GM 2011 10K

Table of Contents


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-1004
Form 10-K
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2011
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             

Commission file number 001-34960
GENERAL MOTORS COMPANY
(Exact Name of Registrant as Specified in its Charter)
STATE OF DELAWARE
27-0756180
(State or other jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
 
 
300 Renaissance Center, Detroit, Michigan
48265-3000
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s telephone number, including area code
(313) 556-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Name of Each Exchange on
which Registered
Common Stock
New York Stock Exchange/Toronto Stock Exchange
4.75% Series B Mandatory Convertible Junior Preferred Stock
New York Stock Exchange
Warrants (expiring July 10, 2016)
New York Stock Exchange
Warrants (expiring July 10, 2019)
New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes  þ  No  ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes  ¨  No  þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  þ  No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its company Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  þ  No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  þ  Accelerated filer  ¨  Non-accelerated filer  ¨  Smaller reporting company  ¨
Do not check if smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨  No  þ
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 $45.5 billion on June 30, 2011.
As of February 15, 2012 the number of shares outstanding of common stock was 1,565,761,986 shares.

DOCUMENTS INCORPORATED BY REFERENCE
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.



INDEX
 
 
 
Page
 
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
 
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
 
 
 
 
 
 
Note 1.
 
Note 2.
 
Note 3.
 
Note 4.
 
Note 5.
 
Note 6.
 
Note 7.
 
Note 8.
 
Note 9.
 
Note 10.
 
Note 11.
 
Note 12.
 
Note 13.
 
Note 14.
 
Note 15.
 
Note 16.
 
Note 17.
 
Note 18.
 
Note 19.
 
Note 20.
 
Note 21.
 
Note 22.
 
Note 23.
 
Note 24.
 
Note 25.
 
Note 26.



 
Note 27.
 
Note 28.
 
Note 29.
 
Note 30.
 
Note 31.
 
Note 32.
Item 9.
Item 9A.
Item 9B.
 
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
 
Item 15.
 





Table of Contents
GENERAL MOTORS COMPANY AND SUBSIDIARIES


PART I
General Motors Company was formed in 2009 originally as a Delaware limited liability company, Vehicle Acquisition Holdings LLC, and subsequently converted to a Delaware corporation, NGMCO, Inc. This company, which on July 10, 2009 acquired substantially all of the assets and assumed certain liabilities of General Motors Corporation (363 Sale) and changed its name to General Motors Company, is sometimes referred to in this Annual Report on Form 10-K (2011 Form 10-K) for the periods on or subsequent to July 10, 2009 as “we,” “our,” “us,” “ourselves,” the “Company,” “General Motors,” or “GM,” and is the successor entity solely for accounting and financial reporting purposes (Successor). General Motors Corporation is sometimes referred to in this 2011 Form 10-K, for the periods on or before July 9, 2009, as “Old GM” and is the predecessor entity solely for accounting and financial reporting purposes (Predecessor). On July 10, 2009 in connection with the 363 Sale, General Motors Corporation changed its name to Motors Liquidation Company, which is sometimes referred to in this 2011 Form 10-K for the periods after July 10, 2009 as “MLC.” On December 15, 2011 MLC was dissolved and the Motors Liquidation Company GUC Trust (GUC Trust) assumed responsibility for the affairs of and certain claims against MLC and its debtor subsidiaries that were not concluded prior to MLC's dissolution. MLC transferred to the GUC Trust all of MLC's remaining undistributed shares of our common stock and warrants to acquire our common stock.

Item 1. Business

We design, build and sell cars, trucks and automobile parts worldwide. We also provide automotive financing services through General Motors Financial Company, Inc. (GM Financial).

Automotive

Our automotive operations meet the demands of our customers through our four automotive segments: GM North America (GMNA), GM Europe (GME), GM International Operations (GMIO) and GM South America (GMSA).

In the year ended December 31, 2009 we combined our vehicle sales data, market share data and production volume data in the period July 10, 2009 through December 31, 2009 with Old GM's data in the period January 1, 2009 through July 9, 2009 for comparative purposes.

Our total worldwide vehicle sales were 9.0 million and 8.4 million in the years ended December 31, 2011 and 2010. Total combined GM and Old GM worldwide vehicle sales in the year ended December 31, 2009 were 7.5 million.

In the year ended December 31, 2010 we completed the sale of Saab Automobile AB (Saab) and of Saab Automobile GB and completed the wind down of our Pontiac, Saturn and HUMMER brands.

GMNA primarily meets the demands of customers in North America with vehicles developed, manufactured and/or marketed under the following brands:
•     Buick
•     Cadillac
•     Chevrolet
•     GMC
The demands of customers outside North America are primarily met with vehicles developed, manufactured and/or marketed under the following brands:
•     Buick
•     Chevrolet
•     GMC
•     Opel
•     Cadillac
•     Daewoo
•     Holden
•     Vauxhall

At December 31, 2011 we had equity ownership stakes directly or indirectly in entities through various regional subsidiaries, including GM Korea Company (GM Korea), Shanghai General Motors Co., Ltd. (SGM), SAIC-GM-Wuling Automobile Co., Ltd. (SGMW), FAW-GM Light Duty Commercial Vehicle Co., Ltd. (FAW-GM) and SAIC GM Investment Limited (HKJV). These companies design, manufacture and market vehicles under the following brands:
•     Alpheon
•     Buick
•     Chevrolet
•     Jiefang
•     Baojun
•     Cadillac
•     Daewoo
•     Wuling

In addition to the products we sell to our dealers for consumer retail sales, we also sell cars and trucks to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies and governments. We sell vehicles to fleet customers

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Table of Contents
GENERAL MOTORS COMPANY AND SUBSIDIARIES


directly or through our network of dealers. Our retail and fleet customers can obtain a wide range of aftersale vehicle services and products through our dealer network, such as maintenance, light repairs, collision repairs, vehicle accessories and extended service warranties.

Competitive Position

Information in this 2011 Form 10-K relating to our relative position in the global automotive industry is based upon the good faith estimates of management and includes all sales by joint ventures on a total vehicle basis, not based on the percentage of ownership in the joint venture. Market share information in this 2011 Form 10-K is based on vehicle sales volume. Worldwide market share and vehicle sales data excludes the markets of Iran, North Korea, Sudan and Syria.

The global automotive industry is highly competitive. The principal factors that determine consumer vehicle preferences in the markets in which we operate include price, quality, available options, style, safety, reliability, fuel economy and functionality. Market leadership in individual countries in which we compete varies widely.

In the year ended December 31, 2011 our worldwide market share increased to 11.9%. Our vehicle sales volumes in the year ended December 31, 2011 reflect the moderate improvement in certain facets of the U.S. economy which has contributed to a slow but steady improvement in U.S. industry vehicle sales, as well as increased volumes in Russia and China.

In the year ended December 31, 2010 our worldwide market share was 11.5%. Our vehicle sales volumes in the year ended December 31, 2010 were consistent with a gradual U.S. vehicle sales recovery from the negative economic effects of the U.S. recession first experienced by Old GM in the second half of 2008, as well as increased volumes in China.

In the year ended December 31, 2009 combined GM and Old GM worldwide market share was 11.6%. In 2009 the U.S. and Europe continued to be negatively affected by the economic factors first experienced in 2008 as their automotive industry sales declined 21.4% and 14.5% when compared to the year ended December 31, 2008, although volumes increased in China.

Production volume includes vehicles produced by certain joint ventures. The joint venture agreements with SGMW and FAW-GM allow for significant rights as a member as well as the contractual right to report SGMW and FAW-GM joint venture production in China. The following table summarizes total production volume (vehicles in thousands):

 
Years Ended December 31,
 
2011
 
2010
 
2009
 
GM
 
GM
 
Combined GM
and Old GM
GMNA
 
 
 
 
 
Cars
1,145

 
977
 
727
Trucks
1,944

 
1,832
 
1,186
Total GMNA
3,089

 
2,809
 
1,913
GMIO
 
 
 
 
 
Consolidated entities
1,114

 
1,016
 
752
Joint ventures
 
 
 
 
 
SGMW
1,284

 
1,256
 
1,109
SGM
1,208

 
1,037
 
712
FAW-GM
51

 
86
 
43
Other
384

 
350
 
61
Total GMIO
4,041

 
3,745
 
2,677
GME
1,189

 
1,234
 
1,106
GMSA
948

 
926
 
807
Worldwide
9,267

 
8,714
 
6,503

U.S. Market Share

The following table summarizes the respective U.S. market shares in passenger cars, trucks and crossovers:

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GENERAL MOTORS COMPANY AND SUBSIDIARIES


 
Years Ended December 31,
 
2011
 
2010
 
2009
GM
19.2
%
 
18.8
%
 
19.7
%
Ford
16.5
%
 
16.7
%
 
15.9
%
Toyota
12.6
%
 
15.0
%
 
16.7
%
Fiat/Chrysler
10.5
%
 
9.2
%
 
8.8
%
Honda
8.8
%
 
10.4
%
 
10.8
%
Hyundai
8.7
%
 
7.6
%
 
6.9
%
Nissan
8.0
%
 
7.7
%
 
7.3
%

Vehicle Sales
The following tables summarize total industry sales of new motor vehicles of domestic and foreign makes and the related competitive position (vehicles in thousands):

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GENERAL MOTORS COMPANY AND SUBSIDIARIES


 
Vehicle Sales(a)(b)(c)
Years Ended December 31,
 
2011
 
2010(d)
 
2009(d)
 
Industry
 
GM
 
GM as
a % of
Industry
 
Industry
 
GM
 
GM as
a % of
Industry
 
Industry
 
Combined
GM and
Old GM
 
Combined
GM and
Old GM as
a % of
Industry
GMNA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
United States
13,047

 
2,504

 
19.2
%
 
11,778

 
2,215

 
18.8
%
 
10,607

 
2,084

 
19.7
%
Canada
1,620

 
243

 
15.0
%
 
1,583

 
247

 
15.6
%
 
1,483

 
254

 
17.1
%
Mexico
937

 
169

 
18.0
%
 
848

 
156

 
18.3
%
 
774

 
138

 
17.9
%
Other
259

 
9

 
3.5
%
 
242

 
7

 
3.1
%
 
282

 
7

 
2.5
%
Total GMNA
15,863

 
2,924

 
18.4
%
 
14,451

 
2,625

 
18.2
%
 
13,145

 
2,484

 
18.9
%
GME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
United Kingdom
2,250

 
281

 
12.5
%
 
2,294

 
290

 
12.7
%
 
2,223

 
287

 
12.9
%
Germany
3,509

 
299

 
8.5
%
 
3,198

 
269

 
8.4
%
 
4,049

 
382

 
9.4
%
Italy
1,930

 
154

 
8.0
%
 
2,162

 
170

 
7.9
%
 
2,358

 
189

 
8.0
%
Russia
2,714

 
244

 
9.0
%
 
1,970

 
159

 
8.1
%
 
1,511

 
142

 
9.4
%
Uzbekistan
126

 
122

 
96.1
%
 
150

 
145

 
96.3
%
 
107

 
103

 
95.8
%
France
2,689

 
125

 
4.7
%
 
2,708

 
124

 
4.6
%
 
2,685

 
119

 
4.4
%
Spain
932

 
80

 
8.6
%
 
1,114

 
100

 
8.9
%
 
1,075

 
94

 
8.7
%
Other
5,663

 
430

 
7.6
%
 
5,339

 
406

 
7.6
%
 
4,777

 
352

 
7.4
%
Total GME
19,813

 
1,735

 
8.8
%
 
18,935

 
1,663

 
8.8
%
 
18,785

 
1,668

 
8.9
%
GMIO
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
China(e)
18,702

 
2,547

 
13.6
%
 
18,289

 
2,352

 
12.9
%
 
13,745

 
1,826

 
13.3
%
Australia
1,008

 
126

 
12.5
%
 
1,036

 
133

 
12.8
%
 
937

 
121

 
12.9
%
South Korea
1,579

 
141

 
9.0
%
 
1,555

 
127

 
8.1
%
 
1,454

 
115

 
7.9
%
Middle East Operations
1,112

 
138

 
12.4
%
 
1,089

 
120

 
11.0
%
 
1,167

 
114

 
9.8
%
India(e)
3,252

 
111

 
3.4
%
 
3,023

 
110

 
3.7
%
 
2,257

 
69

 
3.1
%
Egypt
175

 
46

 
26.6
%
 
249

 
68

 
27.2
%
 
206

 
52

 
25.5
%
Other
8,832

 
193

 
2.2
%
 
9,333

 
162

 
1.7
%
 
8,195

 
155

 
1.9
%
Total GMIO
34,660

 
3,302

 
9.5
%
 
34,574

 
3,072

 
8.9
%
 
27,961

 
2,452

 
8.8
%
GMSA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Brazil
3,633

 
632

 
17.4
%
 
3,515

 
658

 
18.7
%
 
3,141

 
596

 
19.0
%
Argentina
861

 
136

 
15.8
%
 
665

 
109

 
16.3
%
 
517

 
79

 
15.2
%
Colombia
325

 
106

 
32.6
%
 
254

 
85

 
33.6
%
 
185

 
67

 
36.1
%
Venezuela
121

 
44

 
36.5
%
 
125

 
51

 
40.7
%
 
137

 
49

 
36.1
%
Other
715

 
147

 
20.6
%
 
602

 
122

 
20.3
%
 
389

 
81

 
20.8
%
Total GMSA
5,655

 
1,065

 
18.8
%
 
5,161

 
1,025

 
19.9
%
 
4,369

 
872

 
20.0
%
Total Worldwide
75,991

 
9,026

 
11.9
%
 
73,121

 
8,385

 
11.5
%
 
64,260

 
7,475

 
11.6
%


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Vehicle Sales(a)(b)(c)
Years Ended December 31,
 
2011
 
2010(d)
 
2009(d)
 
Industry
 
GM
 
GM as
a % of
Industry
 
Industry
 
GM
 
GM as
a % of
Industry
 
Industry
 
Combined GM and Old GM
 
Combined
GM and
Old GM
as a % of
Industry
United States
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cars
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Midsize
2,639

 
496

 
18.8
%
 
2,493

 
472

 
18.9
%
 
2,288

 
518

 
22.7
%
Small
2,293

 
285

 
12.4
%
 
2,047

 
171

 
8.4
%
 
2,051

 
202

 
9.8
%
Luxury
859

 
70

 
8.1
%
 
845

 
69

 
8.2
%
 
778

 
69

 
8.8
%
Sport
287

 
101

 
35.4
%
 
263

 
94

 
36.0
%
 
253

 
85

 
33.7
%
Total cars
6,078


952

 
15.7
%
 
5,648

 
807

 
14.3
%
 
5,370

 
874

 
16.3
%
Trucks
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Utilities
893

 
215

 
24.1
%
 
806

 
204

 
25.3
%
 
716

 
211

 
29.5
%
Pick-ups
1,817

 
625

 
34.4
%
 
1,630

 
553

 
33.9
%
 
1,404

 
487

 
34.7
%
Vans
702

 
89

 
12.7
%
 
651

 
74

 
11.3
%
 
575

 
68

 
11.9
%
Medium Duty
269

 

 

 
189

 
4

 
1.9
%
 
177

 
13

 
7.2
%
Total trucks
3,680

 
929

 
25.2
%
 
3,277

 
835

 
25.5
%
 
2,871

 
780

 
27.2
%
Crossovers
3,288

 
622

 
18.9
%
 
2,853

 
573

 
20.1
%
 
2,365

 
430

 
18.2
%
Total United States
13,047

 
2,504

 
19.2
%
 
11,778

 
2,215

 
18.8
%
 
10,607

 
2,084

 
19.7
%
Canada, Mexico and Other
2,816

 
420

 
14.9
%
 
2,673

 
410

 
15.3
%
 
2,539

 
400

 
15.7
%
Total GMNA
15,863

 
2,924

 
18.4
%
 
14,451

 
2,625

 
18.2
%
 
13,145

 
2,484

 
18.9
%
__________
(a)
GMNA vehicle sales primarily represent sales to the end customer. GME, GMIO and GMSA vehicle sales primarily represent estimated sales to the end customer. In countries where end customer data is not readily available other data sources, such as wholesale or forecast volumes, are used to estimate vehicle sales.
(b)
Certain fleet sales that are accounted for as operating leases are included in vehicle sales at the time of delivery to the daily rental car companies.
(c)
Vehicle sales data may include rounding differences.
(d)
Includes HUMMER, Saab, Saturn and Pontiac vehicle sales data.
(e)
Includes the following joint venture vehicle sales:
 
Years Ended December 31,
 
2011
 
2010
 
2009
 
GM
 
GM
 
Combined GM
and Old GM
Joint venture sales in China
 
 
 
 
 
SGM
1,200

 
1,033

 
728

SGMW and FAW-GM
1,342

 
1,315

 
1,096

Joint venture sales in India
 
 
 
 
 
HKJV
111

 
101

 


Fleet Sales and Deliveries

The sales and market share data provided previously includes both retail and fleet vehicle sales. Certain fleet transactions, particularly daily rental, are generally less profitable than retail sales. In the accompanying tables fleet sales are presented as vehicle sales. 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.

