General Motors 2014 Annual Report Download - page 32

GENERAL MOTORS COMPANY AND SUBSIDIARIES
parts and labor to repair these vehicles and for courtesy transportation. The cost of the vehicles recalled in the six months ended
December 31, 2014 were comprehended in the June 30, 2014 catch-up adjustment of $0.9 billion associated with a change in estimate
for previously sold vehicles. Refer to Note 1 and Note 13 to our consolidated financial statements for more detail related to the catch-
up adjustment. Total Net sales and revenue for GMNA have increased for the year ended December 31, 2014 as compared to prior
year by 6.4%. It is difficult to determine the impact, if any, on current or future Net sales and revenue due to our recent recall activity.
Of the approximately 36 million vehicles subject to recall, approximately 63% of the vehicles and 65% of the costs involve vehicles
we no longer produce or sell. We began repairing vehicles in early April 2014 and we have produced sufficient parts to have the
ability to repair all vehicles impacted by the Ignition Switch Recall. Refer to the “GM North America” section of MD&A for
additional information on all of the recalls we announced in 2014.
In the year ending December 31, 2015 we expect an increase in EBIT-adjusted and EBIT-adjusted margins due primarily to: (1) a
slight increase in U.S. industry vehicle sales; and (2) full year production of full-size SUVs; partially offset by (3) increased
engineering and marketing costs.
The International Union, United Automobile, Aerospace and Agriculture Implement Workers of America (UAW) contract we
entered into in September 2011 expires in September 2015.
GME
The automotive industry conditions in Europe remain challenging due to economic uncertainty resulting from weak gross domestic
growth, high unemployment and vehicle production overcapacity. Despite such conditions, automotive industry sales to retail and
fleet customers began to improve in the three months ended December 31, 2013 compared to the corresponding period in 2012. This
trend continued in 2014 with industry sales to retail and fleet customers of 19 million vehicles representing a 1.8% increase compared
to the corresponding period in 2013.
Our European operations are benefiting from this trend and continue to show signs of improvement underscored by further
improvement in our Opel and Vauxhall market share in the year ended December 31, 2014, which builds on our first market share
increase in 14 years in 2013. This market share increase was partially driven by the success of the recently launched Opel Mokka.
We continue to implement various strategic actions to strengthen our operations and increase our competitiveness. The key actions
include investments in our product portfolio including the next generation Opel Astra and Corsa, a revised brand strategy and
reducing material, development and production costs, including restructuring activities. The success of these actions will depend on a
combination of our ability to execute and external factors which are outside of our control.
We continue to assess additional strategic actions across the region as a result of significant volume pricing and foreign exchange
pressures in certain markets, which may result in additional restructuring or rationalization actions. These actions, if implemented,
may result in impairment and other charges. The determination of the amount of these charges is subject to significant uncertainty and
highly dependent on finalization of our strategic assessments.
Our restructuring activities include our effort to rationalize our manufacturing footprint in GME whereby we reached agreement
with the labor union in Germany to terminate all vehicle and transmission production at our Bochum, Germany facility at the end of
2014. Affected employees are eligible for a voluntary restructuring separation program. Restructuring charges were recorded
primarily through the end of 2014. Refer to Note 19 to our consolidated financial statements for additional information.
In the year ended December 31, 2014 we performed a strategic assessment of our Russian operations as a result of a significant
deterioration in sales volumes due to challenging market conditions and deterioration in the Russian Ruble. Our review indicated that
the existing long-lived assets and certain investments in our Russian operations were not recoverable. As a result we recorded
impairment charges of $0.2 billion in Automotive cost of sales which was treated as an adjustment for EBIT-adjusted reporting
purposes. Industry and economic conditions in Russia remain volatile and we continue to evaluate and execute various strategic
actions to improve our operations in a difficult environment.
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