GENERAL MOTORS COMPANY Basis of Presentation This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the accompanying condensed consolidated financial statements and the notes thereto, and the audited consolidated financial statements and notes thereto included in our 2021 Form 10-K. Forward -looking statements in this MD&A are not guarantees of future performance and may involve risks and uncertainties that could cause actual results to differ materially from those projected. Refer to the "Forward-Looking Statements" section of this MD&A and Part 1, Item 1A. Risk Factors of our 2021 Form 10-K for a discussion of these risks and uncertainties. Except for per share amounts or as otherwise specified, dollar amounts presented within tables are stated in millions. Certain columns and rows may not add due to rounding. Non-GAAP Measures Our non-GAAP measures include: EBIT-adjusted, presented net of noncontrolling interests; EBT-adjusted for our GM Financial segment; EPS-diluted-adjusted; effective tax rate-adjusted (ETR-adjusted); return on invested capital-adjusted (ROIC-adjusted) and adjusted automotive free cash flow. Our calculation of these non-GAAP measures may not be comparable to similarly titled measures of other companies due to potential differences between companies in the method of calculation. As a result, the use of these non-GAAP measures has limitations and should not be considered superior to, in isolation from, or as a substitute for, relatedU.S. GAAP measures. These non-GAAP measures allow management and investors to view operating trends, perform analytical comparisons and benchmark performance between periods and among geographic regions to understand operating performance without regard to items we do not consider a component of our core operating performance. Furthermore, these non-GAAP measures allow investors the opportunity to measure and monitor our performance against our externally communicated targets and evaluate the investment decisions being made by management to improve ROIC-adjusted. Management uses these measures in its financial, investment and operational decision-making processes, for internal reporting and as part of its forecasting and budgeting processes. Further, our Board of Directors uses certain of these and other measures as key metrics to determine management performance under our performance-based compensation plans. For these reasons, we believe these non-GAAP measures are useful for our investors. EBIT-adjusted EBIT-adjusted is presented net of noncontrolling interests and is used by management and can be used by investors to review our consolidated operating results because it excludes automotive interest income, automotive interest expense and income taxes as well as certain additional adjustments that are not considered part of our core operations. Examples of adjustments to EBIT include, but are not limited to, impairment charges on long-lived assets and other exit costs resulting from strategic shifts in our operations or discrete market and business conditions; costs arising from legal matters; and certain currency devaluations associated with hyperinflationary economies. For EBIT-adjusted and our other non-GAAP measures, once we have made an adjustment in the current period for an item, we will also adjust the related non-GAAP measure in any future periods in which there is an impact from the item. Our corresponding measure for our GM Financial segment is EBT-adjusted because interest income and interest expense are part of operating results when assessing and measuring the operational and financial performance of the segment. EPS-diluted-adjusted EPS-diluted-adjusted is used by management and can be used by investors to review our consolidated diluted EPS results on a consistent basis. EPS-diluted-adjusted is calculated as net income attributable to common stockholders-diluted less adjustments noted above for EBIT-adjusted and certain income tax adjustments divided by weighted-average common shares outstanding-diluted. Examples of income tax adjustments include the establishment or reversal of significant deferred tax asset valuation allowances. ETR-adjusted ETR-adjusted is used by management and can be used by investors to review the consolidated effective tax rate for our core operations on a consistent basis. ETR-adjusted is calculated as Income tax expense less the income tax related to the adjustments noted above for EBIT-adjusted and the income tax adjustments noted above for EPS-diluted-adjusted divided by Income before income taxes less adjustments. When we provide an expected adjusted effective tax rate, we do not provide an expected effective tax rate because theU.S. GAAP measure may include significant adjustments that are difficult to predict. ROIC-adjusted ROIC-adjusted is used by management and can be used by investors to review our investment and capital allocation decisions. We define ROIC-adjusted as EBIT-adjusted for the trailing four quarters divided by ROIC-adjusted average net assets, which is considered to be the average equity balances adjusted for average automotive debt and interest liabilities, exclusive of finance leases; average automotive net pension and OPEB liabilities; and average automotive net income tax assets during the same period. 28
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Adjusted automotive free cash flow Adjusted automotive free cash flow is used by
management and can be used by investors to review the liquidity of our
automotive operations and to measure and monitor our performance against our
capital allocation program and evaluate our automotive liquidity against the
substantial cash requirements of our automotive operations. We measure adjusted
automotive free cash flow as automotive operating cash flow from operations less
capital expenditures adjusted for management actions. Management actions can
include voluntary events such as discretionary contributions to employee benefit
plans or nonrecurring specific events such as a closure of a facility that are
considered special for EBIT-adjusted purposes. Refer to the "Liquidity and
Capital Resources" section of this MD&A for additional information.
The following table reconciles Net income (loss) attributable to stockholders
under
Three Months Ended
September 30, June 30, March 31, December 31,
2022 2021 2022 2021 2022 2021 2021 2020
Net income (loss) attributable
to stockholders $ 3,305 $ 2,420 $ 1,692
152 490 971 (28) 1,177 471 642
Automotive interest expense 259 230 234 243 226 250 227
275
Automotive interest income (122) (38) (73) (32) (50) (32) (44) (46) Adjustments Cruise compensation modifications(a) - - - - 1,057 - - - Patent royalty matters(b) - - - - (100) - 250 - GMBrazil indirect tax matters(c) - - - - - - 194 - Cadillac dealer strategy(d) - 158 - 17 - - - 99 GMI restructuring(e) - - - - - - - 26 GM Korea wage litigation(f) - - - 82 - - - - Ignition switch recall and
related legal matters(g) - - - - - - - (130) Total adjustments - 158 - 99 957 - 444 (5) EBIT (loss)-adjusted$ 4,287 $ 2,922 $ 2,343 $ 4,117 $ 4,044 $ 4,417 $ 2,839 $ 3,712 _________ (a)This adjustment was excluded because it relates to the one-time modification of Cruise stock incentive awards. (b)These adjustments were excluded because they relate to certain royalties accrued with respect to past-year vehicle sales in the three months endedDecember 31, 2021 , and the resolution of substantially all of these matters in the three months endedMarch 31, 2022 . (c)This adjustment was excluded because it relates to a settlement with third parties in the three months endedDecember 31, 2021 relating to retrospective recoveries of indirect taxes inBrazil realized in prior periods. (d)These adjustments were excluded because they relate to strategic activities to transition certainCadillac dealers from the network as part ofCadillac's EV strategy. (e)This adjustment was excluded because of a strategic decision to rationalize our core operations by exiting or significantly reducing our presence in various international markets to focus resources on opportunities expected to deliver higher returns. This adjustment primarily consists of employee separation charges in the three months endedDecember 31, 2020 . (f)This adjustment was excluded because of the unique events associated withKorea Supreme Court decisions related to our salaried workers. (g)This adjustment was excluded because of the unique events associated with the ignition switch recall. 29
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The following table reconciles diluted earnings (loss) per common share under
Three Months Ended Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Amount Per Share Amount Per Share Amount Per Share Amount Per Share
Diluted earnings per common share $ 3,278 $ 2.25 $ 2,375 $ 1.62 $ 6,931 $ 4.73 $ 8,141 $ 5.55
Adjustments(a) - - 158 0.11 957 0.65 257 0.18
Tax effect on adjustments(b) - - (39) (0.03) (296) (0.20) (43) (0.03)
Tax adjustments(c) - - (271) (0.18) (482) (0.33) 45 0.03
Deemed dividend adjustment(d) - - - - 909 0.62 - -
EPS-diluted-adjusted $ 3,278 $ 2.25 $ 2,223 $ 1.52 $ 8,019 $ 5.48 $ 8,400 $ 5.73
__________
(a)Refer to the reconciliation of Net income (loss) attributable to stockholders
under U.S. GAAP to EBIT (loss)-adjusted within this section of MD&A for the
details of each individual adjustment.
(b)The tax effect of each adjustment is determined based on the tax laws and
valuation allowance status of the jurisdiction to which the adjustment relates.
(c)These adjustments consist of tax benefit related to the release of a
valuation allowance against deferred tax assets considered realizable as a
result of Cruise tax reconsolidation in the nine months ended September 30,
2022 , tax benefit related to a deduction for an investment in a subsidiary in
the three months ended September 30, 2021 and tax expense related to the
establishment of a valuation allowance against Cruise deferred tax assets in the
nine months ended September 30, 2021 . These adjustments were excluded because of
the unique nature of these events and significant impacts of valuation
allowances are not considered part of our core operations.
(d)This adjustment consists of a deemed dividend related to the redemption of
Cruise preferred shares from SoftBank in the nine months ended September 30,
2022 .