The following table summarizes estimated fleet sales and those sales as a percentage of total vehicle sales. Fleet sales data may

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include rounding differences (vehicles in thousands):
 
Years Ended December 31,
 
2011
 
2010
 
2009
 
GM
 
GM
 
Combined GM
and Old GM
GMNA
740

 
715

 
590

GME
564

 
534

 
540

GMIO
378

 
330

 
333

GMSA
246

 
217

 
177

Total fleet sales
1,927

 
1,796

 
1,640

Fleet sales as a percentage of total vehicle sales
21.3
%
 
21.4
%
 
21.9
%

The following table summarizes U.S. fleet sales and those sales as a percentage of total U.S. vehicle sales (vehicles in thousands):
 
Years Ended December 31,
 
2011
 
2010
 
2009
 
GM
 
GM
 
Combined GM
and Old GM
Daily rental sales
417

 
429

 
306

Other fleet sales
222

 
195

 
208

Total fleet sales
639

 
624

 
514

Fleet sales as a percentage of total vehicle sales
 
 
 
 
 
Cars
31.3
%
 
36.9
%
 
29.0
%
Trucks
24.2
%
 
23.4
%
 
22.0
%
Crossovers
18.8
%
 
22.9
%
 
20.9
%
Total vehicles
25.5
%
 
28.2
%
 
24.7
%

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 in large part upon the level of competition in the markets in which we operate and the level of demand for our products. In 2012 we will continue to price vehicles competitively, including offering strategic and tactical incentives as required. We believe this strategy, coupled with sound inventory management, will continue to strengthen the reputation of our brands and result in competitive prices.

Cyclical Nature of Business

Retail sales are cyclical and 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 on general economic conditions, credit availability and consumer spending.

Relationship with Dealers

We market vehicles worldwide primarily through a network of independent authorized retail dealers. These outlets include distributors, dealers and authorized sales, service and parts outlets.

The following table summarizes the number of authorized dealerships:

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December 31,
 
2011
 
2010
 
2009
GMNA
5,068

 
5,167

 
6,450

GME
7,745

 
7,859

 
8,422

GMIO
6,901

 
6,053

 
5,784

GMSA
1,162

 
1,136

 
1,166

Total worldwide
20,876

 
20,215

 
21,822


We 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 vehicles 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 in order to enhance dealer profitability. 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 to be made only with GM parts. Our dealers generally provide their customers access to credit or lease financing, vehicle insurance and extended service contracts provided by GM Financial, Ally Financial, Inc. (Ally Financial) and other financial institutions.

The quality of GM dealerships and our relationship with our dealers and distributors are critical to our success as dealers 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 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 Development and Intellectual Property

Costs for research, manufacturing engineering, product engineering, and design and development activities relate primarily to developing new products or services or improving existing products or services including activities related to vehicle emissions control, improved fuel economy and the safety of drivers and passengers.

The following table summarizes research and development expense (dollars in millions):
 
Successor
 
 
Predecessor
 
Year Ended
December 31, 2011
 
Year Ended
December 31, 2010
 
July 10, 2009
Through
December 31, 2009
 
 
January 1, 2009
Through
July 9, 2009
Research and development expense
$
8,124

 
$
6,962

 
$
3,034

 
 
$
3,017


Our top priority for research is to continue to develop and advance our alternative propulsion strategy because energy diversity and environmental leadership are critical elements of our overall business strategy. Our objective is to be the recognized industry leader in fuel efficiency through the development of a wide variety of technologies to reduce petroleum consumption.

Fuel Efficiency

We are fully committed to meeting the requirements of the Energy Independence and Security Act of 2007 (EISA) and compliance with other regulatory schemes. We plan to achieve compliance through a combination of strategies including: (1) extensive technology improvements to conventional powertrains; (2) increased use of smaller displacement engines and improved and advanced automatic transmissions; (3) vehicle improvements including increased use of lighter, front-wheel drive architectures; (4) increased hybrid and electric vehicle offerings; and (5) portfolio changes including increasing car/crossover mix and dropping select larger vehicles in favor of smaller, more fuel efficient offerings.

Alternative Fuel Vehicles

Alternative fuels offer the greatest near-term potential to reduce liquid petroleum consumption in the transportation sector. Leveraging experience and capability developed around these technologies in our global operations we continue to develop Flex Fuel vehicles that can run on gasoline-ethanol blend fuels as well as vehicles that run on compressed natural gas and liquefied petroleum gas (LPG).

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We currently offer 20 FlexFuel vehicles in the U.S. for the 2012 model year plus an additional four models to fleet and commercial customers capable of operating on gasoline, E85 ethanol or any combination of the two. We continue to study the future role FlexFuel vehicles may play in the U.S. in light of recent regulatory developments and the rate of development of the refueling infrastructure. In 2011 94% of vehicle sales in Brazil were FlexFuel vehicles capable of running on 100% ethanol blends. We also market FlexFuel vehicles in Australia, Thailand and other global markets where biofuels have emerged in the marketplace.

We support the development of biodiesel blend fuels, which are clean-burning alternative diesel fuels produced from renewable sources, and we provide biodiesel capabilities in other markets reflecting the availability of biodiesel blend fuels.

We produce compressed natural gas capable vehicles in Europe such as the Opel Zafira, and in the U.S., the Chevrolet Express and GMC Savana full-size vans are offered to fleet and commercial customers. We offer LPG capable vehicles in select markets in Europe, Asia Pacific, South America and North America reflecting the infrastructure, regulatory focus and natural resource availability of the markets in which they are sold.

Hybrid, Plug-In, Extended Range and Battery Electric Vehicles

We are investing significantly in multiple technologies offering increasing levels of vehicle electrification including hybrid, plug-in hybrid, extended range and battery electric vehicles. We currently offer eight hybrid models and continue to develop plug-in hybrid electric vehicle technology (PHEV) and extended range electric vehicles such as the Chevrolet Volt and Opel Ampera. In 2013 we plan to produce the Chevrolet Spark battery electric vehicle. We plan to invest heavily in 2012 to support the expansion of our electric vehicle offerings and in-house development and manufacturing capabilities of advanced batteries, electric motors and power control systems.

Hydrogen Fuel Cell Technology

As part of our long-term strategy to reduce petroleum consumption and greenhouse gas emissions we are committed to continuing development of our hydrogen fuel cell technology. Our Chevrolet Equinox fuel cell electric vehicle demonstration programs, such as Project Driveway, are the largest in the world and have accumulated more than 2.3 million miles of real-world driving by consumers, celebrities, business partners and government agencies.

OnStar

OnStar Corporation (OnStar) is a wholly owned subsidiary of GM serving more than 6 million subscribers in the U.S., Canada and China. OnStar is a provider of connected safety, security and mobility solutions and advanced information technology and is available on more than 45 of our 2012 model year vehicles. OnStar is also available for installation on most other vehicles already on the road through its recently launched OnStar FMV. OnStar's key services include automatic crash response, stolen vehicle assistance, remote door unlock, turn-by-turn navigation, vehicle diagnostics and hands-free calling.

In recent years, OnStar has developed a system based on the findings of a Center for Disease Control and Prevention expert panel which allows OnStar advisors to alert first responders when a vehicle crash is likely to have caused serious injury to the occupants. OnStar also launched the automotive industry's first mobile application, leveraging OnStar's unique connection to the vehicle to provide drivers with up-to-date vehicle information such as oil level, tire pressure and fuel level as well as providing remote start and remote door unlock features and the ability to send directions from your phone to your vehicle.

Product Development

Our vehicle development activities are integrated into a single global organization. This strategy builds on earlier efforts to consolidate and standardize our approach to vehicle development. We define a global architecture as a specific range of performance characteristics and dimensions supporting a common set of major underbody components and subsystems with common interfaces.

A centralized organization is responsible for many of the non-visible parts of the vehicle such as steering, suspension, the brake system, the heating, ventilation and air conditioning system and the electrical system. This team works very closely with the global architecture development teams around the world, who are responsible for components that are unique to each brand, such as exterior and interior design, tuning of the vehicle to meet the brand character requirements and final validation to meet applicable government requirements.


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Intellectual Property

We generate and hold a significant number of patents in a number of countries in connection with the operation of our business. While none of these patents by itself is material to our business as a whole, these patents are very important to our operations and continued technological development. 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 Supplies

We purchase a wide variety of raw materials, parts, supplies, energy, freight, transportation and other services from numerous suppliers for use in the manufacture of our products. The raw materials are primarily composed of steel, aluminum, resins, copper, lead and platinum group metals. We have not experienced any significant shortages of raw materials and normally do not carry substantial inventories of such raw materials in excess of levels reasonably required to meet our production requirements.

In some instances, we purchase systems, components, parts and supplies from a single source and may be at an increased risk for supply disruptions. The inability or unwillingness of these sources to supply us with parts and supplies could have a material adverse effect on our production capacity. Purchases from our two largest suppliers have ranged from approximately 10% to 12% of our total purchases from 2009 to 2011.

Environmental and Regulatory Matters

Automotive Emissions Control

We are subject to laws and regulations that require us to control automotive emissions, including vehicle exhaust emission standards, vehicle evaporative emission standards and onboard diagnostic system (OBD) requirements. Advanced OBD systems are used to identify and diagnose problems with emission control systems. Problems detected by the OBD system may increase warranty costs and the chance for recall. Emission and OBD requirements become more challenging each year as vehicles must meet lower emission standards and new diagnostics are required and will continue to become even more stringent throughout the world.

North America

The federal government imposes stringent emission control requirements on vehicles sold in the U.S. and additional requirements are imposed by various state governments. These requirements include pre-production testing of vehicles, testing of vehicles after assembly, the imposition of emission defect and performance warranties and the obligation to recall and repair vehicles that do not comply with emissions requirements. We must obtain certification that the vehicles will meet emission requirements from the United States Environmental Protection Agency (EPA) before we can sell vehicles in the U.S. and Canada and from the California Air Resources Board (CARB) before we can sell vehicles in California and other states that have adopted the California emissions requirements.

We believe that our vehicles meet the current EPA and CARB requirements. If our vehicles do not comply with the emission standards or if defective emission control systems or components are discovered in such testing, or as part of government required defect reporting, we could incur substantial costs related to emissions recalls and possible fines. We expect that new CARB and federal requirements will increase the time and mileage periods over which manufacturers are responsible for a vehicle's emission performance.

Fleet-wide compliance with current EPA and CARB emission standards must be achieved based on a sales-weighted fleet average. CARB has proposed its next round of emission requirements which if adopted are expected to phase in with the 2015 model year. The EPA is also developing similar requirements which if adopted are expected to phase in with the 2017 model year. These requirements are expected to include more stringent exhaust emission and evaporative emission standards. Both the EPA and the CARB have enacted regulations to control the emissions of greenhouse gases. Since we believe these regulations are effectively a form of fuel economy requirement, they are discussed under “Automotive Fuel Economy.” 

California law requires that 12% of 2012 model year cars and certain light-duty trucks sold in the state must be zero emission vehicles (ZEV) such as electric vehicles or hydrogen fuel cell vehicles. The requirement is based on a complex system of credits that vary in magnitude by vehicle type and model year. Manufacturers have the option of meeting a portion of this requirement with partial ZEV credit for vehicles that meet very stringent exhaust and evaporative emission standards and have extended emission

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system warranties. Additional portions of the ZEV requirement can be met with vehicles that meet these partial ZEV requirements and incorporate advanced technology such as hybrid and plug-in hybrid electric propulsion systems meeting specified criteria. We are complying with the ZEV requirements using a variety of means including producing vehicles certified to the partial ZEV requirements. CARB has also proposed 2018 model year and later requirements for increasing volumes of ZEVs and PHEVs to achieve greenhouse gas as well as criteria pollutant emission reductions to help achieve the state's long-term greenhouse gas reduction goals.

The Clean Air Act permits states that have areas with air quality compliance issues to adopt the California car and light-duty truck emission standards in lieu of the federal requirements. Twelve states as well as the Province of Quebec currently have these standards in effect. One state has adopted those standards beginning in the 2014 model year and additional states could also adopt the California standards in the future.

Vehicles equipped with heavy-duty engines are also subject to stringent emission requirements and could be recalled or fines could be imposed against us should testing or defect reporting identify noncompliance with emission requirements. We also certify heavy-duty engines for installation in other manufacturers' products. The heavy-duty exhaust standards became more stringent in the 2010 model year. We are using a system of credits to help meet these stringent standards as permitted by EPA and CARB regulations. OBD requirements were first applied to heavy-duty vehicles beginning with the 2010 model year, which we are meeting with certain hardware and software changes.

Europe

Emissions are regulated by two different entities: the European Commission (EC) and the United Nations Economic Commission for Europe (UN ECE). The EC imposes harmonized emission control requirements on vehicles sold in all 27 European Union (EU) Member States and other countries apply regulations under the framework of the UN ECE. EU Member States can give tax incentives to automobile manufacturers for vehicles which meet emission standards earlier than the compliance date. We must demonstrate that vehicles will meet emission requirements in witness tests and type approval from an approval authority before we can sell vehicles in the EU Member States. Type approval requires the manufacturer to provide a representative vehicle to the evaluating agency who then determines if the particular type of vehicle is fully compliant with the applicable regulations. The regulatory requirements include random testing of newly assembled vehicles and a manufacturer in-use surveillance program. EC and UN ECE requirements are equivalent in terms of stringency and implementation.

