General Motors 2010 Annual Report Download - page 185

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Automotive 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 which are structured without recourse.
GM Financial’s continuing involvement with the credit facilities and securitization trusts includes servicing loans held by the SPEs
and holding a residual interest in the SPE. The SPEs are considered VIEs because they do not have sufficient equity at risk, and are
consolidated because GM Financial is the primary beneficiary and has the power over those activities that most significantly affect the
economic performance of the SPEs, and has an obligation to absorb losses or the right to receive benefits from the SPEs which are
potentially significant. Refer to Notes 6, 7 and 19 for additional information on GM Financial’s involvement with the SPEs.
GM Financial is not required to provide any additional financial support to its sponsored credit facilities and securitization SPEs.
The finance receivables and other assets held by these subsidiaries are not available to our creditors or creditors of our other
subsidiaries. Refer to Notes 6 and 7 for disclosures related to the amounts held by the SPEs as of the balance sheet dates.
Nonconsolidated VIEs
Automotive
VIEs that are not consolidated because we are not or Old GM was not the primary beneficiary primarily include: (1) troubled
suppliers for which we provide or Old GM provided guarantees or financial support; (2) vehicle sales and marketing joint ventures
that manufacture, market and sell vehicles and related services; (3) leasing entities for which residual value guarantees were made;
(4) certain research entities for which annual ongoing funding requirements exist; and (5) Ally Financial.
Guarantees and financial support are provided to certain current or previously divested suppliers in order to ensure that supply
needs for production are not disrupted due to a supplier’s liquidity concerns or possible shutdowns. Types of financial support that we
provide and Old GM provided include, but are not limited to: (1) funding in the form of a loan; (2) guarantees of the supplier’s debt or
credit facilities; (3) one-time payments to fund prior losses of the supplier; (4) indemnification agreements to fund the suppliers’
future losses or obligations; (5) agreements to provide additional funding or liquidity to the supplier in the form of price increases or
changes in payment terms; and (6) assisting the supplier in finding additional investors. The maximum exposure to loss related to
these VIEs is not expected to be in excess of the amount of net accounts and notes receivable recorded with the suppliers and any
related guarantees and loan commitments.
We have and Old GM had investments in joint ventures that manufacture, market and sell vehicles in certain markets. The majority
of these joint ventures are typically self-funded and financed with no contractual terms that require us to provide future financial
support. Future funding is required for HKJV, as subsequently discussed. The maximum exposure to loss is not expected to be in
excess of the carrying amount of the investments recorded in Equity in net assets of nonconsolidated affiliates, and any related capital
funding requirements.
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