technological innovations, market developments and changing customer needs, our sales, profitability and long-term competitiveness may be harmed.
Our ability to maintain profitability is dependent upon our ability to timely fund and introduce new and improved vehicle models, including EVs, that are able to attract a sufficient number of consumers.We operate in a very competitive industry with market participants routinely introducing new and improved vehicle models and features designed to meet rapidly evolving consumer expectations. Producing new and improved vehicle models, competitively and preservingincluding EVs, that preserve our reputation for designing, building and selling safe, high qualityhigh-quality cars, trucks and trucksSUVs is critical to our long-term profitability. Successful launches of our new vehicles are critical to our short-term profitability.
It generally takes The new vehicle development process can take two years or more, to design and develop a new vehicle, and a number of factors may lengthen that time period. Because of this product development cycle and the various elements that may contribute to consumers’ acceptance of new vehicle designs, including competitors’ product introductions, technological innovations, fuel prices, general economic conditions, regulatory developments, transportation infrastructure and changes in quality, safety, reliability and styling demands and preferences, an initial product concept or design may not result in a saleable vehicle or a vehicle that generates sales in sufficient quantities and at high enough prices to be profitable. Our high proportion of fixed costs, both due to our significant investment in property, plant and equipment as well as other requirements of our collective bargaining agreements, which limit our flexibility to adjust personnel costs to changes in demands for our products, may further exacerbate the risks associated with incorrectly assessing demand for our vehicles.
Our long-term strategy is dependent upon our ability to profitably deliver a broad portfolio of EVs.The production and profitable sale of EVs has become increasingly important to our long-term business as we accelerate our transition to an all-electric future. In 2021, we increased our commitment to investments in EV and AV technologies to more than $35.0 billion from 2020 through 2025, with plans to launch more than 30 new EV models globally across several price points in that timeframe. Our EV strategy is dependent on our ability to deliver a broad portfolio of high-quality EVs that are competitive and meet consumer demands; reduce the costs associated with the manufacture of EVs, particularly with respect to batteries; increase vehicle range and the energy density of our batteries; license and monetize our proprietary platforms and related innovations; successfully invest in new technologies relative to our peers; develop new software and services; and leverage our scale, manufacturing capabilities and synergies with existing ICE vehicles.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
In addition, consumer adoption of EVs will be critical to the success of our strategy. Consumer adoption of EVs could be impacted by numerous factors, including the breadth of the portfolio of EVs available; perceptions about EV features, quality, safety, performance and cost relative to ICE vehicles; the range over which EVs may be driven on a full battery charge; the proliferation of charging infrastructure, in particular with respect to public EV charging stations; cost and availability of high fuel-economy ICE vehicles; volatility, or a sustained decrease, in the cost of petroleum-based fuel; failure by governments and other third parties to make the investments necessary to make infrastructure improvements, such as greater availability of cleaner energy grids and EV charging stations, and to provide economic incentives promoting the adoption of EVs; and negative feedback from stakeholders impacting investor and consumer confidence in our company or industry. If we are unable to successfully deliver on our EV strategy, it could materially and adversely affect our results of operations, financial condition and growth prospects, and could negatively impact our brand and reputation.
Our near-term profitability is dependent upon the success of crossovers,our current line of full-size ICE SUVs and full-size pick-upICE pickup trucks.While we offer a balanced and completebroad portfolio of small, mid-size and large cars, crossovers, SUVs and trucks, and we generallyhave announced significant plans to design, build and sell a broad portfolio of EVs, we currently recognize higher profit margins on our crossovers,full-size ICE SUVs and full-size ICE trucks. Our near-term success is dependent upon our ability to sell higher margin vehicles in sufficient volumes. We also plan to use the cash generated by our ICE vehicles to fund our growth strategy, including the development and sale of EVs and AVs. Any near-term shift in consumer preferences toward smaller, more fuel efficientfuel-efficient vehicles, whether as a result of increases in the price of oil or any sustained shortage of oil, including as a result of global political instability, concerns about climate change, including any constraints related to lending on GHG-emitting products, or other reasons, could weaken the demand for our higher margin vehicles.
We must successfully address and reduce the More stringent fuel economy regulations could also impact our ability to sell these vehicles or could result in additional costs associated with these vehicles. See “Our operations and products are subject to extensive laws, regulations and policies, including those related to vehicle emissions and fuel economy standards, which can significantly increase our costs and affect how we do business.”
We operate in a highly competitive industry that has historically had excess manufacturing capacity, and attempts by our competitors to sell more vehicles could have a significant negative effect on our vehicle pricing, market share and operating results.The global automotive industry is highly competitive in terms of the manufacture and sale of electric vehicles. We anticipate that electric vehicle sales will become increasingly important to our business. The inability to reduce the costs associated with the manufacture and sale of electric vehicles may negatively impact our earningsquality, innovation, new technologies, pricing, fuel economy, reliability, safety, customer service and financial condition.services offered. Additionally, overall manufacturing capacity in the industry has historically far exceeded demand. In addition, we currentlyhave made, and plan to continue to make, significant investments in EV manufacturing capacity based on our expectations for EV demand, which is subject to various risks and uncertainties as described above. Many manufacturers, including GM, have relatively high fixed labor costs as well as limitations on their ability to close facilities and reduce fixed costs, often as a result of collective bargaining agreements. In light of any excess capacity and high fixed costs, many industry participants have attempted to sell more vehicles by providing subsidized financing or leasing programs, offering marketing incentives or reducing vehicle prices. As a result, we may be required to offer similar incentives that may result in vehicle prices that do not offset our costs, including any cost increases or the impact of adverse currency fluctuations, which could affect our profitability. Our competitors may also seek to benefit from economies of scale by consolidating or entering into other strategic agreements such as alliances or joint ventures intended to enhance their competitiveness.
Manufacturers in countries that have lower production costs, such as China and India, have become competitors in key emerging markets and have announced their intention to export their products to established markets as a low-cost alternative to established entry-level automobiles. In addition, foreign governments may decide to implement tax and other policies that favor their domestic manufacturers at the expense of international manufacturers, including GM and its joint venture partners. These actions have had, and are expected to continue to have, a significant negative effect on our vehicle pricing, market share and operating results in these markets.
Our AV strategy is dependent upon our ability to successfully mitigate unique technological, operational and regulatory risks. GM Cruise Holdings LLC (Cruise Holdings), our majority-owned subsidiary, is responsible for the development and commercialization of AV technology. Our AV operations are capital intensive and subject to a variety of risks inherent with the development of new technologies, including our ability to continue to develop self-driving software and hardware, such as Light Detection and Ranging (LiDAR) sensors and other components; access to sufficient capital; risks related to the manufacture of purpose-built AVs; and significant competition from both established automotive companies and technology companies, some of which may have more resources and capital to devote to AV technologies than we do. In addition, we face risks related to the commercial deployment of AVs on our targeted timeline or at all, including consumer acceptance, achievement of adequate safety and other performance standards and compliance with uncertain, evolving and potentially conflicting federal and state or provincial regulations. To the extent accidents, cybersecurity breaches or other adverse events associated with our autonomous driving systems occur, we could be subject to liability, reputational harm, government scrutiny and further regulation, and it could deter consumer adoption of AV technology. Any of the foregoing could materially and adversely affect our results of operations, financial condition and growth prospects.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
benefit from certain governmentWe are subject to risks associated with climate change, including increased regulation of GHG emissions, changing consumer preferences and economic incentives supportingother risks related to our transition to EVs and the developmentpotential increased impacts of severe weather events on our operations and adoptioninfrastructure. Increasing attention to climate change, increasing societal expectations on companies to address climate change and changes in consumer preferences may result in increased costs, reduced demand for our products, reduced profits, risks associated with new regulatory requirements and the potential for increased litigation and governmental investigations. Climate change regulations at the federal, state or local level or in international jurisdictions could require us to further limit emissions associated with customer use of electric vehicles. The benefits from these incentives could be reduced, eliminatedproducts we sell, change our manufacturing processes or exhausted,product portfolio or undertake other activities that may require us to incur additional expense, which may negativelybe material. These requirements may increase the cost of, and/or diminish demand for, our ICE vehicles. See “Our operations and products are subject to extensive laws, regulations and policies, including those related to vehicle emissions and fuel economy standards, which can significantly increase our costs and affect how we do business.”
Part of our strategy to address these risks includes our transition to EVs, which presents additional risks, including reduced demand for, and therefore profits from, our ICE vehicles, which we plan to use to fund our growth strategy; higher costs related to EV technologies impacting profitability compared to ICE vehicles; and risks related to the success of our EV strategy. See “Our long-term strategy is dependent upon our ability to sell electricprofitably deliver a broad portfolio of EVs” and “Our near-term profitability is dependent upon the success of our current line of full-size ICE SUVs and full-size ICE pickup trucks.”
Finally, increased intensity, frequency or duration of storms, droughts or other severe weather events as a result of climate change may disrupt our production and the production, logistics, cost and procurement of products from our suppliers and timely delivery of vehicles in sufficient quantitiesto customers, and could negatively impact working conditions at high enough pricesour plants and those of our suppliers. Any of the foregoing could have a material adverse effect on our financial condition and results of operations.
Risks related to be profitable.our operations
Our business is highly dependent upon global automobile market sales volume, which can be volatile. Because we have a high proportion of relatively fixed structural costs, small changes in sales volume can have a disproportionately large effect on our profitability. A number of economic and market conditions drive changes in new vehicle sales, including real estate values,disruptions in the new vehicle supply chain, the availability and prices of used vehicles, levels of unemployment and inflation, availability of affordable financing, fluctuations in the cost of fuel, consumer confidence and demand for vehicles, political unrest or uncertainty, the occurrence of a contagious disease or illness, including COVID-19, barriers to trade and other global economic conditions. For a discussion of economic and market trends, see the Overview"Overview" section ofin Part II, Item 7. We cannot predict futureMD&A. Any significant decrease in new vehicle sales could materially and adversely affect our results of operations and financial condition.
High prices and uncertain availability of commodities, raw materials or other inputs used by us and our suppliers, or instability in logistics and related costs, could negatively impact our profitability. Increases in prices for commodities, raw materials or other inputs that we and our suppliers use in manufacturing products, systems, components and parts, such as steel, precious metals, non-ferrous metals, critical minerals or other similar raw materials, or increases in logistics and related costs, may lead to higher production costs for parts, components and vehicles. In addition, any increase in the cost of critical materials for our EV propulsion systems, including lithium, nickel, cobalt and certain rare earth metals, could lead to higher production costs for our EVs and could impede our ability to successfully deliver on our EV strategy. Further, increasing global demand for, and uncertain supply of, such materials could disrupt our or our suppliers’ ability to obtain such materials in a timely manner and/or could lead to increased costs. Geopolitical risk, fluctuations in supply and demand, any weakening of the U.S. dollar and other economic and market conditions with certainty.political factors may continue to create pricing pressure for commodities, raw materials and other inputs. These inflationary pressures could, in turn, negatively impact our future profitability because we may not be able to pass all of those costs on to our customers or require our suppliers to absorb such costs.
Our significant business in China subjects us to unique operational, competitive and regulatory risks Maintaining a strong positionrisks.Pursuing opportunities in the Chinese market is a keyan important component of our global growth strategy. Our business in China is subject to aggressive competition from many of the largest global manufacturers and numerous domestic manufacturers. As the size of the Chinesemanufacturers as well as non-traditional market continuesparticipants, such as domestic technology companies. In addition, our success in China depends upon our ability to increase we anticipate that additional competitors, both international and domestic, will seek to enter the Chineseadequately address unique market and that existing market participants will act aggressivelyconsumer preferences driven by advancements related to increase their market share.EVs, infotainment, software-enabled connected services and other new technologies. Our ability to fully deploy our technologies in China may be impacted by evolving laws and regulations in the U.S. and China. Increased competition, continued U.S.-China trade tensions or weakening economic conditions in China, among other factors, may result in cost increases, price reductions, reduced sales, profitability and margins, and challenges to gaingaining or holdholding market share.
In addition to increased competition, Chinese regulators have announced aggressive policy initiatives and quotas for the sale of electric vehicles.
Certain risks and uncertainties of doing business in China are solely within the control of the Chinese government, and Chinese law regulates the scope of our foreign investments and business conducted within China. In order to maintain access to the Chinese market, we may be required to comply with significant technical and other regulatory requirements that are unique to the Chinese market, at times with challenging lead-time to implement such requirements.lead times. These actions may increase the cost of doing business in China or
GENERAL MOTORS COMPANY AND SUBSIDIARIES
limit how and reduceunder what conditions we may do business in China, which could materially and adversely affect our profitability.profitability and financial condition.
AWe benefit from many ongoing strategic business relationships, and a significant amount of our operations are conducted by joint ventures, thatwhich we cannot operate solely for our benefit. ManyWe are engaged in many strategic business relationships, and we expect that such arrangements will continue to be an important factor in the growth and success of our business, particularly in light of industry consolidation. However, there are no assurances that we will be able to identify or secure suitable business relationships in the future or that our competitors will not capitalize on such opportunities before we do, or that any strategic business relationships that we enter into will be successful. If we are unable to successfully source and execute on strategic business relationships in the future, our overall growth could be impaired, and our business, prospects and results of operations could be materially adversely affected.
In addition, many of our operations, primarily in China and Korea as well as our battery manufacturing operations with LG Energy Solution, are carried out by joint ventures. In joint ventures we share ownership and management of a company with one or more parties who may not have the same goals, strategies, priorities or resources as we do and may compete with us outside the joint venture. Joint ventures are intended to be operated for the equal benefit of all co-owners, rather than for our exclusive benefit. Operating a business as a joint venture often requires additional organizational formalities as well as time-consuming procedures for sharing information and making decisions that must further take into consideration our partners' interests. In joint ventures we are required to foster our relationships with our co-owners as well as promote the overall success of the joint venture, and if a co-owner changes, relationships deteriorate or strategic objectives diverge, our success in the joint venture may be materially adversely affected. TheFurther, the benefits from a successful joint venture are shared among the co-owners, therefore we do not receive all the benefits from our successful joint ventures.
In addition, because we share ownership and management with one or more parties, we may have limited control over the actions of a joint venture, particularly when we own a minority interest. As a result, we may be unable to prevent misconduct or other violations of applicable laws or other misconduct by a joint venture.venture or the failure to satisfy contractual obligations by one or more parties. Moreover, a joint venture may not follow the same requirements regarding compliance, internal controls and internal control over financial reporting that we follow. To the extent another party makes decisions that negatively impact the joint venture or internal control issues arise within the joint venture, we may have to take responsive or other actionactions, or we may be subject to penalties, fines or other relatedpunitive actions for these activities.
The international scale and footprint of our operations exposesexpose us to additional risks.We manufacture, sell and service products globally and rely upon aan integrated global supply chain to deliver the raw materials, components, systems and parts that we need to manufacture our products. Our global operations subject us to extensive domestic and foreign legal and regulatory requirements, and a variety of other political, economic and regulatory risks, including: (1) changes in government leadership; (2) changes in trade compliance, labor, employment, tax, privacy, environmental and other laws, regulations or regulationsgovernment policies impacting our overall business model or practices or restricting our ability to manufacture, purchase or sell products consistent with market demand and our business objectives; (3) political pressures to change any aspect of our business model or practices andor that impair our ability to source raw materials, services, components, systems and parts, or manufacture products on competitive terms in a manner consistent with our current practice; changes in tax laws;business objectives; (4) political uncertainty, instability, civil unrest or government controls over certain sectors; (5) political and economic tensions between governments and changes in international tradeeconomic policies, including restrictions on the repatriation of dividends or in the export of technology, especially between China and the U.S. and China, more detailed inspections,; (6) changes to customs requirements or procedures (e.g., inspections) or new or higher tariffs, for example, on products imported into or exported from Mexico into the U.S.;, including under U.S. or other trade laws or measures; (7) new non-tariff barriers to entry or domestic preference procurement requirements, or enforcement of, changes to, or withdrawals from or impediments to implementing free trade agreements (for example, the North American Free Trade Agreement or NAFTA)United States-Mexico-Canada Agreement), or preferences of foreign nationals for domestically manufactured products; (8) changes in foreign currency exchange rates, particularly in Brazil and Argentina, and interest rates; (9) economic downturns in foreign countries or geographic regions where we have significant operations, significant changes in conditions in the countries in which we operate with the effect of
GENERAL MOTORS COMPANY AND SUBSIDIARIES
competition from new market entrants;operate; (10) differing local product preferences and product requirements, including government certification requirements related to, among other things, fuel economy, vehicle emissions, EVs and AVs, connected services and safety; (11) impact of changes to and compliance with U.S. and other foreign countries’ export controls, economic sanctions and economic sanctions;other similar measures; (12) liabilities resulting from U.S. and foreign laws and regulations, including, but not limited to, those related to the Foreign Corrupt Practices Act and certain other anti-corruption laws; (13) differing labor regulations, agreements, requirements and union relationships; (14) differing dealer and franchise regulations and relationships; (15) difficulties in obtaining financing in foreign countries for local operations.operations; and (16) natural disasters, public health crises, including the occurrence of a contagious disease or illness, such as COVID-19, and other catastrophic events.
Any significant disruption at one of our manufacturing facilities could disrupt our production schedule.We assemble vehicles at various facilities around the world. TheseOur facilities are typically designed to produce particular models for particular geographic markets. No single facility is designed to manufacture our full range of vehicles. In some cases, certain facilities produce products, systems, components and parts that disproportionately contribute a greater degree to our profitability than others.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
others and create significant interdependencies among manufacturing facilities around the world. Should these or other facilities become unavailable either temporarily or permanently for any number of reasons, including labor disruptions, supply chain disruptions, the occurrence of a contagious disease or illness, such as COVID-19, or catastrophic weather events, whether or not as a result of climate change, the inability to manufacture thereat the affected facility may result in harm to our reputation, increased costs, lower revenues and the loss of customers. In particular, substantially all of our hourly employees are represented by unions and covered by collective bargaining agreements that must be negotiated from time-to-time, including at the local facility level, which increases our risk of work stoppages. We may not be able to easily shift production to other facilities or to make up for lost production. Any new facility needed to replace an inoperable manufacturing facility would need to comply with the necessary regulatory requirements, need to satisfy our specialized manufacturing requirements and require specialized equipment. Even though we carry business interruption insurance policies, we may suffer losses as a result of business interruptions that exceed the coverage available or any losses which may be excluded under our insurance policies.
Any disruption in our suppliers'suppliers’ operations could disrupt our production schedule.Our automotive operations are dependent upon the continued ability of our suppliers to deliver the systems, components, raw materials and parts that we need to manufacture our products. Our use of “just-in-time” manufacturing processes allows us to maintain minimal inventory quantities of systems, components, raw materials and parts.inventory. As a result, our ability to maintain production is dependent upon our suppliers delivering sufficient quantities of systems, components, raw materials and parts on time to meet our production schedules. In some instances, we purchase systems, components, raw materials and parts that are ultimately derivederived from a single source and may be at an increased risk for supply disruptions. Disputes,Any number of factors, including labor disruptions, catastrophic weather events, the occurrence of a contagious disease or illness, such as COVID-19, contractual or other disputes, unfavorable economic or industry conditions, delivery delays or other performance problems or financial difficulties or solvency problems, withcould disrupt our suppliers, including Takata Corporation (Takata), which may be exacerbated by the cost of remediating quality issues with these items, couldsuppliers’ operations and lead to uncertainty in our supply chain or cause supply disruptions for us, which could, in turn, disrupt our operations, including the production of certain of our higher margin vehicles. WhereIf the COVID-19 pandemic continues to spread or re-emerges and results in a prolonged period of travel, commercial, social and other similar restrictions, we could experience continued and/or additional global supply disruptions. If we experience supply disruptions, we may not be able to develop alternate sourcing quickly. Any disruption of our production schedule caused by an unexpected shortage of systems, components, raw materials or parts even for a relatively short period of time could cause us to alter production schedules, increase work-in-process inventory or suspend production entirely.entirely, which could cause a loss of revenues or an increase in working capital, which would adversely affect our profitability and financial condition.
High prices of raw materials used by usIn particular, a global semiconductor supply shortage has had, and our suppliers could negatively impact our profitability. Increases in prices for raw materials that we and our suppliers use in manufacturing products, systems, components and parts such as steel, precious metals, non-ferrous metals, including aluminum, copper and plastic parts may leadis continuing to higher production costs for parts and components. This could, in turn, negatively impact our future profitability because we may not be able to pass all of those costs on to our customers or require our suppliers to absorb such costs.
We operate in a highly competitive industry that has excess manufacturing capacity and attempts by our competitors to sell more vehicles could have, a significant negative effect on our vehicle pricing, market share and operating results. The globalwide-ranging effects across multiple industries, particularly the automotive industry, is highly competitive and overall manufacturing capacity init has impacted multiple suppliers that incorporate semiconductors into the industry far exceeds demand. Many manufacturers have relatively high fixed labor costs as well as significant limitations on their abilityparts they supply to close facilities and reduce fixed costs. Many of our competitors have responded to these relatively high fixed costs by providing subsidized financing or leasing programs, offering marketing incentives or reducing vehicle prices.us. As a result, we are not necessarily able to set our prices to offset higher costs of marketing incentives, commodity or other cost increases, or the impact of adverse currency fluctuations. Our competitors may also seek to benefit from economies of scale by consolidating or entering into other strategic agreements such as alliances intended to enhance their competitiveness.
Domestic manufacturers in lower cost countries, such as China and India, have become competitors in key emerging markets and announced their intention to export their products to established markets as a low cost alternative to established entry-level automobiles. In addition, foreign governments may decide to implement tax and other policies that favor their domestic manufacturers at the expense of international manufacturers, including GM and its joint venture partners. These actions havesemiconductor supply shortage has had, and are expected todepending on how long it persists, could continue to have, a material impact on our operations.
The COVID-19 pandemic and its impact on the global economy may disrupt our business and operations, which could materially adversely impact our business, financial condition, liquidity and results of operations.Pandemics, epidemics or disease outbreaks in the U.S. or globally may disrupt our business, which could materially affect our results of operations, financial condition, liquidity and future expectations. The COVID-19 pandemic has caused, and is continuing to cause, significant disruption to the global economy, including the automotive industry, and has had a material impact on our business. However, the full extent to which the COVID-19 pandemic will impact our operations will depend on future developments, including the duration and severity of the pandemic, any subsequent outbreaks of the virus or any related variants and the efficacy, availability and adoption of vaccines. Future developments are highly uncertain and cannot be predicted with confidence and may adversely impact our global supply chain and global manufacturing operations and cause us to again suspend our operations in the U.S. and elsewhere. In particular, if the COVID-19 pandemic continues or re-emerges, particularly in North America where our profits are most concentrated, resulting in a prolonged period of travel, commercial, social and other similar restrictions, we could experience among other things: (1) continued or additional global supply disruptions, including a delayed recovery from the global semiconductor supply shortage; (2) labor disruptions; (3) an inability to manufacture; (4) an inability to sell to our customers; (5) a decline in showroom traffic and customer demand during and following the pandemic; (6) customer defaults on automobile loans and leases; (7) lower than expected pricing on vehicles sold at auction; and (8) an impaired ability to access credit and the capital markets. We may also be subject to enhanced legal risks, including potential litigation related to the COVID-19 pandemic.We also have substantial cash requirements going forward, including: (1) ongoing cash costs including payments associated with previously announced vehicle recalls, the settlements of multi-district litigation and other recall-related contingencies, payments to service debt and other long-term obligations, including mandatory contributions to our pension plans; and (2) capital expenditures and payments for engineering and product development activities. Our ability to meet these cash requirements may be negatively impacted by the ongoing COVID-19 pandemic. Any resulting financial impact or the duration of such impact cannot be reasonably estimated at this time, but the COVID-19 pandemic could have a material impact on our business, financial condition and results of operations going forward.
We may continue to restructure our operations in the U.S. and various other countries and initiate additional cost reduction actions, but we may not succeed in doing so.Since 2017, we have undertaken restructuring actions to lower our operating costs in response to difficult market and operating conditions in various parts of the world, including the U.S.,
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Canada, Korea, Southeast Asia, India, Africa, Australia and New Zealand and Europe. As we continue to assess our performance throughout our regions, we may take additional restructuring actions to rationalize our operations, which may result in material asset write-downs or impairments and reduce our profitability in the periods incurred. In addition, these restructuring actions subject us to increased risks of labor unrest or strikes, supplier, dealer, or other third-party litigation, regulator claims or proceedings, negative publicity and business disruption. Failure to realize anticipated savings or benefits from our restructuring and/or cost reduction actions could have a material adverse effect on our vehicle pricing, market sharebusiness, liquidity and operating results.cash flows.
Risks related to our intellectual property, cybersecurity, information technology and data management practices
Competitors may independently develop products and services similar to ours, and there are no guarantees that GM'sGM’s intellectual property rights would prevent competitors from independently developing or selling those productproducts and services. There may be instances where, notwithstanding our intellectual property position, competitive products or services may impact the value of our brands and other intangible assets, and our business may be adversely affected. Moreover, although GM takes
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reasonable steps to maintain the confidentiality of GM proprietary information, there can be no assurance that such efforts will completely deter or prevent misappropriation or improper use of our technology.intellectual property. We sometimes face attempts to gain unauthorized access to our information technology networks and systems for the purpose of improperly acquiring our trade secrets or confidential business information. The theft or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an incident could adversely affect our competitive position. In addition, we may be the target of patent enforcement of patentsactions by third parties, including aggressive and opportunistic enforcement claims by non-practicing entities. Regardless of the merit of such claims, responding to infringement claims can be expensive and time-consuming. Although we have taken steps to mitigate such risks, if we are found to infringehave infringed any third-party intellectual property rights, we could be required to pay substantial damages, or we could be enjoined from offering some of our products and services. In addition, to prevent unauthorized use of our intellectual property, it may be necessary to prosecute actions for infringement, misappropriation or other violation of our intellectual property against third parties. Any such action could result in significant costs and diversion of our resources and management’s attention, and there can be no assurance that we will be successful in any such action.
Security breaches and other disruptions to information technology systems and networked products, including connected vehicles, owned or maintained by us, GM Financial, or third-partythird-parties, such as vendors or suppliers, on our behalf, could interfere with our operations and could compromise the confidentiality of private customer data or our proprietary information.We rely upon information technology systems and manufacture networked and connected products, some of which are managed by third-parties,third parties, to process, transmit and store electronic information and to manage or support a variety of our business processes, activities and products. Additionally, we and GM Financial collect and store sensitive data, including intellectual property and proprietary business information proprietary business information(including that of our dealers and suppliers,suppliers), as well as personally identifiable information of our customers and employees, in data centers and on information technology networks.networks (including networks that may be controlled or maintained by third parties). The secure operation of these systems and products, and the processing and maintenance of the information processed by these systems and products, is critical to our business operations and strategy. Further, customers using our systems rely on the security of our infrastructure, including hardware and other elements provided by third parties, to ensure the reliability of our products and the protection of their data. We also face the risk of operational disruption, failure, termination or capacity constraints of any of the third parties that facilitate our business activities, including vendors, service providers, suppliers, customers, counterparties, exchanges, clearing agents, clearinghouses or other financial intermediaries. Such parties and other third parties who provide us services or with whom we communicate could also be the source of a cyberattack on, or breach of, our operational systems, network, data or infrastructure. Despite our security measures and business continuity plans, theseour information technology systems and networked and connected products may be vulnerable to damage, disruptions or shutdowns caused by attacks by hackers, computer viruses, malware (including “ransomware”), phishing attacks or breaches due to errors or malfeasance by employees, contractors and others who have access to these systems and products. The occurrence of any of these events could compromise the confidentiality, operational integrity and accessibility of these systems and products.products and the data that resides within them. Similarly, such an occurrence could result in the compromise or loss of the information processed by these systems and products. Such events could result in, among other things, the loss of proprietary data, interruptions or delays in our business operations and damage to our reputation. In addition, such events could result in legalincrease the risk of claims alleging that we are non-compliant with applicable laws or proceedings,regulations, subjecting us to potential liability or regulatory penalties and related costs under laws protecting the privacy of personal information; disrupt our operations; or reduce the competitive advantage we hope to derive from our investment in advanced technologies. WeVarious events described above have experiencedoccurred in the past and may occur in the future. Although impacts of past events have been immaterial, the impacts of such events in the past and, although past events were immaterial, future events may occur and may be material.
Portions of our information technology systems also may experience interruptions, delays or cessations of service or produce errors due to regular maintenance efforts, such as systems integration or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which could cause business disruptions and be more expensive, time-consuming, disruptive and resource intensive. Such disruptions could adversely impact our ability to design, manufacture and sell products and services, and interrupt other business processes.
Security breaches and other disruptions of our in-vehicle systems could impact the safety of our customers and reduce confidence in GM and our products.Our vehicles contain complex information technology systems. These systems control various vehicle functions including engine, transmission, safety, steering, navigation, acceleration, braking, window, and door lock functions.functions and battery and electric motors. We have designed, implemented and tested security measures intended to prevent
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unauthorized access to these systems. However, hackers have reportedly attempted, and may attempt in the future, to gain unauthorized access to modify, alter and use such systems to gain control of, or to change, our vehicles’ functionality, user interface and performance characteristics, or to gain access to data stored in or generated by the vehicle. Any unauthorized access to or control of our vehicles or their systems or any loss of data could adversely impact the safety of our customers or result in legal claims or proceedings, liability or regulatory penalties. Laws that would permit third-party access to vehicle data and related systems could expose our vehicles and vehicle systems to third-party access without appropriate security measures in place, leading to new safety and security risks for our customers and reducing customer trust and confidence in our products. In addition, regardless of their veracity, reports of unauthorized access to our vehicles or their systems or data could negatively affect our brand and harm our reputation, which could adversely impact our business prospects, financial condition and operating results.
Our enterprise data practices, including the collection, use, sharing and security of the Personal Identifiable Information of our customers, employees and suppliers, are subject to increasingly complex and restrictive regulations in all key market regions.Under these regulations, the failure to maintain compliant data practices could result in consumer complaints and regulatory inquiry, resulting in civil or criminal penalties, as well as brand impact or other harm to our business. In addition, increased consumer sensitivity to real or perceived failures in maintaining acceptable data practices could damage our reputation and deter current and potential users or customers from using our products and services. The cost of compliance with these laws and regulations will be high and is likely to increase in the future. The growing patchwork of state and country regulations imposes burdensome obligations on companies to quickly respond to consumer requests, such as requests to delete, disclose and stop selling personal information, with significant fines for noncompliance. Complying with these new laws has significantly increased, and may continue to increase, our operating costs and is driving increased complexity in our operations.
Risks related to government regulations and litigation
Our operations and products are subject to extensive laws, governmental regulations and policies, thatincluding those related to vehicle emissions and fuel economy standards, which can significantly increase our costs and affect how we do business.We are significantly affected by governmental regulations on a global basis that can increase costs related to the production of our vehicles and affect our product portfolio.portfolio, particularly regulations relating to fuel economy standards and GHG emissions. Meeting or exceeding manythe requirements of these regulations is costly, and often technologically challenging with respect to mandated emissions and fuel economymay require phase-out of internal combustion propulsion in certain major jurisdictions, and these standards especially where standards mayare often not be harmonized across jurisdictions. We anticipate that the number and extent of these and other regulations, laws and policies, and the related costs and changes to our product portfolio, may increase significantly in the future.future, primarily motivated by efforts to reduce GHG emissions. Specifically, fuel economy and GHG emission regulations at the federal, state or local level or in international jurisdictions could require us to further limit the sale of certain profitable products, subsidize the sale of less profitable ones, change our manufacturing processes, pay penalties or undertake other activities that may require us to incur additional expense, which may be material. These governmentrequirements may increase the cost of, and/or diminish demand for, our vehicles. These regulatory requirements, among others, could significantly affect our plans for global product development and, given the uncertainty surrounding enforcement and regulatory definitions and interpretations, may result in substantial costs, including civil or criminal penalties. In addition, an evolving but un-harmonized emissions and fuel economy regulatory framework that could include specific sales mandates may limit or dictate the types of vehicles we sell and where we sell them, which can affect revenue.our revenues. Refer to the "Environmental“Environmental and Regulatory Matters"Matters” section of Item 1. Business for further information on these regulatory and environmental requirements. We also expect that manufacturers will continue to be subject to increased scrutiny from regulators globally.
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We expect that to comply with fuel economy and GHG emission control requirementsstandards and mandates to sell specific volumes of ZEV in certain jurisdictions, we will be required to sell a significant volume of electric vehicles, as well asEVs, and potentially develop and implement new technologies for conventional internal combustion engines, all at increased cost levels.of which will require substantial investment and expense. There are limits on our ability to achieve fuel economy improvements over a given time frame, however.primarily relating to the cost and effectiveness of available technologies, lack of sufficient consumer acceptance of new technologies and of changes in vehicle mix, lack of willingness of consumers to absorb the additional costs of new technologies, the appropriateness (or lack thereof) of certain technologies for use in particular vehicles, the widespread availability (or lack thereof) of supporting infrastructure for new technologies, especially for EVs, and the human, engineering and financial resources necessary to deploy new technologies across a wide range of products and powertrains in a short time. There is no assurance that we will be able to produce and sell vehicles that use such new technologies on a profitable basis or that our customers will purchase such vehicles in the quantities necessary for us to comply with thesecurrent or future regulatory programs.requirements.
In the current uncertain regulatory framework, environmental liabilitiescompliance costs for which we may be responsible and that are not reasonably estimable could be substantial. Alleged violations of safetyfuel economy or emissionsemission standards could result in legal proceedings, the recall of one or more of our products, negotiated remedial actions, fines, restricted product offerings or a combination of any of those items. Any of these actions could have substantiala material adverse effectseffect on our profitability, financial condition and operations, including facility idling, reduced employment, increased costs and loss of revenue.
Many
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In addition, many of our advanced technologies, including autonomous,AVs, present novel issues with which domestic and foreign regulators have only limited experience, and will be subject to evolving regulatory frameworks. Any current or future regulations in these areas could impede the successful commercialization of these technologies and impact whether and how these technologies are designed and integrated into our products, and may ultimately subject us to increased costs and uncertainty.
We could be materially adversely affected by unusual or significant litigation, governmental investigations or other proceedings.We are subject to legal proceedings in the U.S. and elsewhere involving various issues, including product liability lawsuits, warranty litigation, class action litigations alleging product defects, emissions litigation, stockholder litigation, labor and proceedings related to the Ignition Switch Recall.employment litigation and claims and actions arising from restructurings and divestitures of operations and assets. In addition, we are subject to governmental proceedings and investigations. A negative outcome in one or more of these legal proceedings could result in the imposition of damages, including punitive damages, substantial fines, significant reputational harm, civil lawsuits and criminal penalties, interruptions of business, modification of business practices, equitable remedies and other sanctions against us or our personnel as well as significant legal and other costs. In addition, wecosts, all of which may become obligatedbe significant. For a further discussion of these matters refer to issue upNote 16 to 30 million shares of our common stock (subject to adjustment to take into account stock dividends, stock splits and other transactions) to the Motors Liquidation Company GUC Trust (GUC Trust) under a provision of the Amended and Restated Master Sale and Purchase Agreement between us and General Motors Corporation and certain of its subsidiaries in the event that allowed general unsecured claims against the GUC Trust, as estimated by the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court), exceed $35.0 billion. At December 31, 2017, the Bankruptcy Court estimated that allowed general unsecured claims were approximately $31.9 billion.consolidated financial statements.
If, in the discretion of the U.S. Attorney’s Office for the Southern District of New York (the U.S. Attorney's Office), we do not comply with the terms of the Deferred Prosecution Agreement (the DPA), the U.S. Attorney's Office may prosecute us for charges alleged by the U.S. Attorney's Office including those relating to faulty ignition switches. On September 17, 2015 we announced that we entered into the DPA with the U.S. Attorney's Office regarding its investigation of the events leading up to certain recalls announced in February and March of 2014 relating to faulty ignition switches. Under the DPA, we consented to, among other things, the filing of a two-count information (the Information) in the U.S. District Court for the Southern District of New York (the Southern District) charging GM with a scheme to conceal material facts from a government regulator and wire fraud. We pled not guilty to the charges alleged in the Information. The DPA further provides that, in the event the U.S. Attorney's Office determines during the period of deferral of prosecution (or any extensions thereof) that we have violated any provision of the DPA, including violating any U.S. federal law or our obligation to cooperate with and assist the independent monitor (the Monitor), the U.S. Attorney's Office may, in its discretion, either prosecute us on the charges alleged in the Information or impose an extension of the period of deferral of prosecution of up to one additional year. Under such circumstance, the U.S. Attorney's Office would be permitted to rely upon the admissions we made in the DPA and would benefit from our waiver of certain procedural and evidentiary defenses. Such a criminal prosecution could subject us to penalties.
The costs and effect on our reputation of product safety recalls and alleged defects in products and services could materially adversely affect our business.Government safety standards require manufacturers to remedy certain product safety defects through recall campaigns.campaigns and vehicle repurchases. Under these standards, we could be subject to civil or criminal penalties or may incur various costs, including significant costs for free repairs. At present,repairs made at no cost to the consumer. The costs we incur in connection with these recalls typically include the cost of the part being replaced and labor to remove and replace the defective part. The costs to complete a recall or customer satisfaction action could be exacerbated to the extent that such action relates to a global platform.platform, such as the Chevrolet Bolt EV recall. Concerns about the safety of our products, including advanced technologies like autonomous,AVs, whether raised internally or by regulators or consumer advocates, and whether or not based on scientific evidence or supported by data, can result in product delays, recalls, field actions, lost sales, governmental investigations, regulatory action, private claims, lawsuits and settlements and reputational damage. These circumstances can also result in damage to brand image, brand equity and consumer trust in the Company’sour products and ability to lead the disruption occurring in the automotive industry.
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We currently source a variety of systems, components, raw materials and parts including but not limited to air bag inflators, from third parties. From time to time these items may have performance quality or reputationalquality issues that could harm our reputation and cause us to incur significant costs. For example,costs, particularly if the affected items relate to global platforms or involve defects that are identified years after production. Our ability to recover costs associated with recalls or other campaigns caused by parts or components purchased from suppliers may be limited by the suppliers’ financial condition or a number of other reasons or defenses.
We may incur additional tax expense or become subject to additional tax exposure. We are subject to the tax laws and regulations of the U.S. and numerous other jurisdictions in which we do business. Many judgments are required in determining our worldwide provision for income taxes and other tax liabilities, and we are currently conducting recalls for certain Takata air bag inflators usedregularly under audit by the U.S. Internal Revenue Service and other tax authorities, which may not agree with our tax positions. In addition, our tax liabilities are subject to other significant risks and uncertainties, including those arising from potential changes in somelaws and regulations in the countries in which we do business, the possibility of adverse determinations with respect to the application of existing laws, changes in our business or structure and changes in the valuation of our prior model year vehicles. Further recalls, if any, thatdeferred tax assets and liabilities. Any unfavorable resolution of these and other uncertainties may be required to remediate Takata air bag inflators in our vehicles could have a materialsignificant adverse impact on our business.
For a further discussiontax rate and results of these matters referoperations. If our tax expense were to Note 17 toincrease, or if the ultimate determination of our consolidated financial statements.
We may continue to restructure or divest our operationstaxes owed is for an amount in various countries, but we may not succeed in doing so. In 2017, we announced significant restructuring and cost reduction actions to lowerexcess of amounts previously accrued, our operating costs in response to difficult marketresults, cash flows and operating conditions in various parts of the world. As we continue to assess our performance throughout our regions, we may take additional restructuring actions to rationalize our operations, which may result in impairments and reduce our profitability in the periods incurred. In addition, we may not realize anticipated savings or benefits from past or future cost reduction actions in full or in part or within the time periods we expect. We are also subject to the risks of labor unrest, negative publicity and business disruption in connection with our cost reduction actions. Failure to realize anticipated savings or benefits from our cost reduction actions could have a material adverse effect on our business, prospects, financial condition liquidity, results of operations and cash flows.could be adversely affected.
Our future competitiveness and ability
Risks related to achieve long-term profitability depends on our ability to control our costs, which requires us to successfully implement operating effectiveness initiatives throughout our operations. We are continuing to implement a number of operating effectiveness initiatives to improve productivity and reduce costs. Our future competitiveness depends upon our continued success in implementing these initiatives throughout our operations. While some of the elements of cost reduction are within our control, others, such as interest rates or return on investments, which influence our expense for pensions, depend more on external factors, and there can be no assurance that such external factors will not materially adversely affect our ability to reduce our costs. Reducing costs may prove difficult due to our focus on increasing advertising and our belief that engineering and other expenses necessary to improve the performance, safety and customer satisfaction of our vehicles and to continue to innovate our technology, product and service offerings to meet changing customer needs and market developments are likely to increase.Automotive Financing - GM Financial
We rely on GM Financial to provide financial services to our dealerscustomers and customers in a majority of the markets in which we sell vehicles. dealers.GM Financial faces a number of business, economic and financial risks that could impair its access to capital and negatively affect its business and operations, andwhich in turn could impede its ability to provide leasing and financing to retail consumerscustomers and commercial lending to our dealers to support additional sales of our vehicles. We rely on GM Financial in North America, South America and China to support leasing and sales of our vehicles to consumers requiring vehicle financing and also to provide commercial lending to our dealers. Any reduction in GM Financial'sFinancial’s ability to provide such financial services would negatively affect our efforts to support additional sales of our vehicles and expand our market penetration among consumerscustomers and dealers.
As
The primary factors that could adversely affect GM Financial’s business and operations and reduce its ability to provide financing services at competitive rates include the sufficiency, availability and cost of sources of financing, including credit facilities, securitization programs and secured and unsecured debt issuances; the performance of loans and leases in its portfolio, which could be materially affected by charge-offs, delinquencies and prepayments; wholesale auction values of used vehicles; vehicle return rates and the residual value performance on vehicles GM Financial leases to customers; fluctuations in interest rates and currencies; competition for customers from commercial banks, credit unions and other financing and leasing companies; and changes to regulation, supervision, enforcement and licensing across various jurisdictions.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
In addition, GM Financial has certain floating-rate obligations, hedging transactions and floating-rate dealer loans that determine their applicable interest rate or payment amount by reference to the London Interbank Offered Rate (LIBOR). The U.K. Financial Conduct Authority, which regulates LIBOR, has announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021. In March 2021, the ICE Benchmark Administration Limited, the administrator of LIBOR, extended the transition dates of certain LIBOR tenors (including all U.S. Dollar LIBOR tenors other than one-week and two-month U.S. Dollar LIBOR tenors) to June 30, 2023, after which LIBOR reference rates will cease to be provided. Despite this deferral, the LIBOR administrator has advised that no new contracts using U.S. Dollar LIBOR should be entered into after December 31, 2021. It is unknown whether any banks will continue to voluntarily submit rates for the calculation of LIBOR, or whether LIBOR will continue to be published by its administrator based on these submissions or on any other basis, after such dates. At this time, it is not possible to predict the effect that these developments or any discontinuance, modification or other reforms may have on LIBOR, other benchmarks or floating-rate debt instruments, including GM Financial’s floating-rate debt. Any such discontinuance, modification, alternative reference rates or other reforms may materially adversely affect interest rates on GM Financial’s current indebtedness. There is a risk that the discontinuation of LIBOR will impact GM Financial's ability to manage interest rate risk effectively without an adequate replacement.
Further, as an entity operating in the financial services sector, GM Financial is required to comply with a wide variety of laws and regulations that may be costly to adhere to and may affect our consolidated operating results. Compliance with these laws and regulations requires that GM Financial maintain forms, processes, procedures, controls and the infrastructure to support these requirements, and these laws and regulations often create operational constraints both on GM Financial’s ability to implement servicing procedures and on pricing. Laws in the financial services industry are designed primarily for the protection of consumers. The failure to comply with these laws could result in significant statutory civil and criminal penalties, monetary damages, attorneys’ fees and costs, possible revocation of licenses and damage to reputation, brand and valued customer relationships.