A new level of exhaust emission standards for cars and light-duty trucks, Euro 5 standards, was applied in 2009, while stricter Euro 6 standards will apply beginning in 2014. The new European emission standards focus particularly on reducing emissions from diesel vehicles. The new requirements will require additional technologies and further increase the cost of diesel engines, which currently cost more than gasoline engines. To comply with Euro 6 we expect that we will need to implement technologies which are identical to those being developed to meet U.S. emission standards. The technologies available today are not cost effective and would therefore not be suitable for the European market for small- and mid-size diesel vehicles which typically are under high cost pressure. Certain measures to reduce exhaust pollutant emissions have detrimental effects on vehicle fuel economy which drives additional technology cost to maintain fuel economy.

In the long-term, notwithstanding the already low vehicle emissions in Europe, regulatory discussions in Europe are expected to continue. Regulators will continue to refine the testing requirements addressing issues such as test cycle, durability, OBD, in-service conformity and off-cycle emissions.

International Operations

China has implemented Euro 4 standards with European OBD requirements nationwide for newly registered vehicles. Beijing is expected to require many elements of Euro 5 standards for newly registered vehicles beginning in 2012 with additional elements of Euro 5 standards to be enforced beginning in 2014. Nationwide implementation of Euro 5 is expected between 2015 and 2017. For diesel-powered vehicles China has implemented Euro 4 standards for new type approvals of both light-duty diesel vehicles and all new registrations of heavy-duty diesel vehicles. Enforcement of Euro 4 standards for new diesel light-duty registrations has been delayed until 2013.

South Korea has implemented Euro 5 standards with European OBD requirements for diesel-powered vehicles, and CARB standards for gasoline/LPG-powered vehicles.

South America

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Certain countries follow the U.S. test procedures, standards and OBD requirements and others follow the EU test procedures, standards and OBD requirements with different levels of stringency. Brazil implemented national L5 low emission vehicle standards for passenger cars and light commercial vehicles in 2009. L6 standards for light diesel vehicles are to be implemented in 2012, which will mandate OBD requirements for light diesel vehicles in 2015. L6 standards for light gasoline vehicles are to be implemented in 2014 for new vehicles and 2015 for all models. Argentina implemented Euro 4 standards starting with new vehicle registrations in 2009 and the implementation of Euro 5 standards has been delayed from 2012 to 2013 for new vehicles and from 2014 to 2016 for all vehicles. Other countries in the South American region either have adopted some level of U.S. or EU standards or no standards at all.

Industrial Environmental Control

Environmental Matters

Our operations are subject to a wide range of environmental protection laws including those laws regulating air emissions, water discharges, 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.

The future effect of environmental matters including potential liabilities is often difficult to estimate. At December 31, 2011 our accruals for environmental liabilities were $169 million which is expected to be paid out over the periods of remediation for the applicable sites. Remediation periods typically range from five to 30 years.

Site Remediation

The following table summarizes the expenditures for site-remediation actions including ongoing operations and maintenance (dollars in millions):
 
Successor
 
 
Predecessor
 

Year Ended
December 31, 2011
 

Year Ended
December 31, 2010
 
July 10, 2009
Through
December 31, 2009
 
 
January 1, 2009
Through
July 9, 2009
Site remediation expenses
$
33

 
$
19

 
$
3

 
 
$
34


It is possible that such remediation actions could require average annual expenditures of $30 million over the next five years.

However, currently unidentified remediation costs and other damages for which we ultimately may be responsible can not be determined with specificity because of uncertainties with respect to factors such as our connection to the site or to materials located at the site, the involvement of other potentially responsible parties, the application of laws and other standards or regulations, site conditions and the nature and scope of investigations, studies and remediation to be undertaken (including the technologies to be required and the extent, duration and success of remediation). As a result we are unable to determine with specificity the total amount of costs or other damages for which we are potentially responsible in connection with all sites although that total could be substantial.

To mitigate the effects our worldwide facilities have on the environment we are committed to convert as many of our worldwide facilities as possible to landfill-free facilities. At December 31, 2011 81 (or 52%) of our facilities were landfill-free facilities. At our landfill-free facilities, over 90% of waste materials are recycled or reused and approximately 2% is converted to energy at waste-to-energy facilities. We estimate that we recycled or reused over 2.6 million metric tons of waste materials at our global operations and estimate that we converted 65,100 metric tons of waste materials to energy at waste-to-energy facilities in the year ended December 31, 2011.

We continue to implement our global energy strategy with a goal to increase our green power purchases. Our data collection and management system is designed to monitor and measure energy use as well as calculate the related CO2 emissions including collecting and verifying energy, water and other environmental data from our facilities. Our approach to manage our greenhouse gas emissions includes a greenhouse gas reporting policy, global process to collect accurate data, internal and external targets and reporting progress against the established targets.

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Automotive Fuel Economy

North America

Corporate Average Fuel Economy (CAFE) reporting is required for three separate fleets: domestically produced cars, imported cars and light-duty trucks. Beginning with the 2011 model year both car and light-duty truck standards were established using targets for various vehicle sizes and vehicle model sales volumes. In 2011 our domestic car standard was estimated to be 29.8 mpg, our import car standard was estimated to be 30.8 mpg and our light-duty truck standard was estimated to be 22.7 mpg. Our current product plan is expected to be compliant with the federal CAFE program.

In December 2011 the EPA and the United States National Highway Transportation Safety Administration (NHTSA) issued a proposal to implement a coordinated national program consisting of new requirements for the 2017 through 2025 model year light-duty vehicles that will reduce greenhouse gas emissions and improve fuel economy. This would represent a continuation of the national program that has been established for the 2012 through 2016 model year light-duty vehicles. This program includes EPA and NHTSA standards that will require an industry-wide target standard of 250 grams of carbon-related exhaust emissions per mile and 34.1 mpg by 2016. Our current product plan projects compliance with both federal programs through 2016.

The CARB regulates greenhouse gas emissions from vehicles (which is the same as regulating fuel economy). This California program is currently established for the 2009 through 2016 model years. CARB has agreed that compliance with the federal program is deemed to be compliant with the California program for the 2012 through 2016 model years.

A Canadian governmental agency implemented greenhouse gas standards that were harmonized with U.S. standards beginning with the 2011 model year. However these regulations do not require the separation of car fleet into domestic and import vehicles.

The Province of Quebec had previously adopted standards for the 2009 through 2016 model years that were equivalent to the California program but has revised their regulations to allow compliance with the national standards effective with the 2012 model year.

Europe

Legislation was passed in 2009 to regulate vehicle CO2 emissions beginning in 2012. Based on a target function of CO2 to vehicle weight, each automobile manufacturer must meet a specific sales-weighted fleet average target. This fleet average requirement will be phased in from 2012 with full compliance required by 2015. Automobile manufacturers can earn super-credits for the sales volume of vehicles having a specific CO2 value of less than 50 grams CO2 per kilometer. This is intended to encourage the early introduction of ultra-low CO2 vehicles such as the Chevrolet Volt and Opel Ampera by providing an additional incentive to reduce the CO2 fleet average. Automobile manufacturers may gain credit of up to seven grams for eco-innovations for those technologies which improve real-world fuel economy but may not show in the test cycle, such as solar panels on vehicles. There is also a 5% credit for FlexFuel vehicles if more than 30% of refueling stations in an EU Member State sell E85. Further regulatory detail is being developed. The legislation sets a target of 95 grams CO2 per kilometer for 2020 with an impact assessment required to further assess and develop this requirement. We have developed a compliance plan by adopting operational CO2 targets for each market entry in Europe.

In 2011 the EU adopted a standard to regulate CO2 emissions from light commercial vehicles. This regulation is modeled after the CO2 regulation for passenger cars. It proposes that new light commercial vehicles meet a fleet average CO2 target of 175 grams CO2 per kilometer with a phase in of compliance from 2014 and full compliance required by 2016. The manufacturer-specific CO2 compliance target will be determined as a function of the weight of the vehicle with all standard equipment and fuel (vehicle curb weight). Flexibilities such as eco-innovations and super credits are part of the regulatory proposal as well. An EU long-term target for 2020 of 147 grams CO2 per kilometer has been adopted for light commercial vehicles. We have developed a compliance plan by adopting operational CO2 targets for each market entry in Europe.

An EC regulation has been adopted that will require low-rolling resistance tires, tire pressure monitoring systems and gear shift indicators by 2012. An additional EC regulation has been adopted that will require labeling of tires for noise, fuel efficiency and rolling resistance, affecting vehicles at the point of sale as well as the sale of tires in the aftermarket.

Seventeen EU Member States have introduced fuel consumption or CO2 based vehicle taxation schemes. Tax measures are within the jurisdiction of the EU Member States. We are faced with significant challenges relative to the predictability of future tax laws

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and differences in the tax schemes and thresholds.

International Operations

We face new or increasingly more stringent fuel economy standards in many countries. China has established new Phase 3 fuel economy standards supplementing the current Phase 2 pass-fail system with a corporate fleet average scheme based on vehicle curb weight for the 2012 through 2015 model years. Implementation will be phased in beginning 2012 with full compliance required by 2015. China has continued its retail subsidies for consumers for fuel efficient vehicles, extended range and plug-in, battery electric and fuel cell vehicles. China is now working on a more aggressive Phase 4 fuel economy standard that is expected to apply to the 2016 through 2020 model years.

In Korea new preliminary fuel economy/CO2 targets for 2012 through 2015 and beyond were previously announced as part of the government's low carbon/green growth strategy. These targets are based on each vehicle's curb weight but in general are set at levels more stringent than fuel economy/CO2 targets in the U.S. but less stringent than fuel economy/CO2 targets in Europe. The proposed standards will be phased in beginning in 2012 and full compliance required by 2015 with manufacturers having the option to certify either on a fuel consumption basis or a CO2 emissions basis. Each manufacturer will be given a corporate target to meet based on an overall industry fleet fuel economy/CO2 average. Other aspects of the program being considered include credits, incentives and penalties. Korea has promulgated the new fuel economy/CO2 regulation during the second quarter of 2011.

In Australia the government is planning to adopt attribute-based CO2 standards beginning in 2015 with standards expected to become more stringent through 2020.

South America

In Brazil governmental bodies and the automobile manufacturers association established a national voluntary program for evaluation and labeling of light passenger and commercial vehicles equipped with internal combustion engines. This voluntary program aims to increase vehicle energy efficiency by labeling vehicles with fuel consumption measurements for urban, extra-urban and combined (equivalent to city and highway mpg measurements in the U.S.) driving conditions.

Chemical Regulations

North America

Governmental agencies in both the U.S. and Canada have introduced regulations and legislation related to the selection and use of safer chemical alternatives, green chemistry and product stewardship initiatives. These initiatives will give broad regulatory authority to ban or restrict the use of certain chemical substances and potentially affect automobile manufacturers' responsibilities for vehicle life-cycle including chemical substance selection for product development and manufacturing. These emerging regulations will potentially lead to increases in cost and supply chain complexity.

Europe

In 2007 the EU implemented its regulatory requirements to register, evaluate, authorize and restrict the use of chemical substances. These regulations require chemical substances manufactured in or imported into the EU in quantities of one metric ton or more per year to be registered with the European Chemicals Agency before 2018. During the pre-registration phase, Old GM and its suppliers registered those substances identified by these regulations. These regulations are to be phased in over a 10 year period. Under these regulations substances of very high concern may either require authorization for further use or may be restricted in the future. This could potentially increase the cost of certain alternative substances that are used to manufacture vehicles and parts or result in a supply chain disruption when a substance is no longer available to meet production timelines. Our research and development initiatives may be diverted to address future requirements. We continually monitor the implementation of these regulations to maintain compliance and its effect on our suppliers and the automotive industry.

Safety

In the U.S. if a vehicle or vehicle equipment does not comply with a safety standard or if a vehicle defect creates an unreasonable safety risk the manufacturer is required 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 fatalities in the U.S. and claims involving fatalities outside the U.S. We are also required to report information concerning

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safety recalls and other safety campaigns outside the U.S.

Outside the U.S. safety standards and recall regulations often have the same purpose as the U.S. standards but may differ in their requirements and test procedures. Other countries pass regulations which are more stringent than U.S. standards. Many countries require type approval while the U.S. and Canada require self-certification.

Vehicular Noise Control

In the U.S. passenger cars and light-duty trucks are subject to state and local motor vehicle noise regulations. We identify the most stringent state and local requirements and validate to those requirements. Medium to heavy-duty trucks are regulated at the federal level. Federal truck regulations preempt all U.S. state or local noise regulations for trucks over a gross vehicle weight rating of 10,000 lbs.

Outside the U.S. noise regulations have been established by authorities at the national and supranational level (e.g., EC or UN ECE). We believe that our vehicles meet all applicable noise regulations in the markets where they are sold.

While current noise emission requirements regulate maximum allowable noise levels, formal proposals are under development to regulate minimum sound levels. These proposals stem from concern that relatively quiet vehicles, specifically hybrids and electrics, may not be readily heard by pedestrians. The NHTSA is required to study and issue regulations for the minimum level of sound for hybrid and electric vehicles by January 2014. The UN ECE is developing an international standard for manufacturers to equip vehicles with pedestrian alerting devices where the vehicle fails to meet minimum sound emission levels.

We are committed to designing and manufacturing vehicles to comply with these regulations and potential noise emission regulations that may come from these proposals.

Potential Effect of Regulations

We are actively working on aggressive near-term and long-term plans to develop and bring to market technologies designed to further reduce emissions, mitigate remediation expenses related to environmental liabilities, improve fuel efficiency, monitor and enhance the safety features of our vehicles and provide additional value and benefits to our customers. This is illustrated by our commitment to marketing more hybrid vehicles, our accelerated commitment to developing electrically powered vehicles, our use of biofuels in our expanded portfolio of FlexFuel vehicles and enhancements to conventional internal combustion engine technology which have contributed to the fuel efficiency of our vehicles. The conversion of many of our manufacturing facilities to landfill-free status has shown our commitment to mitigate potential environmental liability. We believe that the development and global implementation of new, cost-effective energy technologies in all sectors is the most effective way to improve energy efficiency, reduce greenhouse gas emissions and mitigate environmental liabilities.

Despite these advanced technology efforts, our ability to satisfy fuel economy, CO2 and other emissions requirements is contingent on various future economic, consumer, legislative and regulatory factors that we cannot control or predict with certainty. If we are not able to comply with specific new requirements, which include higher CAFE standards and state CO2 requirements such as those which require the CARB to regulate greenhouse gas emissions from vehicles (AB 1493 Rules), then we could be subject to sizeable civil penalties or have to restrict product offerings drastically to remain in compliance. Environmental liabilities for which we may be responsible are not reasonably estimable and could be substantial. Violations of safety or emissions standards could result in the recall of one or more of our products. In turn any of these actions could have substantial adverse effects on our operations including facility idling, reduced employment, increased costs and loss of revenue.

