General Motors 2012 Annual Report Download - page 23

GENERAL MOTORS COMPANY AND SUBSIDIARIES
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;
• 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;
• Maintain a strong balance sheet by reducing financial leverage given the high operating leverage of our business model; and
• Ensure that our dealers and customers have consistently available, transparent and competitive financing options through GM
Financial and other providers.
Automotive Financing Strategy
Our automotive financing strategy centers around ensuring that our dealers and customers have consistently available, transparent
and competitive financing options throughout the business and credit cycles. We achieve this through our captive finance capabilities
at GM Financial and through operating relationships with financial institutions, including Ally Financial, Inc. (Ally Financial).
In October 2010 we acquired GM Financial to further bolster our offerings in the leasing and sub-prime financing segments in the
U.S. and Canada. We believe that by having our own capabilities in key financing segments of the market we will be able to achieve
more competition from other financing market participants, which we believe improves pricing and service to our dealers and retail
customers.
In November 2012 GM Financial entered into an agreement with Ally Financial to acquire Ally Financial’s automotive finance and
financial services operations in Europe and Latin America. Additionally in November 2012 GM Financial entered into a share transfer
agreement with Ally Financial to acquire Ally Financial’s equity interest in GMAC-SAIC Automotive Finance Company Limited
(GMAC-SAIC) that conducts automotive finance and financial services operations in China. The purchases will allow GM Financial
to support our dealers in markets comprising 80% of our global sales. The combined consideration will be approximately $4.2 billion,
subject to certain possible closing adjustments. Pursuant to the transactions, GM Financial’s assets are expected to double to
approximately $33.0 billion and its liabilities, including consolidated debt, will increase to approximately $27.0 billion compared with
$11.8 billion at December 31, 2012. The closings of the transactions are expected to occur in stages throughout 2013.
In April 2012 GM Financial commenced commercial lending activities in the U.S. centered on floor plan financing of dealer
vehicle inventory and dealer loans to finance dealer sites, facilities, facility improvements and working capital. These loans are made
on a secured basis. We believe the availability of financing for our dealers is important to our business. GM Financial plans to launch
similar commercial lending in Canada during the first half of 2013.
In April 2011 GM Financial began originating leases for our customers in Canada. Given the importance of leasing and the
previous lack of availability of third-party leasing offerings to our customers in the Canadian market (due to regulatory restrictions
preventing banks and bank holding companies from offering leasing in Canada), we believe having a captive financing offering in
Canada is strategically important to our business. In August 2012 GM Financial began offering consumer sub-prime financing in
Canada.
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 separate product offerings for prime and sub-prime customers. GM Financial
continues to expand its business in targeted areas that it views as strategic and to otherwise evaluate opportunities in specific segments
of the automotive financing market.
General Motors Company 2012 ANNUAL REPORT20