General Motors Company Profile - Mercer University

General Motors Company Profile - Mercer University

General Motors Company Profile Prepared for: BAA605 Marketing Concepts and Practices By: Jose Alvares J. Sndor Cheka John Kalengaii 1 Table of Contents History of GM GM Segments New Offerings Philanthropic Endeavors Financial Strengths Weaknesses

News Summary References Appendix A: Chart Data 2 History of GM General Motors began on September 16, 1908. General motors began by bringing together a few companies under one umbrella: including: Buick; Cadillac; Oakland, which became Pontiac; Oldsmobile; and other small automotive companies. GM was always in the business of buying other companies to incorporate. It believed by bringing in companies with different attributes, then they would be able to reach a broader market.

GM began to get into the defense contracting market during World War I. GM had purchased 30 automotive companies by 1920. 3 History of GM In 1923, GM began its dominance over the automotive world by becoming the leading producer of automobiles. During this era, GM began a decentralized management concept which saved the company from financial ruin. The decentralized management enabled the smaller division tailor their product to each segment of the market which

they were targeting. The 1950s proved to be the hay day for GM where it was able to capture 44% of the market. 4 History of GM In the 1970s, the company was able to respond to the need for more gas efficient automobiles. In the 1980s, GM began to acquire businesses which were outside the realm of automobile manufacturing companies. The 1990s required a more conservative strategy for a declining market. 5 Automotive Divisions: High End

6 Automotive Divisions: Low End 7 Automotive Divisions: Overseas 8 GM Companies: Parts Genuine Gm Parts ACDelco GM Performance Parts GM Accessories

GM Fleet Alternative fuels GM Supplier Discount GM XM Satellite Radio Onstar 9 GM Companies: Services GMAC Financial Services GM Cardmember services. Supply Power Commercial Finance GM Business Card

10 GM Network Companies in which GM is a majority stock holder 11 GM Components Automotive Parts Manufacturing Engine Division Transmission Division 12

New Offerings 13 Philanthropic Endeavors Hummer and the Red Cross start a partnership GM GlobalAid teams with CARE and UNICEF to start a disaster relief fund GM is also a major corporate sponsor of the of MLK Jr. Memorial GM started Volunteer Plus which gives $250

per hour for employee involvement with charities GM is a corporate sponsor of Make-aWish foundation. GM also donates to Americas Promise 14 GM 2004 Financial Highlights Record consolidated net sales and revenues Record net income at GMAC

Record net income and market shares at GMAP Profitability at GMLAAM Increase of GME losses $5.2 Billion health care cost 15

GM Consolidated Sales & Revenues 2000 - Est. 2006 Net sales & Revenues as of December,31 2004 were $193.5 billion, up 4.1% from December 2003 2005 sales Q1,2,3 = $141.468B GM expected annual sales & revenues as of December 31, 2005 are $184.8B GM 2006 Expected Sales growth rate is 5% Continue on the next slide 16 GM Consolidated Sales & Revenues 2000 - Est. 2006 The decrease in 2001 was due primarily to pricing pressures and a decrease in wholesale sales volume in North America and Europe,

largely to the currency devaluation in Argentina and pricing pressures throughout the GMs Latin America, Africa, and Mid-East regions. The increased in 2002 is due to increased in market share in three of GMs four regions around the world, favorable product mix and cost reduction. Also, GM had record sales for of SUVs and trucks. In 2003, the increase is also due to increased in market share in three of GMs four regions, favorable product mix and a weaker of the dollar in US. The continue growth at GM Asia-Pacific and the higher wholesale volume at GM Latin America/Africa/Mid-East and GM Europe were the factors to increase the net sales and revenues in 2004. In 2005, the expected decrease in sales and revenues is due to 17 higher row material prices and strong competition in US. GM Global Sales Production GM total unit sales production keep

growing, mainly due to the growth of Latin and Asian markets. GMNA car division sales production is jeopardized by the market share growth of Japanese automakers. 18 GM Profit GM's 2004 profits have been crushed by excess capacity, high union wages, and massive employee-retirement obligations.

GM tries to restructure as high raw-materials costs and weak demand for high-margin sport utility vehicles crushes profits by 36% 19 GM ROE and ROA GM ability to manage investor money and assets has been inconsistent and inefficient. 20 GM Operating Margin & Net

Operating Margin GM ability to generate more profit per dollars of sales has steadily decline over the last 2 years Toyota Motor Corp. (One of the main competitor) has reported an increase of 10.51% for its Operating Margin and 14.29% for its Net Operating Margin 21 GM Regional Results GMAP vehicle sales increase more than 14% market share increased by 0.7% to 9.3%. The expected 2006 Asia & Pacific industry

vehicle growth rate is 7%. GMLAAM vehicle unit sales up 26%; market share increased by 1.1% to 17.4%. The expected 2006 LAAM market growth rate is 15%. GME increased its market share by 0.2% to 9.5%; A continued weak price and US$/EUR rate forced GME to report a loss of $976 Million. The industry vehicle is expected to grow by 5% in year 2006. GMNA net Income totaled 1.6 Billion; market share declined by 0.8% to 27.2%.The unit sales of cars decreased by 0.8% while the trucks sales unit increased by 1%. (Trucks sale represents 60% of GMs total U.S. vehicle unit sales)

22 News: Health Care Cost Health care cost in the United States average 15% of gross domestic product GM spends 5 Billion on health care cost for 1.1 million employee, retirees and independents throughout the United states. Those costs amounted to about $1500 for each vehicles manufactured in the United States. GM competitors governments cover a large portion of employee and retiree health-care cost. 23 Strengths Worlds number one carmaker GM has 325,000 employees around the world. Manufacturing plants in 32 countries. Sells in 200 countries. Strong brands.