The following table reconciles our effective tax rate under U.S. GAAP to
ETR-adjusted:
Three Months Ended Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Income tax Income tax
Income before Income tax Effective tax Income before Income tax Effective tax Income before expense Effective tax Income before expense Effective tax
income taxes expense (benefit) rate income taxes expense (benefit) rate income taxes (benefit) rate income taxes (benefit) rate
Effective tax rate $ 4,097 $ 845 20.6 % $ 2,538 $ 152 6.0 %$ 9,009 $ 1,308 14.5 %$ 10,479 $ 2,300 21.9 % Adjustments(a) - - 158 39 1,053 296 282 43 Tax adjustments(b) - 271 482 (45) ETR-adjusted$ 4,097 $ 845
20.6 % $ 2,696 $ 462 17.1 % $ 10,062 $ 2,086 20.7 % $ 10,761 $ 2,298 21.4 %
__________
(a)Refer to the reconciliation of Net income (loss) attributable to stockholders underU.S. GAAP to EBIT (loss)-adjusted within this section of MD&A for adjustment details. These adjustments include Net income attributable to noncontrolling interests where applicable. The tax effect of each adjustment is determined based on the tax laws and valuation allowance status of the jurisdiction to which the adjustment relates. (b)Refer to the reconciliation of diluted earnings (loss) per common share underU.S. GAAP to EPS-diluted-adjusted within this section of MD&A for adjustment details. We define return on equity (ROE) as Net income (loss) attributable to stockholders for the trailing four quarters divided by average equity for the same period. Management uses average equity to provide comparable amounts in the calculation of ROE. The following table summarizes the calculation of ROE (dollars in billions): Four Quarters Ended September 30, 2022 September 30, 2021 Net income (loss) attributable to stockholders $ 9.7 $ 11.1 Average equity(a) $ 64.9 $ 52.4 ROE 14.9 % 21.2 % __________
(a)Includes equity of noncontrolling interests where the corresponding earnings (loss) are included in Net income (loss) attributable to stockholders.
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The following table summarizes the calculation of ROIC-adjusted (dollars in
billions):
Four Quarters Ended
September 30, 2022 September 30, 2021
EBIT (loss)-adjusted(a) $ 13.5 $ 15.2
Average equity(b) $ 64.9 $ 52.4
Add: Average automotive debt and interest liabilities (excluding finance leases)
17.3 17.3
Add: Average automotive net pension & OPEB liability 10.2 17.7
Less: Average automotive and other net income tax asset (21.3) (22.8)
ROIC-adjusted average net assets $ 71.1 $ 64.6
ROIC-adjusted 19.0 % 23.5 %
__________
(a)Refer to the reconciliation of Net income (loss) attributable to stockholders
under U.S. GAAP to EBIT (loss)-adjusted within this section of MD&A.
(b)Includes equity of noncontrolling interests where the corresponding earnings
(loss) are included in EBIT (loss)-adjusted.
Overview Our vision for the future is a world with zero crashes, zero emissions
and zero congestion, which guides our growth-focused strategy to invest in EVs
and AVs, software-enabled services and subscriptions and new business
opportunities, while strengthening our market position in profitable internal
combustion engine vehicles, such as trucks and SUVs. We have committed to an
all-electric future with a core focus on zero-emission battery EVs as part of
our long-term strategy. We plan to execute our strategy with a diverse team and
a steadfast commitment to good citizenship through sustainable operations and a
leading health and safety culture.
The automotive industry and GM continue to experience supply chain disruptions,
which impact multiple suppliers and our planned production schedules. We will
continue prioritizing the production of our most popular and in-demand vehicles,
including our full-size trucks, full-size SUVs and EVs. We do not expect these
disruptions to impact our long-term growth and EV initiatives. In June 2021 , we
announced plans to increase our investment in EVs and AVs from $27.0 billion to
more than $35.0 billion through 2025, which we expect may continue to evolve as
we look to further accelerate our EV and AV future.
We continue to monitor the impact of the COVID-19 pandemic, and government
actions and measures taken to prevent its spread, and the potential to affect
our operations. Refer to Part I, Item 1A. Risk Factors of our 2021 Form 10-K for
further discussion of these risks.
We also face continuing market, operating and regulatory challenges in several
countries across the globe due to, among other factors, rising interest rates
and higher material and service prices driven by inflationary pressures,
competitive pressures, our product portfolio offerings, heightened emissions
standards, potentially weakening economic conditions, labor disruptions, foreign
exchange volatility, evolving trade policy and political uncertainty. Refer to
Part I, Item 1A. Risk Factors of our 2021 Form 10-K for a discussion of these
challenges.
As we continue to assess our performance and the needs of our evolving business,
additional restructuring and rationalization actions could be required. These
actions could give rise to future asset impairments or other charges, which may
have a material impact on our operating results.
On August 16, 2022 , the Inflation Reduction Act of 2022 (the "Act") was signed
into law. The Act modifies climate and clean energy corporate tax provisions,
including amendments to the EV consumer tax credit available under current tax
law. New tax credits for commercial EV purchases and investments in clean energy
production, supply chains and manufacturing facilities are included in the Act
effective beginning in 2023. The Act also implements a new 15% corporate minimum
tax based on modified U.S. financial statement net income that is effective
beginning in 2023. We are evaluating the potential impact of the tax credits and
corporate minimum tax requirement on our financial results, including our net
earnings and cash flow.
For the year ending December 31, 2022 , we continue to expect Net income
attributable to stockholders of between $9.6 billion and $11.2 billion ,
EBIT-adjusted of between $13.0 billion and $15.0 billion , EPS-diluted of between
$5.76 and $6.76 and EPS-diluted-adjusted of between $6.50 and $7.50 . We do not
consider the potential impact of future adjustments on our expected financial
results.
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The following table reconciles expected Net income attributable to stockholders
under
Year Ending December 31 , 2022
Net income attributable to stockholders $
9.6-11.2
Income tax expense
1.7-2.1
Automotive interest expense, net 0.7 Adjustments(a) 1.0 EBIT-adjusted(b)$ 13.0-15.0 ________ (a)Refer to the reconciliation of Net income (loss) attributable to stockholders underU.S. GAAP to EBIT (loss)-adjusted within the MD&A for the details of each individual adjustment. (b)We do not consider the potential future impact of adjustments on our expected financial results.
The following table reconciles expected EPS-diluted under
Year Ending December 31, 2022
Diluted earnings per common share $ 5.76-6.76
Adjustments(a) 0.74
EPS-diluted-adjusted(b) $ 6.50-7.50
________
(a)Refer to the reconciliation of diluted earnings (loss) per common share under
U.S. GAAP to EPS-diluted-adjusted within the MD&A for the details of each
individual adjustment.
(b)We do not consider the potential future impact of adjustments on our expected
financial results.
GMNA Industry sales in North America were 12.8 million units in the nine months
ended September 30, 2022 , representing a decrease of 11.4% compared to the
corresponding period in 2021. U.S. industry sales were 10.5 million units in the
nine months ended September 30, 2022 , representing a decrease of 12.8% compared
to the corresponding period in 2021.
Our total vehicle sales in the U.S. , our largest market in North America , were
1.7 million units for market share of 15.7% in the nine months ended September
30, 2022 , representing an increase of 1.0 percentage points compared to the
corresponding period in 2021.
We expect to sustain relatively strong EBIT-adjusted margins in 2022 on the
continued strength of favorable vehicle pricing and strong U.S. industry light
vehicle demand, partially offset by higher costs associated with commodities,
raw materials and logistics. Our outlook is dependent on the pricing
environment, continuing improvement of supply chain disruptions and overall
economic conditions. As a result of supply chain disruptions, we experienced
interruptions to our planned production schedules and continue to prioritize
production of our most popular and in-demand products, including our full-size
trucks, full-size SUVs and EVs. Additionally, we have been manufacturing
vehicles without the impacted components and expect that a substantial number of
these vehicles will be completed and sold to dealers before the end of 2022.
GMI Industry sales in China were 17.2 million units in the nine months ended
September 30, 2022 , representing a decrease of 10.1% compared to the
corresponding period in 2021. Our total vehicle sales in China were 1.7 million
units for market share of 10.0% in the nine months ended September 30, 2022 ,
representing a decrease of 1.2 percentage points compared to the corresponding
period in 2021. The ongoing supply chain disruptions, macro-economic impact and
local restrictions due to COVID-19 and geopolitical tensions continue to place
pressure on China's automotive industry and our vehicle sales in China . Our
Automotive China JVs generated equity income of $0.5 billion in the nine months
ended September 30, 2022 . Although price competition, higher costs associated
with commodities and raw materials and a more challenging regulatory environment
related to emissions, fuel consumption and new energy vehicles will place
pressure on our operations in China , we will continue to build upon our strong
brands, network, and partnerships in China as well as drive improvements in
vehicle mix and cost.