The primary factors that could adversely affect GM Financial's business and operations and reduce its ability
Risks related to provide financing services at competitive rates include the availability of borrowings under its credit facilities to fund its retail and commercial finance activities; its ability to access a variety of financing sources including the asset-backed securities market and other secured and unsecured debt markets; the performance of loans and leases in its portfolio, which could be materially affected by delinquencies, defaults or prepayments; wholesale auction values of used vehicles; higher than expected vehicle return rates and the residual value performance on vehicles GM Financial leases to customers; fluctuations in interest rates and currencies; and changes to regulation, supervision and licensing across various jurisdictions, including new regulations or sanctions imposed in the U.S. by the Department of Justice, SEC and Consumer Financial Protection Bureau.defined benefit pension plans
Our defined benefit pension plans are currently underfunded and our pension funding requirements could increase significantly due to a reduction in funded status as a result of a variety of factors, including weak performance of financial markets, declining interest rates, changes in laws or regulations, or changes in assumptions or investments that do not achieve
GENERAL MOTORS COMPANY AND SUBSIDIARIES
adequate returns. Our employee benefit plans currently hold a significant amount of equity and fixed income securities. A detailed description of the investment funds and strategies and our potential funding requirements are disclosed in Note 1615 to our consolidated financial statements, which also describes significant concentrations of risk to the plan investments.
Our future funding requirements for our U.S. defined benefit pension plans depend upon the future performance of assets placed in trusts for these plans, the level of interest rates used to determine funding levels, the level of benefits provided for by the plans and any changes in laws and regulations. Future funding requirements generally increase if the discount rate decreases or if actual asset returns are lower than expected asset returns, assuming other factors are held constant. We estimate future contributions to these plans using assumptions with respect to these and other items. Changes to those assumptions could have a significant effect on future contributions.
There are additional risks due to the complexity and magnitude of our investments. Examples include implementation of significant changes in investment policy, insufficient market liquidity in particular asset classes and the inability to quickly rebalance illiquid and long-term investments.
Factors whichthat affect future funding requirements for our U.S. defined benefit plans generally affect the required funding for non-U.S. plans. Certain plans outside the U.S. do not have assets and therefore the obligation is funded as benefits are paid. If local legal authorities increase the minimum funding requirements for our non-U.S. plans, we could be required to contribute more funds.funds, which could negatively affect our liquidity and financial condition.
* * * * * * *
Item 1B. Unresolved Staff Comments
NoneNone.
* * * * * * *
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Item 2. Properties
At December 31, 20172021, we had over 100 locations in the U.S. (excluding our automotive financing operations and dealerships), which are primarily for manufacturing, assembly, distribution, warehousing, engineering and testing. We, our subsidiaries or associated companies in which we own an equity interest, own most of these properties and/or lease a portion of these properties. Leased properties are primarily composed of warehouses and administration, engineering and sales offices.
We have manufacturing, assembly, distribution, office or warehousing operations in 3529 countries, including equity interests in associated companies, which perform manufacturing, assembly or distribution operations. The major facilities outside the U.S., which are principally vehicle manufacturing and assembly operations, are located in Argentina, Brazil, Canada, China, Colombia, Ecuador, Mexico and South Korea, Thailand and Vietnam.Korea.
GM Financial owns or leases facilities for administration and regional credit centers. GM Financial has 3937 facilities, of which 2724 are located in the U.S. The major facilities outside the U.S. are located in Brazil, Canada, China and Mexico.
* * * * * * *
Item 3. Legal Proceedings
Refer to theThe discussion in the Litigation-Relatedunder "Litigation-Related Liability and Tax Administrative Matters sectionMatters" in Note 1716 to our consolidated financial statements for information relating to legal proceedings.is incorporated by reference into this Part I - Item 3.
* * * * * * *
Item 4. Mine Safety Disclosures
Not applicableapplicable.
* * * * * * *
PART II
Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information Shares of our common stock are publicly traded on the New York Stock Exchange. The following table summarizesExchange under the quarterly price ranges of our common stock based on high and low prices from intraday trades on the New York Stock Exchange:symbol "GM".
|
| | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2017 | | 2016 |
| High | | Low | | High | | Low |
First quarter | $ | 38.55 |
| | $ | 33.79 |
| | $ | 33.54 |
| | $ | 26.69 |
|
Second quarter | $ | 35.40 |
| | $ | 31.92 |
| | $ | 33.41 |
| | $ | 27.34 |
|
Third quarter | $ | 40.69 |
| | $ | 34.45 |
| | $ | 32.87 |
| | $ | 27.52 |
|
Fourth quarter | $ | 46.76 |
| | $ | 40.70 |
| | $ | 37.74 |
| | $ | 30.21 |
|
Holders At January 30, 201818, 2022, we had 1.41.5 billion issued and outstanding shares of common stock held by 511475 holders of record.
DividendsOur Board We do not plan to reinstate a regular common stock dividend at this time as we prioritize investment in our growth strategy.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Stock Performance Graph The following graph compares the performance of our common stock into the three months ended March 31, 2014. It is anticipated that dividends on our common stock will continue to be declaredStandard & Poor's 500 Stock Index and paid quarterly. However the declaration of any dividend on our common stock is a matter to be acted upon by our Board of Directors in its sole discretion. Any dividend will be paid out of funds legally available for that purpose. Our payment of dividends in the future, as described further in "Liquidity and Capital Resources" in MD&A, will depend on business conditions, our financial condition, earnings, liquidity and capital requirements and other factors. Refer to Item 6. Selected Financial Data for cash dividends declared on our common stockDow Jones Automobile & Parts Titans 30 Index for the years endedlast five years. It assumes $100 was invested on December 31, 2017, 2016, and 2015.with dividends being reinvested.
The following table summarizes stock performance graph data points in dollars:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years ended December 31, |
| 2016 | | 2017 | | 2018 | | 2019 | | 2020 | | 2021 |
General Motors Company | $100 | | $123 | | $104 | | $119 | | $138 | | $194 |
S&P 500 Stock Index | $100 | | $122 | | $116 | | $153 | | $181 | | $233 |
Dow Jones Automobile & Parts Titans 30 Index | $100 | | $121 | | $95 | | $108 | | $163 | | $204 |
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Purchases of Equity Securities The following table summarizes our purchases of common stock in the three months ended December 31, 2017:2021:
|
| | | | | | | | | | | |
| Total Number of Shares Purchased(a) | | Weighted Average Price Paid per Share | | Total Number of Shares Purchased Under Announced Programs(b) | | Approximate Dollar Value of Shares That May Yet be Purchased Under Announced Programs |
October 1, 2017 through October 31, 2017 | 16,530,750 |
| | $ | 44.72 |
| | 16,381,375 |
| | $4.3 billion |
November 1, 2017 through November 30, 2017 | 18,779,333 |
| | $ | 43.53 |
| | 16,141,363 |
| | $3.6 billion |
December 1, 2017 through December 31, 2017 | 1,631,403 |
| | $ | 42.97 |
| | 1,550,706 |
| | $3.5 billion |
Total | 36,941,486 |
| | $ | 44.04 |
| | 34,073,444 |
| | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Total Number of Shares Purchased(a) | | Weighted Average Price Paid per Share | | Total Number of Shares Purchased Under Announced Programs(b) | | Approximate Dollar Value of Shares That May Yet be Purchased Under Announced Programs |
October 1, 2021 through October 31, 2021 | 26,954 | | | $ | 53.13 | | | — | | | $3.3 billion |
November 1, 2021 through November 30, 2021 | — | | | $ | — | | | — | | | $3.3 billion |
December 1, 2021 through December 31, 2021 | — | | | $ | — | | | — | | | $3.3 billion |
Total | 26,954 | | | $ | 53.13 | | | — | | | |
__________
| |
(a) | Shares purchased include authorized shares that were a part of our stock repurchase plan. In addition, shares purchased consist of shares retained by us for the payment of the exercise price upon the exercise of warrants and shares delivered by employees or directors to us for the payment of taxes resulting from issuance of common stock upon the vesting of Restricted Stock Units (RSUs), Performance Stock Units (PSUs) and Restricted Stock Awards (RSAs) relating to compensation plans. In June 2017 our shareholders approved the 2017 Long Term Incentive Plan which authorizes awards of stock options, stock appreciation rights, RSAs, RSUs, PSUs or other stock-based awards to selected employees, consultants, advisors, and non-employee Directors of the Company. Refer to Note 22 to our consolidated financial statements for additional details on employee stock incentive plans and Note 20 to our consolidated financial statements for additional details on warrants outstanding. |
| |
(b) | In January 2017 we announced that our Board of Directors had authorized the purchase of up to an additional $5 billion of our common stock with no expiration date. |
(a) Shares purchased consist of shares delivered by employees or directors to us for the payment of taxes resulting from issuance of common stock upon the vesting of Restricted Stock Units (RSUs) relating to compensation plans. In June 2020 our shareholders approved the 2020 Long-Term Incentive Plan (LTIP), which authorizes awards of stock options, stock appreciation rights, RSUs, Performance Stock Units (PSUs) or other stock-based awards to selected employees, consultants, advisors and non-employee Directors of the Company. Refer to Note 22 to our consolidated financial statements for additional details on employee stock incentive plans.
(b) In January 2017, we announced that our Board of Directors had authorized the purchase of up to an additional $5.0 billion of our common stock with no expiration date.
* * * * * * *
Item 6.Selected Financial Data[Reserved]
GENERAL MOTORS COMPANY AND SUBSIDIARIES
|
| | | | | | | | | | | | | | | | | | | |
| At and for the Years Ended December 31, |
2017 | | 2016 | | 2015 | | 2014 | | 2013 |
Income Statement Data: | | | | | | | | | |
Total net sales and revenue | $ | 145,588 |
| | $ | 149,184 |
| | $ | 135,725 |
| | $ | 137,958 |
| | $ | 138,792 |
|
Income from continuing operations(a)(b) | $ | 330 |
| | $ | 9,269 |
| | $ | 9,590 |
| | $ | 4,525 |
| | $ | 5,960 |
|
Basic earnings per common share – continuing operations(a)(b) | $ | 0.23 |
| | $ | 6.12 |
| | $ | 6.09 |
| | $ | 2.06 |
| | $ | 3.16 |
|
Diluted earnings per common share – continuing operations(a)(b) | $ | 0.22 |
| | $ | 6.00 |
| | $ | 5.89 |
| | $ | 1.95 |
| | $ | 2.76 |
|
Dividends declared per common share | $ | 1.52 |
| | $ | 1.52 |
| | $ | 1.38 |
| | $ | 1.20 |
| | $ | — |
|
Balance Sheet Data: | | | | | | | | | |
Total assets(c) | $ | 212,482 |
| | $ | 221,690 |
| | $ | 194,338 |
| | $ | 177,311 |
| | $ | 166,231 |
|
Automotive notes and loans payable | $ | 13,502 |
| | $ | 10,560 |
| | $ | 8,535 |
| | $ | 9,084 |
| | $ | 6,815 |
|
GM Financial notes and loans payable | $ | 80,717 |
| | $ | 64,563 |
| | $ | 45,479 |
| | $ | 29,304 |
| | $ | 22,174 |
|
Total equity | $ | 36,200 |
| | $ | 44,075 |
| | $ | 40,323 |
| | $ | 36,024 |
| | $ | 43,174 |
|
_________
| |
(a) | In the year ended December 31, 2017 we recorded tax expense of $7.3 billion related to U.S. tax reform legislation, $2.3 billion related to the establishment of a valuation allowance against deferred tax assets that will no longer be realizable as a result of the sale of the Opel/Vauxhall Business, and charges of $460 million related to restructuring actions in India and South Africa. In the year ended December 31, 2015 we recorded the reversal of deferred tax asset valuation allowances of $3.9 billion in Europe and recorded charges related to the Ignition Switch Recall Compensation Program (Compensation Program) and for various legal matters of approximately $1.6 billion. In the year ended December 31, 2014 we recorded charges of approximately $2.8 billion in Automotive cost of sales related to recall campaigns and courtesy transportation, a catch-up adjustment of $0.9 billion related to the change in estimate for recall campaigns and a charge of $0.4 billion related to the Compensation Program. |
| |
(b) | In December 2014 we redeemed all of the remaining shares of our Series A Preferred Stock for $3.9 billion, which reduced Income from continuing operations by $0.8 billion. In September 2013 we purchased 120 million shares of our Series A Preferred Stock held by the UAW Retiree Medical Benefits Trust (New VEBA) for $3.2 billion, which reduced Income from continuing operations by $0.8 billion. |
| |
(c) | Total assets includes assets held for sale of $20.6 billion, $20.0 billion, $17.8 billion, and $16.1 billion at December 31, 2016 through 2013, respectively. |
* * * * * * *
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)MD&A should be read in conjunction with the accompanying audited consolidated financial statements and notes. Forward-looking statements in this MD&A are not guarantees of future performance and may involve risks and uncertainties that could cause actual results to differ materially from those projected. Refer to the "Forward-Looking Statements" section of this MD&A and Part I, Item 1A. "Risk Factors"Risk Factors for a discussion of these risks and uncertainties. The discussion of our financial condition and results of operations for the year ended December 31, 2019 included in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2020 is incorporated by reference into this MD&A.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Non-GAAP Measures Unless otherwise indicated, our non-GAAP measures discussed in this MD&A are related to our continuing operations and not our discontinued operations or our assets and liabilities held for sale. Our non-GAAP measures includeinclude: earnings before interest and taxes (EBIT)-adjusted, presented net of noncontrolling interests,interests; earnings before income taxes (EBT)-adjusted for our GM Financial segment; earnings per share (EPS)-diluted-adjusted,-diluted-adjusted; effective tax rate-adjusted (ETR-adjusted),; return on invested capital-adjusted (ROIC-adjusted) and adjusted automotive free cash flow. Our calculation of these non-GAAP measures may not be comparable to similarly titled measures of other companies due to potential differences between companies in the method of calculation. As a result, the use of these non-GAAP measures has limitations and should not be considered superior to, in isolation from, or as a substitute for, related U.S. GAAP measures.
These non-GAAP measures allow management and investors to view operating trends, perform analytical comparisons and benchmark performance between periods and among geographic regions to understand operating performance without regard to items we do not consider a component of our core operating performance. Furthermore, these non-GAAP measures allow investors the opportunity to measure and monitor our performance against our externally communicated targets and evaluate the investment decisions being made by management to improve ROIC-adjusted. Management uses these measures in its financial, investment and operational decision-making processes, for internal reporting and as part of its forecasting and budgeting processes. Further, our Board of Directors uses certain of these and other measures as key metrics to determine management performance under our performance-based compensation plans. For these reasons, we believe these non-GAAP measures are useful for our investors.
EBIT-adjusted EBIT-adjusted is presented net of noncontrolling interests and is used by management and can be used by investors to review our consolidated operating results because it excludes automotive interest income, automotive interest expense and income taxes as well as certain additional adjustments that are not considered part of our core operations.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Examples of adjustments to EBIT include, but are not limited to, impairment charges related to goodwill; impairment charges on long-lived assets and other exit costs resulting from strategic shifts in our operations or discrete market and business conditions; costs arising from the ignition switch recall and related legal matters; and certain currency devaluations associated with hyperinflationary economies. For EBIT-adjusted and our other non-GAAP measures, once we have made an adjustment in the current period for an item, we will also adjust the related non-GAAP measure in any future periods in which there is an impact from the item. Our corresponding measure for our GM Financial segment is EBT-adjusted because interest income and interest expense are part of operating results when assessing and measuring the operational and financial performance of the segment.
Core EBIT-adjusted Beginning in 2018, we intend to report a Core EBIT-adjusted metric. Core EBIT-adjusted will be used by management and can be used by investors to review our core consolidated operating results. Core EBIT-adjusted begins with EBIT-adjusted and excludes the EBIT-adjusted results of our autonomous vehicle operations, including Cruise Automation Inc. (Cruise), Maven and our investment in Lyft.
EPS-diluted-adjusted EPS-diluted-adjusted is used by management and can be used by investors to review our consolidated diluted EPS results on a consistent basis. EPS-diluted-adjusted is calculated as net income attributable to common stockholders-diluted less income (loss) from discontinued operations on an after-tax basis, adjustments noted above for EBIT-adjusted gains or losses on the extinguishment of debt obligations on an after-tax basis and certain income tax adjustments divided by weighted-average common shares outstanding-diluted. Examples of income tax adjustments include the establishment or reversal of significant deferred tax asset valuation allowances.
ETR-adjusted ETR-adjusted is used by management and can be used by investors to review the consolidated effective tax rate for our core operations on a consistent basis. ETR-adjusted is calculated as Income tax expense less the income tax related to the adjustments noted above for EBIT-adjusted and the income tax adjustments noted above for EPS-diluted-adjusted divided by Income before income taxes less adjustments. When we provide an expected adjusted effective tax rate, we do not provide an expected effective tax rate because the U.S. GAAP measure may include significant adjustments that are difficult to predict.
ROIC-adjusted ROIC-adjusted is used by management and can be used by investors to review our investment and capital allocation decisions. We define ROIC-adjusted as EBIT-adjusted for the trailing four quarters divided by ROIC-adjusted average net assets, which is considered to be the average equity balances adjusted for average automotive debt and interest liabilities, exclusive of capitalfinance leases; average automotive net pension and other postretirement benefits (OPEB) liabilities; and average automotive net income tax assets during the same period. Adjustments to the average equity balances exclude assets and liabilities classified as either assets held for sale or liabilities held for sale.
Adjusted automotive free cash flow Adjusted automotive free cash flow is used by management and can be used by investors to review the liquidity of our automotive operations and to measure and monitor our performance against our capital allocation program and evaluate our automotive liquidity against the substantial cash requirements of our automotive operations. We measure adjusted automotive free cash flow as automotive operating cash flow from continuing operations less capital expenditures adjusted for management actions. Management actions primarily related to strengthening our balance sheet,can include voluntary events such as prepayments of debt and discretionary
GENERAL MOTORS COMPANY AND SUBSIDIARIES
contributions to employee benefit plans.plans or nonrecurring specific events such as a closure of a facility that are considered special for EBIT-adjusted purposes. Refer to the “Liquidity and Capital Resources” section of this MD&A for our reconciliationadditional information.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Core adjusted automotive free cash flow Beginning in 2018, we intend to report a Core adjusted automotive free cash flow metric. Core adjusted automotive free cash flow will be used by management and can be used by investors to review the liquidity of our automotive operations and to measure and monitor our performance against our capital allocation program and evaluate our automotive liquidity against the substantial cash requirements of our automotive operations. Core adjusted automotive free cash flow begins with adjusted automotive free cash flow and excludes the cash flows of our autonomous vehicle operations, including Cruise, Maven and our investment in Lyft.
The following table reconciles Net income (loss) attributable to stockholders under U.S. GAAP to EBIT-adjusted:
|
| | | | | | | | | | | |
| Years Ended December 31, |
| 2017 |
| 2016 |
| 2015 |
Net income (loss) attributable to stockholders | $ | (3,864 | ) |
| $ | 9,427 |
|
| $ | 9,687 |
|
(Income) loss from discontinued operations, net of tax | 4,212 |
|
| 1 |
|
| (25 | ) |
Income tax expense (benefit) | 11,533 |
|
| 2,739 |
|
| (1,219 | ) |
Gain on extinguishment of debt | — |
|
| — |
|
| (449 | ) |
Automotive interest expense | 575 |
|
| 563 |
|
| 423 |
|
Automotive interest income | (266 | ) |
| (182 | ) |
| (167 | ) |
Adjustments |
|
|
|
|
|
GMI restructuring(a) | 460 |
|
| — |
|
| 297 |
|
Venezuela-related matters(b) | 80 |
|
| — |
|
| 720 |
|
Ignition switch recall and related legal matters(c) | 114 |
|
| 300 |
|
| 1,785 |
|
Russia exit costs(d) | — |
| | — |
| | 438 |
|
Other | — |
|
| — |
|
| (41 | ) |
Total adjustments | 654 |
|
| 300 |
|
| 3,199 |
|
EBIT-adjusted | $ | 12,844 |
|
| $ | 12,848 |
|
| $ | 11,449 |
|
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Net income attributable to stockholders | $ | 10,019 | | | $ | 6,427 | | | $ | 6,732 | |
| | | | | |
Income tax expense | 2,771 | | | 1,774 | | | 769 | |
| | | | | |
Automotive interest expense | 950 | | | 1,098 | | | 782 | |
Automotive interest income | (146) | | | (241) | | | (429) | |
Adjustments | | | | | |
Patent royalty matters(a) | 250 | | | — | | | — | |
GM Brazil indirect tax matters(b) | 194 | | | — | | | (1,360) | |
Cadillac dealer strategy(c) | 175 | | | 99 | | | — | |
GM Korea wage litigation(d) | 82 | | | — | | | — | |
GMI restructuring(e) | — | | | 683 | | | — | |
Ignition switch recall and related legal matters(f) | — | | | (130) | | | — | |
Transformation activities(g) | — | | | — | | | 1,735 | |
FAW-GM divestiture(h) | — | | | — | | | 164 | |
| | | | | |
Total adjustments | 701 | | | 652 | | | 539 | |
EBIT-adjusted | $ | 14,295 | | | $ | 9,710 | | | $ | 8,393 | |
________
| |
(a) | This adjustment was excluded because of a strategic decision to rationalize our core operations by exiting or significantly reducing our presence in various international markets to focus resources on opportunities expected to deliver higher returns. The adjustment primarily consists of asset impairments, sales incentives, inventory provisions, dealer restructuring, employee separations and other contract cancellation costs in India, South Africa, and Thailand. |
| |
(b) | In the year ended December 31, 2017 this adjustment was excluded because we ceased operations and terminated employment relationships in Venezuela.In the year ended December 31, 2015 this adjustment was excluded because of the devaluation of the Venezuela Bolivar Fuerte (BsF) and our inability to transact to obtain U.S. Dollars.(a)This adjustment was excluded because it relates to potential royalties accrued with respect to past-year sales. (b)These adjustments were excluded because of the unique events associated with decisions rendered by the Superior Judicial Court of Brazil resulting in retrospective recoveries of indirect taxes in the year ended December 31, 2019, and a potential settlement with certain third parties relating to these recoveries in the year ended December 31, 2021. (c)These adjustments were excluded because they relate to strategic activities to transition certain Cadillac dealers from the network as part of Cadillac's electric vehicle strategy. (d)This adjustment was excluded because of the unique events associated with recent Supreme Court of the Republic of Korea (Korea Supreme Court) decisions related to our salaried workers. (e)These adjustments were excluded because of a strategic decision to rationalize our core operations by exiting or significantly reducing our presence in various international markets to focus resources on opportunities expected to deliver higher returns. The adjustments primarily consist of dealer restructurings, asset impairments, inventory provisions and employee separation charges in Australia, New Zealand, Thailand and India in the year ended December 31, 2020. (f)These adjustments were excluded because of the unique events associated with the ignition switch recall, which included various investigations, inquiries and complaints from constituents. (g)These adjustments were excluded because of a strategic decision to accelerate our transformation for the future to strengthen our core business, capitalize on the future of personal mobility, and drive significant cost efficiencies. The adjustments primarily consist of accelerated depreciation, supplier-related charges, pension and other curtailment charges and employee-related separation charges in the year ended December 31, 2019. (h)This adjustment was excluded because we divested our joint venture FAW-GM Light Duty Commercial Vehicle Co., Ltd. (FAW-GM), as a result of a strategic decision by both shareholders, allowing us to focus our resources on opportunities expected to deliver higher returns.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
|
| |
(c) | These adjustments were excluded because of the unique events associated with the ignition switch recall. These events included the creation of the Compensation Program, as well as various investigations, inquiries and complaints from constituents.
|
| |
(d) | These adjustments were excluded because of our decision to exit the Russia market in 2015. The Russia exit costs primarily consisted of sales incentives, dealer restructuring and other contract cancellation costs and asset impairments. |
The following table reconciles diluted earnings (loss) per common share under U.S. GAAP to EPS-diluted-adjusted:
GENERAL MOTORS COMPANY AND SUBSIDIARIES
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2017 |
| 2016 |
| 2015 |
| Amount |
| Per Share |
| Amount |
| Per Share |
| Amount |
| Per Share |
Diluted earnings (loss) per common share | $ | (3,880 | ) |
| $ | (2.60 | ) |
| $ | 9,427 |
|
| $ | 6.00 |
|
| $ | 9,686 |
|
| $ | 5.91 |
|
Diluted (earnings) loss per common share – discontinued operations | 4,212 |
|
| 2.82 |
|
| 1 |
|
| — |
|
| (25 | ) |
| (0.02 | ) |
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
Gain on extinguishment of debt | — |
|
| — |
|
| — |
|
| — |
|
| (449 | ) |
| (0.27 | ) |
All other adjustments(a) | 654 |
|
| 0.44 |
|
| 300 |
|
| 0.19 |
|
| 3,199 |
|
| 1.95 |
|
Total adjustments | 654 |
|
| 0.44 |
|
| 300 |
|
| 0.19 |
|
| 2,750 |
|
| 1.68 |
|
Tax effect on adjustments(b) | (208 | ) |
| (0.14 | ) |
| (114 | ) |
| (0.07 | ) |
| (201 | ) |
| (0.13 | ) |
Tax adjustments(c) | 9,099 |
|
| 6.10 |
|
| — |
|
| — |
|
| (4,001 | ) |
| (2.44 | ) |
EPS-diluted-adjusted | $ | 9,877 |
|
| $ | 6.62 |
|
| $ | 9,614 |
|
| $ | 6.12 |
|
| $ | 8,209 |
|
| $ | 5.00 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
| Amount | | Per Share | | Amount | | Per Share | | Amount | | Per Share |
Diluted earnings per common share | $ | 9,837 | | | $ | 6.70 | | | $ | 6,247 | | | $ | 4.33 | | | $ | 6,581 | | | $ | 4.57 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Adjustments(a) | 701 | | | 0.47 | | | 652 | | | 0.46 | | | 539 | | | 0.38 | |
Tax effect on adjustments(b) | (105) | | | (0.07) | | | (70) | | | (0.05) | | | (188) | | | (0.13) | |
Tax adjustments(c) | (51) | | | (0.03) | | | 236 | | | 0.16 | | | — | | | — | |
EPS-diluted-adjusted | $ | 10,382 | | | $ | 7.07 | | | $ | 7,065 | | | $ | 4.90 | | | $ | 6,932 | | | $ | 4.82 | |
________
| |
(a) | Refer to the reconciliation of Net income (loss) attributable to stockholders under U.S. GAAP to EBIT-adjusted within this section of MD&A for adjustment details.
|
| |
(b) | The tax effect of each adjustment is determined based on the tax laws and valuation allowance status of the jurisdiction to which the adjustment relates.
|
| |
(c) | In the year ended December 31, 2017 these adjustments consist of the tax expense of $7.3 billion related to U.S. tax reform legislation and the establishment of a valuation allowance against deferred tax assets of $2.3 billion that will no longer be realizable as a result of the sale of the Opel/Vauxhall Business, partially offset by tax benefits related to tax settlements. In the year ended December 31, 2015 these adjustments primarily consist of the tax benefit related to the valuation allowance reversal in Europe. These adjustments were excluded because impacts of tax legislation and valuation allowances are not considered part of our core operations.
|
(a) Refer to the reconciliation of Net income attributable to stockholders under U.S. GAAP to EBIT-adjusted within this section of the MD&A for adjustment details.
(b) The tax effect of each adjustment is determined based on the tax laws and valuation allowance status of the jurisdiction to which the adjustment relates.
(c) In the year ended December 31, 2021, the adjustments consist of tax benefits related to a deduction for an investment in a subsidiary and resolution of uncertainty relating to an indirect tax refund claim in Brazil, partially offset by tax expense related to the establishment of a valuation allowance against Cruise deferred tax assets. In the year ended December 31, 2020, the adjustment consists of tax expense related to the establishment of a valuation allowance against deferred tax assets in Australia and New Zealand. These adjustments were excluded because of the unique nature of these events and significant impacts of valuation allowances are not considered part of our core operations.
The following table reconciles our effective tax rate under U.S. GAAP to ETR-adjusted:
| | | Years Ended December 31, | | Years Ended December 31, |
| 2017 |
| 2016 |
| 2015 | | 2021 | | 2020 | | 2019 |
| Income before income taxes |
| Income tax expense |
| Effective tax rate |
| Income before income taxes |
| Income tax expense |
| Effective tax rate |
| Income before income taxes |
| Income tax expense (benefit) |
| Effective tax rate | | Income before income taxes | | Income tax expense | | Effective tax rate | | Income before income taxes | | Income tax expense | | Effective tax rate | | Income before income taxes | | Income tax expense | | Effective tax rate |
Effective tax rate | $ | 11,863 |
|
| $ | 11,533 |
|
| 97.2 | % |
| $ | 12,008 |
|
| $ | 2,739 |
|
| 22.8 | % |
| $ | 8,371 |
|
| $ | (1,219 | ) |
| (14.6 | )% | Effective tax rate | $ | 12,716 | | | $ | 2,771 | | | 21.8 | % | | $ | 8,095 | | | $ | 1,774 | | | 21.9 | % | | $ | 7,436 | | | $ | 769 | | | 10.3 | % |
Adjustments(a) | 654 |
|
| 208 |
|
|
|
| 300 |
|
| 114 |
|
|
|
| 2,750 |
|
| 201 |
|
|
| Adjustments(a) | 726 | | | 105 | | | 652 | | | 70 | | | 545 | | | 188 | | |
Tax adjustments(b) |
|
| (9,099 | ) |
|
|
|
|
| — |
|
|
|
|
|
| 4,001 |
|
|
| Tax adjustments(b) | | 51 | | | (236) | | | — | | |
ETR-adjusted | $ | 12,517 |
|
| $ | 2,642 |
|
| 21.1 | % |
| $ | 12,308 |
|
| $ | 2,853 |
|
| 23.2 | % |
| $ | 11,121 |
|
| $ | 2,983 |
|
| 26.8 | % | ETR-adjusted | $ | 13,442 | | | $ | 2,927 | | | 21.8 | % | | $ | 8,747 | | | $ | 1,608 | | | 18.4 | % | | $ | 7,981 | | | $ | 957 | | | 12.0 | % |
__________
| |
(a) | Refer to the reconciliation of Net income (loss) attributable to stockholders under U.S. GAAP to EBIT-adjusted within this section of MD&A for adjustment details. |
| |
(b) | Refer to the reconciliation of diluted earnings (loss) per common share under U.S. GAAP to EPS-diluted-adjusted within this section of MD&A for adjustment details. |
(a) Refer to the reconciliation of Net income attributable to stockholders under U.S. GAAP to EBIT-adjusted within this section of the MD&A for adjustment details. Net income attributable to noncontrolling interests for these adjustments is included in the years ended December 31, 2021 and 2019. The tax effect of each adjustment is determined based on the tax laws and valuation allowance status of the jurisdiction to which the adjustment relates.
(b) Refer to the reconciliation of diluted earnings per common share under U.S. GAAP to EPS-diluted-adjusted within this section of the MD&A for adjustment details.
We define return on equity (ROE) as Net income (loss) attributable to stockholders for the trailing four quarters divided by average equity for the same period. Management uses average equity to provide comparable amounts in the calculation of ROE. The following table summarizes the calculation of ROE (dollars in billions):
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Net income (loss) attributable to stockholders | $ | 10.0 | | | $ | 6.4 | | | $ | 6.7 | |
Average equity(a) | $ | 56.5 | | | $ | 43.3 | | | $ | 43.7 | |
ROE | 17.7 | % | | 14.9 | % | | 15.4 | % |
_______
(a) Includes equity of noncontrolling interests where the corresponding earnings (loss) are included in Net income (loss) attributable to stockholders.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
|
| | | | | | | | | | | |
| Years Ended December 31, |
| 2017 |
| 2016 |
| 2015 |
Net income (loss) attributable to stockholders | $ | (3.9 | ) |
| $ | 9.4 |
|
| $ | 9.7 |
|
Average equity | $ | 42.2 |
|
| $ | 43.6 |
|
| $ | 37.0 |
|
ROE | (9.2 | )% |
| 21.6 | % |
| 26.2 | % |
The following table summarizes the calculation of ROIC-adjusted (dollars in billions):
GENERAL MOTORS COMPANY AND SUBSIDIARIES
| | | Years Ended December 31, | | Years Ended December 31, |
| 2017 |
| 2016 |
| 2015 | | 2021 | | 2020 | | 2019 |
EBIT-adjusted(a) | $ | 12.8 |
|
| $ | 12.8 |
|
| $ | 11.4 |
| EBIT-adjusted(a) | $ | 14.3 | | | $ | 9.7 | | | $ | 8.4 | |
Average equity | $ | 42.2 |
|
| $ | 43.6 |
|
| $ | 37.0 |
| |
Add: Average automotive debt and interest liabilities (excluding capital leases) | 11.6 |
|
| 9.9 |
|
| 8.0 |
| |
Average equity(b) | | Average equity(b) | $ | 56.5 | | | $ | 43.3 | | | $ | 43.7 | |
Add: Average automotive debt and interest liabilities (excluding finance leases) | | Add: Average automotive debt and interest liabilities (excluding finance leases) | 17.1 | | | 27.8 | | | 14.9 | |
Add: Average automotive net pension & OPEB liability | 21.0 |
|
| 22.0 |
|
| 25.8 |
| Add: Average automotive net pension & OPEB liability | 15.8 | | | 17.6 | | | 16.7 | |
Less: Average automotive net income tax asset | (29.3 | ) |
| (32.8 | ) |
| (33.0 | ) | Less: Average automotive net income tax asset | (22.2) | | | (24.0) | | | (23.5) | |
ROIC-adjusted average net assets | $ | 45.5 |
|
| $ | 42.7 |
|
| $ | 37.8 |
| ROIC-adjusted average net assets | $ | 67.2 | | | $ | 64.7 | | | $ | 51.8 | |
ROIC-adjusted | 28.2 | % |
| 30.1 | % |
| 30.3 | % | ROIC-adjusted | 21.3 | % | | 15.0 | % | | 16.2 | % |
________
(a) Refer to the reconciliation of Net income attributable to stockholders under U.S. GAAP to EBIT-adjusted within this section of the MD&A.
(b) Includes equity of noncontrolling interests where the corresponding earnings (loss) are included in EBIT-adjusted.
Overview Our vision for the future is a world with zero crashes, zero emissions and zero congestion, which guides our growth-focused strategy to invest in EVs and AVs, software-enabled services and subscriptions and new business opportunities, while strengthening our market position in profitable ICE vehicles, such as trucks and SUVs. We will execute our strategy with a diverse team and a steadfast commitment to good citizenship through sustainable operations and a leading health and safety culture.
| | | | | |
| |
(a) | Refer to the reconciliation of Net income (loss) attributable to stockholders under U.S. GAAP to EBIT-adjusted within this section of MD&A. |
| |
| |
| |
| |
Overview Our management teamThe automotive industry and GM are currently experiencing a global semiconductor supply shortage. The supply shortage has adopted a strategic planimpacted, and continues to transform GMimpact, multiple suppliers that incorporate semiconductors into the world'sparts they supply to us. We expect the availability of semiconductors to improve throughout 2022. We will continue prioritizing our most valued automotive company. Our plan includes several major initiatives thatpopular and in-demand vehicles, including our full-size trucks, full-size SUVs, and EVs. We do not expect this shortage to impact our long-term growth and EV initiatives. In June 2021, we anticipate will redefine the future of personal mobility throughannounced plans to increase our zero crashes, zero emissions, zero congestion vision while also strengthening the core of our business: earning customers for life by delivering winning vehicles, leading the industryinvestment in qualityEVs and safety and improving the customer ownership experience; leading in technology and innovation, including electrification, autonomous, data monetization and connectivity; growing our brands; making tough, strategic decisions about which markets and products in which we will invest and compete; building profitable adjacent businesses and targeting 10% core margins on an EBIT-adjusted basis.
In additionAVs to our EBIT-adjusted margin improvement goal, our overall financial targets include total annual operational and functional cost savings of $6.5 billion through 2018 compared to 2014 costs, of which approximately $5.5 billion has been realized as of December 31, 2017, and which will more than offset$35.0 billion from 2020 through 2025, in part to accelerate battery and EV assembly capacity.
We also continue to monitor the impact of the COVID-19 pandemic, and government actions and measures taken to prevent its spread, and the potential to affect our planned incremental investments in brand building, engineering and technology as we launch new products; and executionoperations. Refer to Part I, Item 1A. Risk Factors for further discussion of our capital allocation program as described in the "Liquidity and Capital Resources" section of this MD&A.these risks.
For the year ending December 31, 20182022, we expect EPS-diluted and EPS-diluted-adjusted of between $6.25 and $7.25, Net income attributable to bestockholders of between $9.4 billion and $10.8 billion and EBIT-adjusted of between $13.0 billion and $15.0 billion. We do not consider the potential impact of future adjustments on our expected financial results.
The following table reconciles expected Net income attributable to stockholders under U.S. GAAP to expected EBIT-adjusted (dollars in the mid-six dollar range. billions):
| | | | | |
| Year Ending December 31, 2022 |
Net income attributable to stockholders | $ 9.4-10.8 |
Income tax expense | 2.8-3.4 |
| |
Automotive interest expense, net | 0.8 |
| |
EBIT-adjusted(a) | $ 13.0-15.0 |
________
(a)We do not consider the potential future impact of adjustments on our expected financial results. We expect core EBIT-adjusted and core adjusted automotive free cash flow to be in line with 2017. Core consists of all operations excluding our autonomous vehicle operations, including Cruise, Maven car sharing entities, and our investment in Lyft.
We also face continuing challenges from a market, operating and regulatory standpointchallenges in a number ofseveral countries across the globe due to, among other factors, weak economic conditions, competitive pressures, limitations in our product portfolio offerings, emissionsheightened emission standards, labor disruptions, foreign exchange volatility, rising material and services prices driven by inflationary pressures, evolving trade policy and political uncertainty. As a result of these conditions, we continue to strategically assess our performance and ability to achieve acceptable returns on our invested capital. Refer to Item1A.Part I, Item 1A. Risk Factors for a discussion of these challenges. As
GENERAL MOTORS COMPANY AND SUBSIDIARIES
As we continue to assess our performance and the needs of our evolving business, additional restructuring and rationalization actions could be required. These actions may be required or determination may be made that the carrying amount of our long-lived assets may not be recoverable in certain of these countries. Such a determination maycould give rise to future asset impairments or other charges, which may have a material impact on our results of operations.operating results.
GMNAIn the year ended December 31, 2017 industryIndustry sales in North America were 21.5 million units representing a decrease of 1.5% compared to the corresponding period in 2016. U.S. industry sales were 17.618.5 million units in the year ended December 31, 2017.
In2021, representing an increase of 4.3% compared to the corresponding period in 2020. U.S. industry sales were 15.4 million units in the year ended December 31, 20172021, representing an increase of 3.3% compared to the corresponding period in 2020. The COVID-19 pandemic originally resulted in a contraction of total North America industry volumes in 2020 that continued into 2021. Dealer inventory remains constrained for several critical vehicles, including our full-size trucks and full-size SUVs.
Our total vehicle sales in the U.S., our largest market in North America, totaled 3.0were 2.2 million units for a market share of 17.1%,14.4% in the year ended December 31, 2021, representing an increasea decrease of 0.12.7 percentage points compared to the corresponding period in 2016. We continue to lead the U.S. industry in market share.2020.
We achievedexpect to sustain relatively strong EBIT-adjusted margins of 10.7%in 2022 on the continued strength of favorable vehicle pricing and strong U.S. industry light vehicle sales, key product launchesdemand, partially offset by higher costs associated with commodities, raw materials and continued focuslogistics. Our outlook is dependent on the pricing environment, continuing improvement of the semiconductor supply shortage and overall cost savings. Based oneconomic conditions. As a result of the semiconductor supply shortage, we experienced interruptions to our current cost structure,planned production schedules and temporarily suspended certain manufacturing sites to prioritize production of our most popular and in-demand products, including our full-size trucks and full-size SUVs. Additionally, we estimate GMNA’s breakeven pointhave been manufacturing vehicles, without the impacted components, representing an inventory carrying value of approximately $0.6 billion at the U.S. industry level to be in the range of 10.0 to 11.0 million units.December 31, 2021. We expect to sustain an EBIT-adjusted margin of 10%hold these vehicles in 2018 on continued strength of U.S. industry light vehicle sales, favorable mix of full-size trucksour inventory until they are completed and crossovers relativesold to passenger cars, key product launches and continued focus on overall cost savings.our dealers, which we expect to happen in the six months ending June 30, 2022.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
GMIIn the year ended December 31, 2017 China industry sales were 28.3 million units and our market share was 14.3%. We continue to see strength in sales of our Cadillac and Baojun passenger vehicles and SUVs, as well as positive momentum in Chevrolet sales driven by new product launches. Wuling sales were impacted by the market shift away from mini commercial vehicles. In the year ended December 31, 2017 our Automotive China JVs generated equity income of $2.0 billion. We expect low industry growth in 2018 and continuation of pricing pressures, which will continue to pressure margins. We continue to expect equal to increased vehicleIndustry sales in 2018 driven by new launches and expect to sustain strong China equity income by focusing on improvements in vehicle mix, cost efficiencies, and downstream performance optimization.
Many markets across the region continue to improve led by increases in Argentina and Brazil leading to industry sales of 25.2were 25.9 million units representing an increase of 4.0% in the year ended December 31, 20172021, representing an increase of 3.8% compared to the corresponding period in 2016. In2020, which was adversely impacted by the COVID-19 pandemic. Our total vehicle sales in China were 2.9 million units resulting in a market share of 11.2% in the year ended December 31, 2017 our retail sales totaled 1.3 million units leading to a market share of 5.1%,2021, representing a decrease of 0.30.5 percentage points compared to the corresponding period in 2016.2020. The ongoing global semiconductor supply shortage, macro-economic impact of COVID-19 and geopolitical tensions continue to place pressure on China's automotive industry and our vehicle sales in China. Our Automotive China JVs generated equity income of $1.1 billion in the year ended December 31, 2021. Although price competition, higher costs associated with commodities and raw materials, and a more challenging regulatory environment related to emissions, fuel consumption and NEV requirements will place pressure on our operations in China, we will continue to build upon our strong brands, network, and partnerships in China as well as drive improvements in vehicle mix and cost.
Outside of China, industry sales were 23.0 million units in the year ended December 31, 2021, representing an increase of 8.2% compared to the corresponding period in 2020. Our total vehicle sales outside of China were 0.8 million units for a market share of 3.6% in the year ended December 31, 2021, representing a decrease of 1.1 percentage points compared to the corresponding period in 2020.
Cruise Cruise is actively testing AVs in the United States. Gated by safety and regulation, the goal of Cruise is to deliver its self-driving services as soon as possible.
In May 2017 we announced several restructuring actionsthe year ended December 31, 2021, Cruise Holdings issued Class G Preferred Shares (Cruise Class G Preferred Shares) in GMI which were primarilyexchange for $2.7 billion from Microsoft Corporation (Microsoft), Walmart Inc. (Walmart) and other investors, including $1.0 billion from General Motors Holdings LLC. All proceeds related to the withdrawalCruise Class G Preferred Shares are designated exclusively for working capital and general corporate purposes of Chevrolet fromCruise Holdings. In addition, Cruise Holdings and Microsoft entered into a long-term strategic relationship to accelerate the Indian and South African markets at the endcommercialization of 2017 and the transition of our South African manufacturing operations to Isuzu Motors. These actions occurred as a result of a strategic decision to focus resources on opportunities expected to deliver higher returns.self-driving vehicles. Refer to Note 1920 to our consolidated financial statements for additional information related to these restructuring actions. In May 2017 we deconsolidated our business in Venezuela which resulted in a charge of $0.1 billion during the year ended December 31, 2017.further details.
