Global Auto Industry

Franklin Guo Dat Hong Rex Liu Reya Lu

Auto Manufacturing Industry Agenda

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

Auto Manufacturing History

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

Auto Manufacturing History

As the 1973 oil crisis, automobile emissions control rules, Japanese and European imports, and stagnant innovation changed American industry. Small imported cars outperformed large American ones, and the domestic auto industry began to fail. Small performance cars from BMW, Toyota, and Nissan took the place of big-engined cars from America and Italy. Major M & A, alliance: GM---SAAB, Daewoo; Isuzu, Subaru, Suzuki Ford---Jaguar, Land Rover, Volvo; Mazda Benz---Chrysler Renault---Nissan

Regulation History

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

Industry Overview

The Automobile Design and Development Process

Auto Industry Business Strategy

Global Auto Ownership

Porters Model for Automakers

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

Supply Chain

Auto Suppliers

Facing a number of challenges including:

A

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

M & A of Auto Suppliers

Gasoline Prices Impact on Auto

Changes in Gas Price vs. SUV & Hybrid Auto Sales

Gasoline price has a positive correlation with the sales of hybrid

auto and a negative correlation with the sales of SUV.

Global Auto Sales

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

Global Auto Production

Current Auto Manufacturing

Manufacturers Unit Price Comparison

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

design opportunities Heavy employee-level discounting Higher labor costs

Manufacturers Operating Margins Comparison

US automakers operating margins are lower than their

major competitors.

Manufacturers Profits Per Unit Comparison

Profit/Unit in $, 2005 $2,500.00 $2,000.00 $1,500.00 $1,000.00 $500.00 $0.00 -$500.00 -$1,000.00 -$1,500.00 Honda Toyota Nissan Chrysler Group Ford GM

Cost Structure - CAPEX

Cost Structure R&D

Cost Structure Health & Pension

The U.S. Big Three reported that pension and health cost them $1,500 per vehicle produced currently.

Interoperability Costs

Imperfect interoperability impose costs due to higher costs of design and production and slower implementation of design changes.

Vehicle Ownership Forecast

U.S. Market Forecast

Auto Market Forecast

Global Auto Sales Forecast

Asia Pacific will lead in production volumes by 2011

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

2004
Other 2% SA 4% NA 26%

2011
Other 2% SA 5% NA 22% Asia Pacific 40%

Asia Pacific 35%

EU 33%

EU 31%

Global Production 59.8 million

Regional CAGR 2004-11
Global Other SA NA EU Asia Pacific
0.0% 1.0% 2.0% 3.0% 4.0%

Global Production 74.6 million

Source: CSM Auto Production Forecast

5.0%

6.0%

Emission Standards Comparison

Emission Standards Comparison

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

Emission Standards Comparison

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

BMW Group

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

Common Stock Price (BMW) [Price in Euros]

Last: $43.92 Change: $ -0.16 %Change: -0.36

Date: Nov. 23, 2006 Open: 44.10 Bid: N/A High: 44.36 Ask: N/A Low: 43.86 EPS: 4.23 Volume: 21,311 P/E: 10.43 52 Week 52 Week High: 45.97 Low: 35.68 Yield: 1.45% Beta: 0.80 Dividend per share: 0.64

BMW Common Stock 5 Year Performance

Source: Deutsche Brse AG / Interactive Data Managed Solutions

BMW Common Stock 1 Year Performance

Source: Deutsche Brse AG / Interactive Data Managed Solutions

Preferred Stock Price (BMW3) [Price in Euros]

Last: $43.64 Change: -$0.25 %Change: -0.56

Date: Nov. 23, 2006 Open: 44.00 Bid: N/A High: 44.04 Ask: N/A Low: 43.28 EPS: 4.23 Volume: 3,367 P/E: 10.71 52 Week 52 Week High: 45.01 Low: 31.95 Yield: 1.50% Beta: N/A Dividend per share: 0.66

BMW Preferred Stock 5 Year Performance

Source: Deutsche Brse AG / Interactive Data Managed Solutions

BMW Preferred Stock 1 Year Stock Performance

Source: Deutsche Brse AG / Interactive Data Managed Solutions

Company Overview

Established in 1916, originally founded as an aircraft engine manufacturer Head offices located in Munich, Germany One of the top 10 largest vehicle manufacturers in the world Produces automobiles and motorbikes under the following premium brands:

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

Important Company Milestones

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

Company Management

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

Company Management

Dr. Helmut Panke Current Chairman of the Board of Management 2002-2006 Born in 1946 - 1976 1978 Researcher at the Swiss Institute of Nuclear Research - 1978 1982 Consultant at McKinsey & Co - 1982 1985 Head of planning & control at BMW - 1993 1995 CEO and Chairman of BMW (USA) - 2002 2006 Chairman of the Board of Management - 2006 Current member of the Board of Directors at Microsoft Education : University of Munich, B.Sc, 1968; MS, 1972; PhD, 1976

BMW Group Shareholder Structure Overview

17.4

Stefan Quandt Johanna Quandt 53.4 16.7 Susanne Klatten Free Floating 12.5

STEFAN QUANT

JOHANNA QUANDT

SUSANNE KLATTEN

BMW Group Shareholder Structure Overview

Investor Type

8.8

46.6 44.6

Institutional Investors by Region

Germany
strategic investors institutional investors other investors

Europe

UK & Ireland

N. America

Rest of World

4.7 10.8 9.8 6.6 12.8

BMW Share Buyback Program

Approved by shareholders on May 12, 2005 BMW to buyback common shares up to a maximum of 10% of the company share capital By the end 2005, 13,488,400 common shares have been bought back (equivalent to 2% of the companys share capital) Average price paid per share $37.49 Approximate total cost for the share buyback program in 2005: $506 million In 2006, up to 1.5 millions shares of preferred stock will be bought back for employee stock plan

BMW Group Production Figures

BMW Group Vehicle Model Analysis

BMW Group Key Motorcycle Markets 2005

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

Dividend Payout 1999-2005

0.7 0.62 0.64 0.64 0.66 0.6

0.6 0.55 0.52 0.5 0.42 0.4 0.4

Euro

0.58 0.55 0.52

0.46

0.48

Common shares Preferred shares 0.3

0.2

0.1

0 1999 2000 2001 2002 Date 2003 2004 2005

Factors Affecting Profitability

Sharp rise in crude oil prices Reduced consumer buying power and demand Elevated price of raw materials such as steel and other metals

Intense competition from Asian competitors Fluctuating currency exchange rate Large capital expenditure costs

BMW Group Capital Expenditure and Cash Flow Data

Financial Statements

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

BMW Group Income Statement for 3rd Quarter

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

BMW Group Balance Sheet

BMW Group Balance Sheet

BMW Group Growth Strategies

Objective: increase volume of automobiles sold

Producing more fuel efficient vehicles

BMW Group Growth Strategies

Increasing consumer demand with by producing safer and more reliable vehicles

BMW NightVision

BMW Group Growth Strategies

Introduction of the first luxury hydrogen hybrid car 745hL

September 2005, BMW joins hybrid technology sharing partnership with GM and Mercedes to build gas-electric engines

BMW Group Growth Strategies

Continued sales network expansion to meet the needs and demands of local consumer Continue to penetrate the dynamic Asian markets Beginning preparation to enter the Indian market Starting 2007, BMW will build a production plant in Chennai, India

Move down market and target a younger demographic with less income with the 1 series

1 Series arriving in N. America in late 2007

BMW Group Growth Strategies

Continued roll out of new updated versions of existing vehicle models BMW

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

MINI
New redesigned MINI Cooper launches late November 2006

Rolls Royce
New convertible and coupe version of Phantom available late 2007

Fishers Analysis
1) Financial Skill
-

Great financial performance with increasing profits Industry product leadership Great management team; relatively good employee relationship Limited growth space due to intense competition Low industry profit margin

2) People Factor
-

3) Investment Characteristics
-

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

Recommendation

HOLD

Honda Motor Co., Ltd.

Agenda
Current Financial Position Company Analysis Financial Analysis

Semi-annual

Financial Statements Annual Financial Statements

Fishers Analysis Recommendation

Company Snap Shot

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

Chart: 1 Year (Daily)

Source: Globeinvestor.com

Chart: 10 Years (Weekly)

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

Chart: 3 Year Stock Performance Compared to DJTA

Source: Globeinvestor.com

Credit Ratings

As of March 31, 2006

Credit Ratings
Short-term Long-term unsecured unsecured debt securities debt securities

Agencies
Moody's Investors Service Standard & Poor's Rating Services

P-1 A-1

A1 A+

Company Analysis

Overview

Established in 1948 Four lines of business:

Motorcycles Automobiles Power

products and others Financial services

Over 61 principal subsidiaries ~32 manufacturing facilities in 19 countries Total of about 144,785 full-time employees

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

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

Corporate Governance

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

Satoshi Aoki Executive VP and Rep Director

Joined Honda since 1969 Promoted to Executive VP in summer 2005

Lines of Business
Motorcycles Automobiles Power products and Others Financial services

Fields of Business

Research & Development

ASIMO HondaJet Next

generation powertrains

Manufacturing & Distribution

Local

production plants to meet local demand

Sales & Services

Emphasis

on customer satisfaction

R&D Efforts

Key Regions of Operation

Japan
Centers

for R&D, manufacturing, and customer

service

North America
Hondas

overall largest market brand popularity

Europe
Increasing

Asia
China

increasing production facilities

Others
Honda

has over 80% market share in Brazilian motorcycle industry

Unit Sales Breakdown

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

Revenue and Operating Margin

Business Segment Information

Revenue Breakdown by Business Segments (%)

90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2002 2003 2004 2005 2006 Power Products and Others Financial Services Motorcycle Business Automobile Business

Geographic Segment Information

Revenue Breakdown by Geographic Segments (%)

70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 2002 2003 2004 2005 2006 Japan North America Europe Asia Others

Risk Factors

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

and governmental regulations Patents and trademarks

Growth Strategies

Motorcycles
Equipping

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

2007 Sales forecast: 10,840,000 units

Growth Strategies

Automobiles
Launching

new model of SUV and refine existing models Expanding light truck models Expanding sales and services centers in Asia to meet increasing demand Expanding production capacity to meet demand in Brazil

2007 Sales forecast: 3,720,000 units

Growth Strategies

Power products
Supplying

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

2007 Sales forecast: 5,880,000 units

News

Nov. 21, 2006 2007 Honda CR-V and Pilot Earn Insurance Institute for Highway Safety TOP SAFETY PICK Award 2007 Acura RDX Earns an Insurance Institute for Highway Safety TOP SAFETY PICK Award Nov. 7, 2006 HondaJet Named Winner of Popular Science's 2006 Sept. 27, 2006 HondaJet Goes on Sale at National Business Aviation Association Convention

Financial Analysis

Financial Highlights

2006 Capital Expenditure Breakdown by Business Segments

Forecasted 2007 Cap. Ex. Breakdown by Business Segments

Semi-annual Financial Statements

Semi-annual Financial Highlights

Financial Results

Important Factors

Annual Financial Statements

Fishers Analysis

Superiority in Financial skills, Production, Marketing, Research

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

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

Investment Characteristics of Some Business

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

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

General

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

Recommendation

BUY

General Motors

Table of Contents

Stock price Company Background Company Analysis Financial Highlight

(06 3rd Quarter report 05 Annual report)

Income

statement Balance sheet Cash flow statement

Conclusion & Recommendation

Current Position on Nov. 24, 2006

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

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

Globeinvestor.com and merchantonline.com

5-Year Stock Price

(from bigcharts.com)

1-Year Stock Price

(from bigcharts.com)

GM vs. S&P/TSX Composite Index

Globeinvestor.com

Definitions

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

GMAC General Motors Acceptance Corporation

Background

The world's largest automaker Founded in 1908 Global industry sales leader for 75 years GM today employs 327,000 people in the world

Huge labor pension cost

Global headquarters in Detroit, Michigan, USA GM manufactures its cars and trucks in 33 countries

GMs Products

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

Pontiac
Saab Saturn Vauxhall

GM operates one of the world's leading finance companies

GMAC Financial Services, which offers automotive, residential and commercial financing and insurance.

GM's OnStar subsidiary is the industry leader in

vehicle safety, security and information services.

GMA & GMAC Revenue Share - Nine months ended September 30, 2006
GMAC 17% Other Auto 1% Other Financ ing 0%

GMA Other Auto

GMA GMAC 82% Other Financing

Global Partnerships

Majority shareholder of GM Daewoo Auto & Technology Co. of South Korea

Has product, powertrain and purchasing collaborations with Suzuki Motor Corp. and Isuzu Motors Ltd. of Japan. Advanced technology collaborations with

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

Vehicle manufacturing ventures with

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

Type of Vehicle and Market Share

Management

Key people

G. Richard Wagoner, Jr.

Chairman & CEO since May 1, 2003

Joined GM since 1977 BA in economics from Duke University MBA from Harvard Business School

Frederick (Fritz) A. Henderson

Vice Chairman and CFO since Jan. 1, 2006

Joined GM since 1984 BBA from the University of Michigan MBA from Harvard Business School

Robert A. Lutz

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

Former CEO of Excide Technologies & Vice Chairman of Chrysler Corporation BA in production management from the University of California-Berkeley MBA from the University of California-Berkeley Degree of doctor of management from Kettering University

The World's Largest Automaker

GM's largest national market in order:

1. 2. 3. 4.

the United States China Canada the United Kingdom and Germany.

