General Motors 2015 Annual Report Download - page 47

Table of Contents
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nature, frequency and magnitude of historical events with consideration for changes in future expectations. Costs associated with campaigns not accrued at
the time of vehicle sale are estimated based on the per unit part and labor cost, number of units impacted and the take rate. Depending on part availability and
time to complete repairs we may, from time to time, offer courtesy transportation at no cost to our customers. These estimates are re-evaluated on an ongoing
basis and based on the best available information. Revisions are made when necessary. We consider trends of claims and take action to improve vehicle
quality and minimize claims.
The estimated amount accrued for recall campaigns at the time of vehicle sale is most sensitive to the estimated number of recall events, the number of
vehicles per recall event, the take rate, and the cost per vehicle for each recall event. The estimated cost of a recall campaign that is accrued on an individual
basis is most sensitive to our estimated assumed take rate that is primarily developed based on our historical take rate experience. A 10% increase in the
estimated take rate for all recall campaigns would increase the estimated cost by approximately $0.3 billion.
Actual experience could differ from the amounts estimated requiring adjustments to these liabilities in future periods. Due to the uncertainty and potential
volatility of the factors contributing to developing estimates, changes in our assumptions could materially affect our results of operations.
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The estimated effect of sales incentives to dealers and end customers is recorded as a reduction of Automotive net sales and revenue at the later of the time
of sale or announcement of an incentive program to dealers. There may be numerous types of incentives available at any particular time, including a choice
of incentives for a specific model. Incentive programs are generally brand specific, model specific or sales region specific and are for specified time periods,
which may be extended. Significant factors used in estimating the cost of incentives include the volume of vehicles that will be affected by the incentive
programs offered by product, product mix, the rate of customer acceptance of any incentive program and the likelihood that an incentive program will be
extended, all of which are estimated based on historical experience and assumptions concerning customer behavior and future market conditions. When an
incentive program is announced, the number of vehicles in dealer inventory eligible for the incentive program is determined and a reduction of Automotive
net sales and revenue is recorded in the period in which the program is announced. If the actual number of affected vehicles differs from this estimate, or if a
different mix of incentives is actually paid, the reduction in Automotive net sales and revenue incentives could be affected. There are a multitude of inputs
affecting the calculation of the estimate for sales incentives and an increase or decrease of any of these variables could have a significant effect on recorded
sales incentives.
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In this 2015 Form 10-K and in reports we subsequently file and have previously filed with the SEC on Forms 10-K and 10-Q and file or furnish on Form 8-
K, and in related comments by our management, we use words like “anticipate,” “appears,” “approximately,” “believe,” “continue,” “could,” “designed,”
“effect,” “estimate,” “evaluate,” “expect,” “forecast,” “goal,” “initiative,” “intend,” “may,” “objective,” “outlook,” “plan,” “potential,” “priorities,”
“project,” “pursue,” “seek,” “will,” “should,” “target,” “when,” “would,” or the negative of any of those words or similar expressions to identify forward-
looking statements that represent our current judgment about possible future events. In making these statements we rely on assumptions and analyses based
on our experience and perception of historical trends, current conditions and expected future developments as well as other factors we consider appropriate
under the circumstances. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results, and our actual
results may differ materially due to a variety of important factors, both positive and negative. These factors, which may be revised or supplemented in
subsequent reports on SEC Forms 10-Q and 8-K, include among others the following:
• Our ability to maintain profitability over the long-term, including our ability to fund and introduce new and improved vehicle models that are able
to attract a sufficient number of consumers;
• The success of our full-size pick-up trucks and SUVs;
• Global automobile market sales volume, which can be volatile;
• The results of our joint ventures, which we cannot operate solely for our benefit and over which we may have limited control;
• Our ability to realize production efficiencies and to achieve reductions in costs as we implement operating effectiveness initiatives throughout our
automotive operations;
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