GM Korea Company (GM Korea) entered into a collectively bargained wage agreement which was ratified by its union in January 2018. The impact of the agreement was not material to our consolidated financial statements.
We have had recent discussions with key stakeholders in GM Korea, including its minority owners and union, regarding the need to improve GM Korea's financial and operational performance. As we strategically assess our performance and the manner in which we operate in Korea and certain other countries, additional restructuring and rationalization actions may be required and may have a material impact on our results of operations.
CorporateBeginning in 2012 through January 30, 2018, we purchased an aggregate of 504 million shares of our outstanding common stock for $16.2 billion.
The Ignition Switch Recall has led to various inquiries, investigations, subpoenas, requests for information and complaints from agencies or other representatives of U.S., federal, state and Canadian governments. In addition these and other recalls have resulted in a number of claims and lawsuits. Such lawsuits and investigations could in the future result in the imposition of material damages, fines, civil consent orders, civil and criminal penalties or other remedies. Refer to Note 17 to our consolidated financial statements for additional information.
Takata Matters In May 2016 NHTSA issued an amended consent order requiring Takata to file defect information reports (DIRs) for previously unrecalled front airbag inflators that contain phased-stabilized ammonium nitrate-based propellant without a moisture absorbing desiccant on a multi-year, risk-based schedule through 2019 impacting tens of millions of vehicles produced by numerous automotive manufacturers. NHTSA concluded that the likely root cause of the rupturing of the airbag inflators is a function of time, temperature cycling and environmental moisture.
Although we do not believe there is a safety defect at this time in any unrecalled GM vehicles within scope of the Takata DIRs, in cooperation with NHTSA we filed Preliminary DIRs on May 27, 2016, updated as of June 13, 2016, covering 2.5 million of certain of our GMT900 vehicles, which are full-size pick-up trucks and SUVs. On November 15, 2016, we filed a petition for inconsequentiality and request for deferral of determination regarding those GMT900 vehicles. On November 28, 2016, NHTSA granted GM’s deferral request in connection with this petition. The deferral provides GM until August 31, 2017 to present evidence and analysis that our vehicles do not pose an unreasonable risk to motor vehicle safety.
We filed a second set of Preliminary DIRs for certain GMT900 vehicles on January 10, 2017. These January 2017 DIRs are consistent with GM’s May 2016 DIRs. On the same day, we also filed a second petition for inconsequentiality and deferral of decision with respect to the vehicles subject to our January 2017 DIRs. On January 18, 2017, NHTSA consolidated our first and second petitions for inconsequentiality and will rule on both at the same time.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
On August 25, 2017, we filed a supplemental brief in support of our petitions that provided NHTSA with the results of our long-term study and testing and the basis for our determination that the inflators in these vehicles do not present an unreasonable risk to safety and that no repair should ultimately be required. In our brief, we requested that NHTSA grant our petitions or, in the alternative, grant an additional deferral period to provide time for further testing.
We filed a third set of Preliminary DIRs for certain GMT900 vehicles on January 9, 2018. These January 2018 DIRs are consistent with GM's May 2016 DIRs and January 2017 DIRs. On the same day, we also filed a third petition for inconsequentiality with respect to the vehicles subject to our January 2018 DIRs.
We believe these vehicles are currently performing as designed and ongoing testing continues to support the belief that the vehicles' unique design and integration mitigates against inflator propellant degradation and rupture risk. For example, the airbag inflators used in the vehicles are a variant engineered specifically for our vehicles, and include features such as greater venting, unique propellant wafer configurations, and machined steel end caps. The inflators are packaged in the instrument panel in such a way as to minimize exposure to moisture from the climate control system. Also, these vehicles have features that minimize the maximum temperature to which the inflator will be exposed, such as larger interior volumes and standard solar absorbing windshields and side glass.
Accordingly, no warranty provision has been made for any repair associated with our vehicles subject to the Preliminary DIRs and amended consent order. However, in the event we are ultimately obligated to repair the vehicles subject to current or future Takata DIRs under the amended consent order in the U.S., we estimate a reasonably possible impact to GM of approximately $1.0 billion.
GM is engaged in discussions with regulators outside the U.S. with respect to Takata inflators. There are differences in vehicle and inflator design between the relevant vehicles sold internationally and those sold in the U.S. We continue to gather and analyze evidence about these inflators and to share our findings with regulators. We were required to recall certain vehicles sold outside of the U.S. in the three months ended September 30, 2017 to replace Takata inflators in these vehicles. Additional recalls, if any, could be material to our results of operations and cash flows. We continue to monitor the international situation.
On June 26, 2017, Takata filed for bankruptcy protection in the United States and Japan. Over the past several months, a group of global automakers, including GM, have had discussions with Takata and Key Safety Systems, Inc. regarding a potential transaction involving the sale of Takata's business. GM has not experienced any supply interruptions arising from Takata initiating formal insolvency proceedings and anticipates that Takata will continue an uninterrupted supply of component parts to GM during the insolvency proceedings. GM continues to monitor Takata’s financial and operational performance and to develop alternative and contingent supplies to attempt to mitigate prospective threats to the supply of components.
PSA Group Transaction On July 31, 2017 we closed the sale of our Opel/Vauxhall Business to PSA Group and on October 31, 2017 we closed the sale of the Fincos to Banque PSA Finance S.A. and BNP Paribas Personal Finance S.A.
The net consideration paid at closing for the European Business was $2.5 billion, consisting of (1) $2.2 billion in cash; and (2) $0.8 billion in warrants in PSA Group; partially offset by (3) the $0.5 billion de-risking premium payment made to PSA Group for assuming certain underfunded pension liabilities. In addition, we agreed to sell the shares of PSA Group received upon exercise of the warrants within 35 days after exercise. The purchase price is subject to certain working capital adjustments as provided in the Master Agreement (the Agreement).
The total charge from the sale of the European Business was $6.2 billion, net of tax, of which $3.9 billion is recorded in Income (loss) from discontinued operations, net of tax, and $2.3 billion was treated as an adjustment to both EPS-diluted-adjusted and ETR-adjusted. The charge relates to: (1) $4.3 billion of deferred tax assets that will no longer be realizable or that transferred to PSA Group; (2) $1.5 billion related to previously deferred pension losses and payment of the de-risking premium to PSA Group for its assumption of certain underfunded pension liabilities; (3) a pre-tax disposal loss of $0.5 billion as a result of the sale of the Fincos, which includes the recognition of $0.2 billion of foreign currency translation losses; (4) a pre-tax charge of $0.4 billion for the cancellation of production programs resulting from the convergence of vehicle platforms between the European Business and PSA Group; and (5) other costs to support the separation of operations to be provided for a period of time following closing; partially offset by proceeds.
Our wholly owned subsidiary (the Seller) has agreed to indemnify PSA Group for certain losses resulting from any inaccuracy of the representations and warranties or breaches of our covenants included in the Agreement and for certain other liabilities, including emissions and product liabilities. The Company has entered into a guarantee for the benefit of PSA Group and pursuant
GENERAL MOTORS COMPANY AND SUBSIDIARIES
to which the Company has agreed to guarantee the Seller's obligation to indemnify PSA Group. Certain of these indemnification obligations are subject to time limitations, thresholds and/or caps as to the amount of required payments. We are currently unable to estimate any reasonably possible overall amounts or range of loss that may result from claims made under these indemnities, if any.
PSA Group has provided a number of working capital and other adjustments under the Agreement and other ancillary agreements, many of which are customary in these types of transactions. We currently believe that post-closing adjustments under the Agreement, if any, would not have a material impact on our results of operations.
We retained net underfunded pension liabilities of $6.8 billion owed primarily to current pensioners and former employees of the European Business with vested pension rights. PSA Group assumed, pursuant to the Agreement, approximately $3.1 billion of net underfunded pension liabilities primarily with respect to active employees of the Opel/Vauxhall Business, and during the three months ended September 30, 2017 the Seller made payments of $3.4 billion in respect of these assumed liabilities, which includes pension funding payments for active employees and the de-risking premium payment discussed above. At closing we drew upon our three-year unsecured revolving credit facility to fund these payments. We issued debt securities thereafter to repay the draw on our credit facility. As part of the retained pension liabilities described above, we retained the U.K. defined benefit pension plans in existence at signing related to the Opel/Vauxhall Business, including responsibility for service cost accruals through the closing date.
We have agreed to purchase from and supply to PSA Group certain vehicles for a period of time following closing and not to engage in certain competing businesses in Europe for a period of three years.
Refer to Note 3 to our consolidated financial statements for additional information.
Contingently Issuable SharesUnder the Amended and Restated Master Sale and Purchase Agreement between us and Motors Liquidation Company we may be obligated to issue additional shares (Adjustment Shares) of our common stock in the event that allowed general unsecured claims against the GUC Trust, as estimated by the Bankruptcy Court, exceed $35.0 billion. Refer to Note 17 to our consolidated financial statements for a description of the contingently issuable Adjustment Shares.
Automotive Financing - GM Financial Summary and Outlook GM Financial has expanded its leasing and prime lending programs in North America; therefore, leasing and prime lending have become a larger percentage of the originations and retail portfolio balance. During 2017 we saw used car prices in the U.S. decline approximately 5% as compared to 2016. For 2018, an increasing supply of used vehicles resulting from off-lease returns will continue to pressure used car prices. As a result, we expect a further decline in used car prices in the U.S. between 5% and 6% in 2018 as compared to 2017. GM Financial continues to expect pre-tax income to double from 2014 earnings of $0.8 billion once full captive penetration levels are achieved on a consistent basis. The following table summarizes the residual value as well as the number of units included in GM Financial equipment on operating leases, net by vehicle type (units in thousands):
|
| | | | | | | | | | | | | | | | | | | |
| December 31, 2017 |
| December 31, 2016 |
| Residual Value |
| Units |
| Percentage |
| Residual Value |
| Units |
| Percentage |
Cars | $ | 5,701 |
|
| 450 |
|
| 27.2 | % |
| $ | 5,240 |
|
| 420 |
|
| 31.7 | % |
Trucks | 7,173 |
|
| 285 |
|
| 17.3 | % |
| 5,231 |
|
| 224 |
|
| 16.9 | % |
Crossovers | 13,723 |
|
| 818 |
|
| 49.5 | % |
| 10,349 |
|
| 604 |
|
| 45.7 | % |
SUVs | 3,809 |
|
| 99 |
|
| 6.0 | % |
| 2,791 |
|
| 75 |
|
| 5.7 | % |
Total | $ | 30,406 |
|
| 1,652 |
|
| 100.0 | % |
| $ | 23,611 |
|
| 1,323 |
|
| 100.0 | % |
GM Financial's retail penetration in North America grew to approximately 37% in the year ended December 31, 2017 from approximately 33% in 2016 as a result of the expanded leasing and lending programs. In the year ended December 31, 2017 GM Financial's revenue consisted of leased vehicle income of 71%, retail finance charge income of 23%, and commercial finance charge income of 3%. We believe that offering a comprehensive suite of financing products will generate incremental sales of our vehicles, drive incremental GM Financial earnings and help support our sales throughout various economic cycles. GM Financial's leasing program is exposed to residual values, which are heavily dependent on used vehicle prices. Used vehicle prices were higher in 2021 compared to 2020 levels, primarily due to low new vehicle inventory. In 2022, we expect used vehicle prices may decrease relative to 2021 levels, but to remain above pre-pandemic levels, primarily due to sustained low new vehicle inventory. The increase in used vehicle prices resulted in gains on terminations of leased vehicles of $2.0 billion in GM Financial interest, operating and other expenses for the year ended
GENERAL MOTORS COMPANY AND SUBSIDIARIES
December 31, 2021, and $1.3 billion in the corresponding period in 2020. The following table summarizes the estimated residual value based on GM Financial's most recent estimates and the number of units included in GM Financial Equipment on operating leases, net by vehicle type (units in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
| Residual Value | | Units | | Percentage | | Residual Value | | Units | | Percentage |
Crossovers | $ | 16,696 | | | 897 | | | 67.3 | % | | $ | 16,334 | | | 964 | | | 65.5 | % |
Trucks | 7,886 | | | 264 | | | 19.8 | % | | 7,455 | | | 275 | | | 18.7 | % |
SUVs | 3,104 | | | 80 | | | 5.9 | % | | 3,435 | | | 92 | | | 6.3 | % |
Cars | 1,430 | | | 93 | | | 7.0 | % | | 1,949 | | | 140 | | | 9.5 | % |
Total | $ | 29,116 | | | 1,334 | | | 100.0 | % | | $ | 29,173 | | | 1,471 | | | 100.0 | % |
GM Financial's penetration of our retail sales in the U.S. was 44% in the year ended December 31, 2021 and 45% in the corresponding period in 2020. Penetration levels vary depending on incentive financing programs available and competing third-party financing products in the market. GM Financial's prime loan originations as a percentage of total loan originations in North America was 73% in the year ended December 31, 2021 and 2020. In the year ended December 31, 2021, GM Financial's revenue consisted of leased vehicle income of 67%, retail finance charge income of 29% and commercial finance charge income of 2%.
Consolidated Results We review changes in our results of operations under five categories: volume, mix, price, cost and other. Volume measures the impact of changes in wholesale vehicle volumes driven by industry volume, market share and changes in dealer stock levels. Mix measures the impact of changes to the regional portfolio due to product, model, trim, country and option
GENERAL MOTORS COMPANY AND SUBSIDIARIES
penetration in current year wholesale vehicle volumes. Price measures the impact of changes related to Manufacturer’s Suggested Retail Price and various sales allowances. Cost includes primarily:primarily includes: (1) material and freight; (2) manufacturing, engineering, advertising, administrative and selling and warranty expense; and (3) non-vehicle related activity. Other primarily includes primarily foreign exchange and non-vehicle related automotive revenues as well as equity income or loss from our nonconsolidated affiliates. Refer to the regional sections of this MD&A for additional information.
Total Net Sales and Revenue
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | Favorable/ (Unfavorable) | | | | | Variance Due To |
2021 | | 2020 | | | % | | | Volume | | Mix | | Price | | Other | |
| | | | | | (Dollars in billions) |
GMNA | $ | 101,308 | | | $ | 96,733 | | | $ | 4,575 | | | 4.7 | % | | | $ | (14.5) | | | $ | 10.8 | | | $ | 6.2 | | | $ | 2.1 | | |
GMI | 12,172 | | | 11,586 | | | 586 | | | 5.1 | % | | | $ | (1.6) | | | $ | 1.3 | | | $ | 0.9 | | | $ | 0.1 | | |
Corporate | 104 | | | 350 | | | (246) | | | (70.3) | % | | | | | $ | — | | | | | $ | (0.3) | | |
Automotive | 113,584 | | | 108,669 | | | 4,915 | | | 4.5 | % | | | $ | (16.1) | | | $ | 12.0 | | | $ | 7.0 | | | $ | 2.0 | | |
Cruise | 106 | | | 103 | | | 3 | | | 2.9 | % | | | | | | | | | $ | — | | |
GM Financial | 13,419 | | | 13,831 | | | (412) | | | (3.0) | % | | | | | | | | | $ | (0.4) | | |
Eliminations/reclassifications | (105) | | | (118) | | | 13 | | | 11.0 | % | | | | | $ | — | | | | | $ | — | | |
Total net sales and revenue | $ | 127,004 | | | $ | 122,485 | | | $ | 4,519 | | | 3.7 | % | | | $ | (16.1) | | | $ | 12.0 | | | $ | 7.0 | | | $ | 1.6 | | |
Refer to the regional sections of this MD&A for additional information on volume, mix and price.
31
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | Favorable/ (Unfavorable) | | | | | Variance Due To |
2017 | | 2016 | | | % | | | Volume | | Mix | | Price | | Other |
| | | | | | (Dollars in billions) |
GMNA | $ | 111,345 |
| | $ | 119,113 |
| | $ | (7,768 | ) | | (6.5 | )% | | | $ | (12.2 | ) | | $ | 3.5 |
| | $ | 0.6 |
| | $ | 0.3 |
|
GMI | 21,920 |
| | 20,943 |
| | 977 |
| | 4.7 | % | | | $ | 0.2 |
|
| $ | 0.2 |
|
| $ | 0.6 |
| | $ | — |
|
Corporate | 342 |
| | 149 |
| | 193 |
| | n.m. |
| | |
|
| |
|
| |
|
| | $ | 0.2 |
|
Automotive | 133,607 |
| | 140,205 |
| | (6,598 | ) | | (4.7 | )% | | | $ | (12.0 | ) | | $ | 3.7 |
| | $ | 1.3 |
| | $ | 0.5 |
|
GM Financial | 12,151 |
| | 8,983 |
| | 3,168 |
| | 35.3 | % | | |
|
| |
|
| |
|
| | $ | 3.2 |
|
Eliminations | (170 | ) | | (4 | ) | | (166 | ) | | n.m. |
| | |
|
| |
|
| |
|
| | $ | (0.2 | ) |
Total net sales and revenue | $ | 145,588 |
| | $ | 149,184 |
| | $ | (3,596 | ) | | (2.4 | )% | | | $ | (12.0 | ) | | $ | 3.7 |
| | $ | 1.3 |
| | $ | 3.5 |
|
________
n.m. = not meaningful
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | Favorable/ (Unfavorable) | | | | | Variance Due To |
2016 | | 2015 | | | % | | | Volume | | Mix | | Price | | Other |
| | | | | | (Dollars in billions) |
GMNA | $ | 119,113 |
| | $ | 106,744 |
| | $ | 12,369 |
| | 11.6 | % | | | $ | 10.8 |
| | $ | 0.7 |
| | $ | 1.7 |
| | $ | (0.8 | ) |
GMI | 20,943 |
| | 22,970 |
| | (2,027 | ) | | (8.8 | )% | | | $ | (1.7 | ) |
| $ | 0.2 |
|
| $ | 1.2 |
| | $ | (1.7 | ) |
Corporate | 149 |
| | 150 |
| | (1 | ) | | (0.7 | )% | | |
|
| |
|
| |
|
| | $ | — |
|
Automotive | 140,205 |
| | 129,864 |
| | 10,341 |
| | 8.0 | % | | | $ | 9.1 |
| | $ | 0.9 |
| | $ | 2.9 |
| | $ | (2.5 | ) |
GM Financial | 8,983 |
| | 5,867 |
| | 3,116 |
| | 53.1 | % | | |
|
| |
|
| |
|
| | $ | 3.1 |
|
Eliminations | (4 | ) | | (6 | ) | | 2 |
| | 33.3 | % | | |
|
| |
|
| |
|
| | $ | — |
|
Total net sales and revenue | $ | 149,184 |
| | $ | 135,725 |
| | $ | 13,459 |
| | 9.9 | % | | | $ | 9.1 |
| | $ | 0.9 |
| | $ | 2.9 |
| | $ | 0.7 |
|
Automotive Cost of Sales
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | Favorable/ (Unfavorable) | | | | | Variance Due To |
| 2017 | | 2016 | | | % | | | Volume | | Mix | | Cost | | Other |
|
| | | | | (Dollars in billions) |
GMNA | $ | 92,765 |
| | $ | 99,690 |
| | $ | 6,925 |
| | 6.9 | % | | | $ | 8.7 |
| | $ | (2.7 | ) | | $ | 1.2 |
| | $ | (0.3 | ) |
GMI | 21,449 |
| | 20,426 |
| | (1,023 | ) | | (5.0 | )% | | | $ | (0.1 | ) | | $ | (0.5 | ) | | $ | (0.1 | ) | | $ | (0.3 | ) |
Corporate | 818 |
| | 387 |
| | (431 | ) | | n.m. |
| | |
|
| | $ | — |
| | $ | (0.6 | ) | | $ | 0.2 |
|
Eliminations | (163 | ) | | (4 | ) | | 159 |
| | n.m. |
| | |
|
| |
|
| | $ | 0.2 |
| | $ | — |
|
Total automotive cost of sales | $ | 114,869 |
| | $ | 120,499 |
| | $ | 5,630 |
| | 4.7 | % | | | $ | 8.6 |
| | $ | (3.1 | ) | | $ | 0.6 |
| | $ | (0.4 | ) |
________
n.m. = not meaningful
GENERAL MOTORS COMPANY AND SUBSIDIARIES
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | Favorable/ (Unfavorable) | | | | | Variance Due To |
| 2016 | | 2015 | | | % | | | Volume | | Mix | | Cost | | Other |
| | | | | | (Dollars in billions) |
GMNA | $ | 99,690 |
| | $ | 88,880 |
| | $ | (10,810 | ) | | (12.2 | )% | | | $ | (7.6 | ) | | $ | (1.9 | ) | | $ | (1.7 | ) | | $ | 0.4 |
|
GMI | 20,426 |
| | 23,694 |
| | 3,268 |
| | 13.8 | % | | | $ | 1.4 |
| | $ | (0.6 | ) | | $ | 0.9 |
| | $ | 1.6 |
|
Corporate | 387 |
| | 426 |
| | 39 |
| | 9.2 | % | | |
|
| |
|
| | $ | (0.1 | ) | | $ | 0.1 |
|
Eliminations | (4 | ) | | (5 | ) | | (1 | ) | | (20.0 | )% | | |
|
| |
|
| | $ | — |
| |
|
|
Total automotive cost of sales | $ | 120,499 |
| | $ | 112,995 |
| | $ | (7,504 | ) | | (6.6 | )% | | | $ | (6.2 | ) | | $ | (2.6 | ) | | $ | (0.9 | ) | | $ | 2.2 |
|
Automotive and Other Cost of Sales | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | Favorable/ (Unfavorable) | | | | | Variance Due To |
| 2021 | | 2020 | | | % | | | Volume | | Mix | | Cost | | Other |
| | | | | | (Dollars in billions) |
GMNA | $ | 87,419 | | | $ | 83,886 | | | $ | (3,533) | | | (4.2) | % | | | $ | 10.0 | | | $ | (4.6) | | | $ | (8.5) | | | $ | (0.4) | |
GMI | 11,802 | | | 12,515 | | | 713 | | | 5.7 | % | | | $ | 1.4 | | | $ | (0.5) | | | $ | (0.3) | | | $ | 0.2 | |
Corporate | 200 | | | 310 | | | 110 | | | 35.5 | % | | | | | $ | — | | | $ | 0.1 | | | $ | — | |
Cruise | 1,124 | | | 829 | | | (295) | | | (35.6) | % | | | | | | | $ | (0.3) | | | |
Eliminations | (1) | | | (1) | | | — | | | — | % | | | | | | | | | |
Total automotive and other cost of sales | $ | 100,544 | | | $ | 97,539 | | | $ | (3,005) | | | (3.1) | % | | | $ | 11.3 | | | $ | (5.1) | | | $ | (9.0) | | | $ | (0.2) | |
The most significant element of our Automotive and other cost of sales is material cost, which makes up approximately two-thirds of the total amount. The remaining portion includes labor costs, depreciation and amortization, engineering, freight and product warranty and recall campaigns.
Factors whichthat most significantly influence a region's profitability are industry volume, market share, and the relative mix of vehicles (cars, trucks, crossovers)(trucks, crossovers, cars) sold. Variable profit is a key indicator of product profitability. Variable profit is defined as revenue less material cost, freight, the variable component of manufacturing expense and warranty and recall-related costs. Vehicles with higher selling prices generally have higher variable profit. Refer to the regional sections of this MD&A for additional information on volume and mix.
In the year ended December 31, 2017 favorable2021, unfavorable Cost was primarily due primarily to: (1) decreased warranty costs of $1.4 billion; (2) decreased employee related costs of $0.8 billion; (3) decreased material and freight costs of $0.7 billion related to carryover vehicles; and (4) decreased restructuring costs related to UAW cash severance incentive program of $0.2 billion in 2016 that did not recur in 2017; partially offset by (5) increased material and freight costs of $1.4 billion related to vehicles launched within the last twelve months incorporating significant exterior and/or interior changes (Majors); (6)$4.0 billion; (2) increased engineering costs of $2.0 billion primarily related to accelerating our electric vehicle portfolio and the non-recurrence of austerity measures implemented in 2020 due to the COVID-19 pandemic; (3) increased manufacturing costs of $1.4 billion primarily related to the suspension of production and the non-recurrence of austerity measures implemented in 2020 due to the COVID-19 pandemic; (4) increased costs of $1.1 billion primarily related to parts and accessories; (5) increased other employee related costs of $0.7 billion; and(6) charges of $0.3 billion related to potential royalties accrued with respect to past sales; partially offset by (7) charges of $0.4$0.7 billion primarily related to dealer restructuring actionscharges, property and intangible asset impairments, inventory provisions and employee separation charges in Australia, New Zealand, Thailand and India in 2020; and South Africa.(8) a decrease in campaign and other warranty-related costs of $0.2 billion, which includes Chevrolet Bolt recall costs of $2.0 billion and associated recoveries of $1.9 billion. In the year ended December 31, 20172021, unfavorable Other was due primarily to the foreign currency effect of $0.4 billion due toresulting from the strengthening of the Canadian Dollar and other currencies against the U.S. Dollar, partially offset by the weakening of the Brazilian Real and other currencies against the U.S. Dollar.
Automotive and Other Selling, General and Administrative Expense
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | Year Ended 2021 vs. 2020 Change | | |
| | |
| 2021 | | 2020 | | 2019 | | Favorable/ (Unfavorable) | | % | | | | |
Automotive and other selling, general and administrative expense | $ | 8,554 | | | $ | 7,038 | | | $ | 8,491 | | | $ | (1,516) | | | (21.5) | % | | | | |
In the year ended December 31, 2016 unfavorable Cost was2021, Automotive and other selling, general and administrative expense increased primarily due primarily to: (1)to increased advertising, administrative and other costs of $2.3$1.2 billion primarily manufacturing, engineering, depreciation and amortization and warranty which are inclusive of launch costs; partially offset by (2) decreased material and freight costs of $2.3 billion related to carryover vehicles, partially offset by increased materialthe suspension of production and freight coststhe non-recurrence of $1.3 billion relatedausterity measures implemented in 2020 due to Majors;the COVID-19 pandemic.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Interest Income and (3) impairments of $0.4 billion related to Thailand and Venezuela in 2015. Other Non-operating Income, net
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | Year Ended 2021 vs. 2020 Change |
| |
| 2021 | | 2020 | | 2019 | | Favorable/ (Unfavorable) | | % |
Interest income and other non-operating income, net | $ | 3,041 | | | $ | 1,885 | | | $ | 1,469 | | | $ | 1,156 | | | 61.3 | % |
In the year ended December 31, 2016 favorable Other was due primarily to the foreign currency effect of $2.0 billion due primarily to the BsF devaluation in 2015 and the weakening of the Argentine Peso, Canadian Dollar2021, Interest income and other currencies against the U.S. Dollar;non-operating income, net increased primarily due to an increase in non-service pension income of $0.8 billion and costsan increase in gains related to our exit in RussiaStellantis N.V. (Stellantis) warrants of $0.2 billion in 2015.
Automotive Selling, General and AdministrativeIncome Tax Expense
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | Year Ended 2021 vs. 2020 Change |
| |
| 2021 | | 2020 | | 2019 | | Favorable/ (Unfavorable) | | % |
Income tax expense | $ | 2,771 | | | $ | 1,774 | | | $ | 769 | | | $ | (997) | | | (56.2) | % |
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | Year Ended 2017 vs. 2016 Change | | Year Ended 2016 vs. 2015 Change |
| | |
| 2017 |
| 2016 |
| 2015 |
| Favorable/ (Unfavorable) |
| % |
| Favorable/ (Unfavorable) |
| % |
Automotive selling, general and administrative expense | $ | 9,575 |
|
| $ | 10,354 |
|
| $ | 11,888 |
|
| $ | 779 |
|
| 7.5 | % |
| $ | 1,534 |
|
| 12.9 | % |
In the year ended December 31, 2017 Automotive selling, general and administrative expense decreased due primarily to decreased advertising costs of $0.4 billion and a decrease in net charges of $0.2 billion for legal related matters related to the ignition switch recall.
In the year ended December 31, 2016 Automotive selling, general and administrative expense decreased due primarily to a net decrease in charges of $1.5 billion for matters related to the ignition switch recall and favorable net foreign currency effect of $0.2 billion due primarily to the weakening of various currencies against the U.S. Dollar.
Income Tax Expense (Benefit)
GENERAL MOTORS COMPANY AND SUBSIDIARIES
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | Year Ended 2017 vs. 2016 Change | | Year Ended 2016 vs. 2015 Change |
| | |
| 2017 | | 2016 | | 2015 | | Favorable/ (Unfavorable) | | % | | Favorable/ (Unfavorable) | | % |
Income tax expense (benefit) | $ | 11,533 |
|
| $ | 2,739 |
|
| $ | (1,219 | ) |
| $ | (8,794 | ) |
| n.m. |
| $ | (3,958 | ) |
| n.m. |
________
n.m. = not meaningful
In the year ended December 31, 20172021, Income tax expense increased due primarily to the $7.3 billion tax expense related to U.S. tax reform legislation and the establishment of a $2.3 billion valuation allowance related to the sale of Opel/Vauxhall Business, partially offset by tax benefits related to tax settlements and foreign dividends.
In the year ended December 31, 2016 Income tax expense increased due primarily to the absence of the 2015 income tax benefit from the release of European valuation allowances of $3.9 billion and an increase in income tax expense of $0.6 billion due primarily to an increase in pre-tax income;income, partially offset by $0.6 billion in tax benefitsbenefit related to foreign currency losses.a deduction for an investment in a subsidiary.
For the year ended December 31, 20172021 our ETR-adjusted was 21.1%, and we21.8%. We expect theour adjusted effective tax rate to be similarbetween 22% and 24% for the year ending December 31, 2018.2022.
Refer to Note 1817 to our consolidated financial statements for additional information related to Income tax expense (benefit) including information on U.S. tax reform legislation.expense.
GM North America
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | Favorable/ (Unfavorable) | | | | | Variance Due To |
| 2021 | | 2020 | | | % | | | Volume | | Mix | | Price | | Cost | | Other |
| | | | | | (Dollars in billions) |
Total net sales and revenue | $ | 101,308 | | | $ | 96,733 | | | $ | 4,575 | | | 4.7 | % | | | $ | (14.5) | | | $ | 10.8 | | | $ | 6.2 | | | | | $ | 2.1 | |
EBIT-adjusted | $ | 10,318 | | | $ | 9,071 | | | $ | 1,247 | | | 13.7 | % | | | $ | (4.5) | | | $ | 6.2 | | | $ | 6.2 | | | $ | (7.1) | | | $ | 0.5 | |
EBIT-adjusted margin | 10.2 | % | | 9.4 | % | | 0.8 | % | | | | | | | | | | | | | |
| (Vehicles in thousands) | | | | | | | | | | | | | |
Wholesale vehicle sales | 2,308 | | | 2,707 | | | (399) | | | (14.7) | % | | | | | | | | | | | |
Discontinued Operations
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | Year Ended 2017 vs. 2016 Change | | Year Ended 2016 vs. 2015 Change |
| | |
| 2017 | | 2016 | | 2015 | | Favorable/ (Unfavorable) | | % | | Favorable/ (Unfavorable) | | % |
Income (loss) from discontinued operations, net of tax | $ | (4,212 | ) |
| $ | (1 | ) |
| $ | 25 |
|
| $ | (4,211 | ) |
| n.m. |
| $ | (26 | ) |
| n.m. |
________
n.m. = not meaningful
GMNA Total Net Sales and Revenue In the year ended December 31, 2017 Income (loss) from discontinued operations, net of tax, decreased due primarily to a disposal loss of $3.9 billion, net of tax, primarily related to deferred tax assets that transferred to PSA Group, previously deferred pension losses and payment of the de-risking premium to PSA Group for its assumption of certain underfunded pension liabilities and the loss as a result of the sale of the Fincos.
GM North America
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| Favorable/ (Unfavorable) |
|
| | | Variance Due To |
| 2017 |
| 2016 |
|
| % | | | Volume | | Mix | | Price | | Cost | | Other |
|
|
|
|
| | | (Dollars in billions) |
Total net sales and revenue | $ | 111,345 |
|
| $ | 119,113 |
|
| $ | (7,768 | ) |
| (6.5 | )% | | | $ | (12.2 | ) | | $ | 3.5 |
| | $ | 0.6 |
| |
|
| | $ | 0.3 |
|
EBIT-adjusted | $ | 11,889 |
|
| $ | 12,388 |
|
| $ | (499 | ) |
| (4.0 | )% | | | $ | (3.5 | ) | | $ | 0.9 |
| | $ | 0.6 |
| | $ | 1.8 |
| | $ | (0.3 | ) |
EBIT-adjusted margin | 10.7 | % |
| 10.4 | % |
| 0.3 | % |
|
|
| | | | | | | | | | | |
| (Vehicles in thousands) |
|
|
| | | | | | | | | | | |
Wholesale vehicle sales | 3,511 |
|
| 3,958 |
|
| (447 | ) |
| (11.3 | )% | | | | | | | | | | | |
GENERAL MOTORS COMPANY AND SUBSIDIARIES
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| Favorable/ (Unfavorable) |
|
| | | Variance Due To |
| 2016 |
| 2015 |
|
| % | | | Volume | | Mix | | Price | | Cost | | Other |
|
|
|
|
| | | (Dollars in billions) |
Total net sales and revenue | $ | 119,113 |
|
| $ | 106,744 |
|
| $ | 12,369 |
|
| 11.6 | % | | | $ | 10.8 |
| | $ | 0.7 |
| | $ | 1.7 |
| |
|
| | $ | (0.8 | ) |
EBIT-adjusted | $ | 12,388 |
|
| $ | 11,354 |
|
| $ | 1,034 |
|
| 9.1 | % | | | $ | 3.2 |
| | $ | (1.2 | ) | | $ | 1.7 |
| | $ | (2.2 | ) | | $ | (0.4 | ) |
EBIT-adjusted margin | 10.4 | % |
| 10.6 | % |
| (0.2 | )% |
|
|
| | | | | | | | | | | |
| (Vehicles in thousands) |
|
|
| | | | | | | | | | | |
Wholesale vehicle sales | 3,958 |
|
| 3,558 |
|
| 400 |
|
| 11.2 | % | | | | | | | | | | | |
GMNA Total Net Sales and Revenue In the year ended December 31, 20172021, Total net sales and revenue decreasedincreased primarily due primarily to: (1) decreased net wholesale volumes associated with a decrease in Chevrolet passenger car sales and a decrease in off-lease rental car sales; partially offset by (2) favorable mix associated with a decrease indecreased sales of Chevroletcrossover vehicles and passenger cars and decreased volumesincreased sales of off-lease rental car sales;full-size SUVs and full-size pickup trucks, as a result of prioritizing semiconductor chips for our most popular and in-demand vehicles; (2) favorable price primarily due to lower incentives as a result of low dealer inventory levels and the launch of our full-size SUVs; and (3) favorable pricing for Majors of $1.4 billion, partially offset by unfavorable pricing for carryover vehicles of $0.8 billion; and (4) favorable Other due primarily to increased sales of parts and accessories and the foreign currency effect resulting from the strengthening of the Canadian Dollar and the Mexican Peso against the U.S. Dollar.
In the year ended December 31, 2016 Total net sales and revenue increased due primarily to: (1) increased net wholesale volumes reflecting our strategic decision to reduce daily rental activity, strong retail demand for the Chevrolet Malibu and Spark, full-size trucks and SUVs and the Buick Envision; (2) favorable pricing for Majors of $1.8 billion; and (3) favorable mix associated with full-size trucks and SUVs and a reduction in rental car activities, partially offset by the Chevrolet Malibu and Spark;Dollar; partially offset by (4) unfavorable Otherdecreased net wholesale volumes due primarilyto a decrease in sales of crossover vehicles and passenger cars, partially offset by increased sales of full-size SUVs and full-size pickup trucks. The impact on production in 2021 due to the foreign currency effect resulting fromongoing semiconductor supply shortage exceeded the weakeningimpact of production suspensions in 2020 due to the Mexican Peso and Canadian Dollar against the U.S. Dollar.COVID-19 pandemic.
GMNA EBIT-Adjusted The most significant factors whichthat influence profitability are industry volume and market share. While not as significant as industry volume and market share, another factor affecting profitability is the relative mix of vehicles sold. Trucks, crossovers and cars sold currently have a variable profit of approximately 180%140%, 55%40% and 15%40% of our GMNA portfolio on a weighted-average basis.
In the year ended December 31, 20172021, EBIT-adjusted decreasedincreased primarily due primarily to: (1) decreased net wholesale volumes;favorable mix; (2) favorable price; and (2) unfavorable(3) favorable Other due primarily to the foreign currency effect resulting from the weakeningstrengthening of the Mexican Peso against the U.S. Dollar; partially offset by (3) favorable Cost including decreased warranty costs of $1.4 billion, decreased material and freight costs related to carryover vehicles of $0.7 billion, decreased other employee related costs of $0.7 billion, decreased advertising costs of $0.3 billion and decreased restructuring charges of $0.2 billion related to the 2016 UAW cash severance incentive program, partially offset by increased material costs for Majors of $1.3 billion and increased engineering costs of $0.3 billion; (4) favorable mix; and (5) favorable pricing.
In the year ended December 31, 2016 EBIT-adjusted increased due primarily to: (1) increased net wholesale volumes; and (2) favorable pricing; partially offset by (3) unfavorable Cost including increased material costs for Majors of $1.1 billion, restructuring charges of $0.2 billion related to the UAW cash severance incentive program and increased other costs of $2.8 billion primarily engineering, depreciation and amortization, manufacturing, warranty and marketing which are inclusive of launch costs, partially offset by favorable material and freight costs related to carryover vehicles of $2.0 billion; (4) unfavorable mix associated with the Chevrolet Malibu, Volt and Spark, partially offset by full-size trucks and SUVs and a reduction in rental car activities; and (5) unfavorable Other due primarily to the foreign currency effect resulting from the weakening of the Mexican Peso and Canadian Dollar against the U.S. Dollar.
GM International
Dollar and favorable revaluation of investments; partially offset by (4) unfavorable Cost due to increased material and freight
GENERAL MOTORS COMPANY AND SUBSIDIARIES
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| Favorable/ (Unfavorable) |
|
| | | Variance Due To |
| 2017 |
| 2016 |
|
| % | | | Volume | | Mix | | Price | | Cost | | Other |
|
|
|
|
| | | (Dollars in billions) |
Total net sales and revenue | $ | 21,920 |
|
| $ | 20,943 |
|
| $ | 977 |
|
| 4.7 | % | | | $ | 0.2 |
|
| $ | 0.2 |
|
| $ | 0.6 |
|
|
|
| $ | — |
|
EBIT-adjusted | $ | 1,300 |
|
| $ | 767 |
|
| $ | 533 |
|
| 69.5 | % | | | $ | — |
|
| $ | (0.3 | ) |
| $ | 0.6 |
|
| $ | 0.3 |
|
| $ | (0.2 | ) |
EBIT-adjusted margin | 5.9 | % |
| 3.7 | % |
| 2.2 | % |
|
|
| | | | | | | | | | | |
Equity income — Automotive China | $ | 1,976 |
|
| $ | 1,973 |
|
| $ | 3 |
|
| 0.2 | % | | | | | | | | | | | |
EBIT (loss)-adjusted — excluding Equity income | $ | (676 | ) |
| $ | (1,206 | ) |
| $ | 530 |
|
| 43.9 | % | | | | | | | | | | | |
| (Vehicles in thousands) |
|
|
| | | | | | | | | | | |
Wholesale vehicle sales | 1,267 |
|
| 1,255 |
|
| 12 |
|
| 1.0 | % | | | | | | | | | | | |
cost of $3.6 billion, increased engineering cost of $1.6 billion including the impact of accelerating our electric vehicle portfolio, increased manufacturing and advertising costs of $1.9 billion primarily related to the suspension of production and the non-recurrence of austerity measures implemented in 2020 due to the COVID-19 pandemic, and increased other employee related costs, partially offset by increased non-service pension income and a decrease in campaigns and other warranty-related costs, and (5) decreased net wholesale volumes.
GM International
| | | Years Ended December 31, | | Favorable/ (Unfavorable) | | | | | Variance Due To | | Years Ended December 31, | | Favorable/ (Unfavorable) | | | Variance Due To |
| 2016 | | 2015 | | % | | | Volume | | Mix | | Price | | Cost | | Other | | 2021 | | 2020 | | % | | | Volume | | Mix | | Price | | Cost | | Other |
| | | | | | (Dollars in billions) |
| | | | | | (Dollars in billions) |
Total net sales and revenue | $ | 20,943 |
| | $ | 22,970 |
| | $ | (2,027 | ) | | (8.8 | )% | | | $ | (1.7 | ) |
| $ | 0.2 |
|
| $ | 1.2 |
|
|
|
| $ | (1.7 | ) | Total net sales and revenue | $ | 12,172 | | | $ | 11,586 | | | $ | 586 | | | 5.1 | % | | | $ | (1.6) | | | $ | 1.3 | | | $ | 0.9 | | | $ | 0.1 | |
EBIT-adjusted | $ | 767 |
| | $ | 665 |
| | $ | 102 |
| | 15.3 | % | | | $ | (0.3 | ) |
| $ | (0.5 | ) |
| $ | 1.1 |
|
| $ | 0.5 |
|
| $ | (0.7 | ) | |
EBIT-adjusted margin | 3.7 | % | | 2.9 | % | | 0.8 | % | | | | | | | | | | | | | | |
EBIT (loss)-adjusted | | EBIT (loss)-adjusted | $ | 827 | | | $ | (528) | | | $ | 1,355 | | | n.m. | | | $ | (0.3) | | | $ | 0.7 | | | $ | 0.8 | | | $ | (0.4) | | | $ | 0.5 | |
EBIT (loss)-adjusted margin | | EBIT (loss)-adjusted margin | 6.8 | % | | (4.6) | % | | 11.4 | % | | | |
Equity income — Automotive China | $ | 1,973 |
| | $ | 2,057 |
| | $ | (84 | ) | | (4.1 | )% | | | | | | | | | | | | Equity income — Automotive China | $ | 1,098 | | | $ | 512 | | | $ | 586 | | | n.m. | | | |
EBIT (loss)-adjusted —excluding Equity income | $ | (1,206 | ) | | $ | (1,392 | ) | | $ | 186 |
| | 13.4 | % | | | | | | | | | | | | |
EBIT (loss)-adjusted — excluding Equity income | | EBIT (loss)-adjusted — excluding Equity income | $ | (271) | | | $ | (1,040) | | | $ | 769 | | | 73.9 | % | | | |
| (Vehicles in thousands) | | | | | | | | | | | | | | | (Vehicles in thousands) | | | |
Wholesale vehicle sales | 1,255 |
| | 1,372 |
| | (117 | ) | | (8.5 | )% | | | | | | | | | | | | Wholesale vehicle sales | 551 | | | 663 | | | (112) | | | (16.9) | % | | | |
________
n.m. = not meaningful
The vehicle sales of our Automotive China JVs are not recorded in Total net sales and revenue. The results of our joint ventures are recorded in Equity income, which is included in EBIT-adjustedEBIT (loss)-adjusted above.
GMI Total Net Sales and Revenue In the year ended December 31, 20172021, Total net sales and revenue increased primarily due primarily to: (1) favorable pricing related to carryover vehiclesmix in ArgentinaSouth America, Asia/Pacific and Brazil and in Egypt to mitigate the impact of the weakening Egyptian Pound against the U.S. Dollar;Middle East; (2) favorable mix driven by the increased sales of Chevrolet Cruzepricing across multiple vehicle lines in Brazil and Argentina;South America; and (3) favorable Other primarily due to increased wholesale volumes associated with the Chevrolet Onix in Brazil and Argentina, partially offset by decreased wholesale volumes across multiple product lines in Asia/Pacific, the Middle East and Africa; (4) flat Other due primarily to the foreign currency effect resulting from the strengthening of the Brazilian Real and Korean Won against the U.S. Dollar, offset by the depreciation of the Argentinian Peso and Egyptian Pound against the U.S. Dollar and decreasedcomponents, parts and accessories sales, partially offset by the foreign currency effects resulting from the weakening of various currencies against the U.S. dollar; partially offset by (4) decreased wholesale volumes primarily due to the semiconductor supply shortage and the wind-down of our vehicle sales operations in the Middle East.Australia, New Zealand and Thailand.