Pension Legislation

We are subject to a variety of U.S. federal rules and regulations including the Employee Retirement Income Security Act of 1974, as amended and the Pension Protection Act of 2006 (PPA) which govern the manner in which we fund and administer our pension plans. Refer to Note 18 to our consolidated financial statements for additional information on the PPA. We do not have any required funding for our U.S. qualified plans in 2012. We also maintain pension plans for employees in a number of countries outside the U.S. which are subject to local laws and regulations.

Export Control

We are subject to U.S. export control laws and regulations and most countries in which we do business have applicable export

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controls. Our Office of Export Compliance and our global Export Compliance Officers are responsible for working with our business units to ensure compliance with these laws and regulations. Non-U.S. export controls are likely to become increasingly significant to our business as we develop our research and development operations on a global basis.

Automotive Financing - GM Financial

GM Financial (formerly AmeriCredit Corp.) which we acquired on October 1, 2010 for cash of $3.5 billion is our captive automotive finance company that has been operating since 1992. GM Financial purchases automobile finance contracts for new and used vehicles purchased by consumers primarily from franchised and select independent dealerships. GM Financial predominantly offers financing to consumers who are typically unable to obtain financing from more traditional sources. The typical borrower has experienced prior credit difficulties or has limited credit history and generally has a credit bureau score ranging from 500 through 700. GM Financial services its loan portfolio at regional centers using automated loan servicing and collection systems. Since GM Financial provides financing in a relatively high-risk market it expects to sustain a higher level of credit losses than other more traditional sources of financing.

GM Financial finances its loan origination volume through the use of credit facilities and securitization trusts that issue asset-backed securities to investors. GM Financial retains an interest in these securitization trusts that are over collateralized whereby more receivables are transferred to the securitization trusts than the amount of asset-backed securities issued by the securitization trusts as well as the estimated future excess cash flows expected to be received by GM Financial over the life of the securitization. Excess cash flows result from the difference between the finance charges received from the obligors on the receivables and the interest paid to investors in the asset-backed securities net of credit losses and expenses.

Excess cash flows in the securitization trusts are initially utilized to fund credit enhancement requirements in order to attain specific credit ratings for the asset-backed securities issued by the securitization trusts. Once targeted credit enhancement requirements are reached and maintained excess cash flows are distributed to GM Financial or, in a securitization utilizing a senior subordinated structure, may be used to accelerate the repayment of certain subordinated securities. In addition to excess cash flows GM Financial receives monthly base servicing fees and collects other fees such as late charges as servicer for securitization trusts.

In December 2010 GM Financial began offering a lease product in certain geographic areas through our franchised dealerships that targets consumers with prime credit bureau scores leasing new GM vehicles. During 2011 GM Financial completed the nationwide rollout of the lease product in the U.S. including product offering for prime and sub-prime customers. GM Financial continued to expand its business in targeted areas that it viewed as strategic and to otherwise evaluate opportunities in specific segments of the automotive financing market. We expect any expansion of GM Financial including the anticipated expansion into offering commercial lending services to GM dealers in 2012 or any arrangements with other financing providers will complement our important relationship with Ally Financial.

In April 2011 GM Financial began originating leases for our customers in Canada.

Employees

At December 31, 2011 we employed 207,000 employees of whom 140,000 (67%) were hourly employees and 67,000 (33%) were salaried employees. The following table summarizes worldwide employment (in thousands):
 
December 31,
 
2011
 
2010
 
2009
GMNA
98

 
96

 
103

GME
39

 
40

 
50

GMIO
34

 
32

 
34

GMSA
33

 
31

 
28

GM Financial
3

 
3

 


Total Worldwide
207

 
202

 
215

 


 
 
 
 
U.S. - Salaried
29

 
28

 
26

U.S. - Hourly
48

 
49

 
51


At December 31, 2011 48,000 of our U.S. employees (or 62%) were represented by unions of which 47,000 employees were

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represented by the International Union, United Automobile, Aerospace and Agriculture Implement Workers of America (UAW). Many of our employees outside the U.S. were represented by various unions. At December 31, 2011 we had 400,000 U.S. hourly and 120,000 U.S. salaried retirees, surviving spouses and deferred vested participants.

Executive Officers of the Registrant
The names and ages as of February 27, 2012 of our executive officers and their positions and offices with GM are as follows:
Name and (Age)
Positions and Offices
Daniel F. Akerson (63)
Chairman and Chief Executive Officer
Stephen J. Girsky (49)
Vice Chairman, Corporate Strategy, Business Development, Global Product Planning, and Global Purchasing and Supply Chain
Thomas G. Stephens (63)(a)
Vice Chairman and Global Chief Technology Officer
Daniel Ammann (39)
GM Senior Vice President and Chief Financial Officer
Jaime Ardila (56)
GM Vice President and President, South America
Mary T. Barra (50)
GM Senior Vice President, Global Product Development
Timothy E. Lee (61)
GM Vice President and President, International Operations
Michael P. Millikin (63)
GM Senior Vice President and General Counsel
David N. Reilly (62)(a)
GM Vice President and President, Europe
Mark L. Reuss (48)
GM Vice President and President, North America
Karl-Friedrich Stracke (55)
GM Vice President and President, Europe
Selim Bingol (51)
GM Vice President, Global Communications
Cynthia J. Brinkley (52)
GM Vice President, Global Human Resources
Nicholas S. Cyprus (58)
GM Vice President, Controller and Chief Accounting Officer
James A. Davlin (48)
GM Vice President, Finance and Treasurer
Joel Ewanick (51)
GM Vice President and Global Chief Marketing Officer
Robert E. Ferguson (52)
GM Vice President, Global Public Policy
Terry S. Kline (50)(b)
GM Vice President, Information Technology and Chief Information Officer
__________
(a) Retiring effective April 1, 2012
(b) Retiring effective March 1, 2012

There are no family relationships as defined in Item 401 of Regulation S-K 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 or a committee of the Board 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.

Daniel F. Akerson was named Chief Executive Officer in September 2010 and Chairman in January 2011. He has been a member of our Board of Directors since July 2009. Before joining GM he was Managing Director and Head of Global Buyout of The Carlyle Group from July 2009 to August 2010 and Managing Director and Co-Head of the U.S. Buyout Fund from 2003 to 2009. Prior to joining The Carlyle Group he served as Chairman and Chief Executive Officer of XO Communications, Inc. from September 1999 to January 2003. XO Communications, Inc. filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in June 2002 and emerged from bankruptcy proceedings in January 2003.

Stephen J. Girsky was named Vice Chairman of Corporate Strategy, Business Development, Global Product Planning, and Global Purchasing and Supply Chain in February 2011. He has been Vice Chairman of Corporate Strategy and Business Development since March 2010. He has been a member of our Board of Directors since July 2009 and serves on the Finance and Risk and Public Policy Committees. He has also been Chairman of the Adam Opel AG Supervisory Board since November 2011 and a member of that board since January 2010. Prior to joining GM he served as Senior Advisor to the Office of the Chairman of our company from December 2009 to February 2010 and President of S. J. Girsky & Company, an advisory firm, from January 2009 to March 2010. From November 2008 to June 2009 he was an advisor to the UAW. From 2006 to 2009 he served as President of Centerbridge

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Industrial Partners, LLC, an affiliate of the private investment firm Centerbridge Partners, L.P. He also served as lead director of Dana Holding Corporation from 2008 to 2009.

Thomas G. Stephens was named Vice Chairman and Global Chief Technology Officer in February 2011 and will be retiring effective April 1, 2012. He had been employed by General Motors Corporation since 1969. He had been Vice Chairman, Global Product Operations since December 2009, and Vice Chairman, Global Product Development from April 2009 to December 2009. Prior to that he had been Executive Vice President, Global Powertrain and Global Quality since March 2008, Group Vice President, Global Powertrain and Global Quality from March 2007 to March 2008 and Group Vice President, Global Powertrain from July 2001 to March 2007.

Daniel Ammann was named GM Senior Vice President and Chief Financial Officer in April 2011. He has also been a member of the Adam Opel AG Supervisory Board since November 2011. He had been GM Vice President, Finance and Treasurer from April 2010 to April 2011. Before joining GM he was Managing Director and Head of Industrial Investment Banking for Morgan Stanley, a position he held since 2004.

Jaime Ardila was named GM Vice President and President, South America effective July 2010. He had been employed by General Motors Corporation since 1984. He had served as President and Managing Director of GM Mercosur since November 2007, with responsibility for operations in Brazil, Argentina, Uruguay, Paraguay, Chile, Bolivia and Peru. Prior to this position he was Vice President and Chief Financial Officer of GM Latin America, Africa and Middle East since March 2003.

Mary T. Barra was named GM Senior Vice President, Global Product Development in February 2011. She had been employed by General Motors Corporation since 1980. She has also been a member of the Adam Opel AG Supervisory Board since January 2012. She had been Vice President, Global Human Resources from July 2009 to December 2010. Prior to this appointment she had been Vice President, Global Manufacturing Engineering since February 2008. She had been Executive Director, Vehicle Manufacturing Engineering since January 2005.

Timothy E. Lee was named GM Vice President and President, International Operations in December 2009. He had been employed by General Motors Corporation since 1969. He has also been a member of the Adam Opel AG Supervisory Board since November 2011. He had been Group Vice President, Global Manufacturing and Labor since October 2009. He was named GM North America Vice President, Manufacturing in January 2006.

Michael P. Millikin was named GM Senior Vice President and General Counsel in February 2011. He had been employed by General Motors Corporation since 1977. He had been Vice President and General Counsel from July 2009 to January 2011. Prior to that he was Associate General Counsel since June 2005. He has been a member of the Adam Opel AG Supervisory Board since 1998.

David N. Reilly was named GM Vice President and President, Europe in December 2009 and will be retiring effective April 1, 2012. He had been employed by General Motors Corporation since 1975. He had been Executive Vice President, GM International Operations since August 2009. He was named Group Vice President and President of GM Asia Pacific in July 2006 and had previously been President and Chief Executive Officer of GM Korea since April 2004.

In December 2006 Mr. Reilly was charged with regard to certain alleged violations of South Korean labor laws. The criminal charges are based on the alleged illegal engagement of certain workers employed by an outsourcing agency in production activities at GM Korea. The charges were filed against Mr. Reilly in his capacity as the most senior GM executive in South Korea and the company's Representative Director, who under South Korean law is the most senior member of management of a stock corporation, and is the person typically named as the individual respondent or defendant in any legal action brought against such company. These charges constitute a criminal offense under the laws of South Korea but would not constitute a criminal offense in the U.S. Mr. Reilly filed a formal request for trial to defend against the charges and was acquitted on February 19, 2009. This judgment was subsequently overturned on December 23, 2010 and is currently under appeal. The appeal remains pending but a decision is expected in 2012.

Mark L. Reuss was named GM Vice President and President, North America in December 2009. He had been employed by General Motors Corporation since 1983. Before this appointment he served briefly as Vice President of Engineering. He managed the operations in Australia and New Zealand as the President and Managing Director of GM Holden, Ltd. (Holden) from February 2008 to July 2009. He had previously been Executive Director of Global Vehicle Integration, Safety and Virtual Development since March 2006.


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Karl-Friedrich Stracke was named GM Vice President and President, Europe in January 2012. He had been employed by General Motors Corporation since 1979. He had been Chief Executive Officer of Opel Vauxhall and acting Chairman of the Management Board of Adam Opel AG since April 2011. Prior to that he served as Vice President Global Engineering since December 2009. He had served as Executive Director, Global Vehicle Integration, Safety and Virtual Development since February 2008 and Global Executive Director, Body Exterior, Interior and Dimensional Engineering from March 2006 to February 2008.

Selim Bingol was named GM Vice President, Global Communications in March 2010. Before joining GM he was Senior Vice President, Corporate Communications at AT&T Corporation from December 2004 to August 2007. He had been Senior Vice President and Senior Partner with Fleishman-Hillard, a leading global communications firm, since 1989.

Cynthia J. Brinkley was named GM Vice President, Global Human Resources in July 2011. She joined GM from AT&T Corporation where she was Senior Vice President, Talent Development and Chief Diversity Officer from February 2008 to June 2011. Prior to that she had served as President, AT&T Missouri since July 2002.

Nicholas S. Cyprus was named GM Vice President, Controller and Chief Accounting Officer in August 2009. He had been employed by General Motors Corporation since December 2006 when he became Controller and Chief Accounting Officer. Prior to joining General Motors Corporation he was Senior Vice President, Controller and Chief Accounting Officer for the Interpublic Group of Companies from May 2004 to March 2006.

James A. Davlin was named GM Vice President, Finance and Treasurer in October 2011. He joined GM from Deere & Company where he was Vice President of Corporate Strategy and Business Development from October 2010 and served as Vice President and Treasurer from January 2007 to September 2010. He previously served as Assistant Treasurer, Global Treasury with Eli Lilly and Company from 2002 to 2007.

Joel Ewanick was named Global Chief Marketing Officer in December 2010 and became GM Vice President in February 2011. He had served as Vice President U.S. Marketing since joining GM in May 2010. He previously served as Vice President of Marketing for Hyundai Motor America since February 2007. Prior to Hyundai Motor America he had been Director of Brand Planning for The Richards Group since June 2004.

Robert E. Ferguson was named GM Vice President, Global Public Policy in May 2011. He joined GM in January 2010 as Vice President, Government Relations. Previously he had been a senior strategist at Public Strategies, Inc. since 2008 where he provided counsel to clients such as the International Olympic Committee. Prior to that he served as President of State Legislative and Regulatory Affairs at AT&T Corporation between 2005 and 2008.

Terry S. Kline was named GM Vice President, Information Technology and Chief Information Officer in October 2009 and will be retiring effective March 1, 2012. He had been employed by General Motors Corporation since December 2000. Previously he was the Global Product Development Process Information Officer since September 2003 and also served as the Chief Information Officer for GM Asia Pacific from November 2004 to January 2008.

Segment Reporting Data

Operating segment data and principal geographic area data for the years ended December 31, 2011 and 2010; the period July 10, 2009 through December 31, 2009; and the period January 1, 2009 through July 9, 2009 are summarized in Note 30 to our consolidated financial statements.

Website Access to Our Reports

Our internet website address is www.gm.com. In addition to the information about us and our subsidiaries contained in this 2011 Form 10-K information about us can be found on our website including information on our corporate governance principles. Our website and information included in or linked to our website are not part of this 2011 Form 10-K.

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 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 site that contains reports, proxy and

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information statements and other information. The address of the SEC's website is www.sec.gov.

*  *  *  *  *  *  *

Item 1A. Risk Factors

We face a number of significant risks and uncertainties in connection with our operations. Our business, results of operations and financial condition could be materially adversely affected by the factors described below. While we describe each risk separately, some of these risks are interrelated and certain risks could trigger the applicability of other risks described below.
Our business is highly dependent on sales volume. There is no assurance that the global automobile market will not suffer another significant downturn.

Our business and financial results are highly sensitive to sales volume, as demonstrated by the effect of sharp declines in vehicle sales on our and Old GM's business during the most recent economic downturn. A number of economic and market conditions drive changes in vehicle sales, including real estate values, levels of unemployment, the availability of credit, fluctuations in the cost of fuel and consumer confidence. In particular, recent concerns over levels of sovereign indebtedness have contributed to a renewed tightening of credit markets in some of the markets in which we do business. We cannot predict future economic and market conditions with certainty and any change in economic and market conditions that negatively affects sales volumes could materially adversely affect our results of operations and financial condition.