Outside of China , industry sales were 17.4 million units in the nine months
ended September 30, 2022 , representing an increase of 0.7% compared to the
corresponding period in 2021. Our total vehicle sales outside of China were 0.7
million units for a market share of 4.1% in the nine months ended September 30,
2022 , representing an increase of 0.6 percentage points compared to the
corresponding period in 2021.
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We historically operated a small import business in Russia and sold GM -badged
vehicles into Russia through GM's alliance partner in Uzbekistan . GM's direct
and indirect profitability in Russia was insignificant. With Russia's invasion
of Ukraine , western sanctions on Russia have and may continue to progressively
increase. In addition, reputational, legal and other concerns have impacted and
may continue to impact our ability to operate in Russia . As of the end of
February, we suspended our exports into Russia and instructed our Russian sales
company to cease selling vehicles within Russia . In April, we took additional
actions to extend the suspension of our Russian business, including the
cessation of commercial operations. Although we have limited supply chain
exposure to Russia and Ukraine , we are working closely with our supply base to
mitigate any potential risks. Because of the deteriorating business environment
in Russia and ongoing sanctions, our ability to operate in Russia in the future
is uncertain. In the event we were to lose control of our Russian sales company
or are otherwise unable to operate again in Russia , we would expect to record a
non-cash charge of approximately $0.7 billion to write off our investment and
release accumulated translation losses. These charges would be considered
special for EBIT-adjusted and EPS-diluted-adjusted purposes. In addition, we are
monitoring the situation and its macroeconomic impacts on our financial position
and results of operations.
Cruise Gated by safety and regulation, Cruise continues to make significant
progress towards commercialization of a network of on-demand AVs in the United
States and globally. In 2021, Cruise received a driverless test permit from the
California Public Utilities Commission (CPUC) to provide unpaid rides to the
public in driverless vehicles and received approval of its Autonomous Vehicle
Deployment Permit from the California Department of Motor Vehicles to
commercially deploy driverless AVs. In June 2022 , Cruise received the first ever
Driverless Deployment Permit granted by the CPUC, which allows them to charge a
fare for the driverless rides they are providing to members of the public in
certain parts of San Francisco . Refer to the "Liquidity and Capital Resources"
section of this MD&A for information about GM's additional investment in Cruise.
Vehicle Sales The principal factors that determine consumer vehicle preferences
in the markets in which we operate include overall vehicle design, price,
quality, available options, safety, reliability, fuel economy and functionality.
Market leadership in individual countries in which we compete varies widely.
We present both wholesale and total vehicle sales data to assist in the analysis
of our revenue and our market share. Wholesale vehicle sales data consists of
sales to GM's dealers and distributors as well as sales to the U.S. Government
and excludes vehicles sold by our joint ventures. Wholesale vehicle sales data
correlates to our revenue recognized from the sale of vehicles, which is the
largest component of Automotive net sales and revenue. In the nine months ended
September 30, 2022 , 30.6% of our wholesale vehicle sales volume was generated
outside the U.S. The following table summarizes wholesale vehicle sales by
automotive segment (vehicles in thousands):
Three Months Ended Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022
September 30, 2021
GMNA 784 81.2 % 423 79.0 % 2,139 81.9 % 1,729 81.7 %
GMI 182 18.8 % 113 21.0 % 474 18.1 % 388 18.3 %
Total 966 100.0 % 536 100.0 % 2,613 100.0 % 2,117 100.0 %
Total vehicle sales data represents: (1) retail sales (i.e., sales to consumers
who purchase new vehicles from dealers or distributors); (2) fleet sales (i.e.,
sales to large and small businesses, governments, and daily rental car
companies); and (3) vehicles used by dealers in their business. Total vehicle
sales data for periods presented prior to 2022 reflect courtesy transportation
vehicles used by U.S. dealers in their business; beginning in 2022, we stopped
including such dealership courtesy transportation vehicles in total vehicle
sales until such time as those vehicles were sold to the end customer. Total
vehicle sales data includes all sales by joint ventures on a total vehicle
basis, not based on our percentage ownership interest in the joint venture.
Certain joint venture agreements in China allow for the contractual right to
report vehicle sales of non-GM trademarked vehicles by those joint ventures,
which are included in the total vehicle sales we report for China . While total
vehicle sales data does not correlate directly to the revenue we recognize
during a particular period, we believe it is indicative of the underlying demand
for our vehicles. Total vehicle sales data represents management's good faith
estimate based on sales reported by GM's dealers, distributors, and joint
ventures, commercially available data sources such as registration and insurance
data, and internal estimates and forecasts when other data is not available.
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The following table summarizes industry and
Three Months Ended Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Market Market Market Market
Industry GM Share Industry GM Share Industry GM Share Industry GM Share
North America
United States 3,489 556 15.9 % 3,500 447 12.8 % 10,484 1,651 15.7 % 12,020 1,777 14.8 %
Other 770 107 13.9 % 788 75 9.5 % 2,272 300 13.2 % 2,372 285 12.0 %
Total North America 4,259 663 15.6 % 4,288 522 12.2 % 12,757 1,950 15.3 % 14,391 2,062 14.3 %
Asia/Pacific , Middle East and
Africa
China (a) 6,392 630 9.9 % 5,825 624 10.7 % 17,244 1,727 10.0 % 19,190 2,154 11.2 %
Other 4,702 114 2.4 % 4,516 96 2.1 % 14,678 379 2.6 % 14,575 321 2.2 %
Total Asia/Pacific , Middle East
and Africa 11,094 744 6.7 % 10,341 719 7.0 % 31,922 2,106 6.6 % 33,765 2,475 7.3 %
South America
Brazil 583 88 15.0 % 503 36 7.2 % 1,500 203 13.6 % 1,577 161 10.2 %
Other 413 42 10.2 % 396 34 8.6 % 1,198 124 10.3 % 1,103 115 10.4 %
Total South America 997 130 13.0 % 899 70 7.8 % 2,698 327 12.1 % 2,680 276 10.3 %
Total in GM markets 16,350 1,537 9.4 % 15,528 1,312 8.4 % 47,376 4,384 9.3 % 50,836 4,813 9.5 %
Total Europe 3,538 - - % 3,416 - - % 10,593 1 - % 11,693 1 - %
Total Worldwide(b)(c) 19,888 1,537 7.7 % 18,944 1,312 6.9 % 57,969 4,385 7.6 % 62,529 4,814 7.7 %
United States
Cars 686 49 7.2 % 762 21 2.8 % 2,095 152 7.3 % 2,639 111 4.2 %
Trucks 997 299 30.0 % 907 266 29.4 % 2,884 899 31.2 % 3,040 929 30.6 %
Crossovers 1,806 207 11.5 % 1,832 159 8.7 % 5,506 599 10.9 % 6,340 737 11.6 %
Total United States 3,489 556 15.9 % 3,500 447 12.8 % 10,484 1,651 15.7 % 12,020 1,777 14.8 %
China (a)
SGMS 298 275 766 974
SGMW 332 349 962 1,180
Total China 6,392 630 9.9 % 5,825 624 10.7 % 17,244 1,727 10.0 % 19,190 2,154 11.2 %
__________
(a)Includes sales by the Automotive China JVs: SAIC General Motors Sales Co.,
Ltd. (SGMS) and SAIC GM Wuling Automobile Co., Ltd. (SGMW).
(b)Cuba , Iran , North Korea , Sudan and Syria are subject to broad economic
sanctions. Accordingly, these countries are excluded from industry sales data
and corresponding calculation of market share.
(c)As of March 2022, GM is no longer importing vehicles or parts to Russia ,
Belarus and other sanctioned provinces in Ukraine .
As discussed above, total vehicle sales and market share data provided in the
table above includes fleet vehicles. Certain fleet transactions, particularly
sales to daily rental car companies, are generally less profitable than retail
sales to end customers. The following table summarizes estimated fleet sales and
those sales as a percentage of total vehicle sales (vehicles in thousands):
Three Months Ended Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
GMNA 116 69 406 319
GMI 126 69 282 203
Total fleet sales 242 138 688 522
Fleet sales as a percentage of total
vehicle sales 15.7 % 10.5 % 15.7 % 10.8 %
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GM Financial We believe that offering a comprehensive suite of financing
products will generate incremental sales of our vehicles, drive incremental GM
Financial earnings and help support our sales throughout various economic
cycles. GM Financial's leasing program is exposed to residual values, which are
heavily dependent on used vehicle prices. Used vehicle prices were sustained at
high levels for the three and nine months ended September 30, 2022 , primarily
due to low new vehicle inventory. The high levels of used vehicle prices also
resulted in gains on terminations of leased vehicles of $0.3 billion and $1.0
billion included in GM Financial interest, operating and other expenses for the
three and nine months ended September 30, 2022 , compared to gains of $0.4
billion and $1.6 billion in the corresponding periods in 2021. The decrease in
gains is primarily due to higher residual value estimates resulting in decreased
depreciation expense as well as fewer vehicles returned for the three and nine
months ended September 30, 2022 compared to the corresponding periods in 2021.
