General Motors 2013 Annual Report Download - page 32

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GENERAL MOTORS COMPANY AND SUBSIDIARIES
GM International Operations
We have strategically assessed the manner in which we operate in certain countries within GMIO, including our cost structure, the
level of local sourcing, the level of investment in the product portfolio, the allocation of production activity to the existing
manufacturing base and our brand strategy. These strategic reviews considered the effects that recent and forecasted deterioration in
local market conditions would have on our operations. While we are continuing our strategic assessments, we have taken certain
actions and incurred impairment and other charges as detailed below.
Withdrawal of the Chevrolet Brand from Europe
In December 2013 we announced our plans to cease mainstream distribution of Chevrolet brand in Western and Central Europe in
2015 due to the challenging business model and difficult economic situation in Europe. The results of our Chevrolet operations in
Western and Central Europe, which are subsidiaries of our GM Korea operations, are reflected in the financial results of our GMIO
region. This action is expected to improve our European operations through a further strengthening of our Opel and Vauxhall brands
and reduce the market complexity associated with both Opel and Chevrolet products in Western and Central Europe. In the three
months ended December 31, 2013 we recorded pre-tax charges of $0.6 billion, net of noncontrolling interests of 23.0%, consisting of
intangible asset impairment charges, dealer restructuring costs, sales incentive and inventory related costs and employee severance
and other costs. We may incur additional charges of up to $0.3 billion through the first half of 2014 primarily for dealer restructuring
costs and sales incentives. Refer to Note 19 of our consolidated financial statements for additional information.
Holden
In December 2013 we announced plans to cease vehicle and engine manufacturing and significantly reduce engineering operations
at Holden by the end of 2017. Holden will continue to sell imported vehicles through its Holden dealer network and maintain its
global design studio. Our Australian operations have been subject to unfavorable market conditions including the sustained strength of
the Australian dollar, high cost of production and a small but highly competitive and fragmented domestic automotive market. In the
three months ended December 31, 2013 we recorded pre-tax charges of $0.5 billion consisting of asset impairment charges including
property, plant and equipment and exit-related costs including certain employee severance related costs. We expect to incur additional
charges through 2017 for incremental future cash payments of employee severance once negotiations of the amount are completed.
Refer to Note 19 of our consolidated financial statements for additional information.
GM India
In the three months ended December 31, 2013 we performed a strategic assessment of GM India in response to lower than expected
sales performance of our current product offerings in India, higher raw material costs, unfavorable foreign exchange rates and recent
deterioration in local market conditions. As a result we recorded pre-tax asset impairment charges of $0.3 billion, net of
noncontrolling interests of 9.2%, to adjust the carrying amount of GM India’s real and personal property, Intangible assets, net and
Goodwill. Our strategic assessment also outlines planned actions requiring additional future investments and modifications to our
existing GM India business model that are needed to reach profitability in the medium to long-term. There are no assurances that the
forecasted financial results outlined in the strategic assessment will be achieved. Refer to Note 9 of our consolidated financial
statements for additional information.
Goodwill Impairment Charges
We recorded Goodwill impairment charges of $0.5 billion in the year ended December 31, 2013 primarily related to our GM Korea
and GM India reporting units.
Focus on Chinese Market
We view the Chinese market as important to our global growth strategy and are employing a multi-brand strategy, led by our Buick
and Chevrolet brands. In the coming years, we plan to increasingly leverage our global architectures to increase the number of
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2013 ANNUAL REPORT