Our ability to maintain profitability over the long-term is dependent upon our ability to introduce new and improved vehicle models that are able to attract a sufficient number of consumers.
Our ability to maintain profitability over the long-term depends on our ability to entice consumers to consider our products when purchasing a new vehicle. The automotive industry, particularly in the U.S., is very competitive with market participants routinely introducing new and improved vehicle models designed to meet consumer expectations, and in the recent past our competitors have been very successful in persuading customers that previously purchased our products to purchase their vehicles instead. Producing new and improved vehicle models on a basis competitive with the models introduced by our competitors and changing this perception, including with respect to smaller, more fuel efficient vehicles, as well as the perception of our company in light of Old GM's bankruptcy and our status as a recipient of aid under the Troubled Asset Relief Program (TARP), will be critical to our long-term profitability.
The pace of our development and introduction of new and improved vehicles depends on our ability to implement successfully improved technological innovations in design, engineering, and manufacturing, which requires extensive capital investment. In some cases the technologies that we plan to employ, such as hydrogen fuel cells and advanced battery technology, are not yet commercially practical and depend on significant future technological advances by us and by suppliers. Government support of the production of vehicles with these technologies has led some consumers to have a negative impression of these vehicles, which reduces sales. There can be no assurance that our competitors and others pursuing similar technologies and other competing technologies, in some cases with more money available, will not acquire similar or superior technologies sooner than we do or on an exclusive basis or at a significant price advantage. If we are unable to achieve these goals, we may not be able to maintain profitability over the long-term.
Shortages of and volatility in the price of oil have caused and may have a material adverse effect on our business due to shifts in consumer vehicle demand.
Volatile oil prices in recent years have tended to cause a shift in consumer demand towards smaller, more fuel-efficient vehicles, which provide lower profit margins and in recent years represented a smaller proportion of Old GM's and our sales volume in North America. Any increases in the price of oil in the U.S. or in our other markets or any sustained shortage of oil, including as a result of political instability in the Middle East, South America and African nations, could weaken the demand for our higher margin fullsize pick-up trucks and sport utility vehicles, which could reduce our market share in affected markets, decrease profitability, and have a material adverse effect on our business.
Our future competitiveness and ability to achieve long-term profitability depends on our ability to control our costs, which requires us to successfully implement restructuring initiatives throughout our automotive operations.

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We are continuing to implement a number of cost reduction and productivity improvement initiatives in our automotive operations, including labor modifications and substantial restructuring initiatives for our European operations. Our future competitiveness depends upon our continued success in implementing these restructuring initiatives throughout our automotive operations, especially in North America and Europe. 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 structural costs. Reducing costs may prove difficult due to our focus on increasing advertising and our belief that engineering expenses necessary to improve the performance, safety, and customer satisfaction of our vehicles are likely to increase.
Our automotive manufacturing operations are dependent upon the continued ability of our suppliers to provide us with systems, components, and parts and any disruption in our suppliers' operations could disrupt our production schedule and adversely affect our operations.
Our automotive operations are dependent upon the continued ability of our suppliers to deliver the systems, components, and parts that we need to manufacture our products. Our use of “just-in-time” manufacturing processes results in our having minimal inventories of the systems, components, and parts we need to conduct our automotive manufacturing operations. As a result, our ability to maintain production is dependent upon the continued ability of our suppliers to deliver sufficient quantities of systems, components, and parts at such times as allow us to meet our production schedules. A disruption in any of our suppliers' operations, even if for a relatively short period of time, could cause us to alter our production schedules or suspend production entirely. For example, in March 2011 we suspended production at our Shreveport, Louisiana assembly facility due to a parts shortage resulting from the earthquake off the coast of Japan. In some instances, we purchase systems, components, parts and supplies from a single source and may be at an increased risk for supply disruptions. Where 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 or parts could adversely affect our financial results.
Increase in cost, disruption of supply, or shortage of raw materials could materially harm our business.
We use various raw materials in our business including steel, non-ferrous metals such as aluminum and copper, and precious metals such as platinum and palladium. The prices for these raw materials fluctuate depending on market conditions. In recent years, freight charges and raw material costs increased. Substantial increases in the prices for our raw materials increase our operating costs and could reduce our profitability if we cannot recoup the increased costs through increased vehicle prices. Some of these raw materials, such as corrosion-resistant steel, are only available from a limited number of suppliers. We cannot guarantee that we will be able to maintain favorable arrangements and relationships with these suppliers. An increase in the cost or a sustained interruption in the supply or shortage of some of these raw materials, which may be caused by a deterioration of our relationships with suppliers or by events such as labor strikes, could negatively affect our net revenues and profitability to a material extent.
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 global automotive industry is highly competitive, and overall manufacturing capacity in the industry exceeds demand. Many manufacturers have relatively high fixed labor costs as well as significant limitations on their ability to close facilities and reduce fixed costs. Our competitors may respond to these relatively high fixed costs by attempting to sell more vehicles by adding vehicle enhancements, providing subsidized financing or leasing programs, offering option package discounts or other marketing incentives, or reducing vehicle prices in certain markets. Manufacturers in lower cost countries such as China and India have emerged as competitors in key emerging markets and announced their intention of exporting their products to established markets as a bargain alternative to entry-level automobiles. These actions have had, and are expected to continue to have, a significant negative effect on our vehicle pricing, market share, and operating results, and present a significant risk to our ability to enhance our revenue per vehicle.

Our competitors may be able to benefit from the cost savings offered by industry consolidation or alliances.
Designing, manufacturing and selling vehicles is capital intensive and requires substantial investments in manufacturing, machinery, research and development, product design, engineering, technology and marketing in order to meet both consumer preferences and regulatory requirements. Large original equipment manufacturers are able to benefit from economies of scale by leveraging their investments and activities on a global basis across brands and nameplates. If our competitors consolidate or enter into other strategic agreements such as alliances, they may be able to take better advantage of these economies of scale. We believe that competitors may be able to benefit from the cost savings offered by consolidation or alliances, which could adversely affect

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our competitiveness with respect to those competitors. Competitors could use consolidation or alliances as a means of enhancing their competitiveness or liquidity position, which could also materially adversely affect our business.
As part of our business plan, and pursuant to the direction of the Special Master for TARP Executive Compensation, we have limited cash compensation and certain benefits for our most highly paid executives and have reduced the number of our management and non-management salaried employees, and these actions may materially adversely affect our ability to hire and retain salaried employees.
As part of the cost reduction initiatives in our business plan, and pursuant to the direction of the Special Master for TARP Executive Compensation, the form and timing of the compensation for our most highly paid executives is not competitive with that offered by other major corporations. Furthermore, while we have repaid in full our indebtedness under the United States Department of the Treasury (UST) Credit Agreement, entered into July 10, 2009, as amended, (UST Credit Agreement) the executive compensation and corporate governance provisions of Section 111 of the Emergency Economic Stabilization Act of 2008 (EESA), including the Interim Final Rule implementing Section 111 (the Interim Final Rule), will continue to apply to us for the period specified in the EESA and the Interim Final Rule. Certain of the covenants in the UST Credit Agreement will continue to apply to us until the earlier to occur of: (1) us ceasing to be a recipient of exceptional financial assistance, as determined pursuant to the Interim Final Rule or any successor or final rule (Exceptional Financial Assistance); or (2) UST ceasing to own any direct or indirect equity interests in us. The effect of Section 111 of EESA, the Interim Final Rule and the covenants is to restrict the compensation that we can provide to our top executives and prohibit certain types of compensation or benefits for any employees. At the same time, we have substantially decreased the number of salaried employees so that the workload is shared among fewer employees and in general the demands on each salaried employee are increased. Companies in similar situations have experienced significant difficulties in hiring and retaining highly skilled employees, particularly in competitive specialties. Given our compensation structure and increasing job demands, there is no assurance that we will continue to be able to hire and retain the employees whose expertise is required to execute our business plan while at the same time developing and producing vehicles that will stimulate demand for our products.
Our business plan contemplates that we restructure our operations in various European countries, but we may not succeed in doing so, and our failure to restructure these operations in a cost-effective and non-disruptive manner could have a material adverse effect on our business and results of operations.
Our business plan contemplates that we restructure our operations in various European countries, and we are actively working to accomplish this. Restructurings, whether or not ultimately successful, can involve significant expense and disruption to the business as well as labor disruptions, which can adversely affect the business. The restructuring of our European operations will require us to invest additional funds and require significant management attention. We cannot assure you that any of our contemplated restructurings will be completed or achieve the desired results.
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, and investments that do not achieve 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 is disclosed in Note 18 to our consolidated financial statements, which also describes significant concentrations of risk to the plan investments.
There are additional risks due to the complexity and magnitude of our investments. Examples include implementation of significant changes in investment policy, insufficient market capacity to absorb a particular investment strategy or high volume transactions, and the inability to quickly rebalance illiquid and long-term investments.
Our future funding requirement for our U.S. defined benefit pension plans qualified with the Internal Revenue Service (IRS) 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 government laws and regulations. Future funding requirements generally increase if the discount rate decreases or if actual asset returns are lower than expected asset returns, as other factors are held constant. Our potential funding requirements under various assumed scenarios are described in “Management's Discussion and Analysis of Financial Conditions and Results of Operations — Contractual Obligations and Other Long-Term Liabilities.”
If we are unable to meet our funding requirements for our U.S. pension plans under the terms imposed by regulators at a given

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point in time, we would need to request a funding waiver from the IRS. If the waiver were granted, we would have the opportunity to make up the missed funding, with interest to the plan. Additional periods of missed funding could further reduce the plans' funded status, resulting in limitations on plan amendments and lump sum payouts from the plans. Continued deterioration in the plans' funded status could result in the cessation of participants' continued accrual of benefits under the terms of the plan until such time as the funding level of the plans meet IRS requirements. These actions could materially adversely affect our relations with our employees and their labor unions.
Factors which affect future funding requirement 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 pension plans outside the U.S., we could be required to contribute more funds, which would negatively affect our cash flow.
Our failure to successfully develop our own captive financing unit, including through GM Financial, could leave us at a disadvantage to our competitors that have their own captive financing subsidiaries and that therefore may be able to offer consumers and dealers financing and leasing on better terms than our customers and dealers are able to obtain.
Many of our competitors operate and control their own captive financing subsidiaries. If any of our competitors with captive financing subsidiaries are able to offer consumers and dealers financing and leasing on better terms than our customers and dealers are able to obtain, consumers may be more inclined to purchase our competitors' vehicles and our competitors' dealers may be better able to stock our competitors' products.
Through GM Financial we offer leasing and sub-prime financing for our customers. Our failure to successfully develop our own captive financing unit, including through GM Financial, could result in our loss of customers to our competitors with their own captive financing subsidiaries and could adversely affect our dealers' ability to stock our vehicles if they are not able to obtain necessary financing at competitive rates from other sources.

We intend to rely on GM Financial to support additional consumer leasing of our vehicles and additional sales of our vehicles to consumers requiring sub-prime vehicle financing, and 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 and its ability to provide leasing and sub-prime financing options to consumers to support additional sales of our vehicles.
GM Financial is subject to various risks that could negatively affect its business, operations and access to capital and therefore its ability to provide leasing and sub-prime financing options at competitive rates to consumers of our vehicles. Because we intend to rely on GM Financial to serve as an additional source of leasing and sub-prime financing options for consumers, any impairment of GM Financial's ability to provide such leasing or sub-prime financing would negatively affect our efforts to expand our market penetration among consumers who rely on leasing and sub-prime financing options to acquire new vehicles. The factors that could adversely affect GM Financial's business and operations and impair its ability to provide leasing and sub-prime financing at competitive rates include:
The availability of borrowings under its credit facilities to finance its loan and lease origination activities pending securitization;
Its ability to transfer loan receivables to securitization trusts and sell securities in the asset-backed securities market to generate cash proceeds to repay its credit facilities and purchase additional loan receivables;
The performance of loans in its portfolio, which could be materially affected by delinquencies, defaults or prepayments;
Its ability to effectively manage risks relating to sub-prime automobile receivables;
Wholesale auction values of used vehicles;
Higher than expected vehicle return rates on vehicles GM Financial leases; and
Fluctuations in interest rates.

The above factors, alone or in combination, could negatively affect GM Financial's business and operations or its ability to provide leasing and sub-prime financing options to consumers to support additional sales of our vehicles.

The UST (or its designee) owns a substantial interest in us, and its interests may differ from those of our other stockholders.

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The UST owns 31.9% of our outstanding shares of common stock as of February 15, 2012. As a result of this stock ownership interest, the UST has the ability to exert significant influence over various matters, through its power to vote for the election of our directors. To the extent the UST elects to exert such significant influence over us, its interests (as a government entity) may differ from those of our other stockholders and it may influence, through its ability to vote for the election of our directors, matters including:
The selection, tenure and compensation of our management;
Our business strategy and product offerings;
Our relationship with our employees, unions and other constituencies; and
Our financing activities, including the issuance of debt and equity securities.

In particular, the UST may have a greater interest in promoting U.S. economic growth and jobs than other stockholders of the Company. For example, while we have repaid in full our indebtedness under the UST Credit Agreement, a covenant that continues to apply until the earlier of December 31, 2014 or the UST has been paid in full the total amount of all UST invested capital requires that we use our commercially reasonable best efforts to ensure, subject to exceptions, that our manufacturing volume in the U.S. is consistent with specified benchmarks.