For the remainder of 2022, GM Financial expects used vehicle prices to remain
elevated primarily due to sustained low new vehicle inventory and reduced
incentive levels, but to decrease relative to 2021 peak levels. The following
table summarizes the estimated residual value based on GM Financial's most
recent estimates and the number of units included in GM Financial Equipment on
operating leases, net by vehicle type (units in thousands):
September 30, 2022 December 31, 2021
Residual Residual
Value Units Percentage Value Units Percentage
Crossovers $ 14,791 770 67.4 % $ 16,696 897 67.3 %
Trucks 7,155 237 20.8 % 7,886 264 19.8 %
SUVs 2,666 68 5.9 % 3,104 80 5.9 %
Cars 1,041 67 5.9 % 1,430 93 7.0 %
Total $ 25,654 1,141 100.0 % $ 29,116 1,334 100.0 %
GM Financial's penetration of our retail sales in the U.S. was 45% in the nine
months ended September 30, 2022 and 44% in the corresponding period in 2021.
Penetration levels vary depending on incentive financing programs available and
competing third-party financing products in the market. GM Financial's prime
loan originations as a percentage of total loan originations in North America
increased to 80% in the nine months ended September 30, 2022 from 72% in the
nine months ended September 30, 2021 . In the nine months ended September 30,
2022 , GM Financial's revenue consisted of leased vehicle income of 63%, retail
finance charge income of 31% and commercial finance charge income of 3%.
Consolidated Results We review changes in our results of operations under five
categories: volume, mix, price, cost and other. Volume measures the impact of
changes in wholesale vehicle volumes driven by industry volume, market share and
changes in dealer stock levels. Mix measures the impact of changes to the
regional portfolio due to product, model, trim, country and option penetration
in current year wholesale vehicle volumes. Price measures the impact of changes
related to Manufacturer's Suggested Retail Price and various sales allowances.
Cost primarily includes: (1) material and freight; (2) manufacturing,
engineering, advertising, administrative and selling and warranty expense; and
(3) non-vehicle related activity. Other primarily includes foreign exchange and
non-vehicle related automotive revenues as well as equity income or loss from
our nonconsolidated affiliates. Refer to the regional sections of this MD&A for
additional information.
Total Net Sales and Revenue
Three Months Ended Variance Due To
September 30, September 30, Favorable/
2022 2021 (Unfavorable) % Volume Mix Price Other
(Dollars in billions)
GMNA $ 34,691 $ 20,554 $ 14,137 68.8 % $ 14.6 $ (2.1) $ 1.7 $ -
GMI 3,980 2,843 1,137 40.0 % $ 1.4 $ (0.5) $ 0.4 $ (0.1)
Corporate 32 27 5 18.5 % $ - $ -
Automotive 38,703 23,424 15,279 65.2 % $ 16.0 $ (2.6) $ 2.1 $ (0.2)
Cruise 25 26 (1) (3.8) % $ -
GM Financial 3,187 3,354 (167) (5.0) % $ (0.2)
Eliminations/reclassifications (27) (25) (2) (8.0) % $ -
Total net sales and revenue
$ 15,110 56.4 %$ 16.0 $ (2.6) $ 2.1 $ (0.3) 35
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Nine Months Ended Variance Due To
September 30, September 30, Favorable/
2022 2021 (Unfavorable) % Volume Mix Price Other
(Dollars in billions)
GMNA $ 92,907 $ 74,443 $ 18,464 24.8 % $ 16.4 $ (3.3) $ 5.0 $ 0.4
GMI 11,100 8,721 2,379 27.3 % $ 1.7 $ (0.1) $ 1.0 $ (0.2)
Corporate 132 67 65 97.0 % $ - $ 0.1
Automotive 104,140 83,231 20,909 25.1 % $ 18.1 $ (3.4) $ 6.0 $ 0.2
Cruise 76 81 (5) (6.2) % $ -
GM Financial 9,489 10,187 (698) (6.9) % $ (0.7)
Eliminations/reclassifications (79) (79) - - % $ -
Total net sales and revenue $ 113,627 $ 93,420 $ 20,207 21.6 % $ 18.1 $ (3.4) $ 6.0 $ (0.5) Refer to the regional sections of this MD&A for additional information on volume, mix and price.
Automotive and Other Cost of Sales
Three Months Ended Variance Due To
September 30, September 30, Favorable/
2022 2021 (Unfavorable) % Volume Mix Cost Other
(Dollars in billions)
GMNA $ 29,326 $ 17,635 $ (11,691) (66.3) % $ (9.9) $ 0.5 $ (2.5) $ 0.2
GMI 3,773 2,702 (1,071) (39.6) % $ (1.1) $ 0.3 $ (0.4) $ 0.1
Corporate 135 54 (81) n.m. $ - $ (0.1) $ -
Cruise 467 282 (185) (65.6) % $ (0.2)
Eliminations - (1) (1) n.m. $ -
Total automotive and
other cost of sales $ 33,700 $ 20,672 $ (13,028) (63.0) % $ (11.0) $ 0.8 $ (3.2) $ 0.3
__________
n.m. = not meaningful
Nine Months Ended Variance Due To
September 30, September 30, Favorable/
2022 2021 (Unfavorable) % Volume Mix Cost Other
(Dollars in billions)
GMNA $ 79,580 $ 63,658 $ (15,922) (25.0) % $ (11.1) $ - $ (5.1) $ 0.3
GMI 10,244 8,449 (1,795) (21.2) % $ (1.4) $ 0.2 $ (0.7) $ 0.1
Corporate 397 125 (272) n.m. $ - $ (0.2) $ -
Cruise 2,094 822 (1,272) n.m. $ (1.3)
Eliminations (2) (1) 1 n.m. $ -
Total automotive and
other cost of sales $ 92,314 $ 73,053 $ (19,261) (26.4) % $ (12.5) $ 0.2 $ (7.3) $ 0.4
__________
n.m. = not meaningful
In the three months ended September 30, 2022 , increased Cost was primarily due
to: (1) increased material and freight costs of $1.2 billion ; (2) increased
campaigns and other warranty-related costs of $0.9 billion , including
non-recurrence of the Chevrolet Bolt recall and associated recoveries in 2021;
(3) increased manufacturing costs of $0.3 billion ; (4) increased costs of $0.3
billion primarily related to parts and accessories sales; and (5) increased
engineering costs of $0.2 billion primarily related to accelerating our EV
portfolio. In the three months ended September 30, 2022 , favorable Other was
primarily due to the foreign currency effect resulting from the weakening of the
Korean Won and other currencies against the U.S. Dollar.
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In the nine months ended September 30, 2022 , increased Cost was primarily due
to: (1) increased material and freight costs of $3.9 billion ; (2) increased
manufacturing costs of $0.9 billion ; (3) increased costs of $0.9 billion
primarily related to parts and accessories sales; (4) increased costs of $0.8
billion related to modification of Cruise stock incentive awards; and (5)
increased engineering costs of $0.8 billion primarily related to accelerating
our EV portfolio. In the nine months ended September 30, 2022 , favorable Other
was primarily due to the foreign currency effect resulting from the weakening of
the Korean Won and other currencies against the U.S. Dollar.
Refer to the regional sections of this MD&A for additional information on volume and mix.
Automotive and Other Selling, General and Administrative Expense
Three Months Ended Nine Months Ended
September 30, Favorable/ September 30, September 30, Favorable/
September 30, 2022 2021 (Unfavorable) % 2022 2021 (Unfavorable) %
Automotive and other selling,
general and administrative expense $ 2,477 $ 2,148 $ (329) (15.3) % $ 7,274 $ 6,076 $ (1,198) (19.7) %
In the three months ended
In the nine months ended
Interest Income and Other Non-operating Income, net
Three Months Ended Nine Months Ended
September 30, September 30, Favorable/ September 30, September 30, Favorable/
2022 2021 (Unfavorable) % 2022 2021 (Unfavorable) %
Interest income and other
non-operating income, net $ 598 $ 800 $ (202) (25.3) % $ 1,410 $ 2,383 $ (973) (40.8) %
In the three months ended
In the nine months endedSeptember 30, 2022 , Interest income and other non-operating income, net decreased primarily due to (1)$0.4 billion in losses in the nine months endedSeptember 30, 2022 compared to$0.3 billion in gains in the nine months endedSeptember 30, 2021 related to Stellantis warrants; and (2)$0.3 billion decrease in non-service pension income.