GMI EBIT (loss)-Adjusted In the year ended December 31, 2016 Total net sales and revenue decreased2021, EBIT-adjusted increasedprimarily due primarily to: (1) decreased wholesale volumes across multiple product lines in Egypt, South Africa, the Middle East, Brazilfavorable price; (2) favorable mix; and Venezuela,(3) favorable Other primarily due to increased equity income; partially offset by increased sales of the Chevrolet Spark and Malibu in Korea and the Middle East; and (2)(4) unfavorable Other of $1.7 billion dueCost primarily to the foreign currency effect resulting from the weakening of all currencies across South America, the Egyptian Pound and South African Rand against the U.S. Dollar; partially offset by (3) favorable pricing related to carryover vehicles due primarily to high inflation in Argentina.
GMI EBIT-Adjusted In the year ended December 31, 2017 EBIT-adjusted increased due primarily to: (1) favorable pricing; and (2) favorable Cost due to increased material costs; and (5) decreased employee related costs and selling, general and administrative expenses across the region; partially offset by (3) unfavorable mix driven by decreased high-margin sales in the Middle East.wholesale volumes.
In the year ended December 31, 2016 EBIT-adjusted increased due primarily to: (1) favorable pricing; and (2) favorable Cost due to lower engineering expenses and material and freight performance related to carryover vehicles; partially offset by (3) unfavorable mix due primarily to the lack of vehicle sales in Venezuela and decreased sales of full-size trucks and SUVs in the Middle East as a result of a weaker economy due to low oil prices; and (4) unfavorable Other due primarily to the foreign currency effect resulting from the weakening of all currencies across South America, the Egyptian Pound and South African Rand against the U.S. Dollar.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
We view the Chinese market as important to our global growth strategy and are employing a multi-brand strategy led by our Buick, Chevrolet and Cadillac brands.strategy. In the coming years we plan to leverage our global architectures to increase the number of product offerings under the Buick, Chevrolet and Cadillac brands in China and continue to grow our business under the local Baojun and Wuling brands, with Baojun seizing the growth opportunities in less developed cities and markets.brands. We operate in the Chinese market through a number of joint ventures and maintaining good relationsstrong relationships with our joint venture partners which are affiliated with the Chinese government, is an important part of our China growth strategy.
The following tables summarizetable summarizes certain key operational and financial data for the Automotive China JVs (vehicles in thousands):
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Wholesale vehicle sales including vehicles exported to markets outside of China | 3,007 | | | 3,029 | | | 3,244 | |
Total net sales and revenue | $ | 42,776 | | | $ | 38,736 | | | $ | 39,123 | |
Net income | $ | 2,109 | | | $ | 1,239 | | | $ | 2,258 | |
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Cash and cash equivalents | $ | 10,254 | | | $ | 8,980 | |
Debt | $ | 374 | | | $ | 313 | |
|
| | | | | | | | | | | |
| Years Ended December 31, |
| 2017 | | 2016 | | 2015 |
Wholesale vehicles including vehicles exported to markets outside of China | 4,140 |
| | 4,013 |
| | 3,794 |
|
Total net sales and revenue | $ | 50,065 |
| | $ | 47,150 |
| | $ | 44,959 |
|
Net income | $ | 3,984 |
| | $ | 4,117 |
| | $ | 4,290 |
|
GENERAL MOTORS COMPANY AND SUBSIDIARIES
|
| | | | | | | |
| December 31, 2017 | | December 31, 2016 |
Cash and cash equivalents | $ | 9,202 |
| | $ | 8,197 |
|
Debt | $ | 381 |
| | $ | 246 |
|
Cruise | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | 2021 vs. 2020 Change | | |
| 2021 | | 2020 | | 2019 | | Favorable/ (Unfavorable) | | % | | | | |
Total net sales and revenue(a) | $ | 106 | | | $ | 103 | | | $ | 100 | | | $ | 3 | | | 2.9 | % | | | | |
EBIT (loss)-adjusted | $ | (1,196) | | | $ | (887) | | | $ | (1,004) | | | $ | (309) | | | (34.8) | % | | | | |
GM Financial(a) Primarily reclassified to Interest income and other non-operating income, net in our consolidated income statement in each of the years ended December 31, 2021, 2020 and 2019.
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | 2017 vs. 2016 Change | | 2016 vs. 2015 Change |
| 2017 |
| 2016 |
| 2015 | | Amount |
| % |
| Amount |
| % |
Total revenue | $ | 12,151 |
|
| $ | 8,983 |
|
| $ | 5,867 |
| | $ | 3,168 |
|
| 35.3 | % |
| $ | 3,116 |
|
| 53.1 | % |
Provision for loan losses | $ | 757 |
|
| $ | 644 |
|
| $ | 603 |
| | $ | 113 |
|
| 17.5 | % |
| $ | 41 |
|
| 6.8 | % |
Earnings before income taxes-adjusted | $ | 1,196 |
|
| $ | 763 |
|
| $ | 679 |
| | $ | 433 |
|
| 56.7 | % |
| $ | 84 |
|
| 12.4 | % |
| (Dollars in billions) |
Average debt outstanding | $ | 74.9 |
|
| $ | 54.8 |
|
| $ | 36.2 |
| | $ | 20.1 |
|
| 36.7 | % |
| $ | 18.6 |
|
| 51.4 | % |
Effective rate of interest paid | 3.4 | % |
| 3.6 | % |
| 4.0 | % | | (0.2 | )% |
|
|
|
| (0.4 | )% |
|
|
|
GM Financial Revenue Cruise EBIT (Loss)-Adjusted In the year ended December 31, 20172021, EBIT (loss)-adjusted increased primarily due to an increase in developmental costs as we progress towards the commercialization of a network of on-demand AVs in the U.S.
GM Financial
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | 2021 vs. 2020 Change | | |
| 2021 | | 2020 | | 2019 | | Amount | | % | | | | |
Total revenue | $ | 13,419 | | | $ | 13,831 | | | $ | 14,554 | | | $ | (412) | | | (3.0) | % | | | | |
Provision for loan losses | $ | 248 | | | $ | 881 | | | $ | 726 | | | $ | (633) | | | (71.9) | % | | | | |
EBT-adjusted | $ | 5,036 | | | $ | 2,702 | | | $ | 2,104 | | | $ | 2,334 | | | 86.4 | % | | | | |
Average debt outstanding (dollars in billions) | $ | 94.1 | | | $ | 91.4 | | | $ | 91.2 | | | $ | 2.7 | | | 3.0 | % | | | | |
Effective rate of interest paid | 2.7 | % | | 3.3 | % | | 4.0 | % | | (0.6) | % | | | | | | |
GM Financial Revenue In the year ended December 31, 2021, Total revenue increaseddecreased primarily due primarily to increaseddecreased leased vehicle income of $2.7$0.5 billion, primarily due to a larger lease portfolio anddecrease in the size of the leased vehicles portfolio; partially offset by increased finance charge income of $0.4$0.1 billion, primarily due to growth in the retail finance receivables portfolio, partially offset by a decrease in the effective yield and a decrease in the size of the commercial finance receivables portfolios.portfolio.
GM Financial EBT-Adjusted In the year ended December 31, 2016 Total revenue2021, EBT-adjusted increased primarily due primarily toto: (1) increased leased vehicle income net of $3.1leased vehicle expenses of $1.2 billion primarily due to decreased depreciation on leased vehicles resulting from increased residual value estimates and a decrease in the size of the portfolio, as well as increased lease termination gains; (2) decreased provision for loan losses of $0.6 billion primarily due to a larger lease portfolio.
GM Financial Earnings Before Income Taxes-Adjusted Inreduction in the reserve levels established at the onset of the COVID-19 pandemic as a result of actual credit performance that was better than forecasted and favorable expectations for future charge-offs and recoveries, reflecting improved economic conditions, partially offset by reserves established for loans originated during the year ended December 31, 2017 Earnings before income taxes-adjusted increased due primarily to: (1) increased net leased vehicle income of $0.8 billion due primarily to a larger lease portfolio; and (2) increased finance charge income; partially offset by2021; (3) increased interest expense of $0.6 billion due to an increase in average debt outstanding.
In the year ended December 31, 2016 Earnings before income taxes-adjusted increased due primarily to: (1) increased net leased vehicle income of $0.8 billion due primarily to a larger lease portfolio; partially offset by (2) increaseddecreased interest expense of $0.5 billion due to decreased credit spreads on GM Financial debt, partially offset by an increase in the average debt outstanding; and (3)partially offset by (4) increased operating expenses of $0.2 billion.billion in 2021. GM Financial interest, operating and other expenses includes a $0.1 billion loss on extinguishment of debt.
Liquidity and Capital Resources We believe that our current levellevels of cash, and cash equivalents, marketable debt securities, and availabilityavailable borrowing capacity under our revolving credit facilities will beand other liquidity actions currently available to us are sufficient to meet our liquidity needs. We expect to have substantial cash requirements going forward which we plan to fund through total available liquidity and cash flows generated from operations and future debt issuances.requirements. We also maintain access to the capital markets and may issue debt or equity securities, from time to time, which may provide an additional source of liquidity. We have substantial cash requirements going forward, which we plan to fund through our total available liquidity, cash flows from operating activities and additional liquidity measures, if determined to be necessary.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
The following summarizes aggregated information about our material short and long-term cash requirements from our known contractual and other obligations (dollars in millions):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Payments Due by Period |
| 2022 | | 2023-2024 | | 2025-2026 | | 2027 and after | | Total |
Automotive debt | $ | 334 | | | $ | 2,772 | | | $ | 2,571 | | | $ | 11,228 | | | $ | 16,905 | |
Automotive Financing debt | 33,333 | | | 33,594 | | | 14,739 | | | 10,871 | | | 92,537 | |
| | | | | | | | | |
Automotive interest payments(a) | 945 | | | 1,687 | | | 1,389 | | | 7,790 | | | 11,811 | |
Automotive Financing interest payments(b) | 1,864 | | | 2,258 | | | 915 | | | 575 | | | 5,612 | |
| | | | | | | | | |
Operating lease obligations | 262 | | | 482 | | | 355 | | | 490 | | | 1,589 | |
| | | | | | | | | |
Material | 1,848 | | | 632 | | | 3 | | | — | | | 2,484 | |
| | | | | | | | | |
Other contractual obligations(c) | 1,706 | | | 1,743 | | | 102 | | | 3,655 | | | 7,207 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
__________
(a)Amounts include automotive interest payments based on contractual terms and current interest rates on our debt and finance lease obligations. Automotive interest payments based on variable interest rates were determined using the interest rate in effect at December 31, 2021.
(b)GM Financial interest payments were determined using the interest rate in effect at December 31, 2021 for floating rate debt and the contractual rates for fixed rate debt. GM Financial interest payments on floating rate tranches of the securitization notes payable were converted to a fixed rate based on the floating rate plus any expected hedge payments.
(c)Primarily consists of information technology and other contractual services.
Our known current material uses of cash include, among other possible demands: (1) capital spending and our investments in Ultium Cells LLC, our battery joint venture, of approximately $9.0 billion to $10.0 billion annually over the medium term in addition to payments for engineering and product development activities; (2) payments associated with previously announced vehicle recalls and any other recall-related contingencies; and (3) payments to service debt and other long-term obligations, including discretionary and mandatory contributions to our pension plans. Our material future uses of cash, which may vary from time to time based on market conditions and other factors, are focused on the three objectives:objectives of our capital allocation program: (1) reinvest ingrow our business;business at an average target ROIC-adjusted rate of 20% or greater; (2) maintain a strong investment-grade balance sheet;sheet, including a target average automotive cash balance of $18 billion; and (3) after the first two objectives are met, return available cash to shareholders. Our known future material uses of cash include, among other possible demands: (1) capital expenditures of approximately $8.5 billion annually as well as payments for engineering and product
GENERAL MOTORS COMPANY AND SUBSIDIARIES
development activities; (2) payments associated with previously announced vehicle recalls, the settlements of the multidistrict litigation and any other recall-related contingencies; (3) payments to service debt and other long-term obligations, including discretionary and mandatory contributions to our pension plans; (4) dividend payments on our common stock that are declared by our Board of Directors; and (5) payments to purchase shares of our common stock authorized by our Board of Directors.
Our liquidity plans are subject to a number of risks and uncertainties, including those described in the "Forward-Looking Statements" section of this MD&A and Item 1A. Risk Factors, some of which are outside of our control.
We continue to monitor and evaluate opportunities to strengthen our competitive position over the long-term while maintaining a strong investment-grade balance sheet. These actions may include opportunistic payments to reduce our long-term obligations as well as the possibility of acquisitions, dispositions, investments with joint venture partners and strategic alliances that we believe would generate significant advantages and substantially strengthen our business. These actions may negatively impact our liquidity in the short term.
Our senior management evaluates our capital allocation program on an ongoing basis and recommends any modifications to the program to our Board of Directors, not less than once annually. Management reaffirmed
Our liquidity plans are subject to a number of risks and uncertainties, including those described in the "Forward-Looking Statements" section of this MD&A and Part I, Item 1A. Risk Factors, some of which are outside of our Board of Directors approvedcontrol.
We continue to monitor and evaluate opportunities to strengthen our competitive position over the capital allocation program, which includes reinvesting in our business at an average target ROIC-adjusted rate of 20% or greater,long term while maintaining a strong investment-grade balance sheet, including a target cash balancesheet. These actions may include opportunistic payments to reduce our long-term obligations, as well as the possibility of $18 billion,acquisitions, dispositions and returning available cash to shareholders.investments with joint venture partners as well as strategic alliances that we believe would generate significant advantages and substantially strengthen our business.
As part of our capital allocation program,In January 2017, we announced in January 2016 that our Board of Directors had authorized a program to purchase up to $4 billion of our common stock before the end of 2017, which was completed in the three months ended September 30, 2017. We also announced in January 2017 that our Board of Directors had authorized the purchase of up to an additional $5$5.0 billion of our common stock with no expiration date, subsequent to completing the remaining portionas part of the previously announced programs. We completed $1.5 billion of the $5 billion program in the three months ended December 31, 2017. From inception of the program in 2015 through January 30, 2018 we had purchased an aggregate of 299 million shares of our outstanding common stock under our common stock repurchase program. We have completed $1.7 billion of the $5.0 billion program for $10.5 billion. In the year endedthrough December 31, 2017,2021.
Cash flows that occur amongst our Automotive, Cruise and GM Financial operations are eliminated when we returned totalconsolidate our cash flows. Such eliminations include, among other things, collections by Automotive on wholesale accounts receivables financed by dealers through GM Financial, payments between Automotive and GM Financial for accounts receivables transferred by Automotive to shareholdersGM Financial, loans to Automotive from GM Financial, dividends issued by GM Financial to Automotive, tax payments by GM Financial to Automotive and Automotive cash injections in Cruise. The presentation of $6.7 billion, consistingAutomotive liquidity, Cruise liquidity and GM Financial liquidity presented below includes the impact of dividends paid on our common stock and purchases of our common stock.cash transactions amongst the sectors that are ultimately eliminated in consolidation.
In August 2017 we issued $3.0 billion in aggregate principal amount of senior unsecured notes and used the net proceeds to repay the $3.0 billion drawn on our three-year unsecured revolving credit facility to fund the payments to PSA Group, or one or more pension funding vehicles, for the assumed net underfunded pension liabilities in connection with the sale of the Opel/Vauxhall Business. Refer to Note 14 to our consolidated financial statements for additional information on the senior unsecured notes.
Automotive Liquidity Total available liquidity includes cash, cash equivalents, marketable debt securities and funds available under credit facilities. The amount of available liquidity is subject to intra-month and seasonal fluctuations and includes balances held by various business units and subsidiaries worldwide that are needed to fund their operations.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
We manage our liquidity primarily at our treasury centers as well as at certain of our significant consolidated overseas subsidiaries. Approximately Over 90% of our cash and marketable debt securities were managed within North America and at our regional treasury centers at December 31, 2017.2021. We have used and will continue to use other methods including intercompany loans to utilize these funds across our global operations as needed.
Our cash equivalents and marketable debt securities balances are primarily denominated in U.S. Dollars and include investments in U.S. government and agency obligations, foreign government securities, time deposits, corporate debt securities and mortgage and asset-backed securities. Our investment guidelines, which we may change from time to time, prescribe certain minimum credit worthiness thresholds and limit our exposures to any particular sector, asset class, issuance or security type. The majority of our current investments in debt securities are with A/A2 or better rated issuers.
We use credit facilities as a mechanism to provide additional flexibility in managing our global liquidity. TheAt December 31, 2020, the total size of our credit facilities was $14.5$18.5 billion, at December 31, 2017 and 2016, which consisted principally of our two primaryfour revolving credit facilities. In April 2021, we increased the total borrowing capacity of our five-year, $10.5 billion facility to $11.2 billion and extended the termination date for a $9.9 billion portion of the five-year facility by three years, now set to mature on April 18, 2026. The termination date of April 18, 2023 for the remaining portion of the five-year facility remains unchanged. We also renewed and increased the total borrowing capacity of our three-year, $4.0 billion facility to $4.3 billion, which now matures on April 7, 2024, and renewed our 364-day, $2.0 billion facility allocated for exclusive use by GM Financial, which now matures on April 6, 2022. We also terminated a separate 364-day, $2.0 billion revolving credit facility, entered into in May 2020. Additionally, the prior restrictions on share repurchases and dividends on our common shares were removed upon entrance into the renewed three-year, $4.3 billion facility. In December 2021, we terminated our three-year, $2.0 billion transformation credit facility. At December 31, 2021, the total size of our credit facilities was $15.5 billion, which consisted primarily of two credit facilities.
If available capacity permits, GM Financial has access to our revolving credit facilities. GM Financial did not have any borrowings against our primary facilities, but had letters of credit outstanding under our sub-facility of $0.4 billion at December 31, 2017 and 2016. GM Financial had access toagainst our revolving credit facilities at December 31, 2017 and 2016 but did not borrow against them.2021 or 2020. Refer to Note 1413 to our consolidated financial statements for additional information on credit facilities. At December 31, 2017 and 2016 weWe had intercompany loans from GM Financial of $0.2 billion and $0.4 billion at December 31, 2021 and $0.3 billion,2020, which primarily consisted primarily of commercial loans to dealers we consolidate, and we had no intercompany loans to GM Financial. Refer to Note 5 of our consolidated financial statements for additional information.
Several of our loan facilities, including our revolving credit facilities, require compliance with certain financial and operational covenants as well as regular reporting to lenders. We have reviewed our covenants in effect as of December 31, 2021 and determined we are in compliance and expect to remain in compliance in the future.
GM Financial's Board of Directors declared and paid dividends of $3.5 billion, $0.8 billion, and $0.4 billion on its common stock in 2021, 2020, and 2019. Current dividend levels are reflective of GM Financial earnings supported by strong residual values, favorable credit performance and improved economic conditions. Future dividends from GM Financial will depend on several factors including business and economic conditions, its financial condition, earnings, liquidity requirements and leverage ratio.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
As a means to access the strong liquidity available in our China JVs, from time to time, we may borrow from our joint ventures to provide additional liquidity to support our operations and capital investment. In the three months ending March 31, 2018, we expect to borrow approximately $1.3 billion from SAIC General Motors Corp., Ltd. (SGM) pursuant to a short-term unsecured note payable.
The following table summarizes our automotiveAutomotive available liquidity (dollars in billions):
|
| | | | | | | |
| December 31, 2017 |
| December 31, 2016 |
Cash and cash equivalents | $ | 11.2 |
|
| $ | 9.8 |
|
Marketable securities | 8.3 |
|
| 11.8 |
|
Available liquidity(a) | 19.6 |
|
| 21.6 |
|
Available under credit facilities(b) | 14.1 |
|
| 14.2 |
|
Total automotive available liquidity(a) | $ | 33.6 |
|
| $ | 35.8 |
|
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Automotive cash and cash equivalents | $ | 14.5 | | | $ | 14.2 | |
Marketable debt securities | 7.1 | | | 8.1 | |
Automotive cash, cash equivalents and marketable debt securities | 21.6 | | | 22.3 | |
| | | |
| | | |
| | | |
Available under credit facilities(a) | 15.2 | | | 18.2 | |
Total Automotive available liquidity | $ | 36.8 | | | $ | 40.5 | |
__________
| |
(a) | Amounts do not add due to rounding. |
| |
(b) | Excludes outstanding letters of credit of $0.2 billion at December 31, 2016 under our primary credit facilities which were transferred to PSA Group at closing. |
(a)We had letters of credit outstanding under our sub-facility of $0.3 billion at December 31, 2021 and 2020.
The following table summarizes the changes in our automotiveAutomotive available liquidity (dollars in billions):
|
| | | |
| Year Ended December 31, 2017 |
Operating cash flow | $ | 13.9 |
|
Capital expenditures | (8.4 | ) |
Dividends paid and payments to purchase common stock | (6.7 | ) |
Net cash used in investing activities – discontinued operations(a) | (3.6 | ) |
Issuance of senior unsecured notes | 3.0 |
|
Other non-operating | (0.4 | ) |
Total change in automotive available liquidity | $ | (2.2 | ) |
__________
| | | | | |
| Year Ended December 31, 2021 |
Operating cash flow | $ | 9.7 | |
Capital expenditures | (7.4) | |
| |
(a)GM investment in Cruise | Consists primarily(1.0) | |
| |
Investment in Ultium Cells LLC | (0.5) | |
| |
Repayment of payments to PSA Group, or one or more pension funding vehicles, of $3.4 billion for the assumed net underfunded pension liabilitiessenior unsecured notes | (0.5) | |
Decrease in connection with the sale of the Opel/Vauxhall Business, which includes pension funding payments for active employees and the de-risking premium payment of $455 million, partially offset by proceeds.available credit facilities | (3.0) | |
Other non-operating | (1.0) | |
Total change in automotive available liquidity | $ | (3.7) | |
Automotive Cash Flow (Dollars in Billions)billions)
| | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | 2021 vs. 2020 Change |
| 2021 | | 2020 | | 2019 | |
Operating Activities
| | | | | | | |
Net income | $ | 7.8 | | | $ | 5.0 | | | $ | 5.8 | | | $ | 2.8 | |
Depreciation, amortization and impairment charges | 5.9 | | | 5.5 | | | 6.7 | | | 0.4 | |
Pension and OPEB activities | (2.4) | | | (1.6) | | | (1.5) | | | (0.8) | |
Working capital | (4.0) | | | (1.7) | | | (2.2) | | | (2.3) | |
Accrued and other liabilities and income taxes | 0.9 | | | (1.4) | | | (1.5) | | | 2.3 | |
Other | 1.5 | | | 1.7 | | | 0.1 | | | (0.2) | |
Net automotive cash provided by operating activities | $ | 9.7 | | | $ | 7.5 | | | $ | 7.4 | | | $ | 2.2 | |
|
| | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | 2017 vs. 2016 Change |
| 2016 vs. 2015 Change |
| 2017 |
| 2016 |
| 2015 | |
|
Operating Activities
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Income (loss) from continuing operations | $ | (0.8 | ) |
| $ | 8.6 |
|
| $ | 9.0 |
| | $ | (9.4 | ) |
| $ | (0.4 | ) |
Depreciation, amortization and impairments charges | 5.7 |
|
| 5.1 |
|
| 5.2 |
| | 0.6 |
|
| (0.1 | ) |
Pension and OPEB activities | (2.6 | ) |
| (4.2 | ) |
| (1.5 | ) | | 1.6 |
|
| (2.7 | ) |
Working capital | 1.8 |
|
| 2.2 |
|
| 0.3 |
| | (0.4 | ) |
| 1.9 |
|
Equipment on operating leases | (0.3 | ) |
| 0.8 |
|
| 0.5 |
| | (1.1 | ) |
| 0.3 |
|
Accrued and other liabilities | (2.3 | ) |
| 1.0 |
|
| (1.0 | ) | | (3.3 | ) |
| 2.0 |
|
Income taxes | 10.9 |
| | 2.1 |
|
| (2.0 | ) |
| 8.8 |
|
| 4.1 |
|
GM Financial dividend | 0.6 |
|
| — |
|
| — |
|
| 0.6 |
|
| — |
|
Other | 0.9 |
|
| (1.1 | ) |
| 0.2 |
| | 2.0 |
|
| (1.3 | ) |
Net automotive cash provided by operating activities | $ | 13.9 |
|
| $ | 14.5 |
|
| $ | 10.7 |
| | $ | (0.6 | ) |
| $ | 3.8 |
|
In the year ended December 31, 2017 the decrease in Net automotive cash provided by operating activities was due primarily to unfavorable impacts from: (1) decreased Income (loss) from continuing operations partially offset by the add back of $7.3 billion
GENERAL MOTORS COMPANY AND SUBSIDIARIES
as a result of U.S. tax reform legislation and the establishment of a $2.3 billion valuation allowance related to the sale of the Opel/Vauxhall Business; (2) a decrease in Accrued and other liabilities due to increased sales allowance payments; (3) a decrease in Equipment on operating leases due to an increase in units out to daily rental car companies; and (4) a decrease in Working capital due to lower production volumes, partially offset by accelerated cash receipts from GM Financial and other external sources totaling $0.5 billion; partially offset by (5) discretionary contributions of $2.0 billion made to our U.S. hourly pension plan in the year ended December 31, 2016; and (6) an increase in Other due to several insignificant items.
In the year ended December 31, 20162021, the increase in Net automotive cash provided by operating activities was primarily due primarily to: (1) an increase in Income taxes due primarily to the reversalhigher dividends received from GM Financial of valuation allowances in 2015;$2.7 billion; (2) an increase in Accrued and other liabilities due primarily to an increase in sales incentivesfavorable pre-tax earnings of $1.6$2.6 billion; (3) an increase in Working capital due primarily to increased accounts payable due to increased production volumes and decreased inventories due to lower repurchased rental car activity; partially offset by (3) unfavorable working capital; and (4) a decreaseseveral other insignificant items.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | 2021 vs. 2020 Change | | |
| 2021 | | 2020 | | 2019 | | |
Investing Activities | | | | | | | | | |
Capital expenditures | $ | (7.4) | | | $ | (5.3) | | | $ | (7.5) | | | $ | (2.1) | | | |
Acquisitions and liquidations of marketable securities, net(a) | 1.0 | | | (3.6) | | | 2.4 | | | 4.6 | | | |
GM investment in Cruise | (1.0) | | | — | | | (0.7) | | | (1.0) | | | |
Investment in Ultium Cells LLC | (0.5) | | | — | | | — | | | (0.5) | | | |
Other | (0.3) | | | 0.1 | | | 0.2 | | | (0.4) | | | |
Net automotive cash used in investing activities | $ | (8.2) | | | $ | (8.8) | | | $ | (5.6) | | | $ | 0.6 | | | |
__________
(a)Amount includes $0.6 billion and $0.3 billion of proceeds from the sale of our shares in Pension and OPEB activities due primarily to discretionary contributions of $2.0 billion made to our U.S. hourly pension planLyft, Inc. in the year ended December 31, 2016 2020 and pension income2019.
In the year ended December 31, 2021, cash provided by acquisitions and liquidations of marketable securities, net increased due to liquidations of securities to fund operating activities and investments, compared to net acquisitions of securities from revolver proceeds during the refinement to the discount rate methodology for service and interest cost; and (5) a decrease in Other due primarily to foreign exchange and an increase in deposits.year ended December 31, 2020.
| | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | 2021 vs. 2020 Change |
| 2021 | | 2020 | | 2019 | |
Financing Activities
| | | | | | | |
| | | | | | | |
Net proceeds (payments) from short-term debt | $ | (0.5) | | | $ | (0.5) | | | $ | 0.5 | | | $ | — | |
Issuance of senior unsecured notes | — | | | 4.0 | | | — | | | (4.0) | |
Repayment of senior unsecured notes | (0.5) | | | (0.5) | | | — | | | — | |
Dividends paid and payments to purchase common stock | — | | | (0.6) | | | (2.2) | | | 0.6 | |
| | | | | | | |
Other | 0.1 | | | (0.3) | | | (0.4) | | | 0.4 | |
Net automotive cash provided by (used in) financing activities | $ | (0.9) | | | $ | 2.1 | | | $ | (2.1) | | | $ | (3.0) | |
| | | | | | | |
|
| | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2017 vs. 2016 Change |
| 2016 vs. 2015 Change |
| 2017 |
| 2016 |
| 2015 |
|
|
Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures | $ | (8.4 | ) |
| $ | (8.3 | ) |
| $ | (6.7 | ) |
| $ | (0.1 | ) |
| $ | (1.6 | ) |
Acquisitions and liquidations of marketable securities, net | 3.5 |
|
| (3.7 | ) |
| 0.9 |
|
| 7.2 |
|
| (4.6 | ) |
Investment in Lyft | — |
| | (0.5 | ) | | — |
| | 0.5 |
| | (0.5 | ) |
Acquisition of Cruise | — |
| | (0.3 | ) | | — |
| | 0.3 |
| | (0.3 | ) |
Other | 0.2 |
|
| 0.2 |
|
| — |
|
| — |
|
| 0.2 |
|
Net automotive cash used in investing activities | $ | (4.7 | ) |
| $ | (12.6 | ) |
| $ | (5.8 | ) |
| $ | 7.9 |
|
| $ | (6.8 | ) |
|
| | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | 2017 vs. 2016 Change | | 2016 vs. 2015 Change |
| 2017 | | 2016 | | 2015 | | |
Financing Activities
|
|
|
|
|
|
|
|
|
|
Issuance of senior unsecured notes | $ | 3.0 |
|
| $ | 2.0 |
|
| $ | — |
|
| $ | 1.0 |
|
| $ | 2.0 |
|
Payments to purchase common stock | (4.5 | ) |
| (2.5 | ) |
| (3.5 | ) |
| (2.0 | ) |
| 1.0 |
|
Dividends paid | (2.2 | ) |
| (2.3 | ) |
| (2.2 | ) |
| 0.1 |
|
| (0.1 | ) |
Other | (0.5 | ) |
| (0.3 | ) |
| (0.1 | ) |
| (0.2 | ) |
| (0.2 | ) |
Net automotive cash used in financing activities | $ | (4.2 | ) |
| $ | (3.1 | ) |
| $ | (5.8 | ) |
| $ | (1.1 | ) |
| $ | 2.7 |
|
Adjusted Automotive Free Cash Flow (Dollars in Billions) We measure adjusted automotive free cash flow as automotive operating cash flow from operations less capital expenditures adjusted for management actions. For the year ended December 31, 2021, net automotive cash provided by operating activities under U.S. GAAP was $9.7 billion, capital expenditures were $7.4 billion and adjustments for management actions were $0.3 billion. For the year ended December 31, 2020, net automotive cash provided by operating activities under U.S. GAAP was $7.5 billion, capital expenditures were $5.3 billion and adjustments for management actions were $0.3 billion.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
|
| | | | | | | | | | | |
| Years Ended December 31, |
| 2017 | | 2016 | | 2015 |
Net automotive cash provided by operating activities – continuing operations | $ | 13.9 |
|
| $ | 14.5 |
|
| $ | 10.7 |
|
Less: capital expenditures – continuing operations | (8.4 | ) |
| (8.3 | ) |
| (6.7 | ) |
Adjustments | | | | | |
Discretionary U.S. pension plan contributions | — |
|
| 2.0 |
|
| — |
|
U.K. pension plan contribution(a) | 0.2 |
| | — |
| | — |
|
GM Financial dividend(a) | (0.6 | ) | | — |
| | — |
|
Total adjustments | (0.4 | ) | | 2.0 |
| | — |
|
Adjusted automotive free cash flow – continuing operations(b) | 5.2 |
|
| 8.2 |
|
| 4.0 |
|
Net automotive cash used in operating activities – discontinued operations | — |
|
| (0.1 | ) |
| (0.7 | ) |
Less: capital expenditures – discontinued operations | (0.7 | ) |
| (1.1 | ) |
| (1.0 | ) |
Adjusted automotive free cash flow(b) | $ | 4.5 |
|
| $ | 6.9 |
|
| $ | 2.3 |
|
__________
| |
(a) | These cash flows were excluded because they resulted from the sale of the European Business.
|
| |
(b) | Amounts do not add due to rounding. |
Status of Credit Ratings We receive ratings from four independent credit rating agencies: DBRS Limited (DBRS), Fitch Ratings (Fitch), Moody's Investor Service (Moody's) and Standard & Poor's (S&P). All four credit rating agencies currently rate our corporate credit at investment grade. The following table summarizes our credit ratings at January 30, 2018:
|
| | | | | | | | | | | | | | | | | | | | | | |
| Corporate | | Revolving Credit Facilities | | Senior Unsecured | | Outlook |
DBRS Limited | BBB | | BBB | | N/A | | StablePositive |
Fitch | BBBBBB- | | BBBBBB- | | BBBBBB- | | Stable |
Moody's | Investment Grade | | Baa2 | | Baa3 | | Stable |
S&P | BBB | | BBB | | BBB | | Stable |
Rating actions taken by each
Cruise Liquidity Cruise Holdings issued Cruise Class G Preferred Shares in exchange for $2.7 billion from Microsoft, Walmart and other investors, including $1.0 billion from General Motors Holdings LLC. Refer to Note 20 to our consolidated financial statements for additional information. In January 2022, Cruise Holdings met the requirements for commercial deployment under its agreements with SoftBank Vision Fund (AIV M2), L.P. (SoftBank), which triggered SoftBank's obligation to purchase additional Cruise convertible preferred shares for $1.35 billion. We expect SoftBank to complete the purchase of the majority of such additional preferred shares in the first quarter of 2022 and any balance by the end of 2022. Cruise will need one additional permit from the CPUC, which it has applied for, to commercially deploy such vehicles with paying passengers in California.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
The following table summarizes Cruise's available liquidity (dollars in billions):
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Cruise cash and cash equivalents | $ | 1.6 | | | $ | 0.8 | |
Cruise marketable securities | 1.5 | | | 0.9 | |
Total Cruise available liquidity (a) | $ | 3.1 | | | $ | 1.7 | |
__________
(a)Excludes a multi-year credit rating agenciesagreement between Cruise and GM Financial whereby Cruise can request to borrow, over time, up to an aggregate of $5.2 billion, through 2024, to fund exclusively the purchase of AVs from January 1, 2017 through January 30, 2018 were as follows: (1) Moody’s upgraded our revolving credit facilities rating to Baa2 from Baa3, and revised their outlook to Stable from PositiveGM.
The following table summarizes the changes in January 2017. AlsoCruise's available liquidity (dollars in January 2017 our senior unsecured bonds were upgraded to Baa3 from Ba1 and remain notched below our revolving credit facilities rating; (2) S&P upgraded our corporate rating, revolving credit facilities rating and senior unsecured rating to BBB from BBB- and revised their outlook to Stable from Positivebillions):
| | | | | |
| Year Ended December 31, 2021 |
Operating cash flow | $ | (1.2) | |
Issuance of Cruise Preferred Shares | 1.7 | |
GM investment in Cruise | 1.0 | |
Other non-operating | (0.1) | |
Total change in Cruise available liquidity | $ | 1.4 | |
Cruise Cash Flow (Dollars in January 2017; and (3) Fitch upgraded our corporate rating, revolving credit facilities rating and senior unsecured rating to BBB from BBB– and revised their outlook to Stable from Positive in June 2017.billions)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | 2021 vs. 2020 Change | | |
| 2021 | | 2020 | | 2019 | | |
Net cash used in operating activities | $ | (1.2) | | | $ | (0.8) | | | $ | (0.8) | | | $ | (0.4) | | | |
Net cash used in investing activities | $ | (0.7) | | | $ | (0.7) | | | $ | (0.3) | | | $ | — | | | |
Net cash provided by financing activities | $ | 2.6 | | | $ | — | | | $ | 1.1 | | | $ | 2.6 | | | |
Automotive Financing – GM Financial Liquidity GM Financial's primary sources of cash are finance charge income, leasing income and proceeds from the sale of terminated leased vehicles, servicing fees, net distributions from secured debtcredit facilities, including securitizations, secured and unsecured borrowings and collections and recoveries on finance receivables. GM Financial's primary uses of cash are purchases and funding of retail finance receivables and leased vehicles, the funding of commercial finance receivables, repayment or repurchases of secured and unsecured debt, funding credit enhancement requirements in connection with securitizations and secured debtcredit facilities, interest costs, operating expenses, income taxes and interest costs.dividend payments. GM Financial continues to monitor and evaluate opportunities to optimize its liquidity position and the mix of its debt between secured and unsecured debt. In September 2017 GM Financial issued $1.0 billion of Fixed-to-Floating Rate Cumulative Perpetual Preferred Stock, Series A, $0.01 par value, with a liquidation preference of $1,000 per share. The following table summarizes GM Financial's available liquidity (dollars in billions):
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Cash and cash equivalents | $ | 4.0 | | | $ | 5.1 | |
Borrowing capacity on unpledged eligible assets | 19.2 | | | 19.0 | |
Borrowing capacity on committed unsecured lines of credit | 0.5 | | | 0.5 | |
Borrowing capacity on revolving credit facility, exclusive to GM Financial | 2.0 | | | 2.0 | |
Total GM Financial available liquidity | $ | 25.7 | | | $ | 26.6 | |
|
| | | | | | | |
| December 31, 2017 | | December 31, 2016 |
Cash and cash equivalents | $ | 4.3 |
| | $ | 2.8 |
|
Borrowing capacity on unpledged eligible assets | 12.5 |
| | 8.3 |
|
Borrowing capacity on committed unsecured lines of credit | 0.1 |
| | 0.1 |
|
Available liquidity | $ | 16.9 |
| | $ | 11.2 |
|
GENERAL MOTORS COMPANY AND SUBSIDIARIES
In the year ended December 31, 20172021, GM Financial's available liquidity increaseddecreased primarily due primarily to an increasea decrease in cash and additional netcash equivalents, partially offset by increased available borrowing capacity on new and renewed secured credit facilities,unpledged eligible assets, resulting from the issuance of securitizations,securitization transactions and unsecured debt. GM Financial structures liquidity to support at least six months of GM Financial's expected net cash flows, including new originations, without access to new debt and preferred stock.financing transactions or other capital markets activity.
GM Financial has the abilityaccess to borrow up to $1.0$15.5 billion againstof our three-year, $4.0 billion revolving credit facility and upfacilities with exclusive access to $3.0the 364-day, $2.0 billion against our five-year, $10.5 billion revolving credit facility. Refer to the "Automotive Liquidity" section of this MD&A for additional details. We have a support agreement with GM Financial which, among other things, establishes commitments of funding from us to GM Financial. This agreement also provides that we will continue to own all of GM Financial’s outstanding voting shares so long as any unsecured debt securities
GENERAL MOTORS COMPANY AND SUBSIDIARIES
remain outstanding at GM Financial. In addition, we are required to use our commercially reasonable efforts to ensure GM Financial remains a subsidiary borrower under our corporate revolving credit facilities.
Credit Facilities In the normal course of business, in addition to using its available cash, GM Financial utilizes borrowings under its credit facilities, which may be secured or unsecured, and GM Financial repays these borrowings as appropriate under its cash management strategy. At December 31, 20172021, secured, committed unsecured and uncommitted unsecured credit facilities totaled $26.0$26.2 billion, $0.1$0.5 billion and $2.4$1.2 billion with advances outstanding of $4.7$3.5 billion, an insignificant amount and $2.4$1.2 billion.
GM Financial Cash Flow (Dollars in Billions)billions)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, | | 2021 vs. 2020 Change | | |
| 2021 | | 2020 | | 2019 | | |
Net cash provided by operating activities | $ | 7.3 | | | $ | 8.0 | | | $ | 8.1 | | | $ | (0.7) | | | |
Net cash used in investing activities | $ | (5.5) | | | $ | (9.3) | | | $ | (5.0) | | | $ | 3.8 | | | |
Net cash provided by (used in) financing activities | $ | (2.6) | | | $ | 2.4 | | | $ | (3.5) | | | $ | (5.0) | | | |
|
| | | | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2017 vs. 2016 Change |
| 2016 vs. 2015 Change |
| 2017 |
| 2016 |
| 2015 |
|
|
Net cash provided by operating activities | $ | 6.5 |
|
| $ | 4.7 |
|
| $ | 2.7 |
|
| $ | 1.8 |
|
| $ | 2.0 |
|
Net cash used in investing activities | $ | (21.9 | ) |
| $ | (23.7 | ) |
| $ | (21.2 | ) |
| $ | 1.8 |
|
| $ | (2.5 | ) |
Net cash provided by financing activities | $ | 16.1 |
|
| $ | 19.1 |
|
| $ | 17.9 |
|
| $ | (3.0 | ) |
| $ | 1.2 |
|
In the years ended December 31, 2017 and 2016 Net cash provided by operating activities increased due primarily to an increase in net leased vehicle income, partially offset by increased interest expense and operating expenses.
In the year ended December 31, 20172021, Net cash provided by operating activities decreased primarily due to: (1) a decrease in counterparty derivative collateral posting activities of $0.6 billion; and (2) a decrease in leased vehicle income of $0.5 billion; partially offset by (3) a decrease in interest paid of $0.4 billion.
In the year ended December 31, 2021, Net cash used in investing activities decreased primarily due primarily to: (1) increasedan increase in collections and recoveries on finance receivables of $4.9 billion; (2) an increase in proceeds from the termination of leased vehicles of $4.1 billion; (2) increased collections and recoveries on retail finance receivables of $3.0$1.0 billion; and (3) decreasedan increase in purchases of leased vehicles of $0.3$0.6 billion; partially offset by (4) increased netan increase in purchases of retail finance receivables of $5.5$2.8 billion.
In the year ended December 31, 20162021, Net cash used in investingfinancing activities increased primarily due primarily to: (1) increased purchasesa decrease in borrowings of leased vehicles$9.6 billion; (2) an increase in dividend payments of $4.4$2.7 billion; and (2) increased purchases and funding(3) a decrease in preferred stock issuance of finance receivables of $1.9$0.5 billion; partially offset by (3) increased proceeds from the termination(4) a decrease in debt repayments of leased vehicles of $1.5 billion; (4) increased collections on finance receivables of $1.4 billion; and (5) prior year impact of cash used$7.8 billion.
LIBOR Transition As discussed in Part I, Item 1A. Risk Factors, banks will no longer be persuaded or compelled to submit rates for the acquisitioncalculation of LIBOR after 2021. GM Financial established a LIBOR transition initiative in 2019 to evaluate the potential impacts of the equity interesttransition, and continues to implement strategies to mitigate the risks associated with the LIBOR discontinuation such as including fallback language into any new LIBOR based contracts. GM Financial has only a limited amount of debt outstanding that is scheduled to mature after June 30, 2023 and would utilize the Alternative Reference Rates Committee fallback process. Furthermore, GM Financial has adhered to the International Swaps and Derivatives Association’s Fallbacks Protocol and plans to transition its existing LIBOR-based derivative exposure in SAIC-GMACadvance of $0.9 billion.the June 30, 2023 date when applicable LIBOR will no longer be published. For any residual exposure after the end of 2021, GM Financial expects to leverage relevant contractual and statutory solutions to transition such exposure.
In the year ended December 31, 2017 Net cash provided by financing activities decreased due primarily to an increase in repayments of $12.4 billion and a special dividend payment to GM of $0.6 billion, partially offset by an increase in borrowings of $9.0 billion and the issuance of preferred stock of $1.0 billion.
In the year ended December 31, 2016 Net cash provided by financing activities increased due primarily to a net increase in borrowings.