In the future we may also become subject to new and additional laws and government regulations regarding various aspects of our business as a result of participation in the TARP program and the U.S. government's ownership in our business. These regulations could make it more difficult for us to compete with other companies that are not subject to similar regulations.
Our planned investment in new technology in the future is significant and may not be funded at anticipated levels and, even if funded at anticipated levels, may not result in successful vehicle applications.
We intend to invest significant capital resources to support our products and to develop new technology. In addition, we plan to invest heavily in alternative fuel and advanced propulsion technologies between 2012 and 2013, largely to support our planned expansion of hybrid and electric vehicles. Moreover, if our future operations do not provide us with the liquidity we anticipate, we may be forced to reduce, delay, or cancel our planned investments in new technology.
In some cases the technologies that we plan to employ, such as hydrogen fuel cells and advanced battery technology, are not yet commercially practical and depend on significant future technological advances by us and by suppliers. For example, in November 2010 we began producing an electric car which requires battery technology that has not yet proven to be commercially viable. There can be no assurance that these advances will occur in a timely or feasible way, that the funds that we have budgeted for these purposes will be adequate, or that we will be able to establish our right to these technologies. However, our competitors and others are pursuing similar technologies and other competing technologies, in some cases they may have more money available, and there can be no assurance that they will not acquire similar or superior technologies sooner than we do or on an exclusive basis or at a significant price advantage.
Security breaches and other disruptions to our information technology networks and systems could interfere with our operations, and could compromise the confidentiality of our proprietary information.
We rely upon information technology networks and systems, some of which are managed by third parties, to process, transmit and store electronic information, and to manage or support a variety of business processes and activities, including supply chain management, manufacturing, invoicing, and collection of payments from our dealer network and from customers of GM Financial. Additionally, we collect and store sensitive data, including intellectual property, proprietary business information, the propriety business information of our dealers and suppliers, as well as personally identifiable information of our customers and employees, in data centers and on information technology networks. The secure operation of these information technology networks, and the processing and maintenance of this information is critical to our business operations and strategy. Despite security measures and business continuity plans, our information technology networks and systems may be vulnerable to damage, disruptions or shutdowns due to attacks by hackers or breaches due to errors or malfeasance by employees, contractors and others who have access to our networks and systems, or other disruptions during the process of upgrading or replacing computer software or hardware, power outages, computer viruses, telecommunication or utility failures or natural disasters or other catastrophic events. The occurrence of any of these events could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, disrupt operations and reduce the competitive advantage we

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hope to derive from our investment in advanced technologies.
New laws, regulations, or policies of governmental organizations regarding increased fuel economy requirements and reduced, greenhouse gas emissions, or changes in existing ones, may have a significant effect on how we do business.
We are affected significantly by governmental regulations that can increase costs related to the production of our vehicles and affect our product portfolio. We anticipate that the number and extent of these regulations, and the related costs and changes to our product lineup, will increase significantly in the future. In the U.S. and Europe, for example, governmental regulation is driven primarily by concerns about the environment (including greenhouse gas emissions), vehicle safety, fuel economy, and energy security. These government regulatory requirements could significantly affect our plans for global product development and may result in substantial costs, including civil penalties. They may also result in limits on the types of vehicles we sell and where we sell them, which can affect revenue.
In the U.S., vehicle fuel economy and greenhouse gas emissions are regulated under a harmonized national program administered by the NHTSA and the EPA. The agencies have set coordinated fuel economy and greenhouse emission standards through the 2016 model year for light duty vehicles and through the 2018 model year for heavy duty trucks. California, which has set its own greenhouse gas emission standards through its AB 1493 Rules, has agreed to accept compliance with the national program as compliance with its state program. The NHTSA and EPA have proposed the next round of standards for the 2017 through 2025 model years. EPA projects that its proposed standards would achieve an average industry fleet of 163 grams/mile of CO2 in the 2025 model year, which would be the equivalent of 54.5 mpg if all the CO2 emissions reduction came from fuel economy technology. NHTSA is proposing standards that would require an average industry fleet fuel economy of 49.6 mpg in the 2025 model year. Both agencies have proposed various flexibilities to incentivize early adoption and introduction of advanced technologies that are anticipated to help manufacturers achieve these standards. California has stated that it will adopt standards for the same period and allow manufacturers to comply by meeting the national standards.
We are committed to meeting or exceeding these U.S. regulatory requirements, and our product plan of record projects compliance with the anticipated national program through the 2021 model year. The standards for the 2022 through 2025 model years may differ from the levels proposed as a result of a mid-term review by the agencies. Therefore, we believe it is premature to project compliance with possible standards for those years. We expect that to comply with these standards we will be required to sell a significant volume of hybrid electric vehicles, as well as implement new technologies for conventional internal combustion engines, all at increased cost levels. There is no assurance that we will be able to produce and sell vehicles that use such technologies on a profitable basis, or that our customers will purchase such vehicles in the quantities necessary for us to comply with these regulatory programs.
The EU passed legislation, effective in April 2009 to begin regulating vehicle CO2 emissions beginning in 2012. The legislation sets a target of a fleet average of 95 grams per kilometer for 2020, with the requirements for each manufacturer based on the weight of the vehicles it sells. Additional measures have been proposed or adopted in Europe to regulate features such as tire rolling resistance, vehicle air conditioners, tire pressure monitors, gear shift indicators, and others. At the national level, 17 EU Member States have adopted some form of fuel consumption or carbon dioxide-based vehicle taxation system, which could result in specific market requirements for us to introduce technology earlier than is required for compliance with the EU emissions standards.
Other governments around the world, such as Canada, China, Brazil, Mexico, and South Korea are also creating new policies to address these same issues. As in the U.S., these government policies could significantly affect our plans for product development. Due to these regulations, we could be subject to sizable civil penalties or have to restrict product offerings drastically to remain in compliance. The regulations will result in substantial costs, which could be difficult to pass through to our customers, and could result in limits on the types of vehicles we sell and where we sell them, which could affect our operations, including facility closings, reduced employment, increased costs, and loss of revenue.
A significant amount of our operations are conducted by joint ventures that we cannot operate solely for our benefit.
Many of our operations, particularly in emerging markets, are carried on by joint ventures such as SGM. 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. In joint ventures, we are required to pay more attention to our relationship with our co-owners as well as with the joint venture, and if a co-owner changes or relationships deteriorate, our success in the joint venture be materially adversely affected. The benefits from a successful joint venture are shared among the co-owners, so that we do not receive all the benefits from our successful joint ventures.

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Our business in China is subject to aggressive competition and is sensitive to economic and market conditions.
Maintaining a strong position in the Chinese market is a key component of our global growth strategy. The automotive market in China is highly competitive, with competition from many of the largest global manufacturers and numerous smaller domestic manufacturers. As the size of the Chinese market continues to increase, we anticipate that additional competitors, both international and domestic, will seek to enter the Chinese market and that existing market participants will act aggressively to increase their market share. Increased competition may result in price reductions, reduced margins and our inability to gain or hold market share. In addition, our business in China is sensitive to economic and market conditions that drive sales volume in China. If we are unable to maintain our position in the Chinese market or if vehicle sales in China decrease or do not continue to increase, our business and financial results could be materially adversely affected.
We could be materially adversely affected by changes or imbalances in foreign currency exchange and other rates.
Given the nature of the automotive industry and global spread of our business, we have significant exposures to risks related to changes in foreign currency exchange rates, commodity prices, and interest rates, which can have material adverse effects on our business. For example, the recent strength of the Canadian Dollar versus the U.S. Dollar has had a negative impact on our profitability as parts and vehicles we manufactured in Canada and exported to the U.S. for sale are less competitive. Similarly, a significant strengthening of the Korean Won relative to the U.S. Dollar or the Euro would affect the competitiveness of our Korean operations as well as that of certain Korean competitors. As yet another example, a relative weakness of the British Pound compared to the Euro would have an adverse effect on our results of operations in Europe. In preparing the consolidated financial statements, we translate our revenues and expenses outside the U.S. into U.S. Dollars using the average foreign currency exchange rate for the period and the assets and liabilities using the foreign currency exchange rate at the balance sheet date. As a result, foreign currency fluctuations and the associated translations could have a material adverse effect on our results of operations.
Our businesses outside the U.S. expose us to additional risks that may materially adversely affect our business.
The majority of our vehicle sales are generated outside the U.S. We are pursuing growth opportunities for our business in a variety of business environments outside the U.S. Operating in a large number of different regions and countries exposes us to political, economic, and other risks as well as multiple foreign regulatory requirements that are subject to change, including:
Economic downturns in foreign countries or geographic regions where we have significant operations, such as China;
Economic tensions between governments and changes in international trade and investment policies, including imposing restrictions on the repatriation of dividends, especially between the U.S. and China;
Foreign regulations restricting our ability to sell our products in those countries;
Differing local product preferences and product requirements, including fuel economy, vehicle emissions, and safety;
Differing labor regulations and union relationships;
Consequences from changes in tax laws;
Difficulties in obtaining financing in foreign countries for local operations; and
Political and economic instability, natural calamities, war, and terrorism.

The effects of these risks may, individually or in the aggregate, materially adversely affect our business.

New laws, regulations, or policies of governmental organizations regarding safety standards, or changes in existing ones, may have a significant negative effect on how we do business.
Our products must satisfy legal safety requirements. Meeting or exceeding government-mandated safety standards is difficult and costly because crashworthiness standards tend to conflict with the need to reduce vehicle weight in order to meet emissions and fuel economy standards. While we are managing our product development and production operations on a global basis to reduce costs and lead times, unique national or regional standards or vehicle rating programs can result in additional costs for product development, testing, and manufacturing. Governments often require the implementation of new requirements during the middle of a product cycle, which can be substantially more expensive than accommodating these requirements during the design of a new product.

The costs and effect on our reputation of product recalls could materially adversely affect our business.

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From time to time, we recall our products to address performance, compliance, or safety-related issues. 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. In addition, product recalls can harm our reputation and cause us to lose customers, particularly if those recalls cause consumers to question the safety or reliability of our products. Any costs incurred or lost sales caused by future product recalls could materially adversely affect our business. Conversely, not issuing a recall or not issuing a recall on a timely basis can harm our reputation and cause us to lose customers for the same reasons as expressed above.
The sale or availability for sale of substantial amounts of our common stock could cause our common stock price to decline or impair our ability to raise capital.
Sales of a substantial number of shares of our common stock in the public market, or the perception that large sales could occur, or the conversion of shares of our Series B Preferred Stock or the perception that conversion could occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of equity and equity-related securities. Of the 1,565,761,986 shares of our common stock issued and outstanding at February 15, 2012 approximately 55% were held by the UST, Canada GEN Investment Corporation, a corporation organized under the laws of Canada (Canada Holdings), the UAW Retiree Medical Benefits Trust (New VEBA), and our U.S. hourly and salaried pension plans. Sales or distributions of our common stock by these holders, whether pursuant to an exemption from registration under the Securities Act of 1933, as amended or the exercise of registration rights, could cause the market price of our common stock to decline.
In addition, at December 31, 2011 there were warrants outstanding to acquire 313 million shares of our common stock at exercise prices ranging from $10.00 per share to $42.31 per share and up to 152 million shares of common stock, subject to anti-dilution, make-whole and other adjustments, will be issuable upon conversion of the shares of Series B Preferred Stock outstanding. Exercises or distributions of warrants or the conversion of the shares of Series B Preferred Stock could cause the market price of our common stock to decline.
We have no current plans to pay dividends on our common stock.

We have no current plans to commence payment of a dividend on our common stock. Our payment of dividends on our common stock in the future will be determined by our Board of Directors in its sole discretion and will depend on business conditions, our financial condition, earnings and liquidity, and other factors. So long as any share of our Series A Preferred Stock or Series B Preferred Stock remains outstanding, no dividend or distribution may be declared or paid on our common stock unless all accrued and unpaid dividends have been paid on our Series A Preferred Stock and Series B Preferred Stock, subject to exceptions, such as dividends on our common stock payable solely in shares of our common stock. In addition, our secured revolving credit facility contains certain restrictions on our ability to pay dividends on our common stock, subject to exceptions such as dividends payable solely in shares of our common stock.
Any indentures and other financing agreements that we enter into in the future may limit our ability to pay cash dividends on our capital stock, including our common stock. In the event that any of our indentures or other financing agreements in the future restricts our ability to pay dividends in cash on our common stock, we may be unable to pay dividends in cash on our common stock unless we can refinance the amounts outstanding under those agreements.
In addition, under Delaware law, our Board of Directors may declare dividends on our capital stock only to the extent of our statutory “surplus” (which is defined as the amount equal to total assets minus total liabilities, in each case at fair market value, minus statutory capital), or if there is no such surplus, out of our net profits for the then current and/or immediately preceding fiscal year.
Goodwill impairments could have a material non-cash adverse effect on our results of operations.
We test our goodwill for impairment in the fourth quarter of each year for all reporting units, or more frequently if events occur or circumstances change that would warrant such a review. In the future, should the recent economic uncertainty continue, our equity price decline on a sustained basis, global economies enter into another recession and industry growth stagnates or should we release deferred tax asset valuation allowances in certain tax jurisdictions (which could occur in the near future if additional positive evidence becomes available), the fair value of one or more of our reporting units may decrease below its carrying amount and future goodwill impairments that may be material could be recognized. In addition future goodwill impairments could occur should GME continue to have a negative carrying amount.
In these circumstances, as discussed in Note 12 to our consolidated financial statements, future goodwill impairments would

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largely be driven by decreases in the fair value to U.S. GAAP differences attributable to those assets and liabilities that gave rise to goodwill upon our application of fresh-start reporting. Such decreases may occur upon an improvement in our credit rating, a decrease in credit spreads between high quality corporate bond rates and market interest rates thus resulting in a decrease in the spread between our employee benefit related obligations under U.S. GAAP and their fair values and/or a change in the fair values of our estimated employee benefit obligations. A decrease would also occur upon reversal of our deferred tax asset valuation allowances. Any declines resulting in a goodwill impairment may result in material non-cash charges to our earnings.
*  *  *  *  *  *  *

Item 1B. Unresolved Staff Comments
None
*  *  *  *  *  *  *
Item 2. Properties

At December 31, 2011 we had 101 locations in 26 states and 85 cities or towns in the U.S. excluding our automotive financing operations and dealerships. Of these locations, 40 are manufacturing facilities, of which 12 are engaged in the final assembly of our vehicles, other manufactured automotive components and power products. Of the remaining locations, 24 are service parts operations primarily responsible for distribution and warehouse functions, and the remainder are offices or facilities primarily involved in engineering and testing vehicles. Leased properties are primarily composed of warehouses and administration, engineering and sales offices. The leases for warehouses generally provide for an initial period of two to 10 years based upon prevailing market conditions and may contain renewal options. Leases for administrative offices are generally for shorter periods.

We have 17 locations in Canada and we have assembly, manufacturing, distribution, office or warehousing operations in 61 other countries, including equity interests in associated companies which perform assembly, manufacturing or distribution operations. Leases for warehouses outside the U.S. have remaining lease terms ranging from one to 25 years, many of which contain options to extend or terminate the lease. The major facilities outside the U.S. and Canada, which are principally vehicle manufacturing and assembly operations, are located in:
 
•      Argentina
•      Ecuador
•      Mexico
•      Spain
•      Vietnam
•      Australia
•      Egypt
•      Poland
•      Thailand
 
•      Brazil
•      Germany
•      Russia
•      United Kingdom
 
•      China
•      India
•      South Africa
•      Uzbekistan
 
•      Colombia
•      Kenya
•      South Korea
•      Venezuela
 

We, our subsidiaries, or associated companies in which we own an equity interest, own most of the above facilities.

GM Financial's automotive financing and leasing operations lease facilities for administration and regional credit centers. GM Financial has 18 facilities located in the U.S. and two facilities located in Canada. GM Financial also owns a servicing facility which is located in the U.S. and included in total facilities located in the U.S.

Our properties include facilities which, in our opinion, are suitable and adequate for the manufacture, assembly and distribution of our products.

*  *  *  *  *  *  *

Item 3. Legal Proceedings

The following section summarizes material pending legal proceedings to which the Company is a party, other than ordinary routine litigation incidental to the business. We and the other defendants affiliated with us intend to defend all of the following actions vigorously.