Income Tax Expense (Benefit)
Three Months Ended Nine Months Ended
September 30, September 30, Favorable/ September 30, September 30, Favorable/
2022 2021 (Unfavorable) % 2022 2021 (Unfavorable) %Income tax expense (benefit)$ 845 $ 152 $ (693) n.m.$ 1,308 $ 2,300 $ 992 43.1 % __________ n.m. = not meaningful In the three months endedSeptember 30, 2022 , Income tax expense increased primarily due to higher pre-tax income and the absence of tax benefit related to a deduction for an investment in a subsidiary which occurred in the three months endedSeptember 30, 2021 . In the nine months endedSeptember 30, 2022 , Income tax expense decreased primarily due to Cruise valuation allowance adjustments, lower effective tax rate as a result of Cruise reconsolidation and lower pre-tax income. The decrease was partially offset by the absence of a tax benefit related to a deduction for an investment in a subsidiary which occurred in the three months endedSeptember 30, 2021 . For the three and nine months endedSeptember 30, 2022 , our ETR-adjusted was 20.6% and 20.7%. We expect our adjusted effective tax rate to be approximately 20% for the year endingDecember 31, 2022 . 37
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Refer to Note 15 to our condensed consolidated financial statements for additional information related to Income tax expense.
GM North America Three Months Ended Variance Due To September 30, September 30, Favorable / 2022 2021 (Unfavorable) % Volume Mix Price Cost Other (Dollars in billions) Total net sales and revenue$ 34,691 $ 20,554 $ 14,137 68.8 %$ 14.6 $ (2.1) $ 1.7 $ - EBIT (loss)-adjusted$ 3,894 $ 2,125 $ 1,769 83.2 %$ 4.7 $ (1.6) $ 1.7 $ (2.9) $ (0.1) EBIT (loss)-adjusted margin 11.2 % 10.3 % 0.9 % (Vehicles in thousands) Wholesale vehicle sales 784 423 361 85.3 % Nine Months Ended Variance Due To September 30, September 30, Favorable / 2022 2021 (Unfavorable) % Volume Mix Price Cost Other (Dollars in billions) Total net sales and revenue$ 92,907 $ 74,443 $ 18,464 24.8 %$ 16.4 $ (3.3) $ 5.0 $ 0.4 EBIT (loss)-adjusted$ 9,334 $ 8,153 $ 1,181 14.5 %$ 5.3 $ (3.3) $ 5.0 $ (5.7) $ (0.1) EBIT (loss)-adjusted margin 10.0 % 11.0 % (1.0) % (Vehicles in thousands) Wholesale vehicle sales 2,139 1,729 410 23.7 % GMNA TotalNet Sales and Revenue In the three months endedSeptember 30, 2022 , Total net sales and revenue increased primarily due to: (1) increased net wholesale volumes primarily due to increased sales of crossover vehicles, full-size pickup trucks, passenger cars, mid-size pickup trucks, vans and full-size SUVs; (2) favorable price as a result of low dealer inventory levels and strong demand for our products; partially offset by (3) unfavorable mix associated with increased sales of crossover vehicles, passenger cars and vans, partially offset by increased sales of full-size pickup trucks and full-size SUVs. In the nine months endedSeptember 30, 2022 , Total net sales and revenue increased primarily due to: (1) increased net wholesale volumes primarily due to increased sales of crossover vehicles, passenger cars, full-size pickup trucks, vans, mid-size pickup trucks and full-size SUVs; (2) favorable price as a result of low dealer inventory levels and strong demand for our products; and (3) favorable Other due to increased sales of parts and accessories; partially offset by (4) unfavorable mix associated with increased sales of passenger cars, crossover vehicles, vans and mid-size pickup trucks, partially offset by increased sales of full-size pickup trucks and full-size SUVs. GMNA EBIT (Loss)-Adjusted In the three months endedSeptember 30, 2022 , EBIT-adjusted increased primarily due to: (1) favorable volume; and (2) favorable price; partially offset by (3) unfavorable Cost primarily due to increased material and freight cost of$1.0 billion , increased campaigns and other warranty-related costs of$0.8 billion , including non-recurrence of the Chevrolet Bolt recall and associated recoveries in 2021, increased selling, general and administrative costs of$0.4 billion and increased manufacturing costs of$0.3 billion ; and (4) unfavorable mix. In the nine months endedSeptember 30, 2022 , EBIT-adjusted increased primarily due to: (1) favorable volume; and (2) favorable price; partially offset by (3) unfavorable Cost primarily due to increased material and freight cost of$3.4 billion , increased selling, general and administrative costs of$0.8 billion , increased manufacturing cost of$0.8 billion and increased engineering cost of$0.4 billion including accelerating our EV portfolio and (4) unfavorable mix. 38
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GM International
Three Months Ended Variance Due To
September 30, September 30, Favorable /
2022 2021 (Unfavorable) % Volume Mix Price Cost Other
(Dollars in billions)
Total net sales and revenue $ 3,980 $ 2,843 $ 1,137 40.0 % $ 1.4 $ (0.5) $ 0.4 $ (0.1)
EBIT (loss)-adjusted $ 334 $ 229 $ 105 45.9 % $ 0.3 $ (0.2) $ 0.4 $ (0.4) $ -
EBIT (loss)-adjusted margin 8.4 % 8.1 % 0.3 %
Equity income (loss) -
Automotive China $ 330 $ 270 $ 60 22.2 %
EBIT (loss)-adjusted -
excluding Equity income $ 5 $ (41) $ 46 n.m.
(Vehicles in thousands)
Wholesale vehicle sales 182 113 69 61.1 %
__________
n.m. = not meaningful
Nine Months Ended Variance Due To
September 30, September 30, Favorable /
2022 2021 (Unfavorable) % Volume Mix Price Cost Other
(Dollars in billions)
Total net sales and revenue $ 11,100 $ 8,721 $ 2,379 27.3 % $ 1.7 $ (0.1) $ 1.0 $ (0.2)
EBIT (loss)-adjusted $ 871 $ 552 $ 319 57.8 % $ 0.4 $ - $ 1.0 $ (0.7) $ (0.4)
EBIT (loss)-adjusted margin 7.9 % 6.3 % 1.6 %
Equity income (loss) -
Automotive China $ 477 $ 854 $ (377) (44.1) %
EBIT (loss)-adjusted -
excluding Equity income $ 395 $ (302) $ 697 n.m.
(Vehicles in thousands)
Wholesale vehicle sales 474 388
86 22.2 %
__________
n.m. = not meaningful
The vehicle sales of our Automotive China JVs are not recorded in Total net sales and revenue. The results of our joint ventures are recorded in Equity income (loss), which is included in EBIT (loss)-adjusted above.
GMI TotalNet Sales and Revenue In the three months endedSeptember 30, 2022 , Total net sales and revenue increased primarily due to: (1) increased net wholesale volumes due to lost production volumes resulting from the shortage of semiconductors in 2021; (2) favorable pricing across multiple vehicle lines inSouth America and theMiddle East ; partially offset by (3) unfavorable mix inBrazil ; and (4) unfavorable Other primarily due to the foreign currency effect resulting from the weakening of various currencies against theU.S. dollar, partially offset by increased components, parts and accessories sales. In the nine months endedSeptember 30, 2022 , Total net sales and revenue increased primarily due to: (1) increased net wholesale volumes due to lost production volumes resulting from the shortage of semiconductors in 2021, partially offset by ongoing supply chain constraints; and (2) favorable pricing across multiple vehicle lines inSouth America and theMiddle East ; partially offset by (3) unfavorable mix inBrazil , partially offset by favorable mix in theMiddle East andAsia/Pacific ; and (4) unfavorable Other primarily due to the foreign currency effect resulting from the weakening of various currencies against theU.S. dollar, partially offset by increased components, parts and accessories sales.
GMI EBIT (Loss)-Adjusted In the three months ended
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In the nine months ended September 30, 2022 , EBIT-adjusted increased primarily
due to: (1) favorable price; and (2) increased net wholesale volumes; partially
offset by (3) unfavorable Cost primarily due to increased material and logistic
costs; and (4) unfavorable Other primarily due to foreign currency effect
resulting from the weakening of various currencies against the U.S. dollar and
decreased equity income.
