General Motors 2015 Annual Report Download - page 94

Table of Contents
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
We enter into indemnification agreements for liability claims involving products manufactured primarily by certain joint ventures. We also provide
vehicle repurchase guarantees and payment guarantees on commercial loans outstanding with third parties such as dealers. These guarantees terminate in
years ranging from 2016 to 2030 or upon the occurrence of specific events or are ongoing and we believe that the related potential costs incurred are
adequately covered by recorded accruals. The maximum liability for these guarantees was $2.6 billion and $2.7 billion at December 31, 2015 and 2014,
calculated as future undiscounted payments.
In some instances certain assets of the party whose debt or performance we have guaranteed may offset, to some degree, the amount of certain guarantees.
Our payables to the party whose debt or performance we have guaranteed may also reduce the amount of certain guarantees. If vehicles are required to be
repurchased under vehicle repurchase obligations, the total exposure would be reduced to the extent vehicles are able to be resold to another dealer.
We periodically enter into agreements that incorporate indemnification provisions in the normal course of business. It is not possible to estimate our
maximum exposure under these indemnifications or guarantees due to the conditional nature of these obligations. Insignificant amounts have been recorded
for such obligations as the majority of them are not probable or estimable at this time and the fair value of the guarantees at issuance was insignificant.
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In October 2012 the Brazilian government issued a decree which increased an excise tax rate by 30 percentage points, but also provided an offsetting tax
incentive program that requires participating companies to meet certain criteria, such as local investment and fuel efficiency standards. Participating
companies that fail to meet the required criteria are subject to clawback provisions and fines. At December 31, 2015 we believe it is reasonably assured that
the program requirements will be met.
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In 2014 we determined the certified fuel economy ratings on our Cruze 1.8L gasoline vehicles sold in Korea were incorrect. We retested and recertified the
Cruze fuel economy ratings which fell below our prior certification and self-reported this issue to local government authorities. We voluntarily announced a
customer compensation program for current and previous Cruze owners and recorded an insignificant charge in the three months ended December 31, 2014.
In November 2014 the Korean government released new fuel economy certification guidelines. Since then, in accordance with the new guidelines, we have
completed retesting and recertification of the Chevrolet Captiva 2.0L and 2.2L diesel vehicles and the Malibu 2.0L gas, 2.4L gas and 2.0 liquefied petroleum
gas vehicles. The Captiva 2.0L diesel was subsequently selected for confirmatory testing by the Korean government and was approved. There are no other
domestic models in production to be retested and recertified under the new guidelines.
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In 2013 we determined there was an emissions compliance issue with certain Tavera models produced in India. We self-reported this issue in the three
months ended September 30, 2013 to local government authorities and are continuing to cooperate. We developed a solution, and while the issue was not
safety related, we voluntarily recalled the vehicles to serve our customers. We believe our accrual at December 31, 2015 is adequate to cover the estimated
costs of the recalled vehicles.

The following table summarizes our minimum commitments under noncancelable operating leases having initial terms in excess of one year, primarily for
property (dollars in millions):






Minimum commitments(a) $ 284
$ 232
$ 202
$ 178
$ 137
$ 385
Sublease income (55)
(57)
(54)
(52)
(41)
(233)
Net minimum commitments $ 229
$ 175
$ 148
$ 126
$ 96
$ 152
__________
(a) Certain leases contain escalation clauses and renewal or purchase options.
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