Canadian Export Antitrust Class Actions
Approximately 80 purported class actions on behalf of all purchasers of new motor vehicles in the U.S. since January 1, 2001,

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have been filed in various state and federal courts against General Motors Corporation, General Motors of Canada Limited (GMCL), Ford Motor Company, Chrysler, LLC, Toyota Motor Corporation, Honda Motor Co., Ltd., Nissan Motor Company, Limited, and Bavarian Motor Works and their Canadian affiliates, the National Automobile Dealers Association, and the Canadian Automobile Dealers Association. The nearly identical complaints alleged that the defendant manufacturers, aided by the association defendants, conspired among themselves and with their dealers to prevent the sale to U.S. citizens of vehicles produced for the Canadian market and sold by dealers in Canada. The complaints alleged that new vehicle prices in Canada are 10% to 30% lower than those in the U.S., and that preventing the sale of these vehicles to U.S. citizens resulted in the payment of higher than competitive prices by U.S. consumers. The complaints, as amended, sought injunctive relief under U.S. antitrust law and treble damages under U.S. and state antitrust laws, but did not specify damages. The complaints further alleged unjust enrichment and violations of state unfair trade practices act. The federal court actions were consolidated for coordinated pretrial proceedings under the caption In re New Market Vehicle Canadian Export Antitrust Litigation Cases in the U.S. District Court for the District of Maine, but on July 2, 2009 the federal court granted summary judgment in favor of the defendants which concluded the federal actions. The more than 30 California cases have been consolidated in the California Superior Court in San Francisco County under the case captions Belch v. Toyota Corporation, et al. and Bell v. General Motors Corporation. Old GM's potential liability in these matters was not assumed by General Motors Company as part of the 363 Sale, but GMCL remains subject to suit in all matters.
In the California state court cases, the court certified a state-wide class after a class certification hearing on April 21, 2009. Defendants' appeal to the appropriate appellate court was denied. Defendants filed other substantive motions for summary judgment, some of which were heard in January 2011 and others of which were heard in March 2011 and at later dates. As a result, the Honda and Nissan entities have been dismissed. The disposition of GMCL's motion for summary judgment remains undecided. In the Minnesota state court cases, the court granted summary judgment in the defendants' favor on September 16, 2010. Plaintiffs did not appeal. In the Arizona state court cases, the court granted summary judgment in the defendants' favor on February 28, 2011. The plaintiffs in the Arizona cases have appealed. Without conceding liability, GMCL has agreed with plaintiffs to settle all remaining state court cases in the amount of $21 million with the settlement to be apportioned among the claimants, their lawyers and administrative costs. Lawyers representing the plaintiffs sought approval of the settlement by the state courts in California, Arizona, New Mexico, Tennessee, Wisconsin and Florida in late 2011.

American Export Antitrust Class Actions

On September 25, 2007, a claim was filed in the Ontario Superior Court of Justice against GMCL and Old GM on behalf of a purported class of actual and intended purchasers of vehicles in Canada claiming that a similar alleged conspiracy was now preventing lower-cost U.S. vehicles from being sold to Canadians. The plaintiffs have delivered their certification materials. An order staying claims against MLC was granted in November 2009. The defendants filed their expert reports in July 2011 and have not yet received reply materials from the plaintiffs. In September 2011, the plaintiffs offered to settle with GMCL for $15 million. GMCL rejected offer on the basis that it is premature to consider settlement at this stage. A certification hearing has not yet been scheduled. No determination has been made that the case may be maintained as a class action, and it is not possible to determine the likelihood of liability or reasonably ascertain the amount of any damages.

In January 2012, Honda reached an agreement in principle with the plaintiffs to discontinue the Ontario class action against Honda without prejudice and without costs. A settlement approval hearing has not yet been scheduled.

Canadian Dealer Class Action

On February 12, 2010, a claim was filed in the Ontario Superior Court of Justice against GMCL for damages on behalf of a purported class of 215 Canadian General Motors dealers (the Plaintiff Dealers) which entered into wind-down agreements with GMCL in May 2009. GMCL offered the Plaintiff Dealers the wind-down agreements to assist the plaintiffs' exit from the GMCL Canadian dealer network upon the expiration of their GM Dealer Sales and Service Agreements (DSSAs) on October 31, 2010, and to assist the plaintiffs in winding down their dealer operations in an orderly fashion. The Plaintiff Dealers allege that the DSSAs have been wrongly terminated by GMCL and that GMCL failed to comply with franchise disclosure obligations, breached its statutory duty of fair dealing and unlawfully interfered with the dealers' statutory right to associate in an attempt to coerce the class member dealers into accepting the wind-down agreements. The Plaintiff Dealers claim that the wind-down agreements are rescindable. GMCL has vigorously defended the claims.

On March 1, 2011 the Ontario Superior Court of Justice approved certification of a class for the purpose of deciding a number of specifically defined issues, including: (1) whether GMCL breached its obligation of “good faith” in offering the wind-down agreements; (2) whether GMCL interfered with the Plaintiff Dealers' rights of free association; (3) whether GMCL was obligated to provide a disclosure statement and/or disclose more specific information regarding its restructuring plans in connection with

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proffering the wind-down agreements; and (4) assuming liability, whether the Plaintiff Dealers can recover damages in the aggregate (as opposed to proving individual damages). On June 22, 2011 the Ontario Superior Court of Justice granted GMCL permission to appeal the class certification decision.

OnStar Analog Equipment Litigation

Our wholly-owned subsidiary OnStar is a party to more than 20 putative class actions filed in various states, including Michigan, Ohio, New Jersey, Pennsylvania and California. All of these cases have been consolidated for pretrial purposes in a multi-district proceeding under the caption In re OnStar Contract Litigation in the U.S. District Court for the Eastern District of Michigan. The litigation arises out of the discontinuation by OnStar of services to vehicles equipped with analog hardware. OnStar was unable to provide services to such vehicles because the cellular carriers which provide communication service to OnStar terminated analog service beginning in February 2008. In the various cases, the plaintiffs are seeking certification of nationwide or statewide classes of owners of vehicles currently equipped with analog equipment, alleging various breaches of contract, misrepresentation and unfair trade practices. On December 19, 2011, the court denied plaintiff's motion for class certification.

UAW VEBA Contribution Claim
On April 6, 2010, the UAW filed suit against us in the U.S. District Court for the Eastern District of Michigan claiming that we breached our obligation to contribute $450 million to the New VEBA. The UAW alleges that we were required to make this contribution pursuant to the UAW-Delphi-GM Memorandum of Understanding Delphi Restructuring dated June 22, 2007. We believe this claim is without merit. We filed a motion in the U.S. States Bankruptcy Court for the Southern District of New York (Bankruptcy Court) in October 2010 asserting that the UAW's claim is barred by the Bankruptcy Court approved 2009 UAW Retiree Settlement Agreement and by other orders issued by the Bankruptcy Court that preclude additional GM contributions to the New VEBA. We also maintain that Delphi Corporation's (Delphi) bankruptcy plan of reorganization did not fulfill the applicable conditions of the restructuring agreement and that therefore payment would not be due even in the absence of the 2009 UAW Retiree Settlement Agreement. On August 23, 2011, the Bankruptcy Court issued an opinion abstaining from hearing the case, which will accordingly be litigated in U.S. District Court for the Eastern District of Michigan.

Korean Labor Litigation
Commencing on or about September 29, 2010, current and former hourly employees of GM Korea, our non-wholly owned consolidated subsidiary in the Republic of Korea, filed six separate group actions in the Incheon District Court in Incheon, Korea. The cases allege that GM Korea failed to include certain allowances in its calculation of Ordinary Wages due under the Presidential Decree of the Korean Labor Standards Act. GM Korea may receive additional claims by hourly employees in the future. Similar cases have been brought against other large employers in the Republic of Korea. This case is in its earliest stages and the scope of claims asserted may change. However, based on a preliminary analysis of the claims currently asserted, the allegations of plaintiffs if accepted in their entirety represent a claim of 734 billion Korean Won, which is $636 million.

*  *  *  *  *  *  *

Item 4. Mine Safety Disclosures

Not applicable

*  *  *  *  *  *  *


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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 have been publicly traded since November 18, 2010 when our common stock was listed and began trading on the New York Stock Exchange and the Toronto Stock Exchange. As a result the table below for the year ended December 31, 2010 only provides data with respect to the fourth quarter of 2010.

Quarterly price ranges based on high and low prices from intraday trades of our common stock on the New York Stock Exchange, the principal market in which the stock is traded, are as follows:
 
Year Ended
December 31, 2011
 
Year Ended
December 31, 2010
 
High
 
Low
 
High
 
Low
Quarter
 
 
 
 
 
 
 
First
$
39.48

 
$
30.20

 
N/A
 
N/A
Second
$
33.47

 
$
28.17

 
N/A
 
N/A
Third
$
32.08

 
$
19.77

 
N/A
 
N/A
Fourth
$
26.55

 
$
19.00

 
$
36.98

 
$
33.07


Holders

At February 15, 2012 we had a total of 1.6 billion issued and outstanding shares of common stock held by 276 holders of record.

Dividends

Since our formation, we have not paid any dividends on our common stock. We have no current plans to pay any dividends on our common stock. So long as any share of our Series A or Series B Preferred Stock remains outstanding, no dividend or distribution may be declared or paid on our common stock unless all accrued and unpaid dividends have been paid on our Series A and Series B Preferred Stock, subject to exceptions, such as dividends on our common stock payable solely in shares of our common stock. Our secured revolving credit facility contains certain restrictions on our ability to pay dividends on our common stock, subject to exceptions, such as dividends payable solely in shares of our common stock. So long as any share of our Series A Preferred Stock remains outstanding, no dividend or distribution may be declared or paid on our Series B Preferred Stock unless all accrued and unpaid dividends have been paid on our Series A Preferred Stock, subject to exceptions, such as dividends on our Series B Preferred Stock payable solely in shares of our common stock.

Our payment of dividends in the future, if any, will be determined by our Board of Directors and will be paid out of funds legally available for that purpose. Our payment of dividends in the future will depend on business conditions, our financial condition, earnings, liquidity and capital requirements, the covenants in our secured revolving credit facility and other factors.

Equity Compensation Plan Information

The table below contains information about securities authorized for issuance under equity compensation plans. The features of these plans are discussed further in Note 27 to our consolidated financial statements (number of securities in millions).

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Number of Securities
To be Issued Upon
Exercise of
Outstanding
Options,
Warrants and
Rights
 

Weighted-Average
Exercise Price of
Outstanding
Options,
Warrants and
Rights(a)
 
Number of Securities
Remaining Available
For Future Issuance
Under Equity
Compensation
Plans(b)
Plan Category
 
 
 
 
 
Equity compensation plans approved by security holders General Motors Company 2009 Long-Term Incentive Plan and Salary Stock Plan(c)
23

 
$

 
56

_________
(a)
The awards under the 2009 Long-Term Incentive Plan as amended December 22, 2010 and Salary Stock Plan as amended October 5, 2010 are restricted stock units (RSUs). The RSUs do not have an exercise price and in limited situations certain executives could settle their awards in cash due to tax considerations of certain countries.
(b)
Excludes securities reflected in the first column, “Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights.”
(c)
At December 31, 2011 all of our equity compensation plans were approved by security holders.

*  *  *  *  *  *  *


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Item 6. Selected Financial Data
(Dollars in millions except per share amounts)

 
Successor
 
 
Predecessor
 
Year Ended December 31,
 
July 10, 2009
Through
December 31,
2009(a)
 
 
January 1, 2009
Through
July 9, 2009
 
Year Ended December 31,
2011
 
2010
 
2008
 
2007
Income Statement Data:
 
 
 
 
 
 
 
 
 
 
 
 
Total net sales and revenue(b)
$
150,276

 
$
135,592

 
$
57,474

 
 
$
47,115

 
$
148,979

 
$
179,984

Reorganization gains, net(c)
$

 
$

 
$

 
 
$
128,155

 
$

 
$

Income (loss) from continuing operations
$
9,287

 
$
6,503

 
$
(3,786
)
 
 
$
109,003

 
$
(31,051
)
 
$
(42,685
)
Income from discontinued operations, net of tax

 

 

 
 

 

 
256

Gain on sale of discontinued operations, net of tax

 

 

 
 

 

 
4,293

Net income (loss)
9,287

 
6,503

 
(3,786
)
 
 
109,003

 
(31,051
)
 
(38,136
)
Net (income) loss attributable to noncontrolling interests
(97
)
 
(331
)
 
(511
)
 
 
115

 
108

 
(406
)
Net income (loss) attributable to stockholders
$
9,190

 
$
6,172

 
$
(4,297
)
 
 
$
109,118

 
$
(30,943
)
 
$
(38,542
)
Net income (loss) attributable to common stockholders
$
7,585

 
$
4,668

 
$
(4,428
)
 
 
$
109,118

 
$
(30,943
)
 
$
(38,542
)
GM $0.01 par value common stock and Old GM $1-2/3 par value common stock
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per share:(d)
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to common stockholders
$
4.94

 
$
3.11

 
$
(3.58
)
 
 
$
178.63

 
$
(53.47
)
 
$
(76.16
)
Income from discontinued operations attributable to common stockholders

 

 

 
 

 

 
8.04

Net income (loss) attributable to common stockholders
$
4.94

 
$
3.11

 
$
(3.58
)
 
 
$
178.63

 
$
(53.47
)
 
$
(68.12
)
Diluted earnings (loss) per share:(d)
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations attributable to common stockholders
$
4.58

 
$
2.89

 
$
(3.58
)
 
 
$
178.55

 
$
(53.47
)
 
$
(76.16
)
Income from discontinued operations attributable to common stockholders

 

 

 
 

 

 
8.04

Net income (loss) attributable to common stockholders
$
4.58

 
$
2.89

 
$
(3.58
)
 
 
$
178.55

 
$
(53.47
)
 
$
(68.12
)
Cash dividends per common share
$

 
$

 
$

 
 
$

 
$
0.50

 
$
1.00

Balance Sheet Data (as of period end):
 
 
 
 
 
 
 
 
 
 
 
 
Total assets(b)
$
144,603

 
$
138,898

 
$
136,295

 
 
 
 
$
91,039

 
$
148,846

Automotive notes and loans payable(e)(f)
$
5,295

 
$
4,630

 
$
15,783

 
 
 
 
$
45,938

 
$
43,578

GM Financial notes and loans payable(b)
$
8,538

 
$
7,032

 
 
 
 
 
 
 
 
 
Series A Preferred Stock(h)
$
5,536

 
$
5,536

 
$
6,998

 
 
 
 
$

 
$

Series B Preferred Stock(i)
$
4,855

 
$
4,855

 
$

 
 
 
 
$

 
$

Equity (deficit)(g)
$
38,991

 
$
37,159

 
$
21,957

 
 
 
 
$
(85,076
)
 
$
(35,152
)
_________
(a)
At July 10, 2009 we applied fresh-start reporting following the guidance in Accounting Standards Codification (ASC) 852, “Reorganizations” (ASC 852). The consolidated financial statements for the periods ended on or before July 9, 2009 do not include the effect of any changes in the fair value of assets or liabilities as a result of the application of fresh-start reporting. Our financial information at and for any period after July 10, 2009 is not comparable to Old GM’s financial information.
(b)
GM Financial was consolidated effective October 1, 2010.
(c)
In the period January 1, 2009 through July 9, 2009 Old GM recorded Reorganization gains, net of $128.2 billion directly associated with

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filing of certain of its direct and indirect subsidiaries voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankruptcy Code) in the Bankruptcy Court, the 363 Sale of Old GM and certain of its direct and indirect subsidiaries (collectively the Sellers) and the application of fresh-start reporting. Refer to Note 32 to our consolidated financial statements for additional detail.
(d)
In the year ended December 31, 2011 we used the two-class method for calculating earnings per share as the Series B Preferred Stock is a participating security due to the applicable market value of our common stock being below $33.00 per common share. Refer to Note 26 to our consolidated financial statements for additional detail.
(e)
In December 2008 Old GM entered into the UST loan agreement, as amended, in December 2008 (UST Loan Agreement), pursuant to which the UST agreed to provide a $13.4 billion borrowing facility.
(f)
In December 2010 GM Korea terminated $1.2 billion credit facility following the repayment of the remaining $1.0 billion under the facility.
(g)
Series A preferred stock was reclassified from temporary equity to permanent equity in the year ended December 31, 2010.
(h)
In December 2010 we purchased 84 million shares of our Series A Preferred Stock from the UST for $2.1 billion.
(i)
Series B Preferred Stock was issued in a public offering in November and December 2010.