We view the Chinese market as important to our global growth strategy and are
employing a multi-brand strategy. In the coming years we plan to leverage our
global architectures to increase the number of product offerings under the
Buick, Chevrolet and Cadillac brands in China and continue to grow our business
under the local Baojun and Wuling brands while we are accelerating the
development and rollout of EVs across our brands in China in response to our
commitment to an all-electric future. We operate in the Chinese market through a
number of joint ventures and maintaining strong relationships with our joint
venture partners is an important part of our China growth strategy.
The following table summarizes certain key operational and financial data for the Automotive China JVs (vehicles in thousands):
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2022 2021 2022 2021
Wholesale vehicle sales, including
vehicles exported to markets outside of
China 768 705 1,843 2,000
Total net sales and revenue $ 10,393 $ 10,321 $ 25,467 $ 29,150
Net income (loss) $ 661 $ 546 $ 959 $ 1,659
Cruise
Three Months Ended Nine Months Ended
September 30, Favorable / September 30, September 30, Favorable /
September 30, 2022 2021 (Unfavorable) % 2022 2021 (Unfavorable) %
Total net sales and revenue(a) $ 25 $ 26 $ (1) (3.8) % $ 76 $ 81 $ (5) (6.2) %
EBIT (loss)-adjusted(b) $ (497) $ (286) $ (211) (73.8) % $ (1,365) $ (847) $ (518) (61.2) %
__________
(a)Primarily reclassified to Interest income and other non-operating income, net
in our condensed consolidated income statements in the three and nine months
ended September 30, 2022 and 2021.
(b)Excludes $1.1 billion in compensation expense in the nine months ended
September 30, 2022 resulting from modification of the Cruise stock incentive
awards.
Cruise EBIT (Loss)-Adjusted In the three and nine months ended September 30,
2022 , EBIT (loss)-adjusted increased primarily due to an increase in development
costs as we progress towards the commercialization of a network of on-demand AVs
in the United States and globally.
GM Financial
Three Months Ended Nine Months Ended
September 30, Increase/ September September 30, Increase/
September 30, 2022 2021 (Decrease) % 30, 2022 2021 (Decrease) %
Total revenue $ 3,187 $ 3,354 $ (167) (5.0) % $ 9,489 $ 10,187 $ (698) (6.9) %
Provision for loan
losses $ 180 $ 141 $ 39 27.7 % $ 500 $ 174 $ 326 n.m.
EBT (loss)-adjusted $ 911 $ 1,093 $ (182) (16.7) % $ 3,301 $ 3,856 $ (555) (14.4) % Average debt outstanding (dollars in billions) $ 93.7$ 94.7 $ (1.0) (1.1) %$ 93.1 $ 94.4 $ (1.3) (1.4) % Effective rate of interest paid 3.2 % 3.0 % 0.2 % 2.8 % 2.8 % - % __________ n.m. = not meaningful 40
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GM Financial Revenue In the three months ended September 30, 2022 , total revenue
decreased primarily due to decreased leased vehicle income of $0.3 billion
primarily due to a decrease in the average balance of the leased vehicles
portfolio; partially offset by increased finance charge income of $0.1 billion
primarily due to growth in the size of the portfolio.
In the nine months ended
GM Financial EBT-Adjusted In the three months endedSeptember 30, 2022 , EBT-adjusted decreased primarily due to: (1) decreased leased vehicle income net of leased vehicle expenses of$0.2 billion primarily due to decreased leased vehicle income primarily due to a decrease in the average balance of the leased vehicles portfolio and decreased lease termination gains associated with higher leased portfolio net book values and fewer vehicles returned for remarketing; partially offset by decreased depreciation on leased vehicles resulting from increased residual value estimates and a decrease in the size of the portfolio; and (2) increased interest expense of$0.1 billion primarily due to an increased effective rate of interest on our debt, partially offset by a decrease in the average debt outstanding; partially offset by (3) increased finance charge income of$0.1 billion primarily due to growth in the size of the portfolio. In the nine months endedSeptember 30, 2022 , EBT-adjusted decreased primarily due to: (1) decreased leased vehicle income net of leased vehicle expenses of$0.4 billion primarily due to decreased leased vehicle income as a result of a decrease in the average balance of the leased vehicles portfolio and decreased lease termination gains associated with higher leased portfolio net book values and fewer vehicles returned for remarketing; partially offset by decreased depreciation on leased vehicles resulting from increased residual value estimates and a decrease in the size of the portfolio; (2) increased provision for loan losses of$0.3 billion primarily due to a reduction in reserve levels recorded in the nine months endedSeptember 30, 2021 as a result of actual credit performance that was better than forecast and favorable expectations for future charge-offs and recoveries, as well as an economic forecast weighted more heavily to a weaker outlook as ofSeptember 30, 2022 ; partially offset by (3) increased finance charge income of$0.1 billion primarily due to growth in the size of the portfolio. Liquidity and Capital Resources We believe our current levels of cash, cash equivalents, marketable debt securities, available borrowing capacity under our revolving credit facilities and other liquidity actions currently available to us are sufficient to meet our liquidity requirements. We also maintain access to the capital markets and may issue debt or equity securities, which may provide an additional source of liquidity. We have substantial cash requirements going forward, which we plan to fund through our total available liquidity, cash flows from operating activities and additional liquidity measures, if determined to be necessary. Our known current material uses of cash include, among other possible demands: (1) capital spending and our investments inUltium Cells LLC , our battery joint venture with LG Energy Solution, of approximately$9.0 billion to$10.0 billion in 2022, which we expect may increase in future years as we accelerate investments in our EV and AV future; (2) payments for engineering and product development activities; (3) payments associated with previously announced vehicle recalls and any other recall-related contingencies; (4) payments to service debt and other long-term obligations, including discretionary and mandatory contributions to our pension plans; and (5) payments associated with the previously announced liquidity program for holders of equity-based incentive awards issued to employees of Cruise pursuant to Cruise's 2018 Employee Incentive Plan, which we expect to be$1.0 billion to$1.5 billion in 2022, with ongoing expenditures thereafter. Our material future uses of cash, which may vary from time to time based on market conditions and other factors, are focused on the three objectives of our capital allocation program: (1) grow our business at an average target ROIC-adjusted rate of 20% or greater; (2) maintain a strong investment-grade balance sheet, including a target average automotive cash balance of$18 billion ; and (3) after the first two objectives are met, return available cash to shareholders. Our senior management evaluates our capital allocation program on an ongoing basis and recommends any modifications to the program to our Board of Directors, not less than once annually. Our liquidity plans are subject to a number of risks and uncertainties, including those described in the "Forward-Looking Statements" section of this MD&A and Part I, Item 1A. Risk Factors of our 2021 Form 10-K, some of which are outside of our control. We continue to monitor and evaluate opportunities to strengthen our competitive position over the long term while maintaining a strong investment-grade balance sheet. These actions may include opportunistic payments to reduce our long-term obligations as well as the possibility of acquisitions, dispositions and investments with joint venture partners as well as strategic alliances that we believe would generate significant advantages and substantially strengthen our business.
In
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fourth quarter of 2022, subject to negotiation of final documentation and
satisfaction of certain conditions. Under the anticipated terms of the loan, the
DOE will not have recourse on the principal and interest of the loan against
General Motors Company or any of its consolidated subsidiaries.
In August 2022 , our Board of Directors increased the capacity under our
previously announced common stock repurchase program to $5.0 billion from the
$3.3 billion that remained under the program as of June 30, 2022 . During the
three months ended September 30, 2022 , we completed $1.5 billion of repurchases
under the program and retired 38 million shares of our common stock.
Cash flows that occur amongst our Automotive, Cruise and GM Financial operations
are eliminated when we consolidate our cash flows. Such eliminations include,
among other things, collections by Automotive on wholesale accounts receivables
financed by dealers through GM Financial, payments between Automotive and GM
Financial for accounts receivables transferred by Automotive to GM Financial,
loans to Automotive and Cruise from GM Financial, dividends issued by GM
Financial to Automotive, tax payments by GM Financial to Automotive and
Automotive cash injections in Cruise. The presentation of Automotive liquidity,
Cruise liquidity and GM Financial liquidity presented below includes the impact
of cash transactions amongst the sectors that are ultimately eliminated in
consolidation.
Automotive Liquidity Total available liquidity includes cash, cash equivalents,
marketable debt securities and funds available under credit facilities. The
amount of available liquidity is subject to seasonal fluctuations and includes
balances held by various business units and subsidiaries worldwide that are
needed to fund their operations. We have not significantly changed the
management of our liquidity, including our allocation of available liquidity,
our portfolio composition and our investment guidelines since December 31, 2021 .