Global market share for vehicles sales:

14.2%(2005) from 14.4%(2004)

Declining Revenue
High oil price GM produce high horse power vehicles

Used to be American consumers favorite

People switch to low oil consumption vehicles

Japanese cars Korean cars

Competitive Position

Financial Statement Analysis

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

2006 Quarter Revenue Breakdown

- Auto & Financing and Insurance Operations

2006 Quarter GMA Net Income by Region

2006 Quarter GMAC Net Income by Division

06~07 EPS Estimates

(Earning estimates from Zacks.com)

Segment Reporting

GMA Revenue Share by Region - Nine months ended September 30, 2006
GM LAAM 8% GMAP 9%

GME 19% GMNA 64%

GMNA

GME

GM LAAM

GMAP

Financial Statement Analysis

2005 Annual Report

General Idea about the Performance of GM in 2005

GM is losing big money in North America GMAs global sales revenue is good (growth) GMAC is making money We can see that the auto division is dragging the company performance

Breakdown of GMAs Loss by region in 2005

Breakdown of GMACs profit in 2005

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

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

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

GMs Main Challenges

Huge legacy cost burden

Inability to adjust structural costs in line with falling revenue

GMs Legacy Challenge

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

(!!!Big competitive disadvantage)

Estimated Future Employee Benefit Payments

Consolidated Balance Sheet - Asset

Consolidated Balance Sheet - Liabilities and Stockholders Equity

Breakdown for Balance Sheet - Asset

Breakdown for Balance Sheet - Liabilities and Stockholders Equity

Consolidated Income Statement

Breakdown for Consolidated Income Statement

Loss from Continuing Operations

2005 to 2004 Comparison

Net sales fell to $192.6 billion from 193.5 billion Net loss of $10.6 billion from Net income of $2.8 billions Unfavorable results primarily due to losses at GMNA GMAC net income declined to $2.4 from $3.0 billion

Reasons for Unfavorable results in 2005

GMNA market share and product mix

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

Delphi Chapter 11 Proceeding

GMNA restructuring and global asset Impairments Health-care cost escalation

Factors for Loss in GMNA

Unfavorable product mix ($2.2 billion loss)

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

Production volume decreases ($2.1 b. loss)

Market share decline Reduction in dealer inventories

Unfavorable material costs ($700 mil. loss) Increased health-care expenses ($600 mil. loss)

Escalating health care cost trends

Advertising and sales promotion cost increase ($500 mil. loss) Restructuring charge ($1.7 b. loss) After-tax impairment charge ($552 mil. loss)

North America Turnaround Plan

Keep raising the bar in the execution of great cars and trucks
Revitalize sales and marketing strategy Significantly improve cost competitiveness

Address health-care and pension legacy cost burden

GMNA Turnaround Plan Highlight

Cease production at 12 U.S. plans by 2008 Reduce 30,000 manufacturing positions Work with United Auto Workers to reduce health-care obligations by $15 billion Modify pension benefits Reduce salaries of top executives Reduce dividend by 50%

Consolidated Cash Flow Statement (cont.)

Supplementary Information for Cash Flow Statement (cont.)

GM Profitability Plan

Keep working on cost reduction

Growing revenue around the world Invest in technology, better fuel efficiency Revitalizing sales and marketing strategy

Significant Events

Delphi Bankruptcy

GMAC Pending Sale of 51% controlling interest

Discussions with Renault and Nissan Sale of investments in Isuzu and Suzuki

Sale of Regional Homebuilder

GM-Fishers Analysis

1) Financial Skill

Bad financial performance in GMA Depending on profits from GMAC

Great management team Relatively bad employee relationship (cutting pension expense) Limited growth space due to intense competition Low industry profit margin (negative profit) P/E ratio is High Increasing stock price if turn the Net loss around

2) People Factor

3) Investment Characteristics

4) Investment Price

Recommendation