General Motors 2015 Annual Report Download - page 16

Table of Contents
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oil, including as a result of global political instability, could cause a shift in consumer demand towards smaller, more fuel efficient vehicles, and weaken the
demand for our higher margin full-size pick-up trucks and SUVs.
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Our business and financial results are highly sensitive to sales volume, changes to which can have a disproportionately large effect on our profitability. A
number of economic and market conditions drive changes in vehicle sales, including real estate values, levels of unemployment, availability of affordable
financing, fluctuations in the cost of fuel, consumer confidence, political unrest and global economic conditions. We cannot predict future economic and
market conditions with certainty.
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Maintaining a strong position in the Chinese market is a key component of our global growth strategy. The automotive market in China is highly
competitive, with competition from many of the largest global manufacturers and numerous smaller domestic manufacturers. As the size of the Chinese
market continues to increase we anticipate that additional competitors, both international and domestic, will seek to enter the Chinese market and that
existing market participants will act aggressively to increase their market share. Increased competition may result in price reductions, reduced margins and
our inability to gain or hold market share. In addition our business in China is sensitive to economic and market conditions that drive sales volume in China.
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Many of our operations, primarily in China, are carried out by joint ventures. In joint ventures we share ownership and management of a company with one
or more parties who may not have the same goals, strategies, priorities or resources as we do and may compete with us outside the joint venture. Joint ventures
are intended to be operated for the equal benefit of all co-owners, rather than for our exclusive benefit. Operating a business as a joint venture often requires
additional organizational formalities as well as time-consuming procedures for sharing information and making decisions. In joint ventures we are required to
foster our relationships with our co-owners as well as promote the overall success of the joint venture, and if a co-owner changes or relationships deteriorate,
our success in the joint venture may be materially adversely affected. The benefits from a successful joint venture are shared among the co-owners; therefore,
we do not receive all the benefits from our successful joint ventures. In addition, because we share ownership and management with one or more parties, we
may have limited control over the actions of a joint venture, particularly when we own a minority interest. As a result, we may be unable to prevent
misconduct or other violations of applicable laws by a joint venture. Moreover, a joint venture may not follow the same requirements regarding internal
controls and internal control over financial reporting that we follow. To the extent another party makes decisions that negatively impact the joint venture or
internal control issues arise within the joint venture, we may have to take responsive or other action or we may be subject to penalties, fines or other related
actions for these activities that could have a material adverse impact on our business, financial condition and results of operations.
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The majority of our vehicles are sold outside the U.S. We are pursuing growth opportunities for our business in a variety of business environments outside
the U.S. Operating in a large number of different regions and countries exposes us to political, economic and other risks as well as multiple foreign regulatory
requirements that are subject to change, including:
• Changes in foreign currency exchange rates and interest rates;
• Economic downturns in foreign countries or geographic regions where we have significant operations, such as China;
• Economic tensions between governments and changes in international trade and investment policies, including imposing restrictions on the
repatriation of dividends, especially between the U.S. and China, more detailed inspections, higher tariffs or new barriers to entry;
• Changes in foreign regulations impacting our overall business model restricting our ability to buy and sell our products in those countries,
especially China;
• Differing local product preferences and product requirements, including fuel economy, vehicle emissions and safety;
• Impact of compliance with U.S. and other foreign countries’ export controls and economic sanctions;
• Liabilities resulting from U.S. and foreign laws and regulations, including those related to the Foreign Corrupt Practices Act and certain other anti-
corruption laws;
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