Refer to Part II, Item 7. MD&A of our 2021 Form 10-K.
We use credit facilities as a mechanism to provide additional flexibility in
managing our global liquidity. Our Automotive borrowing capacity under credit
facilities totaled $15.5 billion at September 30, 2022 and December 31, 2021 .
Total Automotive borrowing capacity under our credit facilities does not include
our 364-day, $2.0 billion facility allocated for exclusive use of GM Financial.
We did not have any borrowings against our primary facilities, but had letters
of credit outstanding under our sub-facility of $0.3 billion at September 30,
2022 and December 31, 2021 .
In April 2022 , we renewed our 364-day, $2.0 billion revolving credit facility
allocated for the exclusive use of GM Financial, which now matures on April 4,
2023 . If available capacity permits, GM Financial continues to have access to
our automotive credit facilities. GM Financial did not have borrowings
outstanding against any of these facilities at September 30, 2022 and December
31, 2021 . We had intercompany loans from GM Financial of $0.2 billion at
September 30, 2022 and December 31, 2021 , which primarily consisted of
commercial loans to dealers we consolidate. We did not have intercompany loans
to GM Financial at September 30, 2022 and December 31, 2021 . Refer to Note 5 to
our condensed consolidated financial statements for additional information.
In August 2022 , we issued $2.25 billion in aggregate principal amount of senior
unsecured notes under our new Sustainable Finance Framework with a weighted
average interest rate of 5.51% and maturity dates of 2029 and 2032. We intend to
allocate an amount equal to the net proceeds from these senior unsecured notes
to finance or refinance, in whole or in part, new or existing green projects,
assets or activities undertaken or owned by the Company that meet one or more
eligibility criteria outlined in our Sustainable Finance Framework.
Several of our loan facilities, including our revolving credit facilities,
require compliance with certain financial and operational covenants as well as
regular reporting to lenders. We have reviewed our covenants in effect as of
September 30, 2022 and determined we are in compliance and expect to remain in
compliance in the future.
In March 2022 , under the Share Purchase Agreement, we acquired SoftBank's equity
ownership stake in Cruise for $2.1 billion and, separately, we made an
additional $1.35 billion investment in Cruise in place of SoftBank. During the
three and nine months ended September 30, 2022 , we made additional investments
in Cruise of $0.2 billion and $0.8 billion .
In September 2022 , we exercised our 39.7 million warrants in Stellantis. Upon
exercise, the warrants converted into 69.1 million common shares of Stellantis,
which we immediately sold back to Stellantis. Total net pre-tax proceeds,
including dividends received, in connection with this transaction were
approximately $1.1 billion .
GM Financial's Board of Directors declared and paid dividends of
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The following table summarizes our Automotive available liquidity (dollars in
billions):
September 30, 2022 December 31, 2021
Automotive cash and cash equivalents $ 15.0 $ 14.5
Marketable debt securities 8.0 7.1
Automotive cash, cash equivalents and marketable debt securities
23.0 21.6
Available under credit facilities(a) 15.2 15.2
Total Automotive available liquidity $ 38.1 $ 36.8
__________
(a)We had letters of credit outstanding under our sub-facility of
The following table summarizes the changes in our Automotive available liquidity
(dollars in billions):
Nine Months Ended
September 30, 2022
Operating cash flow $ 11.6
Capital expenditures (5.8)
Purchase of SoftBank's equity stake in Cruise (2.1)
GM investment in Cruise (2.1)
Dividends paid and payments to purchase common stock (1.6)
Issuance of senior unsecured notes 2.2
Net proceeds from sale of Stellantis common shares(a) 0.9
Investment in Ultium Cells LLC (0.6)
Other non-operating (1.1)
Total change in automotive available liquidity $ 1.3
__________
(a)Excludes dividends received and tax withholding.
Nine Months Ended
September 30,
September 30, 2022 2021 Change
Operating Activities
Net income (loss) $ 6.7 $ 6.5 $ 0.2
Depreciation, amortization and impairment charges 4.8 4.3 0.5
Pension and OPEB activities (1.5) (1.8) 0.3
Working capital (1.2) (7.8) 6.6
Accrued and other liabilities and income taxes 1.8 (1.0) 2.8
Other 1.0 0.1 0.9
Net automotive cash provided by (used in) operating
activities $ 11.6 $ 0.3 $ 11.3
In the nine months ended September 30, 2022 , the increase in Net automotive cash
provided by operating activities was primarily due to: (1) working capital; and
(2) lower sales incentive payments of $5.0 billion ; partially offset by (3)
lower dividends received from GM Financial of $0.8 billion .
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Nine Months Ended
September 30,
September 30, 2022 2021 Change
Investing Activities
Capital expenditures $ (5.8) $ (4.2) $ (1.6)
Acquisitions and liquidations of marketable
securities, net (1.3) 3.3 (4.6)
Other(a) (4.0) (1.8) (2.2)
Net automotive cash provided by (used in) investing
activities $ (11.1) $ (2.7) $ (8.4)
__________
(a)Includes $2.1 billion and $1.0 billion for GM's investment in Cruise in the
nine months ended September 30, 2022 and 2021, $2.1 billion related to the
redemption of Cruise preferred shares from SoftBank in the nine months ended
September 30, 2022 , $0.9 billion related to the sale of Stellantis common
shares, excluding dividends received and tax withholding, in the nine months
ended September 30, 2022 , and a $0.6 billion and $0.3 billion investment in
Ultium Cells LLC in the nine months ended September 30, 2022 and 2021.
In the nine months ended September 30, 2022 , cash used in acquisitions and
liquidations of marketable securities, net increased due to acquisitions of
securities and investments compared to liquidations of securities to fund
operating activities and investments during the nine months ended September 30,
2021 .
Nine Months Ended
September 30,
September 30, 2022 2021 Change
Financing Activities
Net proceeds (payments) from short-term debt $ (0.2) $ (0.5) $ 0.3
Issuance of senior unsecured notes 2.2 - 2.2
Other(a) (2.1) (0.4) (1.7)
Net automotive cash provided by (used in) financing
activities $ - $ (0.9) $ 0.8
__________
(a) Includes
Adjusted Automotive Free Cash Flow We measure adjusted automotive free cash flow as automotive operating cash flow from operations less capital expenditures adjusted for management actions. In the nine months endedSeptember 30, 2022 , net automotive cash provided by operating activities underU.S. GAAP was$11.6 billion , capital expenditures were$5.8 billion , and adjustments were insignificant. In the nine months endedSeptember 30, 2021 , net automotive cash provided by operating activities underU.S. GAAP was$0.3 billion , capital expenditures were$4.2 billion , and adjustments for management actions were insignificant. Status of Credit Ratings We receive ratings from four independent credit rating agencies:DBRS Limited (DBRS), Fitch Ratings (Fitch), Moody's Investors Service andStandard & Poor's . All four credit rating agencies currently rate our corporate credit at investment grade. InMay 2022 , Fitch raised our ratings outlook to positive from stable. InJune 2022 , DBRS upgraded our Issuer Rating and Revolving Credit Facility rating to BBB (high) from BBB and also changed its outlook to stable from positive. As ofOctober 17, 2022 , all other credit ratings remained unchanged sinceDecember 31, 2021 .