Off-Balance Sheet Arrangements We do not currently utilize off-balance sheet securitization arrangements. All trade or finance receivables and related obligations subject to securitization programs are recorded on our consolidated balance sheets at December 31, 2017 and 2016. Refer to Note 17 of ourCritical Accounting Estimates The consolidated financial statements for detailed information related to guarantees we have provided and for our noncancelable operating lease obligations.
Contractual Obligations and Other Long-Term Liabilities We have minimum commitments under contractual obligations, including purchase obligations. A purchase obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding on us and that specifies all significant terms, including fixed or minimum quantities to be purchased or fixed minimum price provisions and the approximate timing of the transaction. Based on these definitions, the following table includes only those contractsare prepared in conformity with U.S. GAAP, which include fixed or minimum obligations. The majority of our purchases are not included in the table as they are made under purchase orders which are requirements based and accordingly do not specify minimum quantities. The
GENERAL MOTORS COMPANY AND SUBSIDIARIES
following table summarizes aggregated information about our outstanding contractual obligations and other long-term liabilities at December 31, 2017:
|
| | | | | | | | | | | | | | | | | | | |
| Payments Due by Period |
| 2018 |
| 2019-2020 |
| 2021-2022 |
| 2023 and after |
| Total |
Automotive debt | $ | 2,252 |
|
| $ | 553 |
|
| $ | 54 |
|
| $ | 10,423 |
|
| $ | 13,282 |
|
Automotive Financing debt | 24,502 |
|
| 33,185 |
|
| 13,125 |
|
| 10,477 |
|
| 81,289 |
|
Capital lease obligations | 276 |
|
| 187 |
|
| 68 |
|
| 188 |
|
| 719 |
|
Automotive interest payments(a) | 693 |
|
| 1,209 |
|
| 1,147 |
|
| 8,452 |
|
| 11,501 |
|
Automotive Financing interest payments(b) | 2,373 |
|
| 2,802 |
|
| 1,319 |
|
| 1,144 |
|
| 7,638 |
|
Postretirement benefits(c) | 243 |
|
| 268 |
|
| 3 |
|
| — |
|
| 514 |
|
Operating lease obligations, net | 222 |
|
| 377 |
|
| 231 |
|
| 206 |
|
| 1,036 |
|
Other contractual commitments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Material | 1,090 |
|
| 522 |
|
| 147 |
|
| 144 |
|
| 1,903 |
|
Marketing | 840 |
|
| 441 |
|
| 54 |
|
| 31 |
|
| 1,366 |
|
Rental car repurchases | 2,113 |
|
| — |
|
| — |
|
| — |
|
| 2,113 |
|
Other | 1,056 |
|
| 612 |
|
| 100 |
|
| 246 |
|
| 2,014 |
|
Total contractual commitments(d) | $ | 35,660 |
|
| $ | 40,156 |
|
| $ | 16,248 |
|
| $ | 31,311 |
|
| $ | 123,375 |
|
| | | | | | | | | |
Non-contractual benefits(e) | $ | 269 |
| | $ | 648 |
| | $ | 858 |
| | $ | 9,696 |
| | $ | 11,471 |
|
__________
| |
(a) | Amounts include automotive interest payments based on contractual terms and current interest rates on our debt and capital lease obligations. Automotive interest payments based on variable interest rates were determined using the interest rate in effect at December 31, 2017. |
| |
(b) | GM Financial interest payments were determined using the interest rate in effect at December 31, 2017 for floating rate debt and the contractual rates for fixed rate debt. GM Financial interest payments on floating rate tranches of the securitization notes payable were converted to a fixed rate based on the floating rate plus any expected hedge payments. |
| |
(c) | Amounts include OPEB payments under the current U.S. contractual labor agreements through 2019 and Canada labor agreements through 2021. These agreements are generally renegotiated in the year of expiration. Amounts do not include pension funding obligations, which are discussed in Note 16 to our consolidated financial statements. |
| |
(d) | Amounts do not include future cash payments for long-term purchase obligations and other accrued expenditures (unless specifically listed in the table above) which were recorded in Accounts payable or Accrued liabilities at December 31, 2017. |
| |
(e) | Amounts include all expected future payments for both current and expected future service at December 31, 2017 for OPEB obligations for salaried and hourly employees extending beyond the current North American union contract agreements, workers' compensation and extended disability benefits. Amounts do not include pension funding obligations, which are discussed inNote 16 to our consolidated financial statements.
|
The table above does not reflect product warranty and related liabilities, certified pre-owned extended warranty and free maintenance of $9.1 billion and unrecognized tax benefits of $1.6 billion due to the uncertainty regarding the future cash outflows potentially associated with these amounts.
Critical Accounting Estimates Accounting estimates are an integral part of the consolidated financial statements. These estimates requirerequires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses in the periods presented. We believe the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in developing estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. Refer to Note 2 to our consolidated financial statements for our significant accounting policies related to our critical accounting estimates.
Product Warranty and Recall Campaigns The estimates related to product warranties are established using historical information on the nature, frequency and average cost of claims of each vehicle line or each model year of the vehicle line and assumptions about future activity and events. When little or no claims experience exists for a model year or a vehicle line, the estimate is based on comparable models.
We accrue the costs related to product warranty at the time of vehicle sale and we accrue the estimated cost of recall campaigns when they are probable and estimable.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
The estimates related to recall campaigns accrued at the time of vehicle sale are established by applying a paid loss approach that considers the number of historical recall campaigns and the estimated cost for each recall campaign. These estimates consider the nature, frequency and magnitude of historical recall campaigns, and use key assumptions including the number of historical periods and the weighting of historical data in the reserve studies. Costs associated with recall campaigns not accrued at the time of vehicle sale are estimated based on the estimated cost of repairs and the estimated vehicles to be repaired. Depending on part availability and time to complete repairs we may, from time to time, offer courtesy transportation at no cost to our customers. These estimates are re-evaluated on an ongoing basis and based on the best available information. Revisions are made when necessary based on changes in these factors.
The estimated amount accrued for recall campaigns at the time of vehicle sale is most sensitive to the estimated number of recall events, the number of vehicles per recall event, the assumed number of vehicles that will be brought in by customers for repair (take rate) and the cost per vehicle for each recall event. The estimated cost of a recall campaign that is accrued on an individual basis is most sensitive to our estimated assumed take rate that is primarily developed based on our historical take rate experience. A 10% increase in the estimated take rate for all recall campaigns would increase the estimated cost by approximately $0.6 billion.
Actual experience could differ from the amounts estimated requiring adjustments to these liabilities in future periods. Due to the uncertainty and potential volatility of the factors contributing to developing estimates, changes in our assumptions could materially affect our results of operations.
Sales Incentives The estimated effect of sales incentives offered to dealers and end customers is recorded as a reduction of Automotive net sales and revenue at the time of sale. There may be numerous types of incentives available at any particular time. Incentive programs are generally specific to brand, model or sales region and are for specified time periods, which may be extended. Significant factors used in estimating the cost of incentives include type of program, forecasted sales volume, product mix, and the rate of customer acceptance of incentive programs, all of which are estimated based on historical experience and assumptions concerning future customer behavior and market conditions. A change in any of these factors affecting the estimate could have a significant effect on recorded sales incentives. A 10% increase in the cost of incentives would increase the sales incentive liability by an insignificant amount. Subsequent adjustments to incentive estimates are possible as facts and circumstances change over time, which could affect the revenue previously recognized in Automotive net sales and revenue.
GM Financial Allowance for Loan Losses The GM Financial retail finance receivables portfolio consists of smaller-balance, homogeneous loans that are carried at amortized cost, net of allowance for loan losses. The allowance for loan losses on retail finance receivables reflects net credit losses expected to be incurred over the remaining life of the retail finance receivables, which have a weighted average remaining life of approximately two years. GM Financial forecasts net credit losses based on relevant information about past events, current conditions and forecast economic performance. GM Financial believes that the allowance is adequate to cover expected credit losses on the retail finance receivables; however, because the allowance for loan losses is based on estimates, there can be no assurance that the ultimate charge-off amount will not exceed such estimates or that our credit loss assumptions will not increase.
GM Financial incorporates its outlook on forecast charge-off recovery rates and overall economic performance in its allowance estimate. Due to the high used vehicle prices in 2021, GM Financial increased its recovery rate forecast as of December 31, 2021. Each 5% relative decrease/increase in the forecast recovery rates would increase/decrease the allowance for loan losses by approximately $0.1 billion.
At December 31, 2021, the weightings applied to the economic forecast scenarios considered resulted in an allowance for loan losses on the retail finance receivables portfolio of $1.8 billion. Using different possible weightings that GM Financial could apply to the economic forecast scenarios result in an allowance for loan losses ranging from $1.8 billion to $1.9 billion. Actual economic data and recovery rates that are lower than those forecasted by GM Financial could result in an increase to the allowance for loan losses.
The GM Financial commercial finance receivables portfolio consists of floorplan financing as well as dealer loans, which are loans to finance improvements to dealership facilities, to provide working capital, or to purchase and/or finance dealership real estate. The allowance for loan losses on commercial finance receivables is based on historical loss experience for the consolidated portfolio, in addition to forecasted industry vehicle sales. There can be no assurance that the ultimate charge-off amount will not exceed such estimates or that GM Financial's credit loss assumptions will not increase.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Valuation of GM Financial Equipment on Operating Lease Assets and Residuals GM Financial has investments in leased vehicles recorded as operating leases. Each leased asset in the portfolio represents a vehicle that GM Financial owns and has leased to a customer. At lease inception, an estimate is made of the expected residual value for the vehicle at the end of the lease term, which typically ranges from two to five years. GM Financial estimates the expected residual value based on third-party data that considers various data points and assumptions, including, but not limited to, recent auction values, the expected future volume of returning leased vehicles, significant liquidation of rental or fleet inventory, used vehicle prices, manufacturer incentive programs and fuel prices. Realization of the residual values is dependent on the future ability to market the vehicles under prevailing market conditions.
The customer is obligated to make payments during the lease term for the difference between the purchase price and the contract residual value plus a money factor. However, since the customer is not obligated to purchase the vehicle at the end of the contract, GM Financial is exposed to a risk of loss to the extent the customer returns the vehicle prior to or at the end of the lease term and the value of the vehicle is lower than the residual value estimated at lease inception.
At December 31, 2021, the estimated residual value of GM Financial's leased vehicles was $29.1 billion. Depreciation reduces the carrying value of each leased asset in GM Financial's operating lease portfolio over time from its original acquisition value to its expected residual value at the end of the lease term. In 2021, prices on leased vehicles at termination generally exceeded their contractual residual values due to high used vehicle prices. Accordingly, GM Financial increased the residual value estimates at December 31, 2021, which will result in a prospective decrease in the depreciation rate over the remaining term of the leased vehicles portfolio. If used vehicle prices weaken compared to estimates, GM Financial would increase depreciation expense and/or record an impairment charge on the lease portfolio. If an impairment exists, GM Financial would determine any shortfall in recoverability of the leased vehicle asset groups by year, make and model. Recoverability is calculated as the excess of: (1) the sum of remaining lease payments plus estimated residual value; over (2) leased vehicles, net less deferred revenue. Alternatively, if used vehicle prices outperform GM Financial's latest estimates, it may record gains on sales of off-lease vehicles and/or decreased depreciation expense.
The following table illustrates the effect of a 1% relative change in the estimated residual values at December 31, 2021, which could increase or decrease depreciation expense over the remaining term of the leased vehicle portfolio, holding all other assumptions constant (dollars in millions):
| | | | | | | |
| Impact to Depreciation Expense | | |
2022 | $ | 207 | | | |
2023 | 67 | | | |
2024 | 16 | | | |
2025 and thereafter | 1 | | | |
Total | $ | 291 | | | |
Changes to residual values are rarely simultaneous across all maturities and segments, and also may impact return rates. If a decrease in residual values is concentrated among specific asset groups, the decrease could result in an immediate impairment charge. GM Financial reviewed the leased vehicle portfolio for indicators of impairment and determined that no impairment indicators were present at December 31, 2021 and 2020.
Used vehicle prices were higher in 2021 compared to 2020 levels, primarily due to low new vehicle inventory. In 2022, GM Financial expects used vehicle prices may decrease relative to 2021 levels, but to remain above pre-pandemic levels, primarily due to sustained low new vehicle inventory.
Pension and OPEB Plans Our defined benefit pension plans are accounted for on an actuarial basis, which requires the selection of various assumptions, including an expected long-term rate of return on plan assets, a discount rate, mortality rates of participants and expectation of mortality improvement. Our pension obligations include Korean statutory pension payments that are valued on a walk away basis. The expected long-term rate of return on U.S. plan assets that is utilized in determining pension expense is derived from periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks using standard deviations and correlations of returns among the asset classes that comprise the plans' asset mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
In December 20172021, an investment policy study was completed for the U.S. pension plans. As a result of changes to our capital market assumptions, primarily those related to the fixed income asset class, the weighted-average long-term rate of return on assets increaseddecreased from 6.2%5.6% at December 31, 20162020 to 6.6%5.4% at December 31, 2017. The assumption change related to the fixed income asset class is expected to increase the return on assets by $0.3 billion in 2018.2021. The expected long-term rate of return on plan assets used in determining pension expense for non-U.S. plans is determined in a similar manner to the U.S. plans.
Another key assumption in determining net pension and OPEB expense is the assumed discount rate used to discount plan obligations. We estimate the assumed discount rate for U.S. plans using a cash flow matching approach, which uses projected cash flows matched to spot rates along a high quality corporate bond yield curve to determine the weighted-average discount rate for the calculation of the present value of cash flows. We apply the individual annual yield curve rates instead of the assumed discount rate to determine the service cost and interest cost, which more specifically links the cash flows related to service cost and interest cost to bonds maturing in their year of payment.
We have reviewed theThe Society of Actuaries (SOA) issued mortality improvement tables published by the Society of Actuaries in the three months ended December 31, 20172021. We reviewed our recent mortality experience and we determined that our current mortality assumptions are appropriate to measure our U.S. pension and OPEB plans obligations as of December 31, 2017 U.S. pension plan obligations.2021.
Significant differences in actual experience or significant changes in assumptions may materially affect the pension obligations. The effects of actual results differing from assumptions and the changing of assumptions are included in unamortized net actuarial gains and losses that are subject to amortization to pension expense over future periods. The unamortized pre-tax actuarial loss on our pension plans was $4.0$3.7 billion and $3.8$8.4 billion at December 31, 20172021 and 2016.2020. The year-over-year change is primarily due to the decreasean increase in discount rates partially offset by assumption changes and the increase in actual return on assets. At December 31, 2017 $2.4 billion of the unamortized pre-tax actuarial loss is outside the corridor (10% of the projected benefit obligation (PBO)) and subject to amortization. The weighted-average amortization period is approximately fifteen years resulting in amortization expense of $0.2 billion in 2018.higher than expected asset returns.
The underfunded status of the U.S. pension plans decreased by $1.4 billionimproved in the year ended December 31, 20172021 to $5.8$0.3 billion from $5.4 billion primarily due primarily to: (1) athe favorable effect of actual returns on plan assets of $6.5$3.7 billion; (2) otherthe favorable effect of an increase in discount rates of $2.1 billion; and (3) changes includingin actuarial assumptions, demographic data updates and contributions demographic gains and assumption changes of $0.4$0.5 billion; partially offset by (3) an unfavorable effect due to a decrease in the discount rate of $3.2 billion; and (4) service and interest costcosts of $2.3$1.3 billion.
The following table illustrates the sensitivity to a change in certain assumptions for the pension plans, holding all other assumptions constant:
| | | U.S. Plans(a) | | Non-U.S. Plans(a) | | U.S. Plans(a) | | Non-U.S. Plans(a) |
| Effect on 2018 Pension Expense | | Effect on December 31, 2017 PBO | | Effect on 2018 Pension Expense | | Effect on December 31, 2017 PBO | | Effect on 2022 Pension Expense | | Effect on December 31, 2021 PBO | | Effect on 2022 Pension Expense | | Effect on December 31, 2021 PBO |
25 basis point decrease in discount rate | -$100 | | +$1,780 | | +$17 | | +$688 | 25 basis point decrease in discount rate | -$98 | | +$1,502 | | -$3 | | +$560 |
25 basis point increase in discount rate | +$90 | | -$1,700 | | -$12 | | -$652 | 25 basis point increase in discount rate | +$93 | | -$1,439 | | +$10 | | -$531 |
25 basis point decrease in expected rate of return on assets | +$150 | | N/A | | +$35 | | N/A | 25 basis point decrease in expected rate of return on assets | +$139 | | N/A | | +$32 | | N/A |
25 basis point increase in expected rate of return on assets | -$150 | | N/A | | -$35 | | N/A | 25 basis point increase in expected rate of return on assets | -$139 | | N/A | | -$32 | | N/A |
__________
| |
(a) | The sensitivity does not include the effects of the individual annual yield curve rates applied for the calculation of the service and interest cost. |
(a)The sensitivity does not include the effects of the individual annual yield curve rates applied for the calculation of the service and interest cost.
Refer to Note 1615 to our consolidated financial statements for additional information on pension contributions, investment strategies, assumptions, the change in benefit obligations and related plan assets, pension funding requirements and future net benefit payments. Refer to Note 2 to our consolidated financial statements for a discussion of the inputs used to determine fair value for each significant asset class or category.
Valuation of Deferred Tax Assets The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction. The assessment regarding whether a valuation allowance is required or should be adjusted is based on an evaluation of possible sources of taxable income and also considers all available positive and negative evidence factors. Our accounting for the valuation of deferred tax assets represents our best estimate of future events. Changes in our current estimates, due to unanticipated market conditions, governmental legislative actions or events, could have a material effect on our ability to utilize deferred tax assets.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
At December 31, 2017 total deferred tax assets were $30.7 billion and valuation allowances against those deferred tax assets were $6.7 billion. Refer to Note 1817 to our consolidated financial statements for additional information on the composition of these valuation allowances and for information on the impact of U.S. tax reform legislation.allowances.
Valuation of GM Financial Equipment on Operating Leases Assets and Residuals GM Financial has investments in leased vehicles recorded as operating leases, which relate to vehicle leases to retail customers with lease terms which typically range from two to five years. At the beginning of the lease an estimate is made of the expected residual value at the end of the lease term. The expected residual value is based on third-party data which considers inputs including recent auction values, the expected future volume of returning leased vehicles, used car prices, manufacturer incentive programs and fuel prices. The customer is obligated to make payments during the term of the lease for the difference between the purchase price and the contract residual value plus a money factor. Since the customer is not obligated to purchase the vehicle at the end of the contract, we are exposed to a risk of loss to the extent the customer returns the vehicle at the end of the lease term and the value of the vehicle is below the expected residual value estimated at the inception of the lease.
The following table summarizes vehicles included in GM Financial equipment on operating leases, net (vehicles in thousands):
|
| | | | | |
| December 31, 2017 |
| December 31, 2016 |
Cars | 450 |
|
| 420 |
|
Trucks | 285 |
|
| 224 |
|
Crossovers | 818 |
|
| 604 |
|
SUVs | 99 |
|
| 75 |
|
Total | 1,652 |
|
| 1,323 |
|
At December 31, 2017 the estimated residual value of our leased assets at the end of the lease term was $30.4 billion. We periodically review the adequacy of the depreciation rates. If we believe that the expected residual values of the leased assets have changed, we revise the depreciation rate to ensure the net investment in the operating leases reflects the revised estimate of expected residual value at the end of the lease term. Such adjustments to the depreciation rate would result in a change in depreciation expense on leased assets which is recorded prospectively on a straight-line basis. The following table illustrates the effect of a 1% change in the estimated residual values at December 31, 2017, which would increase or decrease depreciation expense over the remaining term of our operating lease portfolio, holding all other assumptions constant:
|
| | | |
| Impact to Depreciation Expense |
Cars | $ | 57 |
|
Trucks | 72 |
|
Crossovers | 137 |
|
SUVs | 38 |
|
Total | $ | 304 |
|
We also evaluate the carrying value of the operating leases aggregated by vehicle make, year and model into leased asset groups, check for indicators of impairment and test for impairment to the extent necessary in accordance with applicable accounting standards. A leased asset group is considered impaired if impairment indicators exist and the undiscounted expected future cash flows (including the expected residual value) are lower than the carrying value of the asset group. We believe no impairment indicators existed during 2017, 2016 or 2015.
Product Warranty and Recall Campaigns The estimates related to product warranties are established using historical information on the nature, frequency and average cost of claims of each vehicle line or each model year of the vehicle line and assumptions about future activity and events. When little or no claims experience exists for a model year or a vehicle line, the estimate is based on comparable models.
In GMNA we primarily accrue the costs for recall campaigns at the time of vehicle sale. In the other regions, there is not sufficient historical data to support the application of an actuarial-based estimation technique and the estimated costs are accrued at the time when they are probable and reasonably estimable, which typically occurs once it is determined a specific recall campaign is needed and announced.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
The estimates related to recall campaigns accrued at the time of vehicle sale are established by applying a frequency times severity approach that considers the number of recall campaigns, the number of vehicles per recall campaign, the assumed number of vehicles that will be brought in by customers for repair (take rate)Forward-Looking Statements This report and the cost per vehicle for each recall campaign. These estimates considerother reports filed by us with the nature, frequency and magnitude of historical recall campaigns. Costs associated with recall campaigns not accrued at the time of vehicle sale are estimated based on the estimated cost of repairs and the estimated vehicles to be repaired. Depending on part availability and time to complete repairs we may,SEC from time to time, offer courtesy transportation at no cost to our customers. These estimates are re-evaluated on an ongoing basisas well as statements incorporated by reference herein and based on the best available information. Revisions are made when necessary based on changes in these factors.
The estimated amount accrued for recall campaigns at the time of vehicle sale is most sensitive to the estimated number of recall events, the number of vehicles per recall event, the take rate, and the cost per vehicle for each recall event. The estimated cost of a recall campaign that is accrued on an individual basis is most sensitive to our estimated assumed take rate that is primarily developed based on our historical take rate experience. A 10% increase in the estimated take rate for all recall campaigns would increase the estimated cost by approximately $0.3 billion.
Actual experience could differ from the amounts estimated requiring adjustments to these liabilities in future periods. Due to the uncertainty and potential volatility of the factors contributing to developing estimates, changes in our assumptions could materially affect our results of operations.
Sales Incentives The estimated effect of sales incentives offered to dealers and end customers is recorded as a reduction of Automotive net sales and revenue at the later of the time of sale or announcement of an incentive program to dealers. There may be numerous types of incentives available at any particular time, including a choice of incentives for a specific model. Incentive programs are generally brand specific, model specific or sales region specific and are for specified time periods, which may be extended. Significant factors used in estimating the cost of incentives include the volume of vehicles that will be affected by the incentive programs offered by product, the product mix, the rate of customer acceptance of any incentive program and the likelihood that an incentive program will be extended, all of which are estimated based on historical experience and assumptions concerning customer behavior and future market conditions. When an incentive program is announced, the number of vehicles in dealer inventory eligible for the incentive program is determined and a reduction of Automotive net sales and revenue is recorded in the period in which the program is announced. If the actual number of affected vehicles differs from this estimate, or if a different mix of incentives is actually paid, the reduction in Automotive net sales and revenue due to incentives could be affected. There are a multitude of inputs affecting the calculation of the estimate for sales incentives and an increase or decrease in any of these variables could have a significant effect on recorded sales incentives. On January 1, 2018, the date of our adoption of Accounting Standards Update (ASU) 2014-09, "Revenue from Contracts with Customers" (ASU 2014-09), sales incentives began to be recorded at the time of sale rather than at the later of sale or announcement. This change affected our processes for estimating and recording sales incentives. Refer to Note 2 to our consolidated financial statements for additional information on the adoption ASU 2014-09.
Forward-Looking Statements In this 2017 Form 10-K and in reports we subsequently file and have previously filed with the SEC on Forms 10-K and 10-Q and file or furnish on Form 8-K, and in related comments by our management, we usemay include "forward-looking statements" within the meaning of the U.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact. Forward-looking statements represent our current judgment about possible future events and are often identified by words like “aim,” “anticipate,” “appears,” “approximately,” “believe,” “continue,” “could,” “designed,” “effect,” “estimate,” “evaluate,” “expect,” “forecast,” “goal,” “initiative,” “intend,” “may,” “objective,” “outlook,” “plan,” “potential,” “priorities,” “project,” “pursue,” “seek,” “should,” “target,” “when,” “will,” “would,” or the negative of any of those words or similar expressions to identify forward-looking statements that represent our current judgment about possible future events.expressions. In making these statements, we rely on assumptions and analysis based on our experience and perception of historical trends, current conditions and expected future developments as well as other factors we consider appropriate under the circumstances. We believe these judgments are reasonable, but these statements are not guarantees of any future events or financial results, and our actual results may differ materially due to a variety of important factors, both positive and negative.many of which are beyond our control. These factors, which may be revised or supplemented in subsequent reports onwe file with the SEC, Forms 10-Q and 8-K, include, among others, the following: (1) our ability to deliver new products, services, technologies and customer experiences in response to new participantsincreased competition and changing consumer preferences in the automotive industry; (2) our ability to timely fund and introduce new and improved vehicle models, including electric vehicles, that are able to attract a sufficient number of consumers; (3) our ability to profitably deliver a broad portfolio of electric vehicles that will help drive consumer adoption; (4) the success of our crossovers,current line of full-size SUVs and full-size pick-uppickup trucks; (4)(5) our abilityhighly competitive industry, which has been historically characterized by excess manufacturing capacity and the use of incentives, and the introduction of new and improved vehicle models by our competitors; (6) the unique technological, operational, regulatory and competitive risks related to reduce the coststiming and commercialization of autonomous vehicles; (7) risks associated with climate change, including increased regulation of greenhouse gas emissions, our transition to electric vehicles and the manufacture and salepotential increased impacts of electric vehicles; (5)severe weather events; (8) global automobile market sales volume, which can be volatile; (6)(9) prices and uncertain availability of raw materials and commodities used by us and our significantsuppliers, and instability in logistics and related costs; (10) our business in China, which subjects usis subject to unique operational, competitive, regulatory and regulatoryeconomic risks; (7)(11) the success of our ongoing strategic business relationships and of our joint ventures, which we cannot operate solely for our benefit and over which we may have limited control; (8)(12) the international scale and footprint of our operations, which exposes us to a variety of unique political, economic, competitive and regulatory risks, including the risk of changes in government leadership and laws (including labor, trade, tax and other laws), political uncertainty or instability and economic tensions between governments and changes in international trade policies, new barriers to entry and changes to or withdrawals from free trade agreements, changes in foreign exchange rates and interest rates, economic downturns in foreignthe countries in which we operate, differing local product preferences and product requirements, changes to and compliance with U.S. and foreign countries' export controls and economic sanctions, differing labor
GENERAL MOTORS COMPANY AND SUBSIDIARIES
regulations, requirements and union relationships, differing dealer and franchise regulations and relationships, difficulties in obtaining financing in foreign countries; (9)countries, and public health crises, including the occurrence of a contagious disease or illness, such as the COVID-19 pandemic; (13) any significant disruption, including any work stoppages, at oneany of our manufacturing facilities could disrupt our production schedule; (10)facilities; (14) the ability of our suppliers to deliver parts, systems and components without disruption and at such times to allow us to meet production schedules; (11) prices(15) the ongoing COVID-19 pandemic; (16) the success of raw materials used by us and our suppliers; (12) our highly competitive industry, which is characterized by excess manufacturing capacity and the use of incentives and the introduction of new and improved vehicle models by our competitors; (13)any restructurings or other cost reduction actions; (17) the possibility that competitors may independently develop products and services similar to ours, and there are no guaranteesor that our intellectual property rights wouldare not sufficient to prevent competitors from independently developing or selling those products or services; (14)(18) our ability to manage risks related to security breaches and other disruptions to our vehicles, information technology networkssystems and networked products, including connected vehicles and in-vehicle systems; (15)(19) our ability to comply with increasingly complex, restrictive and punitive regulations relating to our enterprise data practices, including the collection, use, sharing and security of the Personal Identifiable Information of our customers, employees, or suppliers; (20) our ability to comply with extensive laws, regulations and regulationspolicies applicable to our industry,operations and products, including those regardingrelating to fuel economy, emissions and emissions; (16)autonomous vehicles; (21) costs and risks associated with litigation and government investigations; (17) our ability to comply with(22) the terms of the DPA; (18) the costcosts and effect on our reputation of product safety recalls and alleged defects in products and services; (19) our ability to successfully and cost-effectively restructure our operations in various countries with minimal disruption; (20) our ability to realize production efficiencies and to achieve reductions in costs; (21)(23) any additional tax expense or exposure; (24) our continued ability to develop captive financing capability through GM Financial; and (22)(25) any significant increasesincrease in our pension expense or projected pension contributions resulting from changes in the value of plan assets or the discount rate applied to value the pension liabilities or mortality or other assumption changes. Afunding requirements. For a further list and descriptiondiscussion of these risks, uncertainties and other factors can be found in this 2017 Form 10-Krisks and our subsequent filings with the SEC.uncertainties, refer to Part I, Item 1A. Risk Factors.
We caution readers not to place undue reliance on forward-looking statements. WeForward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or other factors, that affect the subject of these statements, except where we are expressly required to do so by law.
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GENERAL MOTORS COMPANY AND SUBSIDIARIES
Item 7A.Quantitative and Qualitative Disclosures About Market Risk
The overall financial risk management program is under the responsibility of the Chief Financial Officer with support from the Financial Risk Council, which reviews and, where appropriate, approves strategies to be pursued to mitigate these risks. The Financial Risk Council comprises members of our management and functions under the oversight of the Audit Committee and Finance Committee of the Board of Directors. The Audit Committee and Finance Committee assist and guide the Board of Directors in its oversight of our financial and risk management strategies. A risk management control framework is utilized to monitor the strategies, risks and related hedge positions in accordance with the policies and procedures approved by the Financial Risk Council. Our financial risk management policy is designed to protect against risk arising from extreme adverse market movements on our key exposures.
Automotive The following analyses provide quantitative information regarding exposure to foreign currency exchange rate risk, and interest rate risk and equity price risk. Sensitivity analysis is used to measure the potential loss in the fair value of financial instruments with exposure to market risk. The models used assume instantaneous, parallel shifts in exchange rates and interest rate yield curves. For options and other instruments with nonlinear returns, models appropriate to these types of instruments are utilized to determine the effect of market shifts. There are certain shortcomings inherent in the sensitivity analyses presented, primarily due primarily to the assumption that interest rates change in a parallel fashion and that spot exchange rates change instantaneously. In addition, the analyses are unable to reflect the complex market reactions that normally would arise from the market shifts modeled and do not contemplate the effects of correlations between foreign currency pairs,exposures and offsetting long-short positions in currency pairs or other exposures, such as interest rates, which may significantly reduce the potential loss in value.
Foreign Currency Exchange Rate Risk We have foreign currency exposures related to buying, selling and financing in currencies other than the functional currencies of our operations. At December 31, 20172021, our most significant foreign currency exposures were between the U.S. Dollar/Canadian Dollar, U.S. Dollar/Mexican Peso, Euro/U.S. Dollar, U.S. Dollar/Chinese Yuan, Australian Dollar/U.S. Dollar and U.S. Dollar/Argentinethe Canadian Dollar, Chinese Yuan, Korean Won, Brazilian Real, Euro, and Mexican Peso. Derivative instruments such as foreign currency forwards, swaps and options are primarily used primarily to hedge exposures with respect to forecasted revenues, costs and commitments denominated in foreign currencies. Such contracts had remaining maturities of up to 12 months at December 31, 2017.2021.
The net fair value liability of financial instruments with exposure to foreign currency risk was $0.8$0.7 billion and $0.9 billion at December 31, 20172021 and 2016.2020. These amounts are calculated utilizing a population of foreign currency exchange derivatives and foreign currency denominated debt and exclude the offsetting effect of foreign currency cash, cash equivalents and other assets. The potential loss in fair value for such financial instruments from a 10% adverse change in all quoted foreign currency exchange rates would have been $0.1 billion and $0.2 billioninsignificant at December 31, 20172021 and 2016.2020.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
We are exposed to foreign currency risk due to the translation and remeasurement of the results of certain international operations into U.S. Dollars as part of the consolidation process. We had foreign currency derivatives in asset positions with notional amounts of $2.8$4.2 billion and $5.3 billion and in liability positions with notional amounts of $1.2 billion and $0.5$2.2 billion at December 31, 20172021 and 2016.2020. The fair value of these derivative financial instruments was insignificant. Fluctuations in foreign currency exchange rates can therefore create volatility in the results of operations and may adversely affect our financial condition.
The following table summarizes the amounts of automotive foreign currency translation and transaction and remeasurement (gains) losses:
| | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 |
Translation (gains) losses recorded in Accumulated other comprehensive loss | $ | (132) | | | $ | 387 | |
Transaction and remeasurement (gains) losses recorded in earnings | $ | (15) | | | $ | 209 | |
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| | | | | | | |
| Years Ended December 31, |
| 2017 | | 2016 |
Translation (gains) losses recorded in Accumulated other comprehensive loss | $ | (275 | ) | | $ | 176 |
|
Transaction and remeasurement losses recorded in earnings | $ | 43 |
| | $ | 225 |
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Interest Rate Risk We are subject to market risk from exposure to changes in interest rates related to certain financial instruments, primarily debt, capitalfinance lease obligations and certain marketable debt securities. We did not have any interest rate swap positions to manage interest rate exposures in our automotive operations at December 31, 20172021 and 2016.2020. The fair value liability of debt and capitalfinance leases was $15.1$20.6 billion and $11.4$21.6 billion at December 31, 20172021 and 2016.2020. The potential increase in fair value resulting from a 10% decrease in quoted interest rates would have been $0.7$0.6 billion and $0.5$0.7 billion at December 31, 20172021 and 2016. 2020.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
We had marketable debt securities of $8.3$8.6 billion and $11.8$9.0 billion classified as available-for-sale at December 31, 20172021 and 2016.2020. The potential decrease in fair value from a 50 basis point increase in interest rates would have been insignificant at December 31, 2021 and 2020.
Equity Price Risk We are subject to equity price risk due to market price volatility primarily related to our investment in Stellantis warrants and other insignificant investments. The fair value of investments with exposure to equity price risk was $1.5 billion and $1.2 billion at December 31, 2021 and 2020. Our investment in Stellantis warrants is valued based on a Black-Scholes formula. We estimate that a 10% adverse change in quoted security prices in Stellantis would have had an insignificant effect at December 31, 20172021 and 2016.2020.
Automotive Financing - GM Financial
Interest Rate Risk Fluctuations in market interest rates can affect GM Financial's gross interest rate spread, which is the difference between interest earned on finance receivables and interest paid on debt. GM Financial is exposed to interest rate risks as financial assets and liabilities have different characteristics that may impact financial performance. These differences may include tenor, yield, re-pricing timing, and prepayment expectations. Typically retail finance receivables and leases purchased by GM Financial bearearn fixed interest rates and are funded by variable or fixed rate debt. Commercialcommercial finance receivables originated by GM Financial bearearn variable interest rates and are funded byinterest. GM Financial funds its business with variable or fixed rate debt. The variable rate debt is subject to adjustments to reflect prevailing market interest rates. To help mitigate interest rate risk or mismatched funding, GM Financial may employ hedging strategies to lock in the interest rate spread.hedging.
Fixed interest rate receivables purchased by Quantitative Disclosure GM Financial may be pledged to secure borrowings under its credit facilities. Amounts borrowed under these credit facilities bear interest at variable rates that are subject to frequent adjustments to reflect prevailing market interest rates. To protect the interest rate spread within each credit facility, GM Financial is contractually required to enter into interest rate cap agreements in connection with borrowings under its credit facilities.
In GM Financial's securitization transactions it can transfer fixed rate finance receivables to securitization trusts that, in turn, sell either fixed rate or floating rate securities to investors. Derivative financial instruments, such as interest rate swaps and caps, are used to manage the gross interest rate spread on the floating rate transactions.
Quantitative Disclosure We have historically presented a quantitative measure of our interest rate risk in a tabular disclosure of our interest-sensitive assets and liabilities. With the expansion of our International and North America Asset Liability Committees in 2015 to incorporate more asset-liability management strategies, we now measuremeasures the sensitivity of ourits net interest income to changes in interest rates by using interest rate scenarios that assume a hypothetical, instantaneous parallel shift of one hundred basis points in all interest rates across all maturities, as well as a base case that assumes that rates perform at the current market forward curve. However, interest rate changes are rarely instantaneous or parallel and rates could move more or less than the one percentage point assumed in our analysis. Therefore, the actual impact to economic value of equitynet interest income could be higher or lower than the results detailed in the table below. These interest rate scenarios are purely hypothetical and do not represent our view of future interest rate movements.
Under theseAt December 31, 2021, GM Financial was liability-sensitive, meaning that more liabilities than assets were expected to re-price within the next twelve months. During a period of rising interest rate scenarios, we arerates, the interest paid on liabilities would increase more than the interest earned on assets, which would initially decrease net interest income. During a period of falling interest rates, net interest income would be expected to initially increase. At December 31, 2020, GM Financial was asset-sensitive, meaning that we expect more assets than liabilities were expected to re-price within the next twelve months. During a period of rising interest rates, the interest earned on our assets willwould increase more than the interest paid on our debt,liabilities, which would initially increase our net interest income. During a period of falling interest rates, we would expect
GENERAL MOTORS COMPANY AND SUBSIDIARIES
our net interest income would be expected to initially decrease.
GM Financial's net interest income sensitivity decreased in 2021 as compared to 2020 primarily due to an increased proportion of rate sensitive liabilities exposure relative to rate sensitive assets exposure. GM Financial's hedging strategies approved by its global asset liability committee are used to manage interest rate risk within policy guidelines. The following table presents ourGM Financial's net interest income sensitivity to interest rate movement:
| | | Years Ended December 31, | | Years Ended December 31, |
| 2017 | | 2016 | | 2021 | | 2020 |
One hundred basis points instantaneous increase in interest rates | $ | 19.4 |
| | $ | (43.9 | ) | One hundred basis points instantaneous increase in interest rates | $ | (5.1) | | | $ | 29.7 | |
One hundred basis points instantaneous decrease in interest rates(a) | $ | (19.4 | ) | | $ | 43.9 |
| One hundred basis points instantaneous decrease in interest rates(a) | $ | 5.1 | | | $ | (29.7) | |
__________
| |
(a) | (a) Net interest income sensitivity given a one hundred basis point decrease in interest rates requires an assumption of negative interest rates in markets where existing interest rates are below one percent. |
Additional Model Assumptions The sensitivity analysis presented is ourGM Financial's best estimate of the effect of the hypothetical interest rate scenarios; however, our actual results could differ. OurThe estimates are also based on assumptions including the amortization and prepayment of the finance receivable portfolio, originations of finance receivables and leases, refinancing of maturing debt, replacement of maturing derivatives and exercise of options embedded in debt and derivatives. OurThe prepayment projections are based on historical experience. If interest rates or other factors change, our actual prepayment experience could be different than projected.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Foreign Currency Exchange Rate Risk GM Financial is exposed to foreign currency risk due to the translation and remeasurement of the results of certain international operations into U.S. Dollars as part of the consolidation process. Fluctuations in foreign currency exchange rates can therefore create volatility in the results of operations and may adversely affect GM Financial's financial condition.
GM Financial primarily finances its receivables and leased assets with debt in the same currency. When a different currency is used GM Financial may use foreign currency swaps to convert substantially all of its foreign currency debt obligations to the local currency of the receivables and leaseleased assets to minimize any impact to earnings. As a result, GM Financial believes its market risk exposure relating to changes in currency exchange rates at December 31, 2021 was insignificant.
GM Financial had foreign currency swaps in asset positions with notional amounts of $2.8$8.2 billion and an insignificant amount and in liability positions with notional amounts of an insignificant amount and $0.8$7.6 billion at December 31, 20172021 and 2016.2020. The net fair value of these derivative financial instruments was insignificant.a liability of $0.2 billion and an asset of $0.4 billion at December 31, 2021 and 2020.
The following table summarizes GM Financial's foreign currency translation and transaction and remeasurement (gains) losses:
| | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 |
Translation losses recorded in Accumulated other comprehensive loss | $ | 44 | | | $ | 82 | |
Transaction and remeasurement gains, net recorded in earnings | $ | (3) | | | $ | (6) | |
|
| | | | | | | |
| Years Ended December 31, |
| 2017 | | 2016 |
Translation (gains) losses recorded in Accumulated other comprehensive loss | $ | (474 | ) | | $ | 144 |
|
Transaction and remeasurement losses recorded in earnings | $ | 9 |
| | $ | 4 |
|
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholdersShareholders and the Board of Directors of General Motors Company:Company
Opinion on Internal Control overthe Financial ReportingStatements
We have audited the internal control over financial reportingaccompanying consolidated balance sheets of General Motors Company and subsidiaries (the "Company")Company) as of December 31, 2017,2021 and 2020, the related consolidated statements of income, comprehensive income, cash flows, and equity for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control –- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)(2013 framework) and our report dated February 2, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
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| Product warranty and recall campaigns |
Description of the matter | As discussed in Note 12 to the financial statements, the liabilities for product warranty and recall campaigns amount to $9.8 billion at December 31, 2021. The Company accrues for costs related to product warranty at the time of vehicle sale and accrues the estimated cost of recall campaigns when they are probable and estimable. |
| Auditing these liabilities involved a high degree of subjectivity in evaluating management’s estimates, due to the size, uncertainties, and potential volatility related to the estimated liabilities. Management’s estimates consider historical claims experience, including the nature, frequency, and average cost of claims of each vehicle line or each model year of the vehicle line, and the key assumptions of historical data being predictive of future activity and events, in particular, the number of historical periods used and the weighing of historical data in the reserve studies. |
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How we addressed the matter in our audit | We evaluated the design and tested the operating effectiveness of internal controls over the Company’s product warranty and recall campaign processes. We tested internal controls over management’s review of the valuation models and significant assumptions for product warranty and recall, including the warranty claims forecasted based on the frequency and average cost per warranty claim for product warranty, and the cost estimates related to recall campaigns. Our audit also included the evaluation of controls that address the completeness and accuracy of the data utilized in the valuation models. |
| Our audit procedures related to product warranty and recall campaigns also included, among others, evaluating the Company’s estimation methodology, the related significant assumptions and underlying data, and performing analytical procedures to corroborate cost per vehicle based on historical claims data. Furthermore, we performed sensitivity analyses to evaluate the significant judgments made by management, including cost estimates to evaluate the impact on reserves from changes in assumptions. We performed analysis over the vehicle lines and model years that had little or no claims experience to ensure the vehicle and model substitutions are comparable. We also involved actuarial specialists to evaluate the methodologies and assumptions, and to test the actuarial calculations used by the Company. |
| Sales incentives |
Description of the matter | Automotive sales and revenue represents the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or providing services, which is net of dealer and customer sales incentives the Company expects to pay. As discussed in Note 2 to the financial statements, provisions for dealer and customer incentives are recorded as a reduction to Automotive net sales and revenue at the time of vehicle sale. The liabilities for dealer and customer allowances, claims and discounts amount to $3.2 billion at December 31, 2021. |
| Auditing the estimate of sales incentives involved a high degree of judgment. Significant factors used by the Company in estimating its liability for retail incentives include type of program, forecasted sales volumes, product mix, and the rate of customer acceptance of incentive programs, all of which are estimated based on historical experience and assumptions concerning future customer behavior and market conditions. The Company’s estimation model reflects the best estimate of the total incentive amount that the Company reasonably expects to pay at the time of sale. The estimated cost of incentives is forward-looking, and could be materially affected by future economic and market conditions. |
How we addressed the matter in our audit | We evaluated the design and tested the operating effectiveness of internal controls over the Company’s sales incentive process, including management’s review of the estimation model, the significant assumptions (e.g., incentive cost per unit, customer take rate, and market conditions), and the data inputs used in the model.