In 2004, nearly 9 million Autos sold, up 4%, 2nd highest total in GMs history. Profitable Markets are the Asia-Pacific and Latin America/Africa/Mid-East regions. 24 Strengths (Continued) Significant Progress to reduce cost since 2000. Developing partnerships around the world. New products such as Hummer H3 and Chevy HHR GM has a good product offering in China, with a small, cheap and fuel-economy cars, minivans and pick-up trucks. 25 Weaknesses

Market share is down to 14.4 globally. Capacity Utilization. Too many plants and workers in North America. 111,000 employees and contracts that forbid permanent layoffs. Rebates and Sales Incentives in order to keep the plants running. Health care burden. Third Quarter Losses are $1.6 Billion compared to 26 $88 million one year ago. Weaknesses (Continued) Unprofitable Markets include the North America and Europe. GM does not have a hybrid vehicle on the US market. 27

Summary GM is the worlds number one carmaker. GM has been profitable in the Asia-Pacific/Latin America/Africa/Mid-East regions, while unprofitable in North America and Europe. China is the biggest GMs center of auto profit. GMs largest market is US, and second largest market is China. Health care cost is equal to $5 Billion. 28 Summary (Continued) Lately, GM has been offering rebates and sales incentives, in order to keep manufacturing plants in operation in US. GM has committed to achieve 100% of capacity utilization by 2008.

29 References GM Company from: http://www.gm.com/company/corp_info/ GM Company Profiles from: http://www.gm.com/company/corp_info/profiles/ Business Week Article: http://www.businessweek.com/bwdaily/dnflash/oct2005/nf20051017_7171_db0 35. htm BBC Article: http://news.bbc.co.uk/1/hi/business/1101500.stm http://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm .com/gmnews/viewmonthlyreleasedetail.do?domain=74&docid=19344 GM Letter to Stockholders 2001 from: http://www.gm.com/company/investor_information/docs/fin_data/gm01ar/down load/ltr01ar. pdf GM Letter to Stockholders 2002 from: http://www.gm.com/company/investor_information/docs/fin_data/gm02ar/down load/gm02arletters.pdf

GM Letter to Stockholders 2003 from: http://www.gm.com/company/investor_information/docs/fin_data/gm03ar/ download/gm03arletters.pdf GM Letter to Stockholders 2004 from: http://www.gm.com/company/investor_information/docs/fin_data/gm04ar/ download/gm04arletter.pdf 30 References (Continued) GM Financials 2001 from: http://www.gm.com/company/investor_information/ docs/fin_data/gm01ar/download/fin01ar.pdf GM Financials 2002 from: http://www.gm.com/company/investor_information/ docs/fin_data/gm02ar/download/gm02arfinancials.pdf GM Financials 2003 from: http://www.gm.com/company/investor_information/ docs/fin_data/gm03ar/download/gm03arfinancials.pdf GM Financials 2004 from: http://www.gm.com/company/investor_information/ docs/fin_data/gm04ar/download/gm04arfinancials.pdf General Motors Corporation 2001-2004 Annual Report:

http://www.gm.com/company/investor_information/stockholder_info/ GM GM and UAW reach tentative agreement on health care: http://media.gm.com/servlet/GatewayServlet ?target=http://image.emerald.gm.com/gmnews/viewmonthlyreleasedetail .do?domain=74&docid=19615 Article by Keith Bradsher - NYTimes.com G.M. Thrives in China With Small, Thrifty Vans (August 9, 2005). Article by Danny Hakim NYTimes.com G.M. and Ford Lose Ground in Sales Again (March 2, 2005). Article by Matthew L. Wald NYTimes.com - Hybrid Cars Burning Gas in the Drive for Power (July 17, 2005). 31 Appendix A: Chart Data GM CONSOLIDATED SALES & REVENUES Annual Income Statement Total Net Sales ($ Billions) 12/31/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/31/2005 12/31/2006

184.6 169 177.8 185.8 193.5 184.8 194 GM GLOBAL SALES PRODUCTION (Thousands Units) Year CAR GMNA TRUCK GMNA Total GMNA GME GMLAAM GMAP Worldwide 2000

2,892 2,880 5,772 1,993 544 185 8,494 2001 2,365 2,745 5,110 1,842 575 256 7,786 2002 2,458

3,182 5,640 1,770 561 307 8,278 2003 2,184 3,277 5,461 1,818 547 420 8,246 2004 2005 est. 1,997

1,831 3,223 3,045 5,220 4,876 1,829 1,864 716 777 1,333 1,588 9,098 9,105 GM PROFITS Year Net income ($ Millions) 2000

4,452 2001 601 2002 1,736 2003 3,822 2004 2,805 GM ROE and ROA Return on Equity (%) Return on Assets (%) 12/31/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004

14.75 3.05 25.48 11.33 10.12 1.47 0.19 0.47 0.64 0.58 32 Appendix A: Chart Data (Continued) GM x TOYOTA: OPERATING MARGIN and NET OPERATING MARGIN Annual Income Statement GM Operating Margin (%) GM Net Operating Margin (%)

TOYOTA Operating Margin (%) TOYOTA Net Operating Margin (%) 12/31/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004 16.32 12.98 12.94 15.11 14.83 2.41 0.34 0.93 2.06 1.45 12.41 12.33 12.76 13.8 15.25

3.16 3.51 4.08 5.88 6.72 GM REGION RESULTS: NET INCOME ($ Millions) Year GMAP GMLAAM GME GMNA 2000 -233 26 -676 3174

2001 -57 85 -765 1270 2002 188 -181 -1011 2992 2003 577 -331 -504 811 2004

729 85 -976 1583 33

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