Cruise Liquidity In
Additionally, inMarch 2022 ,GM and Cruise announced a liquidity program for holders of equity-based incentive awards issued to the employees of Cruise pursuant to Cruise's 2018 Employee Incentive Plan, under whichGM will purchase newly issued Cruise Class B Common Shares to fund the tax withholding on vested awards andGM will conduct tender offers for Cruise Class B Common Shares issued to settle vested awards. During the three and nine months endedSeptember 30, 2022 , Cruise issued an insignificant amount and approximately$0.5 billion of Cruise Class B Common Shares, primarily to us, to fund the payment of statutory tax withholding obligations resulting from the settlement or exercise of vested awards. Also,GM conducted quarterly tender offers, and paid an insignificant amount and approximately$0.3 billion in cash to settle tendered Cruise Class B Common Shares under the announced liquidity program during the three and nine months endedSeptember 30, 2022 . Refer to Note 16 to our condensed consolidated financial statements for additional information. 44
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The following table summarizes Cruise's available liquidity (dollars in billions):
September 30, 2022 December 31, 2021
Cruise cash and cash equivalents $ 1.7 $ 1.6
Cruise marketable securities 1.6
1.5
Total Cruise available liquidity(a) $ 3.2 $
3.1
__________
(a)Excludes a multi-year credit agreement between Cruise and GM Financial
whereby Cruise can request to borrow, over time, up to an aggregate of
The following table summarizes the changes in Cruise's available liquidity
(dollars in billions):
Nine Months Ended September 30, 2022
Operating cash flow(a) $ (1.3)
GM investment in Cruise 2.1
Employee Incentive Plan (0.5)
Other non-operating (0.1)
Total change in Cruise available liquidity $ 0.1
__________
(a)Includes
Cruise Cash Flow (dollars in billions)
Nine Months Ended
September 30,
September 30, 2022 2021 Change
Net cash provided by (used in) operating activities
$ (0.7) $ (0.6) Net cash provided by (used in) investing activities$ (0.2) $ (0.9) $ 0.7 Net cash provided by (used in) financing activities $ 1.6
Automotive Financing - GM Financial Liquidity GM Financial's primary sources of
cash are finance charge income, leasing income and proceeds from the sale of
terminated leased vehicles, net proceeds from credit facilities,
securitizations, secured and unsecured borrowings and collections and recoveries
on finance receivables. GM Financial's primary uses of cash are purchases and
funding of finance receivables and leased vehicles, repayment or repurchases of
secured and unsecured debt, funding credit enhancement requirements in
connection with securitizations and secured credit facilities, interest costs,
operating expenses, income taxes and dividend payments. GM Financial continues
to monitor and evaluate opportunities to optimize its liquidity position and the
mix of its debt between secured and unsecured debt. The following table
summarizes GM Financial's available liquidity (dollars in billions):
September 30, 2022 December 31, 2021
Cash and cash equivalents $ 4.1 $ 4.0
Borrowing capacity on unpledged eligible assets 20.8 19.2
Borrowing capacity on committed unsecured lines of credit 0.5 0.5
Borrowing capacity on revolving credit facility, exclusive to GM Financial
2.0 2.0
Total GM Financial available liquidity $ 27.3 $ 25.7
At September 30, 2022 , GM Financial's available liquidity increased from
December 31, 2021 due to increased available borrowing capacity on unpledged
eligible assets, resulting from the issuance of securitization transactions and
unsecured debt, and an increase in cash and cash equivalents. GM Financial
structures liquidity to support at least six months of GM Financial's expected
net cash flows, including new originations, without access to new debt financing
transactions or other capital markets activity.
GM Financial did not have any borrowings outstanding against our credit facility
designated for their exclusive use or the remainder of our revolving credit
facilities at September 30, 2022 and December 31, 2021 . Refer to the Automotive
Liquidity section of this MD&A for additional details.
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Credit Facilities In the normal course of business, in addition to using its
available cash, GM Financial utilizes borrowings under its credit facilities,
which may be secured or unsecured, and GM Financial repays these borrowings as
appropriate under its cash management strategy. At September 30, 2022 , secured,
committed unsecured and uncommitted unsecured credit facilities totaled $26.0
billion , $0.6 billion and $1.3 billion with advances outstanding of $3.8
billion , an insignificant amount and $1.3 billion .
GM Financial Cash Flow (dollars in billions)
Nine Months Ended
September 30,
September 30, 2022 2021 ChangeNet cash provided by (used in) operating activities $ 3.8
$ 5.6 $ (1.8) Net cash provided by (used in) investing activities$ (6.7) $ (3.2) $ (3.5) Net cash provided by (used in) financing activities $ 2.4
In the nine months endedSeptember 30, 2022 , Net cash provided by operating activities decreased primarily due to: (1) a net increase in cash used in counterparty derivative collateral posting activities of$1.0 billion ; and (2) a decrease in leased vehicle income of$0.9 billion ; partially offset by (3) a decrease in interest paid of$0.1 billion . In the nine months endedSeptember 30, 2022 , Net cash used in investing activities increased primarily due to: (1) a decrease in the proceeds from termination of leased vehicles of$4.5 billion ; (2) an increase in purchases and originations of finance receivables of$3.7 billion ; and (3) a decrease in collections and recoveries on finance receivables of$2.8 billion ; partially offset by (4) a decrease in purchases of leased vehicles of$7.6 billion .
In the nine months ended
Critical Accounting Estimates The condensed consolidated financial statements are prepared in conformity withU.S. GAAP, which requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses in the periods presented. We believe the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in developing estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. The critical accounting estimates that affect the condensed consolidated financial statements and the judgments and assumptions used are consistent with those described in the MD&A in our 2021 Form 10-K. Forward-Looking Statements This report and the other reports filed by us with theSEC from time to time, as well as statements incorporated by reference herein and related comments by our management, may include "forward-looking statements" within the meaning of theU.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact. Forward-looking statements represent our current judgment about possible future events and are often identified by words like "aim," "anticipate," "appears," "approximately," "believe," "continue," "could," "designed," "effect," "estimate," "evaluate," "expect," "forecast," "goal," "initiative," "intend," "may," "objective," "outlook," "plan," "potential," "priorities," "project," "pursue," "seek," "should," "target," "when," "will," "would," or the negative of any of those words or similar expressions. In making these statements, we rely on assumptions and analysis based on our experience and perception of historical trends, current conditions and expected future developments as well as other factors we consider appropriate under the circumstances. We believe these judgments are reasonable, but these statements are not guarantees of any future events or financial results, and our actual results may differ materially due to a variety of important factors, many of which are beyond our control. These factors, which may be revised or supplemented in subsequent reports we file with theSEC , include, among others, the following: (1) our ability to deliver new products, services, technologies and customer experiences in response to increased competition and changing consumer preferences in the automotive industry; (2) our ability to timely fund and introduce new and improved vehicle models, including EVs, that are able to attract a sufficient number of consumers; (3) our ability to profitably deliver a broad portfolio of EVs that will help drive consumer adoption; (4) the success of our current line of full-size SUVs and full-size pickup trucks; (5) our highly competitive industry, which has been historically characterized by excess manufacturing capacity and the use of incentives, and the introduction of new and improved vehicle models by our competitors; (6) the unique technological, operational, regulatory and competitive risks related to the timing and commercialization of AVs; (7) risks associated with climate change, including increased regulation of greenhouse gas emissions, our transition to EVs and the potential increased impacts of severe weather events; (8) global automobile market 46
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sales volume, which can be volatile; (9) prices and uncertain availability of
raw materials and commodities used by us and our suppliers, and instability in
logistics and related costs; (10) our business in China , which is subject to
unique operational, competitive, regulatory and economic risks; (11) the success
of our ongoing strategic business relationships and of our joint ventures, which
we cannot operate solely for our benefit and over which we may have limited
control; (12) the international scale and footprint of our operations, which
exposes us to a variety of unique political, economic, competitive and
regulatory risks, including the risk of changes in government leadership and
laws (including labor, trade, tax and other laws), political uncertainty or
instability and economic tensions between governments and changes in
international trade policies, new barriers to entry and changes to or
withdrawals from free trade agreements, changes in foreign exchange rates and
interest rates, economic downturns in the countries in which we operate,
differing local product preferences and product requirements, changes to and
compliance with U.S. and foreign countries' export controls and economic
sanctions, differing labor regulations, requirements and union relationships,
differing dealer and franchise regulations and relationships, difficulties in
obtaining financing in foreign countries, and public health crises, including
the occurrence of a contagious disease or illness, such as the COVID-19
pandemic; (13) any significant disruption, including any work stoppages, at any
of our manufacturing facilities; (14) the ability of our suppliers to deliver
parts, systems and components without disruption and at such times to allow us
to meet production schedules; (15) the ongoing COVID-19 pandemic; (16) the
success of any restructurings or other cost reduction actions; (17) the
possibility that competitors may independently develop products and services
similar to ours, or that our intellectual property rights are not sufficient to
prevent competitors from developing or selling those products or services; (18)
our ability to manage risks related to security breaches and other disruptions
to our information technology systems and networked products, including
connected vehicles and in-vehicle systems; (19) our ability to comply with
increasingly complex, restrictive and punitive regulations relating to our
enterprise data practices, including the collection, use, sharing and security
of the Personal Identifiable Information of our customers, employees, or
suppliers; (20) our ability to comply with extensive laws, regulations and
policies applicable to our operations and products, including those relating to
fuel economy, emissions and AVs; (21) costs and risks associated with litigation
and government investigations; (22) the costs and effect on our reputation of
product safety recalls and alleged defects in products and services; (23) any
additional tax expense or exposure; (24) our continued ability to develop
captive financing capability through GM Financial; and (25) any significant
increase in our pension funding requirements. A further list and description of
these risks, uncertainties and other factors can be found in our 2021 Form 10-K
and our subsequent filings with the SEC .
We caution readers not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or other factors, except where we are expressly required to do so by law.
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