*  *  *  *  *  *  *

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Presentation and Estimates

Basis of Presentation

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying consolidated financial statements.

We analyze the results of our business through our five segments, namely GMNA, GME, GMIO, GMSA and GM Financial.

Consistent with industry practice, market share information includes estimates of industry sales in certain countries where public reporting is not legally required or otherwise available on a consistent basis.

Use of Estimates in the Preparation of the Financial Statements

The consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated 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.

Prior Period Financial Statements Conformed to Current Period Presentation

We changed the presentation of our consolidated balance sheet, consolidated statement of cash flows and certain footnotes to combine line items which were either of a related nature or not individually material. We have made corresponding reclassifications to the comparable information for all periods presented.

In the year ended December 31, 2011 we have recorded foreign currency exchange gains and losses on debt as non-operating items. This is a change from prior period presentations in which foreign currency exchange gains and losses on debt were recorded in Automotive cost of sales. We have reclassified all the successor prior periods to conform to our current presentation. The effects of this reclassification decreased Automotive cost of sales and Interest income and other non-operating income, net by $24 million for the year ended December 31, 2010 and $65 million for the period July 10, 2009 through December 31, 2009.

Overview

Our Company commenced operations on July 10, 2009 when we completed the acquisition of substantially all of the assets and assumption of certain liabilities of Old GM through a 363 Sale under the Bankruptcy Code. By commencing operations following the 363 Sale, we were able to take advantage of a competitive labor agreement with our unions, a restructured dealer network and a reduced and refocused brand strategy in the U.S. focused on four brands.

In November and December of 2010 we consummated a public offering of 550 million shares of our common stock and 100 million shares of Series B Preferred Stock and listed both of these securities on the New York Stock Exchange and the common stock on the Toronto Stock Exchange. In April 2011 in connection with MLC's distribution of warrants for our common stock to

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its unsecured creditors, we listed the warrants expiring July 10, 2016 and the warrants expiring July 10, 2019 on the New York Stock Exchange.

Automotive

We offer a global vehicle portfolio of cars, crossovers and trucks. We are committed to leadership in vehicle design, quality, reliability, telematics and infotainment and safety, as well as to developing key energy efficiency, energy diversity and advanced propulsion technologies, including electric vehicles with range extending capabilities such as the Chevrolet Volt. Our business is diversified across products and geographic markets. We meet the local sales and service needs of our retail and fleet customers with a global network of independent dealers. Of our total 2011 vehicle sales volume, 72.3% was generated outside the U.S., including 43.4% from emerging markets, such as Brazil, Russia, India and China (collectively BRIC), which have recently experienced the industry's highest volume growth.

Our automotive business is organized into four geographically-based segments:

GMNA, with sales, manufacturing and distribution operations in the U.S., Canada and Mexico and sales and distribution operations in Central America and the Caribbean, represented 32.4% of our vehicle sales volume in 2011 and we had the largest market share in this market at 18.4%.
GME has sales, manufacturing and distribution operations across Western and Central Europe. GME's vehicle sales volume, which in addition to Western and Central Europe, includes Eastern Europe (including Russia and the other members of the Commonwealth of Independent States among others) represented 19.2% of our vehicle sales volume in 2011. In 2011 we had the number four market share in this market at 8.8%. GMIO distributes Chevrolet brand vehicles which, when sold in Europe, are included in GME vehicle sales volume and market share data.
GMIO has sales, manufacturing and distribution operations in Asia-Pacific, Eastern Europe (including Russia and the other members of the Commonwealth of Independent States among others), Africa and the Middle East. GMIO's vehicle sales volume, which includes Asia-Pacific, Africa and the Middle East is our largest segment by vehicle sales volume. GMIO represented 36.6% of our global vehicle sales volume including sales through our joint ventures in 2011. In 2011 we had the number two market share for this market at 9.5% and the number one market share in China. In 2011 GMIO derived 77.1% of its vehicle sales volume from China. GMIO records the financial results of Chevrolet brand vehicles that it distributes and sells in Europe.
GMSA, with sales, manufacturing and distribution operations in Brazil, Argentina, Colombia, Ecuador and Venezuela as well as sales and distribution operations in Bolivia, Chile, Paraguay, Peru and Uruguay represented 11.8% of our vehicle sales volume in 2011. In 2011 we had the largest market share for this market at 18.8% and the number three market share in Brazil. In 2011 GMSA derived 59.4% of its vehicle sales volume from Brazil.

Automotive Financing - GM Financial

GM Financial specializes in purchasing retail automobile installment sales contracts originated by GM and non-GM franchised and select independent dealers in connection with the sale of used and new automobiles. GM Financial also offers lease products through GM dealerships in connection with the sale of used and new automobiles that target customers with sub-prime and prime credit bureau scores. GM Financial primarily generates revenue and cash flows through the purchase, retention, subsequent securitization and servicing of finance receivables. To fund the acquisition of receivables prior to securitization, GM Financial uses available cash and borrowings under its credit facilities. GM Financial earns finance charge income on finance receivables and pays interest expense on borrowings under its credit facilities. GM Financial periodically transfers receivables to securitization trusts that issue asset-backed securities to investors. The securitization trusts are special purpose entities (SPEs) that are also variable interest entities that meet the requirements to be consolidated in the financial statements.

Our Strategy

Our vision is to design, build and sell the world’s best vehicles. The primary elements of our strategy to achieve this vision are to:

Deliver a product portfolio of the world’s best vehicles, allowing us to maximize sales under any market conditions;
Sell our vehicles globally by targeting developed markets, which are projected to have increases in vehicle demand as the global economy recovers, and further strengthening our position in high growth emerging markets;

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Improve revenue realization and maintain a competitive cost structure to allow us to remain profitable at lower industry volumes and across the lifecycle of our product portfolio; and
Maintain a strong balance sheet by reducing financial leverage given the high operating leverage of our business model.

Chapter 11 Proceedings and the 363 Sale

Background

Over time as Old GM's market share declined in North America, Old GM needed to continually restructure its business operations to reduce cost and excess capacity. Legacy labor costs and obligations and capacity in its dealer network made Old GM less competitive than new entrants into the U.S. market. These factors continued to strain Old GM's liquidity. In 2005 Old GM incurred significant losses from operations and from restructuring activities such as providing support to Delphi and other efforts intended to reduce operating costs. Old GM managed its liquidity during this time through a series of cost reduction initiatives, capital markets transactions and sales of assets. However, the global credit market crisis had a dramatic effect on Old GM and the automotive industry. In the second half of 2008, the increased turmoil in the mortgage and overall credit markets (particularly the lack of financing for buyers or lessees of vehicles), the continued reductions in U.S. housing values, the volatility in the price of oil, recessions in the U.S. and Western Europe and the slowdown of economic growth in the rest of the world created a substantially more difficult business environment. The ability to execute capital markets transactions or sales of assets was extremely limited, vehicle sales in North America and Western Europe contracted severely, and the pace of vehicle sales in the rest of the world slowed. Old GM's liquidity position, as well as its operating performance, were negatively affected by these economic and industry conditions and by other financial and business factors, many of which were beyond its control.

As a result of these economic conditions and the rapid decline in sales in the three months ended December 31, 2008 Old GM determined that, despite the actions it had then taken to restructure its U.S. business, it would be unable to pay its obligations in the normal course of business in 2009 or service its debt in a timely fashion, which required the development of a new plan that depended on financial assistance from the U.S. government.

In December 2008 Old GM requested and received financial assistance from the U.S. government and entered into the UST Loan Agreement. In early 2009 Old GM's business results and liquidity continued to deteriorate, and, as a result, Old GM obtained additional funding from the UST under the UST Loan Agreement. Old GM also received funding from Export Development Canada (EDC), a corporation wholly-owned by the government of Canada, under a loan and security agreement entered into in April 2009 (EDC Loan Facility).

As a condition to obtaining continued 2009 funding under the UST Loan Agreement, Old GM was required to submit a plan in February 2009 that included specific actions (Viability Plan) intended to result in the following:

Repayment of all loans, interest and expenses under the UST Loan Agreement, and all other funding provided by the U.S. government;
Compliance with federal fuel efficiency and emissions requirements and commencement of domestic manufacturing of advanced technology vehicles;
Achievement of a positive net present value, using reasonable assumptions and taking into account all existing and projected future costs;
Rationalization of costs, capitalization and capacity with respect to its manufacturing workforce, suppliers and dealerships; and
A product mix and cost structure that is competitive in the U.S. marketplace.

The UST Loan Agreement also required Old GM to, among other things, use its best efforts to achieve the following restructuring targets: (1) debt reduction of at least two-thirds; (2) labor modifications to achieve an average compensation competitive with that of foreign-owned U.S. domiciled automakers, and; (3) modification of certain retiree healthcare obligations.

The UST Loan Agreement provided that if, by March 31, 2009 or a later date (not to exceed 30 days after March 31, 2009) as determined by the Presidential Task Force on the Auto Industry (Auto Task Force) (Certification Deadline), the Auto Task Force had not certified that Old GM had taken all steps necessary to achieve and sustain its long-term viability, international competitiveness and energy efficiency in accordance with the Viability Plan, then the loans and other obligations under the UST

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Loan Agreement were to become due and payable on the thirtieth day after the Certification Deadline.

On March 30, 2009 the Auto Task Force determined that the plan was not viable and required substantial revisions. On March 31, 2009 Old GM and the UST agreed to postpone the Certification Deadline to June 1, 2009. Old GM made further modifications to its Viability Plan in an attempt to satisfy the Auto Task Force requirement that it undertake a substantially more accelerated and aggressive restructuring plan (Revised Viability Plan), the most significant of which included reducing Old GM's indebtedness and certain retiree healthcare (VEBA) obligations.

Chapter 11 Proceedings

Old GM was not able to complete the cost reduction and restructuring actions in its Revised Viability Plan, including the debt reductions and VEBA modifications, which resulted in extreme liquidity constraints. As a result, on June 1, 2009 Old GM and certain of its direct and indirect subsidiaries filed voluntary petitions for relief under Chapter 11 (Chapter 11 Proceedings) of the Bankruptcy Code in the Bankruptcy Court.

In connection with the Chapter 11 Proceedings, Old GM entered into a secured superpriority debtor-in-possession credit agreement with the UST and EDC (DIP Facility) and received additional funding commitments from EDC to support Old GM's Canadian operations.

The following table summarizes the total funding and funding commitments Old GM received from the U.S. and Canadian governments and the additional notes Old GM issued related thereto in the period December 31, 2008 through July 9, 2009 (dollars in millions):
 
Predecessor
 
Funding and Funding
Commitments
 
Additional
Notes Issued(a)
 
Total Obligation
Description of Funding Commitment
 
 
 
 
 
UST Loan Agreement(b)
$
19,761

 
$
1,172

 
$
20,933

EDC funding(c)
6,294

 
161

 
6,455

DIP Facility
33,300

 
2,221

 
35,521

Total
$
59,355

 
$
3,554

 
$
62,909

__________
(a)
Old GM did not receive any proceeds from the issuance of these promissory notes, which were issued as additional compensation to the UST and EDC.
(b)
Includes debt of $361 million, which UST loaned to Old GM under the warranty program.
(c)
Includes approximately $2.4 billion from the EDC Loan Facility received in the period January 1, 2009 through July 9, 2009 and funding commitments of $3.9 billion that were immediately converted into our equity. This funding was received on July 15, 2009.

363 Sale

On July 10, 2009, we completed the acquisition of substantially all of the assets and assumed certain liabilities of Old GM from the Sellers. The 363 Sale was consummated in accordance with a purchase agreement, dated June 26, 2009, as amended, between us and the Sellers, and pursuant to the Bankruptcy Court's sale order dated July 5, 2009.

In connection with the 363 Sale, the purchase price we paid to Old GM equaled the sum of:

A credit bid in an amount equal to the total of: (1) debt of $19.8 billion under Old GM's UST Loan Agreement, plus notes of $1.2 billion issued as additional compensation for the UST Loan Agreement, plus interest on such debt Old GM owed as of the closing date of the 363 Sale; and (2) debt of $33.3 billion under Old GM's DIP Facility, plus notes of $2.2 billion issued as additional compensation for the DIP Facility, plus interest Old GM owed as of the closing date, less debt of $8.2 billion owed under the DIP Facility;
UST's return of the warrants Old GM previously issued to it;
The issuance to MLC of shares of our common stock and warrants to acquire newly issued shares of our common stock as presented in the following section entitled “Issuance of Common Stock, Preferred Stock and Warrants;” and

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Our assumption of certain specified liabilities of Old GM (including debt of $7.1 billion owed under the DIP Facility).

Under the purchase agreement, we are obligated to issue additional shares of our common stock (Adjustment Shares) to the GUC Trust following the dissolution of MLC in the event that allowed general unsecured claims against MLC, as approved by the Bankruptcy Court, exceed $35.0 billion. Refer to Note 20 to our consolidated financial statements for a description of the contingently issuable Adjustment Shares.

Agreements with the UST, EDC and New VEBA

On July 10, 2009 we entered into the UST Credit Agreement and assumed debt of $7.1 billion that Old GM incurred under its DIP Facility. Immediately after entering into the UST Credit Agreement, we made a partial prepayment, reducing the loan principal balance to $6.7 billion. We issued notes in the principal amount of $2.5 billion (VEBA Notes) to the New VEBA. Through our wholly-owned subsidiary GMCL, we also entered into the amended and restated loan agreement with EDC (Canadian Loan Agreement), as a result of which GMCL had a $1.3 billion term loan (Canadian Loan).

In December 2009 and March 2010 we made quarterly payments of $1.0 billion and $1.0 billion on the UST Credit Agreement and GMCL made quarterly payments of $192 million and $194 million on the Canadian Loan. In April 2010 we used funds from our escrow account to repay in full the outstanding amount of the UST Credit Agreement of $4.7 billion, and GMCL repaid in full the outstanding amount of the Canadian Loan of $1.1 billion. Both loans were repaid prior to maturity. On October 26, 2010 we repaid in full the outstanding amount (together with accreted interest thereon) of the VEBA Notes of $2.8 billion.

Refer to Note 17 to our consolidated financial statements for additional information on the UST Credit Agreement, VEBA Notes and the Canadian Loan.