Our audit procedures included, among others, the performance of analytical procedures to develop an independent range of the liability for retail incentives as of the balance sheet date. Our independent range was developed for comparison to the Company’s recorded liability, and is based on historical claims, forecasted spend, and the specific vehicle mix of current dealer stock. In addition, we performed sensitivity analyses over the cost per unit assumption developed by management to evaluate the impact on the liability resulting from a change in the assumption. Lastly, we assessed management’s forecasting process by performing quarterly hindsight analyses to assess the adequacy of prior forecasts. |
| Valuation of GM Financial Equipment on Operating Leases |
Description of the matter | GM Financial has recorded investments in vehicles leased to retail customers under operating leases. As discussed in Note 2 to the financial statements, at the beginning of the lease, management establishes an expected residual value for each vehicle at the end of the lease term. The Company’s estimated residual value of leased vehicles at the end of lease term was $29.1 billion as of December 31, 2021. |
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| Auditing management’s estimate of the residual value of leased vehicles involved a high degree of judgment. Management’s estimate is based, in part, on third-party data which considers inputs including recent auction values and significant assumptions regarding the expected future volume of leased vehicles that will be returned to the Company, used car prices, manufacturer incentive programs and fuel prices. Realization of the residual values is dependent on the future ability to market the vehicles under future prevailing market conditions. |
How we addressed the matter in our audit | We evaluated the design and tested the operating effectiveness of the Company’s controls over the lease residual estimation process, including controls over management’s review of residual value estimates obtained from the Company’s third-party provider and other significant assumptions. Our procedures also included, among others, independently recalculating depreciation related to equipment on operating leases and performing sensitivity analyses related to significant assumptions. We also performed hindsight analyses to assess the propriety of management’s estimate of residual values, as well as tested the completeness and accuracy of data from underlying systems and data warehouses that are used in the estimation models. |
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/s/ ERNST & YOUNG LLP |
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We have served as the Company's auditor since 2017. |
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Detroit, Michigan |
February 2, 2022 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of General Motors Company
Opinion on Internal Control over Financial Reporting
We have audited General Motors Company and subsidiaries’ internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, theGeneral Motors Company and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.the COSO criteria.
We also have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statementsbalance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, cash flows and equity for each of the yearthree years in the period ended December 31, 2017, of2021, and the Companyrelated notes and our report dated February 6, 20182, 2022 expressed an unqualified opinion on those financial statements.thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control overOver Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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/s/ ERNST & YOUNG LLP |
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/s/ DELOITTE & TOUCHE LLP Detroit, Michigan |
Detroit, Michigan |
February 6, 20182, 2022 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of General Motors Company:
Opinion on the Financial Statements
We have audited the accompanying Consolidated Balance Sheets of General Motors Company and subsidiaries (the "Company") as of December 31, 2017 and 2016, the related Consolidated Statements of Income, Comprehensive Income, Cash Flows, and Equity for each of the three years in the period ended December 31, 2017, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity withaccounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 6, 2018 expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
|
|
/s/ DELOITTE & TOUCHE LLP
|
Detroit, Michigan |
February 6, 2018 |
We have served as the Company's auditor since 1918.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Item 8.Financial Statements and Supplementary Data
CONSOLIDATED INCOME STATEMENTS
(In millions, except per share amounts)
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Net sales and revenue | | | | | |
Automotive | $ | 113,590 | | | $ | 108,673 | | | $ | 122,697 | |
GM Financial | 13,414 | | | 13,812 | | | 14,540 | |
Total net sales and revenue (Note 3) | 127,004 | | | 122,485 | | | 137,237 | |
Costs and expenses | | | | | |
Automotive and other cost of sales | 100,544 | | | 97,539 | | | 110,651 | |
GM Financial interest, operating and other expenses | 8,582 | | | 11,274 | | | 12,614 | |
Automotive and other selling, general and administrative expense | 8,554 | | | 7,038 | | | 8,491 | |
| | | | | |
Total costs and expenses | 117,680 | | | 115,851 | | | 131,756 | |
Operating income | 9,324 | | | 6,634 | | | 5,481 | |
Automotive interest expense | 950 | | | 1,098 | | | 782 | |
Interest income and other non-operating income, net (Note 19) | 3,041 | | | 1,885 | | | 1,469 | |
| | | | | |
Equity income (Note 8) | 1,301 | | | 674 | | | 1,268 | |
Income before income taxes | 12,716 | | | 8,095 | | | 7,436 | |
Income tax expense (Note 17) | 2,771 | | | 1,774 | | | 769 | |
| | | | | |
Net income | 9,945 | | | 6,321 | | | 6,667 | |
Net loss attributable to noncontrolling interests | 74 | | | 106 | | | 65 | |
Net income attributable to stockholders | $ | 10,019 | | | $ | 6,427 | | | $ | 6,732 | |
| | | | | |
Net income attributable to common stockholders | $ | 9,837 | | | $ | 6,247 | | | $ | 6,581 | |
| | | | | |
Earnings per share (Note 21) | | | | | |
Basic earnings per common share | $ | 6.78 | | | $ | 4.36 | | | $ | 4.62 | |
| | | | | |
| | | | | |
Weighted-average common shares outstanding – basic | 1,451 | | | 1,433 | | | 1,424 | |
| | | | | |
Diluted earnings per common share | $ | 6.70 | | | $ | 4.33 | | | $ | 4.57 | |
| | | | | |
| | | | | |
Weighted-average common shares outstanding – diluted | 1,468 | | | 1,442 | | | 1,439 | |
|
| | | | | | | | | | | |
| Years Ended December 31, |
| 2017 |
| 2016 |
| 2015 |
Net sales and revenue |
|
|
|
|
|
Automotive | $ | 133,449 |
|
| $ | 140,205 |
|
| $ | 129,864 |
|
GM Financial | 12,139 |
|
| 8,979 |
|
| 5,861 |
|
Total net sales and revenue | 145,588 |
|
| 149,184 |
|
| 135,725 |
|
Costs and expenses |
|
|
|
|
|
Automotive cost of sales | 114,869 |
|
| 120,499 |
|
| 112,995 |
|
GM Financial interest, operating and other expenses | 11,128 |
|
| 8,369 |
|
| 5,304 |
|
Automotive selling, general and administrative expense | 9,575 |
|
| 10,354 |
|
| 11,888 |
|
Total costs and expenses | 135,572 |
|
| 139,222 |
|
| 130,187 |
|
Operating income | 10,016 |
|
| 9,962 |
|
| 5,538 |
|
Automotive interest expense | 575 |
|
| 563 |
|
| 423 |
|
Interest income and other non-operating income, net | 290 |
|
| 327 |
|
| 614 |
|
Gain on extinguishment of debt | — |
|
| — |
|
| 449 |
|
Equity income (Note 8) | 2,132 |
|
| 2,282 |
|
| 2,193 |
|
Income before income taxes | 11,863 |
|
| 12,008 |
|
| 8,371 |
|
Income tax expense (benefit) (Note 18) | 11,533 |
|
| 2,739 |
|
| (1,219 | ) |
Income from continuing operations | 330 |
|
| 9,269 |
|
| 9,590 |
|
Income (loss) from discontinued operations, net of tax (Note 3) | (4,212 | ) |
| (1 | ) |
| 25 |
|
Net income (loss) | (3,882 | ) |
| 9,268 |
|
| 9,615 |
|
Net loss attributable to noncontrolling interests | 18 |
|
| 159 |
|
| 72 |
|
Net income (loss) attributable to stockholders | $ | (3,864 | ) |
| $ | 9,427 |
|
| $ | 9,687 |
|
| | | | | |
Net income (loss) attributable to common stockholders | $ | (3,880 | ) | | $ | 9,427 |
| | $ | 9,687 |
|
| | | | | |
Earnings per share (Note 21) | | | | | |
Basic earnings per common share – continuing operations | $ | 0.23 |
|
| $ | 6.12 |
|
| $ | 6.09 |
|
Basic earnings (loss) per common share – discontinued operations | $ | (2.88 | ) |
| $ | — |
|
| $ | 0.02 |
|
Basic earnings (loss) per common share | $ | (2.65 | ) |
| $ | 6.12 |
|
| $ | 6.11 |
|
Weighted-average common shares outstanding – basic | 1,465 |
| | 1,540 |
| | 1,586 |
|
| | | | | |
Diluted earnings per common share – continuing operations | $ | 0.22 |
|
| $ | 6.00 |
|
| $ | 5.89 |
|
Diluted earnings (loss) per common share – discontinued operations | $ | (2.82 | ) |
| $ | — |
|
| $ | 0.02 |
|
Diluted earnings (loss) per common share | $ | (2.60 | ) |
| $ | 6.00 |
|
| $ | 5.91 |
|
Weighted-average common shares outstanding – diluted | 1,492 |
| | 1,570 |
| | 1,640 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Net income | $ | 9,945 | | | $ | 6,321 | | | $ | 6,667 | |
Other comprehensive income (loss), net of tax (Note 20) | | | | | |
Foreign currency translation adjustments and other | 80 | | | (523) | | | (6) | |
| | | | | |
| | | | | |
Defined benefit plans | 4,126 | | | (1,795) | | | (2,122) | |
| | | | | |
Other comprehensive income (loss), net of tax | 4,206 | | | (2,318) | | | (2,128) | |
Comprehensive income | 14,151 | | | 4,003 | | | 4,539 | |
Comprehensive loss attributable to noncontrolling interests | 87 | | | 92 | | | 76 | |
Comprehensive income attributable to stockholders | $ | 14,238 | | | $ | 4,095 | | | $ | 4,615 | |
|
| | | | | | | | | | | |
| Years Ended December 31, |
| 2017 |
| 2016 |
| 2015 |
Net income (loss) | $ | (3,882 | ) |
| $ | 9,268 |
|
| $ | 9,615 |
|
Other comprehensive income (loss), net of tax (Note 20) |
|
|
|
|
|
Foreign currency translation adjustments and other | 747 |
|
| (384 | ) |
| (955 | ) |
Defined benefit plans | 570 |
|
| (969 | ) |
| 1,011 |
|
Other comprehensive income (loss), net of tax | 1,317 |
|
| (1,353 | ) |
| 56 |
|
Comprehensive income (loss) | (2,565 | ) |
| 7,915 |
|
| 9,671 |
|
Comprehensive loss attributable to noncontrolling interests | 20 |
|
| 218 |
|
| 53 |
|
Comprehensive income (loss) attributable to stockholders | $ | (2,545 | ) |
| $ | 8,133 |
|
| $ | 9,724 |
|
Reference should be made to the notes to consolidated financial statements.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except per share amounts) | | | December 31, 2017 | | December 31, 2016 | | December 31, 2021 | | December 31, 2020 |
ASSETS | | | | ASSETS | | | |
Current Assets | | | | Current Assets | |
Cash and cash equivalents | $ | 15,512 |
| | $ | 12,574 |
| Cash and cash equivalents | $ | 20,067 | | | $ | 19,992 | |
Marketable securities (Note 4) | 8,313 |
| | 11,841 |
| |
Accounts and notes receivable (net of allowance of $278 and $212) | 8,164 |
| | 8,700 |
| |
GM Financial receivables, net (Note 5; Note 12 at VIEs) | 20,521 |
| | 16,127 |
| |
Marketable debt securities (Note 4) | | Marketable debt securities (Note 4) | 8,609 | | | 9,046 | |
| Accounts and notes receivable, net of allowance of $192 and $224 | | Accounts and notes receivable, net of allowance of $192 and $224 | 7,394 | | | 8,035 | |
GM Financial receivables, net of allowance of $703 and $1,002 (Note 5; Note 11 at VIEs) | | GM Financial receivables, net of allowance of $703 and $1,002 (Note 5; Note 11 at VIEs) | 26,649 | | | 26,209 | |
Inventories (Note 6) | 10,663 |
| | 11,040 |
| Inventories (Note 6) | 12,988 | | | 10,235 | |
Equipment on operating leases, net (Note 7) | 1,106 |
| | 1,110 |
| |
Other current assets (Note 4; Note 12 at VIEs) | 4,465 |
| | 3,633 |
| |
Current assets held for sale (Note 3) | — |
| | 11,178 |
| |
Other current assets (Note 4; Note 11 at VIEs) | | Other current assets (Note 4; Note 11 at VIEs) | 6,396 | | | 7,407 | |
| Total current assets | 68,744 |
| | 76,203 |
| Total current assets | 82,103 | | | 80,924 | |
Non-current Assets | | | | Non-current Assets | |
GM Financial receivables, net (Note 5; Note 12 at VIEs) | 21,208 |
| | 17,001 |
| |
| GM Financial receivables, net of allowance of $1,183 and $976 (Note 5; Note 11 at VIEs) | | GM Financial receivables, net of allowance of $1,183 and $976 (Note 5; Note 11 at VIEs) | 36,167 | | | 31,783 | |
Equity in net assets of nonconsolidated affiliates (Note 8) | 9,073 |
| | 8,996 |
| Equity in net assets of nonconsolidated affiliates (Note 8) | 9,677 | | | 8,406 | |
Property, net (Note 9) | 36,253 |
| | 32,603 |
| Property, net (Note 9) | 41,115 | | | 37,632 | |
Goodwill and intangible assets, net (Note 11) | 5,849 |
| | 6,149 |
| |
Equipment on operating leases, net (Note 7; Note 12 at VIEs) | 42,882 |
| | 34,342 |
| |
Deferred income taxes (Note 18) | 23,544 |
| | 33,172 |
| |
Other assets (Note 4; Note 12 at VIEs) | 4,929 |
| | 3,849 |
| |
Non-current assets held for sale (Note 3) | — |
| | 9,375 |
| |
Goodwill and intangible assets, net (Note 10) | | Goodwill and intangible assets, net (Note 10) | 5,087 | | | 5,230 | |
| Equipment on operating leases, net (Note 7; Note 11 at VIEs) | | Equipment on operating leases, net (Note 7; Note 11 at VIEs) | 37,929 | | | 39,819 | |
Deferred income taxes (Note 17) | | Deferred income taxes (Note 17) | 21,152 | | | 24,136 | |
Other assets (Note 4; Note 11 at VIEs) | | Other assets (Note 4; Note 11 at VIEs) | 11,488 | | | 7,264 | |
| Total non-current assets | 143,738 |
| | 145,487 |
| Total non-current assets | 162,615 | | | 154,270 | |
Total Assets | $ | 212,482 |
| | $ | 221,690 |
| Total Assets | $ | 244,718 | | | $ | 235,194 | |
LIABILITIES AND EQUITY | | | | LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | | Current Liabilities | |
Accounts payable (principally trade) | $ | 23,929 |
| | $ | 23,333 |
| Accounts payable (principally trade) | $ | 20,391 | | | $ | 19,928 | |
Short-term debt and current portion of long-term debt (Note 14) | | | | |
Short-term debt and current portion of long-term debt (Note 13) | | Short-term debt and current portion of long-term debt (Note 13) | |
Automotive | 2,515 |
| | 1,060 |
| Automotive | 463 | | | 1,276 | |
GM Financial (Note 12 at VIEs) | 24,450 |
| | 22,737 |
| |
Accrued liabilities (Note 13) | 25,996 |
| | 25,893 |
| |
Current liabilities held for sale (Note 3) | — |
| | 12,158 |
| |
GM Financial (Note 11 at VIEs) | | GM Financial (Note 11 at VIEs) | 33,257 | | | 35,637 | |
Accrued liabilities (Note 12) | | Accrued liabilities (Note 12) | 20,297 | | | 23,069 | |
| Total current liabilities | 76,890 |
| | 85,181 |
| Total current liabilities | 74,408 | | | 79,910 | |
Non-current Liabilities | | | | Non-current Liabilities | |
Long-term debt (Note 14) | | | | |
Long-term debt (Note 13) | | Long-term debt (Note 13) | |
Automotive | 10,987 |
| | 9,500 |
| Automotive | 16,355 | | | 16,193 | |
GM Financial (Note 12 at VIEs) | 56,267 |
| | 41,826 |
| |
Postretirement benefits other than pensions (Note 16) | 5,998 |
| | 5,803 |
| |
Pensions (Note 16) | 13,746 |
| | 15,264 |
| |
Other liabilities (Note 13) | 12,394 |
| | 12,415 |
| |
Non-current liabilities held for sale (Note 3) | — |
| | 7,626 |
| |
GM Financial (Note 11 at VIEs) | | GM Financial (Note 11 at VIEs) | 59,304 | | | 56,788 | |
Postretirement benefits other than pensions (Note 15) | | Postretirement benefits other than pensions (Note 15) | 5,743 | | | 6,277 | |
Pensions (Note 15) | | Pensions (Note 15) | 8,008 | | | 12,902 | |
Other liabilities (Note 12) | | Other liabilities (Note 12) | 15,085 | | | 13,447 | |
| Total non-current liabilities | 99,392 |
| | 92,434 |
| Total non-current liabilities | 104,495 | | | 105,607 | |
Total Liabilities | 176,282 |
| | 177,615 |
| Total Liabilities | 178,903 | | | 185,517 | |
Commitments and contingencies (Note 17) | | |
|
| |
Commitments and contingencies (Note 16) | | Commitments and contingencies (Note 16) | 0 | | 0 |
Equity (Note 20) | | | | Equity (Note 20) | |
| Common stock, $0.01 par value | 14 |
| | 15 |
| Common stock, $0.01 par value | 15 | | | 14 | |
Additional paid-in capital | 25,371 |
| | 26,983 |
| Additional paid-in capital | 27,061 | | | 26,542 | |
Retained earnings | 17,627 |
| | 26,168 |
| Retained earnings | 41,937 | | | 31,962 | |
Accumulated other comprehensive loss | (8,011 | ) | | (9,330 | ) | Accumulated other comprehensive loss | (9,269) | | | (13,488) | |
Total stockholders’ equity | 35,001 |
| | 43,836 |
| Total stockholders’ equity | 59,744 | | | 45,030 | |
Noncontrolling interests | 1,199 |
| | 239 |
| Noncontrolling interests | 6,071 | | | 4,647 | |
Total Equity | 36,200 |
| | 44,075 |
| Total Equity | 65,815 | | | 49,677 | |
Total Liabilities and Equity | $ | 212,482 |
| | $ | 221,690 |
| Total Liabilities and Equity | $ | 244,718 | | | $ | 235,194 | |
Reference should be made to the notes to consolidated financial statements.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Cash flows from operating activities | | | | | |
Net income | $ | 9,945 | | | $ | 6,321 | | | $ | 6,667 | |
Depreciation and impairment of Equipment on operating leases, net | 6,076 | | | 7,178 | | | 7,332 | |
Depreciation, amortization and impairment charges on Property, net | 5,975 | | | 5,637 | | | 6,786 | |
Foreign currency remeasurement and transaction (gains) losses | (17) | | | 203 | | | (85) | |
Undistributed earnings of nonconsolidated affiliates, net | (517) | | | 524 | | | 585 | |
Pension contributions and OPEB payments | (838) | | | (851) | | | (985) | |
Pension and OPEB income, net | (1,605) | | | (765) | | | (484) | |
Provision (benefit) for deferred taxes | 2,214 | | | 925 | | | (133) | |
Change in other operating assets and liabilities (Note 24) | (3,366) | | | (399) | | | (3,789) | |
Other operating activities | (2,679) | | | (2,103) | | | (873) | |
| | | | | |
| | | | | |
Net cash provided by operating activities | 15,188 | | | 16,670 | | | 15,021 | |
Cash flows from investing activities | | | | | |
Expenditures for property | (7,509) | | | (5,300) | | | (7,592) | |
Available-for-sale marketable securities, acquisitions | (8,962) | | | (16,204) | | | (4,075) | |
| | | | | |
Available-for-sale marketable securities, liquidations | 9,347 | | | 11,941 | | | 6,265 | |
| | | | | |
| | | | | |
Purchases of finance receivables, net | (33,009) | | | (30,090) | | | (24,538) | |
Principal collections and recoveries on finance receivables | 24,622 | | | 19,726 | | | 22,005 | |
Purchases of leased vehicles, net | (14,602) | | | (15,233) | | | (16,404) | |
Proceeds from termination of leased vehicles | 14,393 | | | 13,399 | | | 13,302 | |
Other investing activities | (635) | | | (65) | | | 138 | |
| | | | | |
| | | | | |
Net cash used in investing activities | (16,355) | | | (21,826) | | | (10,899) | |
Cash flows from financing activities | | | | | |
Net increase (decrease) in short-term debt | 2,912 | | | 277 | | | (312) | |
Proceeds from issuance of debt (original maturities greater than three months) | 45,300 | | | 78,527 | | | 36,937 | |
Payments on debt (original maturities greater than three months) | (47,806) | | | (72,663) | | | (39,156) | |
| | | | | |
Proceeds from issuance of subsidiary preferred and common stock (Note 20) | 1,736 | | | 492 | | | 457 | |
Dividends paid | (186) | | | (669) | | | (2,350) | |
Other financing activities | (212) | | | (412) | | | (253) | |
| | | | | |
| | | | | |
Net cash provided by (used in) financing activities | 1,744 | | | 5,552 | | | (4,677) | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (152) | | | (222) | | | 2 | |
Net increase (decrease) in cash, cash equivalents and restricted cash | 425 | | | 174 | | | (553) | |
| | | | | |
Cash, cash equivalents and restricted cash at beginning of period | 23,117 | | | 22,943 | | | 23,496 | |
Cash, cash equivalents and restricted cash at end of period | $ | 23,542 | | | $ | 23,117 | | | $ | 22,943 | |
| | | | | |
| | | | | |
| | | | | |
Significant Non-cash Investing and Financing Activity | | | | | |
Non-cash property additions | $ | 4,305 | | | $ | 2,300 | | | $ | 2,837 | |
| | | | | |
| | | | | |
| | | | | |
|
| | | | | | | | | | | |
| Years Ended December 31, |
| 2017 |
| 2016 |
| 2015 |
Cash flows from operating activities |
|
|
|
|
|
Income from continuing operations | $ | 330 |
|
| $ | 9,269 |
|
| $ | 9,590 |
|
Depreciation, amortization and impairment charges | 12,261 |
|
| 9,819 |
|
| 7,487 |
|
Foreign currency remeasurement and transaction losses | 52 |
|
| 229 |
|
| 806 |
|
Undistributed earnings of nonconsolidated affiliates, net | (132 | ) |
| (15 | ) |
| (145 | ) |
Pension contributions and OPEB payments | (1,636 | ) |
| (3,454 | ) |
| (1,587 | ) |
Pension and OPEB (income) expense, net | (934 | ) |
| (769 | ) |
| 83 |
|
Provision (benefit) for deferred taxes | 10,880 |
|
| 2,228 |
|
| (2,046 | ) |
Change in other operating assets and liabilities (Note 25) | (3,015 | ) |
| 580 |
|
| (1,208 | ) |
Other operating activities | (468 | ) |
| (894 | ) |
| (370 | ) |
Net cash provided by operating activities – continuing operations | 17,338 |
|
| 16,993 |
|
| 12,610 |
|
Net cash used in operating activities – discontinued operations | (10 | ) |
| (386 | ) |
| (841 | ) |
Net cash provided by operating activities | 17,328 |
|
| 16,607 |
|
| 11,769 |
|
Cash flows from investing activities |
|
|
|
|
|
Expenditures for property | (8,453 | ) |
| (8,384 | ) |
| (6,813 | ) |
Available-for-sale marketable securities, acquisitions | (5,503 | ) |
| (15,182 | ) |
| (8,113 | ) |
Trading marketable securities, acquisitions | — |
|
| (262 | ) |
| (1,250 | ) |
Available-for-sale marketable securities, liquidations | 9,007 |
|
| 10,871 |
|
| 8,463 |
|
Trading marketable securities, liquidations | — |
|
| 872 |
|
| 1,758 |
|
Acquisition of companies/investments, net of cash acquired | (41 | ) |
| (804 | ) |
| (927 | ) |
Purchases of finance receivables, net | (19,325 | ) |
| (14,378 | ) |
| (13,888 | ) |
Principal collections and recoveries on finance receivables | 12,578 |
|
| 9,899 |
|
| 8,548 |
|
Purchases of leased vehicles, net | (19,180 | ) |
| (19,495 | ) |
| (15,096 | ) |
Proceeds from termination of leased vehicles | 6,667 |
|
| 2,554 |
|
| 1,095 |
|
Other investing activities | 178 |
|
| 162 |
|
| 15 |
|
Net cash used in investing activities – continuing operations | (24,072 | ) |
| (34,147 | ) |
| (26,208 | ) |
Net cash used in investing activities – discontinued operations (Note 3) | (3,500 | ) |
| (1,496 | ) |
| (1,502 | ) |
Net cash used in investing activities | (27,572 | ) |
| (35,643 | ) |
| (27,710 | ) |
Cash flows from financing activities |
|
|
|
|
|
Net decrease in short-term debt | (140 | ) |
| (282 | ) |
| (61 | ) |
Proceeds from issuance of debt (original maturities greater than three months) | 52,187 |
|
| 42,036 |
|
| 31,547 |
|
Payments on debt (original maturities greater than three months) | (33,592 | ) |
| (20,727 | ) |
| (13,469 | ) |
Payments to purchase common stock | (4,492 | ) |
| (2,500 | ) |
| (3,520 | ) |
Proceeds from issuance of GM Financial preferred stock | 985 |
|
| — |
|
| — |
|
Dividends paid | (2,233 | ) |
| (2,368 | ) |
| (2,242 | ) |
Other financing activities | (305 | ) |
| (163 | ) |
| (159 | ) |
Net cash provided by financing activities – continuing operations | 12,410 |
|
| 15,996 |
|
| 12,096 |
|
Net cash provided by financing activities – discontinued operations | 174 |
|
| 1,081 |
|
| 1,512 |
|
Net cash provided by financing activities | 12,584 |
|
| 17,077 |
|
| 13,608 |
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 348 |
|
| (213 | ) |
| (1,524 | ) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 2,688 |
|
| (2,172 | ) |
| (3,857 | ) |
Cash, cash equivalents and restricted cash at beginning of period | 15,160 |
|
| 17,332 |
|
| 21,189 |
|
Cash, cash equivalents and restricted cash at end of period | $ | 17,848 |
|
| $ | 15,160 |
|
| $ | 17,332 |
|
| | | | | |
Cash, cash equivalents and restricted cash – continuing operations at end of period (Note 4) | $ | 17,848 |
|
| $ | 14,487 |
|
| $ | 16,588 |
|
Cash, cash equivalents and restricted cash – discontinued operations at end of period | $ | — |
|
| $ | 673 |
|
| $ | 744 |
|
Significant Non-cash Investing and Financing Activity |
|
|
|
|
|
|
|
|
Non-cash property additions – continuing operations | $ | 3,996 |
|
| $ | 3,897 |
|
| $ | 3,970 |
|
Non-cash property additions – discontinued operations | $ | — |
|
| $ | 868 |
|
| $ | 706 |
|
Non-cash business acquisition – continuing operations (Note 10) | $ | — |
|
| $ | 290 |
|
| $ | — |
|
Non-cash proceeds on sale of discontinued operations (Note 3) | $ | 808 |
|
| $ | — |
|
| $ | — |
|
Reference should be made to the notes to consolidated financial statements.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
(In millions)
| | | | | | | | | | | | | | | | Common Stockholders’ | | Noncontrolling Interests | | Total Equity |
| Common Stockholders’ |
| Noncontrolling Interests |
| Total Equity | Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | |
| Balance at January 1, 2019 | $ | 14 | | | $ | 25,563 | | | $ | 22,322 | | | $ | (9,039) | | | $ | 3,917 | | | $ | 42,777 | |
Net income | | Net income | — | | | — | | | 6,732 | | | — | | | (65) | | | 6,667 | |
Other comprehensive loss | | Other comprehensive loss | — | | | — | | | — | | | (2,117) | | | (11) | | | (2,128) | |
Issuance of subsidiary preferred stock (Note 20) | | Issuance of subsidiary preferred stock (Note 20) | — | | | — | | | — | | | — | | | 457 | | | 457 | |
| Common Stock |
| Additional Paid-in Capital |
| Retained Earnings |
| Accumulated Other Comprehensive Loss |
| Noncontrolling Interests |
| Total Equity | |
$ | 16 |
|
| $ | 28,937 |
|
| $ | 14,577 |
|
| $ | (8,073 | ) |
| |
| Stock based compensation | | Stock based compensation | — | | | 409 | | | (34) | | | — | | | — | | | 375 | |
Cash dividends paid on common stock | | Cash dividends paid on common stock | — | | | — | | | (2,165) | | | — | | | — | | | (2,165) | |
Dividends to noncontrolling interests | | Dividends to noncontrolling interests | — | | | — | | | — | | | — | | | (166) | | | (166) | |
Other | | Other | — | | | 102 | | | 5 | | | — | | | 33 | | | 140 | |
Balance at December 31, 2019 | | Balance at December 31, 2019 | 14 | | | 26,074 | | | 26,860 | | | (11,156) | | | 4,165 | | | 45,957 | |
Adoption of accounting standards | | Adoption of accounting standards | — | | | — | | | (660) | | | — | | | — | | | (660) | |
Net income | | Net income | — | | | — | | | 6,427 | | | — | | | (106) | | | 6,321 | |
Other comprehensive loss | | Other comprehensive loss | — | | | — | | | — | | | (2,332) | | | 14 | | | (2,318) | |
Purchase of common stock | | Purchase of common stock | — | | | (57) | | | (33) | | | — | | | — | | | (90) | |
Issuance of subsidiary preferred stock (Note 20) | | Issuance of subsidiary preferred stock (Note 20) | — | | | — | | | — | | | — | | | 544 | | | 544 | |
Stock based compensation | | Stock based compensation | — | | | 525 | | | (10) | | | — | | | — | | | 515 | |
Cash dividends paid on common stock | | Cash dividends paid on common stock | — | | | — | | | (545) | | | — | | | — | | | (545) | |
Dividends to noncontrolling interests | | Dividends to noncontrolling interests | — | | | — | | | — | | | — | | | (46) | | | (46) | |
| Other | | Other | — | | | — | | | (77) | | | — | | | 76 | | | (1) | |
Balance at December 31, 2020 | | Balance at December 31, 2020 | 14 | | | 26,542 | | | 31,962 | | | (13,488) | | | 4,647 | | | 49,677 | |
| Net income | — |
|
| — |
|
| 9,687 |
|
| — |
|
| (72 | ) |
| 9,615 |
| Net income | — | | | — | | | 10,019 | | | — | | | (74) | | | 9,945 | |
Other comprehensive income | — |
|
| — |
|
| — |
|
| 37 |
|
| 19 |
|
| 56 |
| Other comprehensive income | — | | | — | | | — | | | 4,219 | | | (13) | | | 4,206 | |
Purchase of common stock | (1 | ) |
| (1,745 | ) |
| (1,774 | ) |
| — |
|
| — |
|
| (3,520 | ) | |
Exercise of common stock warrants | — |
|
| 46 |
|
| — |
|
| — |
|
| — |
|
| 46 |
| |
| Issuance of subsidiary preferred stock (Note 20) | | Issuance of subsidiary preferred stock (Note 20) | — | | | — | | | — | | | — | | | 1,736 | | | 1,736 | |
Stock based compensation | — |
|
| 369 |
|
| (31 | ) |
| — |
|
| — |
|
| 338 |
| Stock based compensation | — | | | 526 | | | (3) | | | — | | | — | | | 523 | |
Cash dividends paid on common stock | — |
|
| — |
|
| (2,174 | ) |
| — |
|
| — |
|
| (2,174 | ) | |
Dividends declared or paid to noncontrolling interests | — |
|
| — |
|
| — |
|
| — |
|
| (75 | ) |
| (75 | ) | |
| Dividends to noncontrolling interests | | Dividends to noncontrolling interests | — | | | — | | | — | | | — | | | (186) | | | (186) | |
Other | — |
|
| — |
|
| — |
|
| — |
|
| 13 |
|
| 13 |
| Other | 1 | | | (7) | | | (41) | | | — | | | (39) | | | (86) | |
Balance at December 31, 2015 | 15 |
|
| 27,607 |
|
| 20,285 |
|
| (8,036 | ) |
| 452 |
|
| 40,323 |
| |
Net income | — |
|
| — |
|
| 9,427 |
|
| — |
|
| (159 | ) |
| 9,268 |
| |
Other comprehensive loss | — |
|
| — |
|
| — |
|
| (1,294 | ) |
| (59 | ) |
| (1,353 | ) | |
Issuance of common stock | — |
|
| 290 |
|
| — |
|
| — |
|
| — |
|
| 290 |
| |
Purchase of common stock | — |
|
| (1,320 | ) |
| (1,180 | ) |
| — |
|
| — |
|
| (2,500 | ) | |
Exercise of common stock warrants | — |
|
| 89 |
|
| — |
|
| — |
|
| — |
|
| 89 |
| |
Stock based compensation | — |
|
| 317 |
|
| (27 | ) |
| — |
|
| — |
|
| 290 |
| |
Cash dividends paid on common stock | — |
|
| — |
|
| (2,337 | ) |
| — |
|
| — |
|
| (2,337 | ) | |
Dividends declared or paid to noncontrolling interests | — |
|
| — |
|
| — |
|
| — |
|
| (31 | ) |
| (31 | ) | |
Other | — |
|
| — |
|
| — |
|
| — |
|
| 36 |
|
| 36 |
| |
Balance at December 31, 2016 | 15 |
|
| 26,983 |
|
| 26,168 |
|
| (9,330 | ) |
| 239 |
|
| 44,075 |
| |
Net loss | — |
|
| — |
|
| (3,864 | ) |
| — |
|
| (18 | ) |
| (3,882 | ) | |
Other comprehensive income | — |
|
| — |
|
| — |
|
| 1,319 |
|
| (2 | ) |
| 1,317 |
| |
Purchase of common stock | (1 | ) |
| (2,063 | ) |
| (2,428 | ) |
| — |
|
| — |
|
| (4,492 | ) | |
Exercise of common stock warrants | — |
|
| 43 |
|
| — |
|
| — |
|
| — |
|
| 43 |
| |
Issuance of GM Financial preferred stock | — |
|
| — |
|
| — |
|
| — |
|
| 985 |
|
| 985 |
| |
Stock based compensation | — |
|
| 468 |
|
| (34 | ) |
| — |
|
| — |
|
| 434 |
| |
Cash dividends paid on common stock | — |
|
| — |
|
| (2,215 | ) |
| — |
|
| — |
|
| (2,215 | ) | |
Dividends declared or paid to noncontrolling interests | — |
|
| — |
|
| — |
|
| — |
|
| (18 | ) |
| (18 | ) | |
Other | — |
|
| (60 | ) |
| — |
|
| — |
|
| 13 |
|
| (47 | ) | |
Balance at December 31, 2017 | $ | 14 |
|
| $ | 25,371 |
|
| $ | 17,627 |
|
| $ | (8,011 | ) |
| $ | 1,199 |
|
| $ | 36,200 |
| |
Balance at December 31, 2021 | | Balance at December 31, 2021 | $ | 15 | | | $ | 27,061 | | | $ | 41,937 | | | $ | (9,269) | | | $ | 6,071 | | | $ | 65,815 | |
Reference should be made to the notes to consolidated financial statements.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. 1. Nature of Operations and Basis of Presentation
General Motors Company was incorporated as a Delaware corporation in 2009. We design, build and sell cars, trucks, crossovers, cars and automobile parts, worldwide.provide software-enabled services worldwide and are investing in and growing an AV business. We also provide automotive financing services through GM Financial. We analyze the results of our continuing operations through the following segments: GMNA, GMI, Cruise and GM Financial. Cruise is our global segment responsible for the development and commercialization of AV technology. Nonsegment operations and Maven, our ride- and car-sharing business, are classified as Corporate. Corporate includes certain centrally recorded income and costs such as interest, income taxes, corporate expenditures including autonomous vehicle-related engineering costs and certain nonsegment specificnonsegment-specific revenues and expenses.
On July 31, 2017 we closed the sale of our Opel and Vauxhall businesses and certain other assets in Europe (the Opel/Vauxhall Business) to Peugeot, S.A. (PSA Group). On October 31, 2017 we closed the sale of our European financing subsidiaries and branches (the Fincos, and together with the Opel/Vauxhall Business, the European Business) to Banque PSA Finance S.A. and BNP Paribas Personal Finance S.A. The European Business is presented as discontinued operations in our consolidated financial statements for all periods presented. The assets and liabilities of the European Business are presented as held for sale in our consolidated financial statements as of December 31, 2016. Unless otherwise indicated, information in these notes to the consolidated financial statements relates to our continuing operations. Refer to Note 3 for additional details regarding the disposal of the European Business.
Principles of Consolidation The consolidated financial statements are prepared in conformity with U.S. GAAP. All intercompany balances and transactions have been eliminated in consolidation. Except for per share amounts or as otherwise specified, amounts presented within tables are stated in millions.
Principles of Consolidation We consolidate entities that we control due to ownership of a majority voting interest and we consolidate variable interest entities (VIEs) when we have variable interests and are the primary beneficiary. We continually evaluate our involvement with VIEs to determine when these criteria are met.All intercompany balances and transactions have been eliminated in consolidation. Our share of earnings or losses of nonconsolidated affiliates is included in our consolidated operating results using the equity method of accounting when we are able to exercise significant influence over the operating and financial decisions of the affiliate. We use the cost method of accounting if we are not able to exercise significant influence over the operating and financial decisions of the affiliate.
Use of Estimates in the Preparation of the Financial Statements Accounting estimates are an integral part of the consolidated financial statements. These estimates require the use of judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods.
GM Financial The amounts presented for GM Financial have been adjusted to includereflect the effect of our tax attributesimpact on GM Financial's deferred tax positions and provision for income taxes which are not applicable toresulting from the inclusion of GM Financial on a stand-alone basis,in our consolidated tax return and to eliminate the effect of transactions between GM Financial and the other members of the consolidated group. Accordingly, the amounts presented will differ from those presented by GM Financial on a stand-alone basis.
Note 2.Significant Accounting Policies
The accounting policies that follow are utilized by our automotive, and automotive financing and Cruise operations, unless otherwise indicated. We adopted Accounting Standards Update (ASU) 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASU 2016-13) on January 1, 2020 on a modified retrospective basis. As such, the comparative information in prior periods was not restated and continues to be reported under the accounting standards in effect for those periods. The accounting policies for Marketable Debt Securities, Accounts and Notes Receivable and GM Financial Receivables that were affected by the adoption of ASU 2016-13 became effective on January 1, 2020.
Revenue Recognition
Automotive Automotive net sales and revenue primarily consistrepresents the amount of revenue generated fromconsideration to which we expect to be entitled in exchange for vehicle, parts and accessories and services and other sales. The consideration recognized represents the amount received, typically shortly after the sale of vehicles. Vehicle sales are recorded when title and risks and rewards of ownership have passed to our customers. For the majority of our automotive sales this occurs when a vehicle is released to the carrier responsible for transporting it to a dealer and when collectability is reasonably assured. Vehicle sales are recorded when the vehicle is delivered to the dealer in most remaining cases. Provisions for recurring or announcedcustomer, net of estimated dealer and customer sales incentives we reasonably expect to pay. Significant factors in determining our estimates of incentives include forecasted sales volume, product mix and leasing incentives, consistingthe rate of allowancescustomer acceptance of incentive programs, all of which are estimated based on historical experience and rebates,assumptions concerning future customer behavior and market conditions. Subsequent adjustments to incentive estimates are recordedpossible as reductionsfacts and circumstances change over time. A portion of the consideration received is deferred for separate performance obligations, such as maintenance and vehicle connectivity, that will be provided to Automotive net sales and revenueour customers at the time of vehicle sale. All other incentives, allowances and rebates related to vehicles previously sold are recorded as reductions to Automotive net sales and revenue when announced.a future date. Taxes assessed by various government entities, such as sales, use and value-added taxes, collected at the time of the vehicle sale are excluded from Automotive net sales and revenue. Costs for shipping and handling activities that occur after control of the vehicle transfers to the dealer are recognized at the time of sale and presented in Automotive and other cost of sales.
Vehicle, Parts and Accessories For the majority of vehicle and accessories sales, our customers obtain control and we recognize revenue when the vehicle transfers to the dealer, which generally occurs when the vehicle is released to the carrier responsible for transporting it to a dealer. Revenue, net of estimated returns, is recognized on the sale of parts upon delivery to the customer. When our customers have a right to return eligible parts and accessories, we consider the returns in our estimation of the transaction price.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ——– (Continued)
Vehicle salesTypically, transfers to daily rental car companies with guaranteed repurchase obligations are accounted for as operating leases. Estimated leasesales, with revenue is recorded ratably overrecognized at the estimated termtime of transfer. We defer revenue for remarketing obligations, record a residual value guarantee and reflect a liability for amounts expected to be paid once the remarketing services are complete at the time of certain transfers and recognize deferred revenue in earnings upon completion of the lease based onremarketing service.
Used Vehicles Proceeds from the difference betweenauction of vehicles utilized by our employees are recognized in Automotive net sales proceeds and the guaranteed repurchase amount. The difference between the costrevenue upon transfer of control of the vehicle to the customer and estimated residualthe related vehicle carrying value is depreciated onrecognized in Automotive and other cost of sales.
Services and Other Services and other revenue primarily consists of revenue from vehicle-related service arrangements and after-sale services such as maintenance, OnStar, vehicle connectivity and extended service warranties. For those service arrangements that are bundled with a straight-line basis over the estimated termvehicle sale, a portion of the lease.revenue from the sale is allocated to the service component and recognized as deferred revenue within Accrued liabilities or Other liabilities. We recognize revenue for bundled services and services sold separately as services are performed, typically over a period of up to seven years.
Automotive Financing - GM Financial Finance charge income earned on finance receivables is recognized using the effective interest method. Fees and commissions received (including incentive payments) received and direct costs of originating loans are deferred and amortized over the term of the related finance receivables using the effective interest method and are removed from the consolidated balance sheets when the related finance receivables are sold,fully charged off or paid in full. Accrual of finance charge income on retail finance receivables is generally suspended on accounts that are more than 60 days delinquent, accounts in bankruptcy and accounts in repossession. Payments received on nonaccrual loans are first applied to any fees due, then to any interest due and then any remaining amounts are recordedapplied to principal. Interest accrual generally resumes once an account has received payments bringing the delinquency to less than 60 days past due. Accrual of finance charge income on commercial finance receivables is generally suspended on accounts that are more than 90 days delinquent, upon receipt of a bankruptcy notice from a borrower, or where reasonable doubt exists about the full collectability of contractually agreed upon principal and interest. Payments received on nonaccrual loans are first applied to principal. Interest accrual resumes once an account has received payments bringing the account fully current and collection of contractual principal and interest is reasonably assured (including amounts previously charged off).
Income from operating lease assets, which includes lease origination fees, net of lease origination costs, and incentives, is recorded as operating lease revenue on a straight-line basis over the term of the lease agreement. Gains or losses realized upon disposition of off-lease assets including any payments received from lessees upon lease termination, are included in GM Financial interest, operating and other.
Advertising and Promotion Expenditures Advertising and promotion expenditures, which are expensed as incurred in Automotive and other selling, general and administrative expense, were $4.3$3.3 billion, $4.6$2.7 billion and $4.4$3.7 billion in the years ended December 31, 2017, 20162021, 2020 and 2015.2019.
Research and Development Expenditures Research and development expenditures, which are expensed as incurred in Automotive and other cost of sales, were $7.3$7.9 billion, $6.6$6.2 billion and $6.0$6.8 billion in the years ended December 31, 2017, 20162021, 2020 and 2015.2019. We enter into cost sharing arrangements with third parties or nonconsolidated affiliates for product-related research, engineering, design and development activities. Cost sharing payments and fees related to these arrangements are presented in Automotive and other cost of sales.
