General Motors 2015 Annual Report Download - page 19

Table of Contents

We believe that the automotive industry will experience more change in the next five years than it has in the previous 50 years. In addition to our
traditional competitors, we must also be responsive to the entrance of non-traditional participants in the automotive industry. These non-traditional
participants may seek to disrupt the historic business model of the industry through the introduction of new technologies, new products or services, new
business models or new methods of travel. It is strategically significant that we lead the technological disruption occurring in our industry. As our business
evolves, the pressure to innovate will encompass a wider range of products and services, including products and services that may be outside of our
historically core business. If we do not accurately predict, prepare for and respond to new kinds of technological innovations, market developments and
changing customer needs, our sales, profitability and long-term competitiveness may be harmed.


The global automotive industry is highly competitive and overall manufacturing capacity in the industry exceeds demand. Many manufacturers have
relatively high fixed labor costs as well as significant limitations on their ability to close facilities and reduce fixed costs. Our competitors may respond to
these relatively high fixed costs by providing subsidized financing or leasing programs, offering marketing incentives or reducing vehicle prices. Our
competitors may also seek to benefit from economies of scale by consolidating or entering into other strategic agreements such as alliances intended to
enhance their competitiveness.
Manufacturers in lower cost countries, such as China and India, have become competitors in key emerging markets and announced their intention of
exporting their products to established markets as a low cost alternative to established entry-level automobiles. These actions have had, and are expected to
continue to have, a significant negative effect on our vehicle pricing, market share and operating results, and present a significant risk to our ability to
enhance our revenue per vehicle.

We face difficult market and operating conditions in certain parts of the world that may require us to restructure, impair or rationalize these operations. In
many countries across our regions we have experienced challenges in our operations and continue to strategically assess the manner in which we operate in
certain countries. As we continue to assess our performance throughout the regions, additional restructuring, impairment and rationalization actions may be
required and may be material.


We are continuing to implement a number of operating effectiveness initiatives to improve productivity and reduce costs. Our future competitiveness
depends upon our continued success in implementing these initiatives throughout our automotive operations. While some of the elements of cost reduction
are within our control, others, such as interest rates or return on investments, which influence our expense for pensions, depend more on external factors, and
there can be no assurance that such external factors will not materially adversely affect our ability to reduce our costs. Reducing costs may prove difficult due
to our focus on increasing advertising and our belief that engineering expenses necessary to improve the performance, safety and customer satisfaction of our
vehicles are likely to increase.


We rely upon information technology networks and systems, including in-vehicle systems and mobile devices, some of which are managed by third-
parties, to process, transmit and store electronic information, and to manage or support a variety of vehicle or business processes and activities. Additionally
we collect and store sensitive data, including intellectual property, proprietary business information, propriety business information of our dealers and
suppliers, as well as personally identifiable information of our customers and employees, in data centers and on information technology networks. The secure
operation of these information technology networks and in-vehicle systems, and the processing and maintenance of this information, is critical to our
business operations and strategy. Despite security measures and business continuity plans, our information technology networks and systems and in-vehicle
systems may be vulnerable to damage, disruptions or shutdowns due to attacks by hackers or breaches due to errors or malfeasance by employees, contractors
and others who have access to our networks and systems or computer viruses. The occurrence of any of these events could compromise our networks and the
information stored there could be accessed, publicly disclosed, lost or stolen. These occurrences could also impact vehicle safety. We have been the target of
these types of attacks in the past with no known material impacts and future attacks are likely to occur. If successful, these types of attacks on our network
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