Cash Equivalents and Restricted Cash Cash equivalents are defined as short-term, highly-liquid investments with original maturities of 90 days or less. Certain operating agreements require us to post cash as collateral. Cash and cash equivalents subject to contractual restrictions and not readily available are classified as restricted cash. We are required to post cash as collateral as part of certain agreements that we enter into as part of our operations. Restricted cash is invested in accordance with the terms of the underlying agreements and include amounts related to various deposits, escrows and other cash collateral. Restricted cash is included in Other current assets and Other assets in the consolidated balance sheets.
Fair Value Measurements A three-level valuation hierarchy, based upon observable and unobservable inputs, is used for fair value measurements. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions based on the best evidence available. These two types of inputs create the following fair value hierarchy: Level 1 – Quoted prices for identical instruments in active markets; Level 2 – Quoted prices for similar instruments
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose significant inputs are observable; and Level 3 – Instruments whose significant inputs are unobservable. Financial instruments are transferred in and/or out of Level 1, 2 or 3 at the beginning of the accounting period in which there is a change in the valuation inputs.
Marketable Debt Securities We generally classify marketable debt securities as available-for-sale or trading.available-for-sale. Various factors, including turnover of holdings and investment guidelines, are considered in determining the classification of securities. Available-for-sale debt securities are recorded at fair value with non-credit related unrealized gains and losses recorded net of related income taxes in Accumulated other comprehensive loss until realized. Trading securitiesCredit losses are recorded at fair value with changes in fair value recorded in Interest income and other non-operating income, net. An evaluation is made quarterly to determine if any portion of unrealized losses recorded in Accumulated other comprehensive loss needs to be reclassified. Non-credit related unrealized losses are reclassified to Interest income and other non-operating income, net if we intend to sell the security or it is more likely than not that we will be required to sell the security before the recovery of the unrealized loss.
We determine realized gains and losses for all debt securities using the specific identification method.
Wemethod and measure the fair value of our marketable debt securities using a market approach where identical or comparable prices are available and an income approach in other cases. If quoted market prices are not available, fair values of securities are determined using
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)
prices from a pricing service, pricing models, quoted prices of securities with similar characteristics or discounted cash flow models. These prices represent non-binding quotes. Our pricing service utilizes industry-standard pricing models that consider various inputs. We conduct an annualtypically review of our pricing service quarterly and believe the prices received from our pricing service are a reliable representation of exit prices.
An evaluation is made quarterly to determine if unrealized losses related to non-trading investments in securities are other-than-temporary. Factors considered include the length of time and extent to which the fair value has been below cost, the financial condition and near-term prospects of the issuer and the intent to sell or likelihood to be forced to sell the security before any anticipated recovery.
Accounts and Notes Receivable Accounts and notes receivable primarily consists of amounts that are due and payable from our customers for the sale of vehicles, parts, and accessories. We evaluate the collectability of receivables each reporting period and record an allowance for doubtful accounts representingto present the net amount expected to be collected on our estimate of probable losses.receivables. Additions to the allowance are charged to bad debt expense reported in Automotive and other selling, general and administrative expense and were insignificant in the years ended December 31, 2017, 20162021, 2020 and 2015.2019.
GM Financial Receivables Finance receivables are carried at amortized cost, net of allowance for loan losses. Provisions for loan losses are charged to operations in amounts sufficient to maintain the allowance for loan losses at levels considered adequate to cover expected credit losses on the finance receivables. For retail finance receivables, GM Financial uses a combination of forecasting models and management judgmentstatic pool modeling techniques to determine the collective allowance for loan losses.losses expected over the remaining life of the receivables, which is supplemented by management judgment. The modeling techniques incorporate reasonable and supportable forecasts of economic conditions over the expected remaining life of the finance receivables. The economic forecasts incorporate factors which vary by region that GM Financial believes will have the largest impact on expected losses, including unemployment rates, interest rate spreads, disposable personal income and growth rates in gross domestic product.
Troubled debt restructurings (TDRs) are grouped separately for purposes of measuring the allowance. The allowance for TDRs uses static pool modeling techniques like non-TDR retail finance receivables to determine the expected loss amount. The expected cash flows of the receivables are then discounted at the original weighted average effective interest rate of the pool. Factors that are considered when estimating the collective allowance include historical delinquency migration to loss, probability of default and loss given default. The loss confirmation period is a key assumption within the models and represents the average amount of time from when a loss event first occurs to when the receivable is charged off. GM Financial also considersfor TDRs are based on an evaluation of overall portfolio credit quality based on various indicators.
Retail finance receivables that become classified as troubled debt restructurings (TDRs) are separately assessed for impairment. A specific allowance is estimated based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate.historical and current information, which may be supplemented by management judgment. Finance charge income from loans classified as TDRs is accounted for in the same manner as other accruing loans. Cash collections on these loans are allocated according to the same payment hierarchy methodology applied to loans that are not classified as TDRs.
RetailCommercial finance receivables are generally charged off in the month in which the account becomes 120 days contractually delinquent ifcarried at amortized cost, net of allowance for loan losses and amounts held under a cash management program. GM Financial has not yet recorded a repossession charge-off. A charge-off generally representsestablishes the difference betweenallowance for loan losses based on historical loss experience, as well as the estimated netforecast for industry vehicle sales, proceeds andwhich is the amount ofeconomic indicator believed to have the contract, including accrued interest.largest impact on expected losses.
Inventories Inventories are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less cost to sell, and considers general market and economic conditions, periodic reviews of current profitability of vehicles, product warranty costs and the effect of current and expected incentive offers at the balance sheet date.estimated sales incentives. Net realizable value for off-lease and other vehicles is current auction sales proceeds less disposal and warranty costs. Productive material, supplies, work in process and service parts are reviewed to determine if inventory quantities are in excess of forecasted usage or if they have become obsolete.
Equipment on Operating Leases Equipment on operating leases, net is reported at cost, less accumulated depreciation and impairment, net of origination fees or costs and lease incentives. Estimated income from operating lease assets, which includes lease origination fees, net of lease origination costs, is recorded as operating lease revenue on a straight-line basis over the term of the lease agreement. Leased vehicles are depreciated on a straight-line basis to an estimated residual value over the term of the lease agreements.
Equipment on operating leases, netprimarily consists of vehicle leases to retail customers with lease terms of two to five years and vehicles leased to rental car companies with lease terms that average seven months.years. We are exposed to changes in the residual values of these assets. The residual values represent estimates of the values of the leased vehicles at the end of the lease contractsagreements and are determined based on
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
forecasted auction proceeds when there is a reliable basis to make such a determination. Realization of the residual values is dependent on the future ability to market the vehicles under prevailing market conditions. The adequacy of the estimate of the residual value is evaluated over the life of the leasearrangement and adjustments may be made to the extent the expected value of the vehicle at lease termination changes. Adjustments may be in the form of revisions to the depreciation rate or recognition of an impairment charge. ImpairmentA lease vehicle asset group is determined to existbe impaired if an impairment indicator exists and the expected future cash flows, which include estimated residual values, are lower than the carrying amount of a leasedthe vehicle asset group. If the carrying amount
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)
is considered impaired an impairment charge is recorded for the amount by which the carrying amount exceeds fair value of the leased vehicle asset group. Fair value is determined primarily using the anticipated cash flows, including estimated residual values.
In our automotive operations when a leased vehicle is returned the asset is reclassified from Equipment on operating leases, net to Inventories at the lower of cost or estimated selling price, less costs to sell. Upon disposition, proceeds are recorded in Automotive net sales and revenue and costs are recorded in Automotive cost of sales. In our automotive finance operations when a leased vehicle is returned or repossessed the asset is recorded in Other assets at the lower of amortized cost or estimated selling price, less costs to sell.net realizable value. Upon disposition a gain or loss is recorded in GM Financial interest, operating and other expenses for any difference between the net book value of the leased asset and the proceeds from the disposition of the asset.
Depreciation expense and impairment charges related to Equipment on operating leases, net are recorded in Automotive cost of sales or GM Financial interest, operating and other expenses.
Valuation of Cost and Equity Method Investments When events and circumstances warrant, equity investments accounted for under the cost or equity method of accounting are evaluated for impairment. An impairment charge is recorded whenever a decline in value of an equity investment below its carrying amount is determined to be other-than-temporary. Impairment charges related to equity method investments are recorded in Equity income. Impairment charges relatedEquity investments that are not accounted for under the equity method of accounting are measured at fair value or in certain cases adjusted to cost method investments arefair value upon an observable price change, with changes in fair value recorded in Interest income and other non-operating income, net.
Property, net Property, plant and equipment, including internal use software, is recorded at cost. Major improvements that extend the useful life or add functionality are capitalized. The gross amount of assets under capitalfinance leases is included in property, plant and equipment. Expenditures for repairs and maintenance are charged to expense as incurred. We depreciate depreciable property using the straight-line method. Leasehold improvements are amortized over the period of lease or the life of the asset, whichever is shorter. The amortization of the assets under capitalfinance leases is included in depreciation expense. Upon retirement or disposition of property, plant and equipment, the cost and related accumulated depreciation are eliminated and any resulting gain or loss is recorded in earnings. Impairment charges related to property are recorded in Automotive and other cost of sales, Automotive and other selling, general and administrative expense or GM Financial interest, operating and other expenses.
Special Tools Special tools represent product-specific powertrainpropulsion and non-powertrainnon-propulsion related tools, dies, molds and other items used in the vehicle manufacturing process. Expenditures for special tools are recorded at cost and are capitalized. We amortize special tools over their estimated useful lives using the straight-line method or an accelerated amortization method based on their historical and estimated production volume. Impairment charges related to special tools are recorded in Automotive and other cost of sales.
Goodwill Goodwill is not amortized but rather tested for impairment annually on October 1 orand when events occur or circumstances change that would triggerwarrant such a review. A multi-stepThe impairment test entails an assessment of qualitative factors to determine whether it is more likely than not that an impairment exists. If it is more likely than not that an impairment exists, then a quantitative impairment test is used to identify potential goodwill impairment.performed. Impairment exists when the carrying amount of goodwilla reporting unit exceeds its implied fair value. Because the fair value of goodwill can be measured only as a residual amount and cannot be determined directly we calculate the implied goodwill for those reporting units failing Step 1 in the same manner that goodwill is recognized in a business combination pursuant to Accounting Standards Codification (ASC) 805.
Intangible Assets, net Intangible assets, excluding goodwill, primarily include brand names, technology and intellectual property, customer relationships and dealer networks. Intangible assets are amortized on a straight-line or an accelerated method of amortization over their estimated useful lives. An accelerated amortization method reflecting the pattern in which the asset will be consumed is utilized if that pattern can be reliably determined. We consider the period of expected cash flows and underlying data used to measure the fair value of the intangible assets when selecting a useful life. Amortization of developed technology and intellectual property is recorded in Automotive and other cost of sales. Amortization of brand names, customer relationships and our dealer networks is recorded in Automotive and other selling, general and administrative expense or GM Financial interest, operating and other expenses. Impairment charges, if any, related to intangible assets are recorded in Automotive and other selling, general and administrative expense or Automotive and other cost of sales.
Valuation of Long-Lived Assets The carrying amount of long-lived assets and finite-lived intangible assets to be held and used in the business is evaluated for impairment when events and circumstances warrant. If the carrying amount of a long-lived asset group is considered impaired, a loss is recorded based on the amount by which the carrying amount exceeds fair value. Product-specific long-lived asset groups and non-product specific long-lived assets are separately tested for impairment on an asset group basis. Fair value is determined using either the market or sales comparison approach, cost approach or anticipated cash flows
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ——– (Continued)
cash flows discounted at a rate commensurate with the risk involved. Long-lived assets to be disposed of other than by sale are considered held for use until disposition.
Pension and OPEB Plans
Attribution, Methods and Assumptions The cost of benefits provided by defined benefit pension plans is recorded in the period employees provide service. The cost of pension plan amendments that provide for benefits already earned by plan participants is amortized over the expected period of benefit which may be the duration of the applicable collective bargaining agreement specific to the plan, the expected future working lifetime or the life expectancy of the plan participants.
The cost of medical, dental, legal service and life insurance benefits provided through postretirement benefit plans is recorded in the period employees provide service. The cost of postretirement plan amendments that provide for benefits already earned by plan participants is amortized over the expected period of benefit which may be the average period to full eligibility or the average life expectancy of the plan participants.
An expected return on plan asset methodology is utilized to calculate future pension expense for certain significant funded benefit plans. A market-related value of plan assets methodology is also utilized that averages gains and losses on the plan assets over a period of years to determine future pension expense. The methodology recognizes 60% of the difference between the fair value of assets and the expected calculated value in the first year and 10% of that difference over each of the next four years.
The discount rate assumption is established for each of the retirement-related benefit plans at their respective measurement dates. In the U.S., we use a cash flow matching approach that uses projected cash flows matched to spot rates along a high qualityhigh-quality corporate bond yield curve to determine the present value of cash flows to calculate a single equivalent discount rate. Effective 2016 we applied theWe apply individual annual yield curve rates instead of the single equivalent discount rate to determine the service cost and interest cost for our pension and OPEB plans. This refinementplans to more specifically linkslink the cash flows related to service cost and interest cost to bonds maturing in their year of payment.
The benefit obligation for pension plans in Canada, the U.K. and Germany represents 92%93% of the non-U.S. pension benefit obligation at December 31, 2017.2021. The discount rates for plans in Canada, the U.K. and Germany are determined using a cash flow matching approach similar tolike the U.S.
Plan Asset Valuation Due to the lack of timely available market information for certain investments in the asset classes described below as well as the inherent uncertainty of valuation, reported fair values may differ from fair values that would have been used had timely available market information been available.
Common and Preferred Stock Common and preferred stock for which market prices are readily available at the measurement date are valued at the last reported sale price or official closing price on the primary market or exchange on which they are actively traded and are classified in Level 1. Such equity securities for which the market is not considered to be active are valued via the use of observable inputs, which may include among others, the use of adjusted market prices last available, bids or last available sales prices and/or other observable inputs and are classified in Level 2. Common and preferred stock classified in Level 3 are privately issued securities or other issues that are valued via the use of valuation models using significant unobservable inputs that generally consider among others, aged (stale) pricing, earnings multiples, discounted cash flows and/or other qualitative and quantitative factors.
Debt Securities Valuations for debt securities are based on quotations received from independent pricing services or from dealers who make markets in such securities. Debt securities priced via pricing services that utilize matrix pricing which considers readily observable inputs such as the yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices, are classified in Level 2. Debt securities that are typically priced by dealers and pricing services via the use of proprietary pricing models which incorporate significant unobservable inputs are classified in Level 3. These inputs primarily consist of yield and credit spread assumptions, discount rates, prepayment curves, default assumptions and recovery rates.
Investment Funds, Private Equity and Debt Investments and Real Estate Investments Investment funds, private equity and debt investments and real estate investments are valued based on the Net Asset Value (NAV) per Share (or its equivalent) as a practical expedient to estimate fair value due to the absence of readily available market prices.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ——– (Continued)
NAV's are provided by the respective investment sponsors or investment advisers and are subsequently reviewed and approved by management. In the event management concludes a reported NAV does not reflect fair value or is not determined as of the financial reporting measurement date, we will consider whether and when deemed necessary to make an adjustment at the balance sheet date. In determining whether an adjustment to the external valuation is required, we will review material factors that could affect the valuation, such as changes in the composition or performance of the underlying investments or comparable investments, overall market conditions, expected sale prices for private investments which are probable of being sold in the short-term and other economic factors that may possibly have a favorable or unfavorable effect on the reported external valuation.
Stock Incentive Plans Our stock incentive plans include RSUs, RSAs,Restricted Stock Awards (RSAs), PSUs, stock options and awards that may be settled in our stock, options.the stock of our subsidiaries or in cash. We measure and record compensation expense based on the fair value of ourGM or Cruise's common stock on the date of grant for RSUs, RSAs and PSUs with performance conditions and the grant date fair value, of stock options and PSUs with market conditions are determined utilizing a lattice model or the Black-Scholes formula. Compensation costformula, for awards that do not have an established accounting grant date is based on the fair value of our common stock at the end of each reporting period.options and PSUs. We record compensation cost for service-based RSUs, RSAs, PSUs and service-based stock options on a straight-line basis over the entire vesting period, or for retirement eligible employees over the requisite service period.RSUs granted in stock of Cruise vest upon satisfaction of both a service condition and a liquidity condition, defined as a change in control transaction or the consummation of an initial public offering. Compensation costs for RSUs granted in stock of Cruise will be recorded when the liquidity condition is met.Compensation cost for awards that do not have an established accounting grant date, but for which the service inception date has been established, or are settled in cash is based on the fair value of GM or Cruise's common stock at the end of each reporting period. We use the graded vesting method to record compensation cost for stock options with market conditions over the lesser of the vesting period or the time period an employee becomes eligible to retain the award at retirement. The liability for stock incentive plan awards settled in cash is remeasured to fair value at the end of each reporting period.
Product Warranty and Recall Campaigns The estimated costs related to product warranties are accrued at the time products are sold and are charged to Automotive and other cost of sales. These estimates are established using historical information on the nature, frequency and average cost of claims of each vehicle line or each model year of the vehicle line and assumptions about future activity and events. Revisions are made when necessary and are based on changes in these factors.
The estimated costs related to recall campaigns are generally accrued atwhen probable and estimable. In GMNA, we estimate the time of vehicle sale in GMNAcosts related to recall campaigns by applying a frequency times severitypaid loss approach that considers the number of historical recall campaigns the number of vehicles per recall campaign,and the estimated number of vehicles to be repaired and the cost per vehicle for each recall campaign. The estimated costs associated with recall campaigns in other geographical regions are accrued when probable and estimabledetermined using the estimated costs of repairs and the estimated number of vehicles to be repaired. Costs associated with recall campaigns are charged to Automotive and other cost of sales. Revisions are made when necessary based on changes in these factors.
Income Taxes The liability method is used in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements using the statutory tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax laws or rates is recorded in the results of operations in the period that includes the enactment date under the law. We record Global Intangible Low Tax Income (GILTI) as a current period expense when incurred.
We establish valuation allowances for deferred tax assets based on a more likely than not standard. Deferred income tax assets are evaluated quarterly to determine if valuation allowances are required or should be adjusted. We establish valuation allowances for deferred tax assets based on a more likely than not standard. The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction. The assessment regarding whether a valuation allowance is required or should be adjusted also considers all available positive and negative evidence factors. It is difficult to conclude a valuation allowance is not required when there is significant objective and verifiable negative evidence, such as cumulative losses in recent years. We utilize a rolling three years of actual and current year results as the primary measure of cumulative losses in recent years.
Income tax expense (benefit) for the year is allocated between continuing operations and other categories of income such as Other comprehensive income (loss). In periods in which there is a pre-tax loss from continuing operations and pre-tax income in another income category, the tax benefit allocated to continuing operations is determined by taking into account the pre-tax income of other categories.
We record uncertain tax positions on the basis of a two-step process whereby we determine whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position, and for those tax positions that meet the more likely than not criteria, we recognize the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority. We record interest and penalties on uncertain tax positions in Income tax expense (benefit).expense.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Foreign Currency Transactions and Translation The assets and liabilities of foreign subsidiaries that use the local currency as their functional currency are translated to U.S. Dollars based on the current exchange rate prevailing at each balance sheet date
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)
and any resulting translation adjustments are included in Accumulated other comprehensive loss. The assets and liabilities of foreign subsidiaries whose local currency is not their functional currency are remeasured from their local currency to their functional currency and then translated to U.S. Dollars. Revenues and expenses are translated into U.S. Dollars using the average exchange rates prevailing for each period presented. The financial statements of any foreign subsidiary that has been identified as having a highly inflationary economy are remeasured as if the functional currency were the U.S. Dollar.
Gains and losses arising from foreign currency transactions and the effects of remeasurements discussed in the preceding paragraph are recorded in Automotive and other cost of sales and GM Financial interest, operating and other expenses unless related to Automotive debt, which are recorded in Interest income and other non-operating income, net. Foreign currency transaction and remeasurement gains were $17 million, losses were $52 million, $229of $203 million and $806gains of $85 million in the years ended December 31, 2017, 20162021, 2020 and 2015.2019.
Derivative Financial Instruments Derivative financial instruments are recognized as either assets or liabilities at fair value. The accounting for changes in the fair value of each derivative financial instrument depends on whether it has been designated and qualifies as an accounting hedge, as well as the type of hedging relationship identified. Derivative instruments are not used for trading or speculative purposes.
Automotive We utilize options, swaps and forward contracts to manage foreign currency and commodity price and interest rate risks.risk. The change in fair value of option and forward contracts not designated as hedges is recorded in Interest income and other non-operating income, net. Cash flows for all derivative financial instruments are classified in cash flows from operating activities.
Certain foreign currency and commodity forward contracts have been designated as cash flow hedges. The risk being hedged is the foreign currency and commodity price risk related to forecasted transactions. If the contract has been designated as a cash flow hedge, the effective portion of changes in the fair value of the cash flow hedge is deferred in Accumulated other comprehensive loss and is recognized in Automotive cost of sales when the hedged item affects earnings. Any ineffective portion is recorded in Automotive cost of sales in the period of remeasurement.
We estimate the fair value of the PSAStellantis warrants using a Black-Scholes formula. The significant inputs to the model include the PSAStellantis stock price and the estimated dividend yield.The estimated dividend yield is adjusted based on the terms of the Agreement. Under the terms of the Agreement upon exercise of the warrants we We are entitled to receive any dividends declared by PSA between the issuance date andStellantis through the conversion date.date upon exercise of the warrants. Gains or losses as a result of the change in the fair value of the PSAStellantis warrants are recorded in Interest income and other non-operating income, net.
Automotive Financing - GM Financial GM Financial utilizes interest rate derivative instruments to manage interest rate risk and foreign currency derivative instruments to manage foreign currency risk. The change in fair value of the derivative instruments not designated as hedges is recorded in GM Financial interest, operating and other expenses. Cash flows for all derivative financial instruments are classified in cash flows from operating activities.
Certain interest rate and foreign currency swap agreements have been designated as fair value hedges of fixed-rate debt.hedges. The risk being hedged is the risk of changes in the fair value of the hedged debt attributable to changes in the benchmark interest rate.rate or the risk of changes in fair value attributable to changes in foreign currency exchange rates. If the swap has been designated as a fair value hedge, the changes in the fair value of the hedged debtitem are recorded in GM Financial interest, operating and other expenses. The change in fair value of the related derivative (excluding accrued interest)hedge is also recorded in GM Financial interest, operating and other expenses.
Certain interest rate swap and foreign currency swap agreements have been designated as cash flow hedges. The risk being hedged is the interest rate and foreign currency and interest rate risk related to forecasted transactions. If the contract has been designated as a cash flow hedge, the effective portion of changeschange in the fair value of the cash flow hedge is deferred in Accumulated other comprehensive loss and is recognized in GM Financial interest, operating and other expenses along with the earnings effect of the hedged item when the hedged item affects earnings. Any ineffective portion is recorded in GM Financial interest, operating and other expensesChanges in the periodfair value of remeasurement.
Accounting Standards Not Yet Adopted In May 2014 the Financial Accounting Standards Board (FASB) issued ASU 2014-09, which requires us to recognize revenue when a customer obtains control rather than when we have transferred substantially all risks and rewards of a good or service and requires expanded disclosures. ASU 2014-09, as amended, became effective for us on January 1, 2018. ASU 2014-09 affected the amount and timing of certain revenue related transactions primarily resultingamounts excluded from the earlier recognitionassessment of certain sales incentives and fixed fee technology arrangements. Upon adoption of ASU 2014-09 sales incentiveseffectiveness are recorded atcurrently in earnings and are presented in the timesame income statement line as the earnings effect of sale rather than at the later of sale or announcement and fixed fee technology arrangements are recognized when access to intellectual property is granted instead of over the contract period. Certain transactions with daily rental car companies may also qualify to be accounted for as a sale as opposed to the current accounting as an operating lease. Wehedged item.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ——– (Continued)
Note 3. Revenue
adopted the provisions of ASU 2014-09 on a modified retrospective basis through a cumulative adjustment to Equity. The adoption impact of ASU 2014-09 will be a reduction to Equity of approximately $1.0 billion effective January 1, 2018.following table disaggregates our revenue by major source for revenue generating segments:
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| Year Ended December 31, 2021 |
| GMNA | | GMI | | Corporate | | Total Automotive | | Cruise | | GM Financial | | Eliminations/ Reclassifications | | Total |
Vehicle, parts and accessories | $ | 97,515 | | | $ | 10,956 | | | $ | 14 | | | $ | 108,485 | | | $ | — | | | $ | — | | | $ | — | | | $ | 108,485 | |
Used vehicles | 545 | | | 49 | | | — | | | 594 | | | — | | | — | | | — | | | 594 | |
Services and other | 3,248 | | | 1,167 | | | 90 | | | 4,505 | | | 106 | | | — | | | (100) | | | 4,511 | |
Automotive net sales and revenue | 101,308 | | | 12,172 | | | 104 | | | 113,584 | | | 106 | | | — | | | (100) | | | 113,590 | |
Leased vehicle income | — | | | — | | | — | | | — | | | — | | | 9,026 | | | — | | | 9,026 | |
Finance charge income | — | | | — | | | — | | | — | | | — | | | 4,103 | | | — | | | 4,103 | |
Other income | — | | | — | | | — | | | — | | | — | | | 290 | | | (5) | | | 285 | |
GM Financial net sales and revenue | — | | | — | | | — | | | — | | | — | | | 13,419 | | | (5) | | | 13,414 | |
Net sales and revenue | $ | 101,308 | | | $ | 12,172 | | | $ | 104 | | | $ | 113,584 | | | $ | 106 | | | $ | 13,419 | | | $ | (105) | | | $ | 127,004 | |
In January 2016 the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01), which requires equity investments that are not accounted for under the equity method of accounting to be
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| Year Ended December 31, 2020 |
| GMNA | | GMI | | Corporate | | Total Automotive | | Cruise | | GM Financial | | Eliminations/ Reclassifications | | Total |
Vehicle, parts and accessories | $ | 92,749 | | | $ | 10,593 | | | $ | 1 | | | $ | 103,343 | | | $ | — | | | $ | — | | | $ | — | | | $ | 103,343 | |
Used vehicles | 875 | | | 115 | | | 20 | | | 1,010 | | | — | | | — | | | — | | | 1,010 | |
Services and other | 3,109 | | | 878 | | | 329 | | | 4,316 | | | 103 | | | — | | | (99) | | | 4,320 | |
Automotive net sales and revenue | 96,733 | | | 11,586 | | | 350 | | | 108,669 | | | 103 | | | — | | | (99) | | | 108,673 | |
Leased vehicle income | — | | | — | | | — | | | — | | | — | | | 9,530 | | | — | | | 9,530 | |
Finance charge income | — | | | — | | | — | | | — | | | — | | | 3,996 | | | (1) | | | 3,995 | |
Other income | — | | | — | | | — | | | — | | | — | | | 305 | | | (18) | | | 287 | |
GM Financial net sales and revenue | — | | | — | | | — | | | — | | | — | | | 13,831 | | | (19) | | | 13,812 | |
Net sales and revenue | $ | 96,733 | | | $ | 11,586 | | | $ | 350 | | | $ | 108,669 | | | $ | 103 | | | $ | 13,831 | | | $ | (118) | | | $ | 122,485 | |
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| Year Ended December 31, 2019 |
| GMNA | | GMI | | Corporate | | Total Automotive | | Cruise | | GM Financial | | Eliminations/ Reclassifications | | Total |
Vehicle, parts and accessories | $ | 101,346 | | | $ | 14,931 | | | $ | — | | | $ | 116,277 | | | $ | — | | | $ | — | | | $ | — | | | $ | 116,277 | |
Used vehicles | 1,896 | | | 123 | | | — | | | 2,019 | | | — | | | — | | | — | | | 2,019 | |
Services and other | 3,124 | | | 1,057 | | | 220 | | | 4,401 | | | 100 | | | — | | | (100) | | | 4,401 | |
Automotive net sales and revenue | 106,366 | | | 16,111 | | | 220 | | | 122,697 | | | 100 | | | — | | | (100) | | | 122,697 | |
Leased vehicle income | — | | | — | | | — | | | — | | | — | | | 10,032 | | | — | | | 10,032 | |
Finance charge income | — | | | — | | | — | | | — | | | — | | | 4,071 | | | (7) | | | 4,064 | |
Other income | — | | | — | | | — | | | — | | | — | | | 451 | | | (7) | | | 444 | |
GM Financial net sales and revenue | — | | | — | | | — | | | — | | | — | | | 14,554 | | | (14) | | | 14,540 | |
Net sales and revenue | $ | 106,366 | | | $ | 16,111 | | | $ | 220 | | | $ | 122,697 | | | $ | 100 | | | $ | 14,554 | | | $ | (114) | | | $ | 137,237 | |
Revenue is measured at fair value with changes recognized in Net income and which updates certain presentation and disclosure requirements. ASU 2016-01 became effective for us beginning January 1, 2018 and required a cumulative-effect adjustment for certain items upon adoption. The adoption of ASU 2016-01 was not material to our consolidated financial statements.
In February 2016 the FASB issued ASU 2016-02, "Leases" (ASU 2016-02), which requires us as the lesseeamount of consideration we expect to recognize most leases on the balance sheet thereby resultingreceive in the recognition of lease assets and liabilitiesexchange for those leases currently classified as operating leases. The accountingtransferring goods or providing services. Adjustments to sales incentives for leases where we are the lessor remains largely unchanged. ASU 2016-02 is effective for us beginning January 1, 2019 with early adoption permitted. We are continuing to assess the impact of ASU 2016-02 as we proceed with implementation activities to permit adoption on January 1, 2019. We expect the primary impact to our consolidated financial position upon adoption will be the recognition, on a discounted basis, of our minimum commitments under noncancelable operating leases on our consolidated balance sheets resulting in the recording of right of use assets and lease obligations. Our current minimum commitments under noncancelable operating leases are disclosed in Note 17.
In June 2016 the FASB issued ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASU 2016-13), that requires entities to use a new impairment model based on expected losses. Under this new model an entity would recognize an impairment allowance equal to its current estimate of credit losses on financial assets measured at amortized cost. ASU 2016-13 is effective for us beginning January 1, 2020 with early adoption permitted. Credit losses under the new model will consider relevant information about past events, current conditions and reasonable and supportable forecasts, resulting in recognition of lifetime expected credit losses by GM Financial upon loan origination as compared to our current accounting that recognizes credit losses as incurred. We are currently evaluating new processes to calculate credit losses in accordance with ASU 2016-13 that, once completed, will determine the impact on our consolidated financial statements which at the date of adoption will increase the allowance for credit losses with a resulting negative adjustment to Retained earnings.
In August 2016 the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Payments" (ASU 2016-15), clarifying guidance on the classification of certain cash receipts and payments in the statement of cash flows. The adoption of ASU 2016-15 on January 1, 2018 did not have a material impact on our consolidated financial statements.
In March 2017 the FASB issued ASU 2017-07, "Compensation – Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost" (ASU 2017-07), which requires that the service cost component of net periodic pension and OPEB (income) expense be presented in the same income statement line item as other employee compensation costs, while the remaining components of net periodic pension and OPEB (income) expense are to be presented outside operating income. ASU 2017-07 became effective for us on a retrospective basis on January 1, 2018 and will result in a decrease to Operating income and an increase to Interest income and other non-operating income, net of $1.3 billion forpreviously recognized sales were insignificant during the years ended December 31, 20172021, 2020 and 2016.2019.
In August 2017Contract liabilities in our Automotive segments primarily consist of maintenance, extended warranty and other service contracts of $2.5 billion and $2.4 billion at December 31, 2021 and 2020, which are included in Accrued liabilities and Other liabilities. We recognized revenue of $1.2 billion and $1.1 billion related to contract liabilities during the FASB issued ASU 2017-12, "Derivativesyears ended December 31, 2021 and Hedging (Topic 815), Targeted Improvements2020. We expect to Accounting for Hedging Activities" (ASU 2017-12), which simplifies the applicationrecognize revenue of hedge accounting$1.2 billion, $498 million and more closely aligns hedge accounting with companies' risk management strategies thereby making more hedging strategies eligible for hedge accounting. ASU 2017-12 permits hedge accounting for specific risks in hedging relationships involving nonfinancial risk and interest rate risk. The simplifications to the application of hedge accounting may result$868 million in the future expansion of our use of hedge accounting. ASU 2017-12 became effective for us on January 1, 2018. ASU 2017-12 expanded disclosure requirementsyears ending December 31, 2022, 2023 and required a cumulative-effect adjustment for certain items upon adoption. The adoption of ASU 2017-12 was not materialthereafter related to our consolidated financial statements.contract liabilities at December 31, 2021.
Note 3. Discontinued Operations
On March 5, 2017 we entered into the Agreement to sell our European Business to PSA Group. On July 31, 2017 we closed the sale of our Opel/Vauxhall Business to PSA Group and on October 31, 2017 we closed the sale of the Fincos to Banque PSA Finance S.A. and BNP Paribas Personal Finance S.A.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ——– (Continued)
The net consideration paid at closing for the European Business was $2.5 billion, consisting of (1) $2.2 billion in cash; and (2) $808 million in warrants in PSA Group; partially offset by (3) the $455 million de-risking premium payment made to PSA Group for assuming certain underfunded pension liabilities. The warrants are not exercisable for five years and do not include any governance or voting rights with respect to PSA Group. In addition, we agreed to sell the shares of PSA Group received upon exercise of the warrants within 35 days after exercise. The purchase price is subject to certain working capital adjustments as provided in the Agreement.
The total charge from the sale of the European Business was $6.2 billion, net of tax, of which $3.9 billion is recorded in Income (loss) from discontinued operations, net of tax, and $2.3 billion is recorded in Income tax expense. The charge relates to: (1) $4.3 billion of deferred tax assets that will no longer be realizable or that transferred to PSA Group; (2) $1.5 billion related to previously deferred pension losses and payment of the de-risking premium to PSA Group for its assumption of certain underfunded pension liabilities; (3) a pre-tax disposal loss of $525 million as a result of the sale of the Fincos, which includes the recognition of $197 million of foreign currency translation losses; (4) a pre-tax charge of $421 million for the cancellation of production programs resulting from the convergence of vehicle platforms between the European Business and PSA Group; and (5) other insignificant costs to support the separation of operations to be provided for a period of time following closing; partially offset by proceeds.
Refer to Note 17 to our consolidated financial statements for further details related to the working capital adjustments and indemnity provided by the Seller to PSA Group.
We retained net underfunded pension liabilities of $6.8 billion owed primarily to current pensioners and former employees of the European Business with vested pension rights. PSA Group assumed, pursuant to the Agreement, approximately $3.1 billion of net underfunded pension liabilities primarily with respect to active employees of the Opel/Vauxhall Business, and during the year ended December 31, 2017 the Seller made payments to PSA Group, or one or more pension funding vehicles, of $3.4 billion in respect of these assumed liabilities, which includes pension funding payments for active employees and the de-risking premium payment of $455 million discussed above. At closing we drew upon our three-year unsecured revolving credit facility to fund these payments. We issued debt securities, as described in Note 14, thereafter to repay the amount drawn on our credit facility. As part of the retained pension liabilities described above, we retained the U.K. defined benefit pension plans in existence at signing related to the Opel/Vauxhall Business, including responsibility for service cost accruals through the closing date. Those plans with active participants closed to future accrual as of July 30, 2017. Any future service cost accruals on and from the closing date will be the responsibility of PSA Group.
We have agreed to purchase from and supply to PSA Group certain vehicles for a period of time following closing. During the year ended December 31, 2017 Total net sales and revenue of $853 million and purchases and expenses of $218 million related to transactions with the Opel/Vauxhall Business that would have been eliminated in consolidation prior to the sale of the Opel/Vauxhall Business were included in continuing operations. During the year ended December 31, 2017 cash payments were $242 million and cash receipts of $1.2 billion were recorded in Net cash provided by operating cash flows - continuing operations related to transactions with the Opel/Vauxhall Business.
The following tablesummarizes the results of the European Business operations:
|
| | | | | | | | | | | |
| Years Ended December 31, |
| 2017 |
| 2016 |
| 2015 |
Automotive net sales and revenue | $ | 11,257 |
|
| $ | 19,704 |
|
| $ | 19,075 |
|
GM Financial net sales and revenue | 466 |
|
| 552 |
|
| 573 |
|
Total net sales and revenue | 11,723 |
|
| 20,256 |
|
| 19,648 |
|
Automotive cost of sales | 11,049 |
|
| 18,894 |
|
| 18,343 |
|
GM Financial interest, operating and other expenses | 342 |
|
| 423 |
|
| 429 |
|
Automotive selling, general, and administrative expense | 813 |
|
| 1,356 |
|
| 1,517 |
|
Other income and (expense) items | (72 | ) |
| 93 |
|
| (12 | ) |
Loss from discontinued operations before taxes | 553 |
|
| 324 |
|
| 653 |
|
Loss on sale of discontinued operations before taxes(a)(b) | 2,176 |
|
| — |
|
| — |
|
Total loss from discontinued operations before taxes | 2,729 |
|
| 324 |
|
| 653 |
|
Income tax expense (benefit)(b)(c) | 1,483 |
|
| (323 | ) |
| (678 | ) |
Income (loss) from discontinued operations, net of tax | $ | (4,212 | ) |
| $ | (1 | ) |
| $ | 25 |
|
__________
| |
(a) | Includes contract cancellation charges associated with the disposal for the year ended December 31, 2017. |
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)
| |
(b) | Total loss on sale of discontinued operations, net of tax was $3.9 billion for the year ended December 31, 2017. |
| |
(c) | Includes $2.0 billion of deferred tax assets that transferred to PSA Group in the year ended December 31, 2017. |
The following tablesummarizes the assets and liabilities of the European Business at December 31, 2016:
|
| | | |
| December 31, 2016 |
Current Assets |
|
|
Cash and cash equivalents | $ | 386 |
|
Accounts and notes receivable, net | 938 |
|
GM Financial receivables, net | 5,938 |
|
Inventories | 2,748 |
|
Equipment on operating leases, net | 786 |
|
Other current assets | 382 |
|
Total current assets held for sale | 11,178 |
|
Non-current Assets |
|
GM Financial receivables, net | 3,723 |
|
Property, net | 3,217 |
|
Deferred income taxes | 1,920 |
|
Other assets | 515 |
|
Total non-current assets held for sale | 9,375 |
|
Total Assets Held for Sale | $ | 20,553 |
|
|
|
Current Liabilities |
|
Accounts payable (principally trade) | $ | 3,628 |
|
Short-term debt and current portion of long-term debt |
|
Automotive | 107 |
|
GM Financial | 5,124 |
|
Accrued liabilities | 3,299 |
|
Total current liabilities held for sale | 12,158 |
|
Non-current Liabilities |
|
Long-term debt |
|
Automotive | 85 |
|
GM Financial | 4,189 |
|
Pensions | 2,687 |
|
Other liabilities | 665 |
|
Total non-current liabilities held for sale | 7,626 |
|
Total Liabilities Held for Sale | $ | 19,784 |
|
Note 4. Marketable and Other Securities
The following table summarizes the fair value of cash equivalents and marketable debt securities, which approximates cost:
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)
| |
| Fair Value Level |
| December 31, 2017 |
| December 31, 2016 | | Fair Value Level | | December 31, 2021 | | December 31, 2020 |
Cash and cash equivalents |
|
|
|
| Cash and cash equivalents | | | | | |
Cash, cash equivalents and time deposits |
| $ | 6,962 |
|
| $ | 5,692 |
| |
Available-for-sale securities |
|
|
|
|
|
| |
Cash and time deposits | | Cash and time deposits | | $ | 7,881 | | | $ | 8,010 | |
Available-for-sale debt securities | | Available-for-sale debt securities | |
U.S. government and agencies | 2 |
| 750 |
|
| 1,158 |
| U.S. government and agencies | 2 | | 722 | | | 1,370 | |
Corporate debt | 2 |
| 3,032 |
|
| 2,524 |
| Corporate debt | 2 | | 5,321 | | | 3,476 | |
Sovereign debt | | Sovereign debt | 2 | | 2,105 | | | 2,051 | |
Total available-for-sale debt securities – cash equivalents | | Total available-for-sale debt securities – cash equivalents | | 8,148 | | | 6,897 | |
Money market funds | 1 |
| 2,814 |
|
| 1,801 |
| Money market funds | 1 | | 4,038 | | | 5,085 | |
Sovereign debt | 2 |
| 1,954 |
|
| 1,399 |
| |
Total available-for-sale securities – cash equivalents |
|
| 8,550 |
|
| 6,882 |
| |
Total cash and cash equivalents |
| $ | 15,512 |
|
| $ | 12,574 |
| |
Marketable securities |
|
|
|
|
|
| |
Total cash and cash equivalents(a) | | Total cash and cash equivalents(a) | | $ | 20,067 | | | $ | 19,992 | |
Marketable debt securities | | Marketable debt securities | | | | |
U.S. government and agencies | 2 |
| $ | 3,310 |
|
| $ | 5,886 |
| U.S. government and agencies | 2 | | $ | 2,071 | | | $ | 1,771 | |
Corporate debt | 2 |
| 3,665 |
|
| 3,611 |
| Corporate debt | 2 | | 3,396 | | | 3,630 | |
Mortgage and asset-backed | 2 |
| 635 |
|
| 197 |
| Mortgage and asset-backed | 2 | | 575 | | | 632 | |
Sovereign debt | 2 |
| 703 |
|
| 2,147 |
| Sovereign debt | 2 | | 2,567 | | | 3,013 | |
Total available-for-sale securities – marketable securities |
|
| $ | 8,313 |
|
| $ | 11,841 |
| |
Total available-for-sale debt securities – marketable securities(b) | | Total available-for-sale debt securities – marketable securities(b) | | $ | 8,609 | | | $ | 9,046 | |
Restricted cash |
|
|
|
|
|
|
| Restricted cash | | | | |
Cash, cash equivalents and time deposits |
|
| $ | 219 |
|
| $ | 248 |
| |
Available-for-sale securities, primarily money market funds | 1 |
| 2,117 |
|
| 1,665 |
| |
Cash and cash equivalents | | Cash and cash equivalents | | $ | 466 | | | $ | 269 | |
Money market funds | | Money market funds | 1 | | 3,009 | | | 2,856 | |
Total restricted cash |
|
| $ | 2,336 |
|
| $ | 1,913 |
| Total restricted cash | | $ | 3,475 | | | $ | 3,125 | |
|
|
|
|
|
|
| | | | |
Available-for-sale securities included above with contractual maturities(a) |
|
|
|
|
|
| |
Available-for-sale debt securities included above with contractual maturities(c) | | Available-for-sale debt securities included above with contractual maturities(c) | |
Due in one year or less |
| $ | 8,539 |
|
|
|
| Due in one year or less | | $ | 12,003 | | |
Due between one and five years |
| 4,875 |
|
|
|
| Due between one and five years | | 4,130 | | |
Total available-for-sale securities with contractual maturities |
| $ | 13,414 |
|
|
|
| |
| Total available-for-sale debt securities with contractual maturities | | Total available-for-sale debt securities with contractual maturities | | $ | 16,133 | | |
__________
| |
(a) | Excludes mortgage and asset-backed securities. |
(a) Includes $1.6 billion and $761 million in Cruise at December 31, 2021 and 2020.
Sales proceeds(b) Includes $1.5 billion and $943 million in Cruise at December 31, 2021 and 2020.
(c) Excludes mortgage and asset-backed securities of $575 million at December 31, 2021 as these securities are not due at a single maturity date.
Proceeds from investments classified asthe sale of available-for-sale anddebt securities sold prior to maturity were $5.6 billion, $8.5 billion and $7.9$1.9 billion in the years ended December 31, 2017, 20162021 and 2015.2020 and $4.5 billion in the year ended December 31, 2019. Net unrealized gains and losses on available-for-sale securities and realized gains and losses on tradingdebt securities were insignificant in the years ended December 31, 2017, 20162021, 2020 and 2015.2019. Cumulative unrealized gains and losses on available-for-sale debt securities were insignificant at December 31, 20172021 and 2016.2020.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows:
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Cash and cash equivalents | $ | 20,067 | | | $ | 19,992 | |
Restricted cash included in Other current assets | 2,935 | | | 2,581 | |
Restricted cash included in Other assets | 540 | | | 544 | |
Total | $ | 23,542 | | | $ | 23,117 | |
|
| | | | | | | |
| December 31, 2017 |
| December 31, 2016 |
Cash and cash equivalents | $ | 15,512 |
|
| $ | 12,574 |
|
Restricted cash included in Other current assets | 1,745 |
|
| 1,382 |
|
Restricted cash included in Other assets | 591 |
|
| 531 |
|
Total | $ | 17,848 |
|
| $ | 14,487 |
|
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ——– (Continued)
Note 5. GM Financial Receivables and Transactions | | | | | | | | | | | | | | | | December 31, 2021 | | December 31, 2020 |
| December 31, 2017 |
| December 31, 2016 | | Retail | | Commercial(a) | | Total | | Retail | | Commercial(a) | | Total |
| Retail |
| Commercial |
| Total |
| Retail |
| Commercial |
| Total | |
Finance receivables, collectively evaluated for impairment, net of fees | $ | 30,486 |
|
| $ | 9,935 |
|
| $ | 40,421 |
|
| $ | 24,480 |
|
| $ | 7,506 |
|
| $ | 31,986 |
| |
Finance receivables, individually evaluated for impairment, net of fees | 2,228 |
|
| 22 |
|
| 2,250 |
|
| 1,920 |
|
| 27 |
|
| 1,947 |
| |
GM Financial receivables | 32,714 |
|
| 9,957 |
|
| 42,671 |
|
| 26,400 |
|
| 7,533 |
|
| 33,933 |
| GM Financial receivables | $ | 58,093 | | | $ | 6,609 | | | $ | 64,702 | | | $ | 51,288 | | | $ | 8,682 | | | $ | 59,970 | |
Less: allowance for loan losses | (889 | ) |
| (53 | ) |
| (942 | ) |
| (765 | ) |
| (40 | ) |
| (805 | ) | Less: allowance for loan losses | (1,839) | | | (47) | | | (1,886) | | | (1,915) | | | (63) | | | (1,978) | |
GM Financial receivables, net | $ | 31,825 |
|
| $ | 9,904 |
|
| $ | 41,729 |
|
| $ | 25,635 |
|
| $ | 7,493 |
|
| $ | 33,128 |
| GM Financial receivables, net | $ | 56,254 | | | $ | 6,562 | | | $ | 62,816 | | | $ | 49,373 | | | $ | 8,619 | | | $ | 57,992 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Fair value of GM Financial receivables | | | | | $ | 41,735 |
| | | | | | $ | 33,181 |
| |
Fair value of GM Financial receivables utilizing Level 2 inputs | | Fair value of GM Financial receivables utilizing Level 2 inputs | | $ | 6,562 | | | $ | 8,619 | |
Fair value of GM Financial receivables utilizing Level 3 inputs | | Fair value of GM Financial receivables utilizing Level 3 inputs | | $ | 57,613 | | | $ | 51,645 | |
__________
We estimate(a)Net of dealer cash management balances of $1.0 billion and $1.4 billion at December 31, 2021 and 2020. Under the fair valuecash management program, subject to certain conditions, a dealer may choose to reduce the amount of retail finance receivables using observable and unobservable Level 3 inputs within a cash flow model. The inputs reflect assumptions regarding expected prepayments, deferrals, delinquencies, recoveries and charge-offs of the loans within the portfolio. The cash flow model produces an estimated amortization schedule of the finance receivables. The projected cash flows are then discountedinterest on its floorplan line by making principal payments to derive the fair value of the portfolio. Macroeconomic factors could affect the credit performance of the portfolio and therefore could potentially affect the assumptions usedGM Financial in our cash flow model. A substantial majority of our commercial finance receivables have variable interest rates. The carrying amount, a Level 2 input, is considered to be a reasonable estimate of fair value.advance.
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Allowance for loan losses at beginning of period | $ | 1,978 | | | $ | 944 | | | $ | 911 | |
Impact of adoption ASU 2016-13 | — | | | 801 | | | — | |
Provision for loan losses | 248 | | | 881 | | | 726 | |
Charge-offs | (897) | | | (1,169) | | | (1,246) | |
Recoveries | 574 | | | 542 | | | 551 | |
Effect of foreign currency | (17) | | | (21) | | | 2 | |
Allowance for loan losses at end of period | $ | 1,886 | | | $ | 1,978 | | | $ | 944 | |
|
| | | | | | | | | | | |
| Years Ended December 31, |
| 2017 |
| 2016 |
| 2015 |
Allowance for loan losses at beginning of period | $ | 805 |
|
| $ | 749 |
|
| $ | 668 |
|
Provision for loan losses | 757 |
|
| 644 |
|
| 603 |
|
Charge-offs | (1,173 | ) |
| (1,137 | ) |
| (969 | ) |
Recoveries | 552 |
|
| 542 |
|
| 469 |
|
Effect of foreign currency | 1 |
|
| 7 |
|
| (22 | ) |
Allowance for loan losses at end of period | $ | 942 |
|
| $ | 805 |
|
| $ | 749 |
|
The decrease in the allowance for loan losses onas of December 31, 2021 compared to December 31, 2020 was primarily due to a reduction in the reserve levels established at the onset of the COVID-19 pandemic. This reduction was a result of actual credit performance that was better than forecasted and favorable expectations for future charge-offs and recoveries, reflecting improved economic conditions. These decreases in the reserve levels were partially offset by reserves established for loans originated during the year ended December 31, 2021.
Retail Finance Receivables GM Financial's retail finance receivable portfolio includes loans made to consumers and businesses to finance the purchase of vehicles for personal and commercial use. The following tables are consolidated summaries of the retail finance receivables included a collective allowanceby FICO score or its equivalent, determined at origination, for each vintage of $611 million, $525 million and $524 million and a specific allowance of $331 million, $280 million and $225 millionthe retail finance receivables portfolio at December 31, 2017, 20162021 and 2015.2020:
Retail Finance Receivables We use proprietary scoring systems in | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year of Origination | | | | December 31, 2021 |
| 2021 | | 2020 | | 2019 | | 2018 | | 2017 | | Prior | | | | Total | | Percent |
Prime – FICO score 680 and greater | $ | 19,729 | | | $ | 12,408 | | | $ | 4,078 | | | $ | 2,298 | | | $ | 763 | | | $ | 143 | | | | | $ | 39,419 | | | 67.9 | % |
Near-prime – FICO score 620 to 679 | 3,856 | | | 2,388 | | | 1,229 | | | 648 | | | 274 | | | 84 | | | | | 8,479 | | | 14.6 | % |
Sub-prime – FICO score less than 620 | 4,053 | | | 2,528 | | | 1,777 | | | 972 | | | 570 | | | 295 | | | | | 10,195 | | | 17.5 | % |
Retail finance receivables, net of fees | $ | 27,638 | | | $ | 17,324 | | | $ | 7,084 | | | $ | 3,918 | | | $ | 1,607 | | | $ | 522 | | | | | $ | 58,093 | | | 100.0 | % |
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year of Origination | | | | December 31, 2020 |
| 2020 | | 2019 | | 2018 | | 2017 | | 2016 | | Prior | | | | Total | | Percent |
Prime – FICO score 680 and greater | $ | 18,685 | | | $ | 7,033 | | | $ | 4,491 | | | $ | 1,917 | | | $ | 555 | | | $ | 119 | | | | | $ | 32,800 | | | 64.0 | % |
Near-prime – FICO score 620 to 679 | 3,695 | | | 2,097 | | | 1,232 | | | 603 | | | 225 | | | 83 | | | | | 7,935 | | | 15.4 | % |
Sub-prime – FICO score less than 620 | 3,803 | | | 2,920 | | | 1,740 | | | 1,173 | | | 610 | | | 307 | | | | | 10,553 | | | 20.6 | % |
Retail finance receivables, net of fees | $ | 26,183 | | | $ | 12,050 | | | $ | 7,463 | | | $ | 3,693 | | | $ | 1,390 | | | $ | 509 | | | | | $ | 51,288 | | | 100.0 | % |
GM Financial reviews the underwriting process that measure the credit quality of retail finance receivables using several factors, such as credit bureau information, consumer credit risk scores (e.g. FICO scores or their equivalent) and contract characteristics. We also consider other factors such as employment history, financial stability and capacity to pay. Subsequent to origination we review theongoing credit quality of retail finance receivables based on customer payment activity. While we have historically focused on consumers with lower than prime credit scores, we have expanded our prime lending programs. At December 31, 2017 and 2016 33% and 41% ofA retail finance receivables were from consumers with sub-prime credit scores, which are defined as FICO scores or equivalent scores of less than 620 at the time of loan origination.
We purchase retail finance contracts from automobile dealers without recourse, and accordingly, the dealer has no liability to GM Financial if the consumer defaults on the contract. Finance receivables are collateralized by vehicle titles and GM Financial has the right to repossess the vehicle in the event the consumer defaults on the payment terms of the contract.
An account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date the payment was contractually due. Retail finance receivables are collateralized by vehicle titles and, subject to local laws, GM Financial generally has the right to repossess the vehicle in the event the customer defaults on the payment terms of the contract. The accrual of finance charge income had been suspended on delinquent retail finance receivables with contractual amounts due of $778$602 million and $798$714 million at December 31, 20172021 and 2016.2020. The following table summarizestables are consolidated summaries of the contractual amountdelinquency status of delinquentthe outstanding amortized cost of retail finance receivables which is not significantly different than the recorded investmentfor each vintage of the portfolio at December 31, 2021 and 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year of Origination | | December 31, 2021 |
| 2021 | | 2020 | | 2019 | | 2018 | | 2017 | | Prior | | | | Total | | Percent |
0-to-30 days | $ | 27,270 | | | $ | 16,945 | | | $ | 6,772 | | | $ | 3,721 | | | $ | 1,478 | | | $ | 440 | | | | | $ | 56,626 | | | 97.5 | % |
31-to-60 days | 273 | | | 276 | | | 230 | | | 147 | | | 97 | | | 60 | | | | | 1,083 | | | 1.8 | % |
Greater-than-60 days | 83 | | | 93 | | | 76 | | | 46 | | | 30 | | | 21 | | | | | 349 | | | 0.6 | % |
Finance receivables more than 30 days delinquent | 356 | | | 369 | | | 306 | | | 193 | | | 127 | | | 81 | | | | | 1,432 | | | 2.4 | % |
In repossession | 12 | | | 10 | | | 6 | | | 4 | | | 2 | | | 1 | | | | | 35 | | | 0.1 | % |
Finance receivables more than 30 days delinquent or in repossession | 368 | | | 379 | | | 312 | | | 197 | | | 129 | | | 82 | | | | | 1,467 | | | 2.5 | % |
Retail finance receivables, net of fees | $ | 27,638 | | | $ | 17,324 | | | $ | 7,084 | | | $ | 3,918 | | | $ | 1,607 | | | $ | 522 | | | | | $ | 58,093 | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year of Origination | | December 31, 2020 |
| 2020 | | 2019 | | 2018 | | 2017 | | 2016 | | Prior | | | | Total | | Percent |
0-to-30 days | $ | 25,894 | | | $ | 11,591 | | | $ | 7,131 | | | $ | 3,454 | | | $ | 1,249 | | | $ | 421 | | | | | $ | 49,740 | | | 97.0 | % |
31-to-60 days | 210 | | | 325 | | | 235 | | | 170 | | | 102 | | | 61 | | | | | 1,103 | | | 2.1 | % |
Greater-than-60 days | 72 | | | 123 | | | 90 | | | 64 | | | 37 | | | 26 | | | | | 412 | | | 0.8 | % |
Finance receivables more than 30 days delinquent | 282 | | | 448 | | | 325 | | | 234 | | | 139 | | | 87 | | | | | 1,515 | | | 2.9 | % |
In repossession | 7 | | | 11 | | | 7 | | | 5 | | | 2 | | | 1 | | | | | 33 | | | 0.1 | % |
Finance receivables more than 30 days delinquent or in repossession | 289 | | | 459 | | | 332 | | | 239 | | | 141 | | | 88 | | | | | 1,548 | | | 3.0 | % |
Retail finance receivables, net of fees | $ | 26,183 | | | $ | 12,050 | | | $ | 7,463 | | | $ | 3,693 | | | $ | 1,390 | | | $ | 509 | | | | | $ | 51,288 | | | 100.0 | % |
The outstanding amortized cost of retail finance receivables:receivables that are considered TDRs was $1.9 billion and $2.2 billion, including $219 million and $301 million in nonaccrual loans at December 31, 2021 and 2020.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ——– (Continued)
|
| | | | | | | | | | | | | |
| December 31, 2017 |
| December 31, 2016 |
| Amount |
| Percent of Contractual Amount Due |
| Amount |
| Percent of Contractual Amount Due |
31-to-60 days delinquent | $ | 1,334 |
|
| 4.1 | % |
| $ | 1,220 |
|
| 4.6 | % |
Greater-than-60 days delinquent | 559 |
|
| 1.7 | % |
| 532 |
|
| 2.0 | % |
Total finance receivables more than 30 days delinquent | 1,893 |
|
| 5.8 | % |
| 1,752 |
|
| 6.6 | % |
In repossession | 27 |
|
| — | % |
| 47 |
|
| 0.2 | % |
Total finance receivables more than 30 days delinquent or in repossession | $ | 1,920 |
|
| 5.8 | % |
| $ | 1,799 |
|
| 6.8 | % |
Retail finance receivables classified as TDRs and individually evaluated for impairment were $2.2 billion and $1.9 billion and the allowance for loan losses included $328 million and $276 million of specific allowances on these receivables at December 31, 2017 and 2016.
Commercial Finance Receivables OurGM Financial's commercial finance receivables consist of dealer financings, primarily for dealer inventory purchases. A proprietary model isProprietary models are used to assign a risk rating to each dealer. We performGM Financial performs periodic credit reviews of each dealership and adjustadjusts the dealership's risk rating, if necessary. There were no commercial finance receivables on nonaccrual status at December 31, 2021 and an insignificant amount at December 31, 2020.
GM Financial's commercial risk model and risk rating categories are as follows:
| | | | | | | | |
Rating | | Description |
I | | Performing accounts with strong to acceptable financial metrics with at least satisfactory capacity to meet financial commitments. |
II | | Performing accounts experiencing potential weakness in financial metrics and repayment prospects resulting in increased monitoring. |
III | | Non-Performing accounts with inadequate paying capacity for current obligations and have the distinct possibility of creating a loss if deficiencies are not corrected. |
IV | | Non-Performing accounts with inadequate paying capacity for current obligations and inherent weaknesses that make collection of liquidation in full highly questionable or improbable. |
Dealers in Group VIwith III and IV risk ratings are subject to additional monitoring and restrictions on funding, including suspension of lines of credit and liquidation of assets. The commercial finance receivables on non-accrual status were insignificant at December 31, 2017 and 2016. The following table summarizestables summarize the credit risk profile by dealer risk rating of the commercial finance receivables:
|
| | | | | | | | |
|
| December 31, 2017 | | December 31, 2016 |
Group I | – Dealers with superior financial metrics | $ | 1,915 |
| | $ | 1,372 |
|
Group II | – Dealers with strong financial metrics | 3,465 |
| | 2,526 |
|
Group III | – Dealers with fair financial metrics | 3,239 |
| | 2,598 |
|
Group IV | – Dealers with weak financial metrics | 997 |
| | 613 |
|
Group V | – Dealers warranting special mention due to elevated risks | 260 |
| | 334 |
|
Group VI | – Dealers with loans classified as substandard, doubtful or impaired | 81 |
|
| 90 |
|
|
| $ | 9,957 |
| | $ | 7,533 |
|
Note 6.Inventories
|
| | | | | | | |
| December 31, 2017 |
| December 31, 2016 |
Total productive material, supplies and work in process | $ | 4,203 |
|
| $ | 5,008 |
|
Finished product, including service parts | 6,460 |
|
| 6,032 |
|
Total inventories | $ | 10,663 |
|
| $ | 11,040 |
|
Note 7. Equipment on Operating Leases
Equipment on operating leases consists of leases to retail customers that are recorded as operating leases and vehicle sales to daily rental car companies with a guaranteed repurchase obligation.
|
| | | | | | | |
| December 31, 2017 | | December 31, 2016 |
Equipment on operating leases | $ | 53,947 |
| | $ | 41,851 |
|
Less: accumulated depreciation | (9,959 | ) | | (6,399 | ) |
Equipment on operating leases, net(a) | $ | 43,988 |
| | $ | 35,452 |
|
__________
| |
(a) | Includes $42.9 billion and $34.3 billion of GM Financial equipment on operating leases, net in the years ended December 31, 2017 and 2016. |
Depreciation expense related to equipment on operating leases, net was $6.7 billion, $4.7 billion and $2.5 billion in the years endedreceivables at December 31, 2017, 20162021 and 2015.2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year of Origination(a) | | December 31, 2021 | | |
| Revolving | | 2021 | | 2020 | | 2019 | | 2018 | | 2017 | | Prior | | | | Total | | Percent | | | | |
I | $ | 5,210 | | | $ | 420 | | | $ | 396 | | | $ | 120 | | | $ | 50 | | | $ | 50 | | | $ | 10 | | | | | $ | 6,256 | | | 94.7 | % | | | | |
II | 207 | | | 3 | | | 16 | | | 12 | | | — | | | 3 | | | — | | | | | 241 | | | 3.6 | % | | | | |
III | 81 | | | 8 | | | 15 | | | 2 | | | — | | | 2 | | | 4 | | | | | 112 | | | 1.7 | % | | | | |
IV | — | | | — | | | — | | | — | | | — | | | — | | | — | | | | | — | | | — | % | | | | |
Commercial finance receivables, net of fees | $ | 5,498 | | | $ | 431 | | | $ | 427 | | | $ | 134 | | | $ | 50 | | | $ | 55 | | | $ | 14 | | | | | $ | 6,609 | | | 100.0 | % | | | | |
_________
(a)Floorplan advances comprise 94% of the total revolving balance. Dealer term loans are presented by year of origination.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year of Origination(a) | | December 31, 2020 | | |
| Revolving | | 2020 | | 2019 | | 2018 | | 2017 | | 2016 | | Prior | | | | Total | | Percent | | | | |
I | $ | 6,968 | | | $ | 510 | | | $ | 159 | | | $ | 63 | | | $ | 95 | | | $ | 43 | | | $ | 19 | | | | | $ | 7,857 | | | 90.5 | % | | | | |
II | 491 | | | 2 | | | 18 | | | 2 | | | 3 | | | 18 | | | 34 | | | | | 568 | | | 6.5 | % | | | | |
III | 203 | | | — | | | 8 | | | 29 | | | 2 | | | 11 | | | — | | | | | 253 | | | 2.9 | % | | | | |
IV | — | | | — | | | — | | | — | | | — | | | — | | | 4 | | | | | 4 | | | 0.1 | % | | | | |
Commercial finance receivables, net of fees | $ | 7,662 | | | $ | 512 | | | $ | 185 | | | $ | 94 | | | $ | 100 | | | $ | 72 | | | $ | 57 | | | | | $ | 8,682 | | | 100.0 | % | | | | |
__________
(a)Floorplan advances comprise 97% of the total revolving balance. Dealer term loans are presented by year of origination.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ——– (Continued)
Transactions with GM Financial The following table shows transactions between our Automotive segments and GM Financial. These amounts are presented in GM Financial's consolidated balance sheets and statements of income.
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Consolidated Balance Sheets(a) | | | |
Commercial finance receivables, net due from GM consolidated dealers | $ | 163 | | | $ | 398 | |
| | | |
Subvention receivable(b) | $ | 282 | | | $ | 642 | |
Commercial loan funding payable | $ | 26 | | | $ | 23 | |
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Consolidated Statements of Income | | | | | |
Interest subvention earned on finance receivables | $ | 820 | | | $ | 679 | | | $ | 588 | |
Leased vehicle subvention earned | $ | 2,702 | | | $ | 3,042 | | | $ | 3,273 | |
__________
(a)All balance sheet amounts are eliminated upon consolidation.
(b)Our Automotive segments made cash payments to GM Financial for subvention of $3.3 billion, $3.9 billion and $4.1 billion in the years ended December 31, 2021, 2020 and 2019.
GM Financial's Board of Directors declared and paid dividends of $3.5 billion, $800 million and $400 million on its common stock in the years ended December 31, 2021, 2020 and 2019.
Note 6.Inventories
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Total productive material, supplies and work in process | $ | 8,240 | | | $ | 5,117 | |
Finished product, including service parts | 4,748 | | | 5,118 | |
Total inventories | $ | 12,988 | | | $ | 10,235 | |
Note 7. Operating Leases
Operating Leases
Our portfolio of leases primarily consists of real estate office space, manufacturing and warehousing facilities, land and equipment. Certain leases contain escalation clauses and renewal or purchase options, and generally our leases have no residual value guarantees or material covenants. We exclude leases with a term of one year or less from our balance sheet, and do not separate non-lease components from our real estate leases.
Rent expense under operating leases was $294 million, $317 million and $354 million in the years ended December 31, 2021, 2020 and 2019. Variable lease costs were insignificant in the years ended December 31, 2021, 2020 and 2019. At December 31, 2021 and 2020, operating lease right of use assets in Other assets were $1.1 billion and $1.0 billion, operating lease liabilities in Accrued liabilities were $204 million and $209 million and non-current operating lease liabilities in Other liabilities were $1.0 billion and $969 million. Operating lease right of use assets obtained in exchange for lease obligations were $328 million and $222 million in the years ended December 31, 2021 and 2020. Our undiscounted future lease obligations related to operating leases having initial terms in excess of one year are $243 million, $226 million, $198 million, $163 million, $135 million and $409 million for the years 2022, 2023, 2024, 2025, 2026 and thereafter, with imputed interest of $159 million as of December 31, 2021. The weighted average discount rate was 3.5% and 4.0% and the weighted-average remaining lease term was 7.1 years and 7.4 years at December 31, 2021 and 2020. Payments for operating leases included in Net cash provided by (used in) operating activities were $301 million, $309 million and $337 million in the years ended December 31, 2021, 2020 and 2019. Lease agreements that have not yet commenced were $215 million at December 31, 2021.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Equipment on Operating Leases
Equipment on operating leases primarily consists of leases to retail customers of GM Financial.
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Equipment on operating leases | $ | 47,423 | | | $ | 50,000 | |
Less: accumulated depreciation | (9,494) | | | (10,181) | |
Equipment on operating leases, net | $ | 37,929 | | | $ | 39,819 | |
At December 31, 2021, the estimated residual value of our leased assets at the end of the lease term was $29.1 billion.
Depreciation expense related to Equipment on operating leases, net was $6.1 billion, $7.2 billion and $7.3 billion in the years ended December 31, 2021, 2020 and 2019.
The following table summarizes minimum rentallease payments due to GM Financial on leases to retail customers:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ending December 31, |
| 2022 | | 2023 | | 2024 | | 2025 | | 2026 | | Thereafter | | Total |
Lease receipts under operating leases | $ | 5,551 | | | $ | 3,415 | | | $ | 1,147 | | | $ | 103 | | | $ | — | | | $ | — | | | $ | 10,216 | |
|
| | | | | | | | | | | | | | | | | | | |
| 2018 |
| 2019 |
| 2020 |
| 2021 |
| 2022 |
Minimum rental receipts under operating leases | $ | 6,848 |
| | $ | 4,530 |
| | $ | 1,759 |
| | $ | 189 |
| | $ | 12 |
|
Note 8. Equity in Net Assets of Nonconsolidated Affiliates
Nonconsolidated affiliates are entities in which we maintain an equity ownership interest is maintained and for which we use the equity method of accounting is used due to our ability to exert significant influence over decisions relating to their operating and financial affairs. Revenue and expenses of our joint ventures are not consolidated into our financial statements; rather, our proportionate share of the earnings of each joint venture is reflected as Equity income.
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Automotive China equity income | $ | 1,098 | | | $ | 512 | | | $ | 1,132 | |
Other joint ventures equity income | 203 | | | 162 | | | 136 | |
Total Equity income | $ | 1,301 | | | $ | 674 | | | $ | 1,268 | |
|
| | | | | | | | | | | |
| Years Ended December 31, |
| 2017 |
| 2016 |
| 2015 |
Automotive China equity income | $ | 1,976 |
|
| $ | 1,973 |
|
| $ | 2,057 |
|
Other joint ventures equity income | 156 |
|
| 309 |
|
| 136 |
|
Total Equity income | $ | 2,132 |
|
| $ | 2,282 |
|
| $ | 2,193 |
|
Investments in Nonconsolidated Affiliates
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Automotive China carrying amount | $ | 7,156 | | | $ | 6,599 | |
Other investments carrying amount | 2,521 | | | 1,807 | |
Total equity in net assets of nonconsolidated affiliates | $ | 9,677 | | | $ | 8,406 | |
|
| | | | | | | |
| December 31, 2017 |
| December 31, 2016 |
Automotive China carrying amount | $ | 7,832 |
|
| $ | 7,859 |
|
Other investments carrying amount | 1,241 |
|
| 1,137 |
|
Total equity in net assets of nonconsolidated affiliates | $ | 9,073 |
|
| $ | 8,996 |
|
The carrying amount of our investments in certain joint ventures exceeded our share of the underlying net assets by $4.3 billion and $4.2 billion at December 31, 20172021 and 20162020 primarily due primarily to goodwill from the application of fresh-start reporting and the purchase of additional interests in nonconsolidated affiliates.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following table summarizes our direct ownership interests in our China JVs:
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Automotive China JVs | | | |
SAIC General Motors Corp., Ltd. (SGM) | 50 | % | | 50 | % |
Pan Asia Technical Automotive Center Co., Ltd. | 50 | % | | 50 | % |
SAIC General Motors Sales Co., Ltd. (SGMS) | 49 | % | | 49 | % |
SAIC GM Wuling Automobile Co., Ltd. (SGMW) | 44 | % | | 44 | % |
Shanghai OnStar Telematics Co., Ltd. (Shanghai OnStar) | 40 | % | | 40 | % |
SAIC GM (Shenyang) Norsom Motors Co., Ltd. (SGM Norsom) | 25 | % | | 25 | % |
SAIC GM Dong Yue Motors Co., Ltd. (SGM DY) | 25 | % | | 25 | % |
SAIC GM Dong Yue Powertrain Co., Ltd. (SGM DYPT) | 25 | % | | 25 | % |
Other joint ventures | | | |
SAIC-GMAC Automotive Finance Company Limited (SAIC-GMAC) | 35 | % | | 35 | % |
SAIC-GMF Leasing Co., Ltd. | 35 | % | | 35 | % |
|
| | | | | |
| December 31, 2017 | | December 31, 2016 |
Automotive China JVs | | | |
SAIC General Motors Corp., Ltd. (SGM) | 50 | % | | 50 | % |
FAW-GM Light Duty Commercial Vehicle Co., Ltd. (FAW-GM) | 50 | % | | 50 | % |
Pan Asia Technical Automotive Center Co., Ltd. | 50 | % | | 50 | % |
SAIC General Motors Sales Co., Ltd. | 49 | % | | 49 | % |
SAIC GM Wuling Automobile Co., Ltd. (SGMW) | 44 | % | | 44 | % |
Shanghai OnStar Telematics Co., Ltd. (Shanghai OnStar) | 40 | % | | 40 | % |
SAIC GM (Shenyang) Norsom Motors Co., Ltd. (SGM Norsom) | 25 | % | | 25 | % |
SAIC GM Dong Yue Motors Co., Ltd. (SGM DY) | 25 | % | | 25 | % |
SAIC GM Dong Yue Powertrain Co., Ltd. (SGM DYPT) | 25 | % | | 25 | % |
Shanghai Chengxin Used Car Operation and Management Co., Ltd. (Shanghai Chengxin Used Car) | — | % | | 33 | % |
Other joint ventures | | | |
SAIC-GMAC | 35 | % | | 35 | % |
SGM is a joint venture we established with Shanghai Automotive Industry Corporation (SAIC) (50%). SGM has interests in three3 other joint ventures in China: SGM Norsom, SGM DY and SGM DYPT. These three3 joint ventures are jointly held by SGM (50%), SAIC (25%) and ourselves. These four4 joint ventures are engaged in the production, import and sale of a range of products under the Buick, Chevrolet and Cadillac brands. SGM also has interests in Shanghai OnStar (20%), SAIC-GMAC (20%) and SAIC-GMACSAIC-GMF Leasing Co., Ltd. (20%). Shanghai Automotive Group Finance Company Ltd., a subsidiary of SAIC, owns 45% of SAIC-GMAC. SAIC Financial Holdings Company, a subsidiary of SAIC, owns 45% of SAIC-GMF Leasing Co., Ltd.
Summarized Financial Data of Nonconsolidated Affiliates
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
| Automotive China JVs | | Others | | Total | | Automotive China JVs | | Others | | Total |
Summarized Balance Sheet Data | | | | | | | | | | | |
Current assets | $ | 18,176 | | | $ | 18,166 | | | $ | 36,342 | | | $ | 17,604 | | | $ | 16,844 | | | $ | 34,448 | |
Non-current assets | 13,948 | | | 10,042 | | | 23,990 | | | 14,875 | | | 8,634 | | | 23,509 | |
Total assets | $ | 32,124 | | | $ | 28,208 | | | $ | 60,332 | | | $ | 32,479 | | | $ | 25,478 | | | $ | 57,957 | |
| | | | | | | | | | | |
Current liabilities | $ | 24,320 | | | $ | 17,141 | | | $ | 41,461 | | | $ | 25,633 | | | $ | 14,808 | | | $ | 40,441 | |
Non-current liabilities | 1,223 | | | 5,607 | | | 6,830 | | | 1,163 | | | 6,654 | | | 7,817 | |
Total liabilities | $ | 25,543 | | | $ | 22,748 | | | $ | 48,291 | | | $ | 26,796 | | | $ | 21,462 | | | $ | 48,258 | |
| | | | | | | | | | | |
Noncontrolling interests | $ | 867 | | | $ | — | | | $ | 867 | | | $ | 824 | | | $ | 1 | | | $ | 825 | |
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Summarized Operating Data | | | | | |
Automotive China JVs' net sales | $ | 42,776 | | | $ | 38,736 | | | $ | 39,123 | |
Others' net sales | 2,017 | | | 1,850 | | | 1,815 | |
Total net sales | $ | 44,793 | | | $ | 40,586 | | | $ | 40,938 | |
| | | | | |
Automotive China JVs' net income | $ | 2,109 | | | $ | 1,239 | | | $ | 2,258 | |
Others' net income | 587 | | | 436 | | | 477 | |
Total net income | $ | 2,696 | | | $ | 1,675 | | | $ | 2,735 | |
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ——– (Continued)
Summarized Financial Data of Nonconsolidated Affiliates
|
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2017 |
| December 31, 2016 |
| Automotive China JVs |
| Others |
| Total |
| Automotive China JVs |
| Others |
| Total |
Summarized Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
Current assets | $ | 17,370 |
|
| $ | 13,484 |
|
| $ | 30,854 |
|
| $ | 17,325 |
|
| $ | 8,383 |
|
| $ | 25,708 |
|
Non-current assets | 14,188 |
|
| 3,409 |
|
| 17,597 |
|
| 12,712 |
|
| 5,991 |
|
| 18,703 |
|
Total assets | $ | 31,558 |
|
| $ | 16,893 |
|
| $ | 48,451 |
|
| $ | 30,037 |
|
| $ | 14,374 |
|
| $ | 44,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities | $ | 22,642 |
|
| $ | 12,255 |
|
| $ | 34,897 |
|
| $ | 21,428 |
|
| $ | 7,277 |
|
| $ | 28,705 |
|
Non-current liabilities | 1,639 |
|
| 1,903 |
|
| 3,542 |
|
| 1,393 |
|
| 3,898 |
|
| 5,291 |
|
Total liabilities | $ | 24,281 |
|
| $ | 14,158 |
|
| $ | 38,439 |
|
| $ | 22,821 |
|
| $ | 11,175 |
|
| $ | 33,996 |
|
| | | | | | | | | | | |
Noncontrolling interests | $ | 871 |
| | $ | 1 |
| | $ | 872 |
| | $ | 856 |
| | $ | 1 |
| | $ | 857 |
|
|
| | | | | | | | | | | |
| Years Ended December 31, |
| 2017 |
| 2016 |
| 2015 |
Summarized Operating Data |
|
|
|
|
|
Automotive China JVs' net sales | $ | 50,065 |
|
| $ | 47,150 |
|
| $ | 44,959 |
|
Others' net sales | 2,542 |
|
| 2,412 |
|
| 3,571 |
|
Total net sales | $ | 52,607 |
|
| $ | 49,562 |
|
| $ | 48,530 |
|
| | | | | |
Automotive China JVs' net income | $ | 3,984 |
|
| $ | 4,117 |
|
| $ | 4,290 |
|
Others' net income | 648 |
|
| 378 |
|
| 435 |
|
Total net income | $ | 4,632 |
|
| $ | 4,495 |
|
| $ | 4,725 |
|
Transactions with Nonconsolidated Affiliates Our nonconsolidated affiliates are involved in various aspects of the development, production and marketing of cars, trucks, crossovers, cars and automobile parts. We enter into transactions with certain nonconsolidated affiliates to purchase and sell component parts and vehicles. The following tables summarize transactions with and balances related to our nonconsolidated affiliates:
| | | | | | | | | | | | | | | | | |
| Years Ended December 31, |
| 2021 | | 2020 | | 2019 |
Automotive sales and revenue | $ | 227 | | | $ | 235 | | | $ | 199 | |
Automotive purchases, net | $ | 1,551 | | | $ | 165 | | | $ | 1,065 | |
Dividends received | $ | 783 | | | $ | 1,198 | | | $ | 1,852 | |
Operating cash flows | $ | (616) | | | $ | 1,473 | | | $ | 913 | |
| | | | | | | | | | | |
| December 31, 2021 | | December 31, 2020 |
Accounts and notes receivable, net | $ | 1,004 | | | $ | 954 | |
Accounts payable | $ | 555 | | | $ | 494 | |
Undistributed earnings | $ | 2,111 | | | $ | 1,594 | |
|
| | | | | | | | | | | |
| Years Ended December 31, |
| 2017 | | 2016 | | 2015 |
Automotive sales and revenue | $ | 923 |
| | $ | 889 |
| | $ | 1,745 |
|
Automotive purchases, net | $ | 674 |
| | $ | 803 |
| | $ | 7 |
|
Dividends received | $ | 2,000 |
| | $ | 2,120 |
| | $ | 2,047 |
|
Operating cash flows | $ | 2,321 |
| | $ | 2,512 |
| | $ | 3,853 |
|
|
| | | | | | | |
| December 31, 2017 | | December 31, 2016 |
Accounts and notes receivable, net | $ | 780 |
| | $ | 807 |
|
Accounts payable | $ | 534 |
| | $ | 553 |
|
Undistributed earnings | $ | 2,184 |
| | $ | 2,172 |
|
Note 9. Property
| | | | | | | | | | | | | | | | | |
| Estimated Useful Lives in Years | | December 31, 2021 | | December 31, 2020 |
Land | | | $ | 1,301 | | | $ | 1,339 | |
Buildings and improvements | 5-40 | | 10,542 | | | 9,671 | |
Machinery and equipment | 3-27 | | 31,444 | | | 30,013 | |
Special tools | 1-13 | | 23,719 | | | 20,851 | |
Construction in progress | | | 5,395 | | | 3,581 | |
Total property | | | 72,401 | | | 65,455 | |
Less: accumulated depreciation | | | (31,286) | | | (27,823) | |
Total property, net | | | $ | 41,115 | | | $ | 37,632 | |
GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)
|
| | | | | | | | | |
| Estimated Useful Lives in Years | | December 31, 2017 | | December 31, 2016 |
Land |
| | $ | 1,647 |
| | $ | 1,587 |
|
Buildings and improvements | 5-40 | | 7,471 |
| | 6,217 |
|
Machinery and equipment | 3-27 | | 23,915 |
| | 21,613 |
|
Special tools | 1-13 | | 21,113 |
| | 19,359 |
|
Construction in progress |
| | 6,188 |
| | 4,493 |
|
Total property | | | 60,334 |
| | 53,269 |
|
Less: accumulated depreciation | | | (24,081 | ) | | (20,666 | ) |
Total property, net | | | $ | 36,253 |
| | $ | 32,603 |
|
The amount of capitalized software included in Property, net was $1.2$1.4 billion and $1.1$1.3 billion at December 31, 20172021 and 2016.2020. The amount of interest capitalized and excluded from Automotive interest expense related to Property, net was insignificant in the years ended December 31, 2017, 20162021, 2020 and 2015.2019.
| | | Years Ended December 31, | | Years Ended December 31, |
| 2017 | | 2016 | | 2015 | | 2021 | | 2020 | | 2019 |
Depreciation and amortization expense | $ | 4,966 |
| | $ | 4,622 |
| | $ | 3,904 |
| Depreciation and amortization expense | $ | 5,829 | | | $ | 5,354 | | | $ | 6,541 | |
Impairment charges | $ | 199 |
| | $ | 68 |
| | $ | 628 |
| Impairment charges | $ | — | | | $ | 86 | | | $ | 7 | |
| Capitalized software amortization expense(a) | $ | 459 |
| | $ | 458 |
| | $ | 374 |
| Capitalized software amortization expense(a) | $ | 515 | | | $ | 457 | | | $ | 452 | |
The activity attributable to U.S. and non-U.S. Level 3 defined benefit pension plan investments was insignificant in the years ended December 31, 20172021 and 2016.2020.
income funds include investments in high quality funds and, to a lesser extent, high yield funds. High quality fixed income funds invest in government securities, investment-grade corporate bonds and mortgage and asset-backed securities. High yield fixed income funds invest in high yield fixed income securities issued by corporations which are rated below investment grade. Other investment funds also included in this category primarily represent multi-strategy funds that invest in broadly diversified portfolios of equity, fixed income and derivative instruments.
Private equity and debt investments primarily consist of investments in private equity and debt funds. These investments provide exposure to and benefit from long-term equity investments in private companies, including leveraged buy-outs, venture capital and distressed debt strategies.
Real estate investments include funds that invest in entities which are primarily engaged in the ownership, acquisition, development, financing, sale and/or management of income-producing real estate properties, both commercial and residential. These funds typically seek long-term growth of capital and current income that is above average relative to public equity funds.
Illiquid investments held by the plans are generally long-term investments that complement the long-term nature of pension obligations and are not used to fund benefit payments when currently due. Plan management monitors liquidity risk on an ongoing basis and has procedures in place that are designed to maintain flexibility in addressing plan-specific, broader industry and market liquidity events.
The pension plans may invest in financial instruments denominated in foreign currencies and may be exposed to risks that the foreign currency exchange rates might change in a manner that has an adverse effect on the value of the foreign currency denominated assets or liabilities. Forward currency contracts may be used to manage and mitigate foreign currency risk.
The pension plans may invest in debt securities for which any change in the relevant interest rates for particular securities might result in an investment manager being unable to secure similar returns upon the maturity or the sale of securities. In addition, changes to prevailing interest rates or changes in expectations of future interest rates might result in an increase or decrease in the fair value of the securities held. Interest rate swaps and other financial derivative instruments may be used to manage interest rate risk.
There are several putative class actions pending against GM in federal courts in the U.S. and in the Provincial Courts in Canada alleging that various vehicles sold, including model year 2011-2016 Duramax Diesel Chevrolet Silverado and GMC Sierra vehicles, violate federal, state and stateforeign emission standards. We are unable to estimate any reasonably possible loss or range of loss that may result from these actions. GM has also facesfaced a series of additional lawsuits based primarily on allegations in the Duramax suit,U.S. based on these allegations, including putative shareholder class actions claiming violations of federal securities law. The securities anda shareholder demand lawsuits have been voluntarily stayed by the plaintiffs. At this stage of these proceedings, we are unable to provide an evaluation of the likelihoodlawsuit that a loss will be incurred or an estimate of the amounts or range of possible loss.remains pending.
We believe that appropriate accruals have been established for losses that are probable and can be reasonably estimated. It is possible that the resolution of one or more of these matters could exceed the amounts accrued in an amount that could be material to our results of operations. We also from time to time receive subpoenas and other inquiries or requests for information from agencies or other representatives of U.S. federal, state and foreign governments on a variety of issues. Beyond the class action litigations disclosed, we have several other class action litigations pending at any given time. Historically, relatively few classes have been certified in these types of cases. Therefore, we will generally only disclose specific class actions if a class is certified and we believe there is a reasonably possible material exposure to the company.
Indirect tax-related matters are being litigated globally pertaining to value added taxes, customs, duties, sales, property taxes and other non-income tax related tax exposures. The various non-U.S. labor-related matters include claims from current and
former employees related to alleged unpaid wage, benefit, severance and other compensation matters. Certain administrative proceedings are indirect tax-related and may require that we deposit funds in escrow or provide an alternative form of security which may range from $250 million to $650 million at December 31, 2017.security. Some of the matters may involve compensatory, punitive or other treble damage claims, environmental remediation programs or sanctions that, if granted, could require us to pay damages or make other expenditures in amounts that could not be reasonably estimated at December 31, 2017.2021. We believe that appropriate accruals have been established for losses that are probable and can be reasonably estimated. For indirect tax-related matters we estimate our reasonably possible loss in excess of amounts accrued to be up to approximately $1.0 billion$900 million at December 31, 2017.2021.
We periodically enter into agreements that incorporate indemnification provisions in the normal course of business. It is not possible to estimate our maximum exposure under these indemnifications or guarantees due to the conditional nature of these obligations. Insignificant amounts have been recorded for such obligations as the majority of them are not probable or estimable at this time and the fair value of the guarantees at issuance was insignificant. Refer to the Opel/Vauxhall Sale section of this note for additional information on our indemnification obligations to Stellantis under the Agreement.
Provisions are made for estimated U.S. and non-U.S. income taxes which may be incurred on the reversal of our basis differences in investments in foreign subsidiaries and corporate joint ventures not deemed to be indefinitely reinvested. Taxes have not been provided on basis differences in investments primarily as a result of earnings in foreign subsidiaries which are deemed indefinitely reinvested of $2.8 billion and $2.4$3.2 billion at December 31, 20172021 and 2016. Additional2020. We have indefinitely reinvested basis differences related to investments in nonconsolidatednon-consolidated China JVs exist of $4.1$3.4 billion at December 31, 20172021 and 20162020 as a result of fresh-start reporting. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested basis differences is not practicable. The non-U.S. deferred income tax benefit in the year ended December 31, 2015 relates primarily to the release
Our weighted-average assumptions used to value our stock options are a dividend yield of 4.43%1.67%, 4.25% and 4.60%3.90%, expected volatility of 25.0%47.8%, 26.2% and 26.1%28.0%, a risk-free interest rate of 1.97%0.76%, 1.44% and 2.00%2.62%, and an expected option life of 5.846.00, 5.97 and 6.596.00 years for options issued during the years ended December 31, 20172021, 2020 and 2015. There were no stock2019. The expected volatility is based on the average of the implied volatility of publicly traded options issued during the year ended December 31, 2016.for our common stock.
contribute towards meeting required fuel efficiency standards. As a result of these and other factors, we do not manage our business on an individual brand or vehicle basis.
Automotive revenue is attributed to geographic areas based on the country of sale. GM Financial revenue is attributed to the geographic area where the financing is originated. The following table summarizes information concerning principal geographic areas:
No individual country other than the U.S. represented more than 10% of our total Netnet sales and revenue or Long-livedlong-lived assets, other than Mexico, whose long-lived assets are approximately 10% of our total long-lived assets.
The following table summarizes the sources (uses) of cash provided by Change in other operating assets and liabilities and Cash paid for income taxes and interest: