GM Q3 Earns $385 Million On Operations Market Share UP But 0% Int and European Operation Result in Loss Of $368 Million

FOR RELEASE: October 18, 2001

GM Earns $385 Million, or $0.85 Per Share, In Third Quarter, Excluding Special Items

GM EARNS $385 MILLION, OR $0.85 PER SHARE, IN THIRD QUARTER, EXCLUDING SPECIAL ITEMS U.S. MARKET SHARE IMPROVES GMAC SETS THIRD-QUARTER EARNINGS RECORD DETROIT — General Motors Corp. today reported that it earned $385 million, or $0.85 diluted earnings per share, in the third quarter of 2001 — excluding special items — on revenues of $42.5 billion. GM's global automotive and financing operations earned a total of $527 million during the period, which was partially offset by a loss of $142 million at Hughes. These earnings are in line with the most recent guidance provided by GM, but down compared with the prior-year period.

The third-quarter-2001 results exclude one-time charges totaling $753 million, or $1.26 per share, related to the previously announced closing of an assembly plant in Canada, and various special items at Hughes, including the resolution of a dispute with Raytheon Company relating to the 1997 spin-off and merger of Hughes Defense (see Highlights). GM had a loss of $368 million, or $0.41 per share, in the quarter including the charges. GM financial results described throughout the remainder of this release exclude these charges unless otherwise noted. The third-quarter results compare with earnings of $829 million, or $1.55 per share, on revenue of $42.7 billion, in the third quarter of 2000.

"Overall, GM's Automotive Operations faced significant challenges during the quarter but still delivered $212 million in net income," said GM Chairman Jack Smith. "While North American profits were stronger than expected, Europe remained in a significant loss position." Asia Pacific was profitable while Latin America/Africa/Mid-East posted a small loss.

"General Motors Acceptance Corp. (GMAC) delivered record third-quarter earnings, driven by the continued strong performance of its core auto financing operations," Smith said.

"GM North America finished the quarter with particularly strong vehicle sales," said GM President and Chief Executive Officer Rick Wagoner. "U.S. market share was up in the third quarter, driven by strong sales of our full-size trucks, utilities, and new entries such as the Chevrolet Avalanche and Buick Rendezvous, as well as strong and effective merchandising. This is a great base that we plan to build on going forward.

"In a very challenging environment, GM North America continued to deliver solid cost improvements," Wagoner said. "With our ongoing improvement in manufacturing and engineering productivity, plus continued reductions in material costs, we were able to offset partially the tough pricing pressures and the drop in overall vehicle demand. But we know we can do more to improve our cost position."

Wagoner said, "GM Europe (GME) is implementing a major turnaround plan designed to restore profitability. The plan, called Project Olympia, focuses on improving revenue in a number of areas, especially through the introduction of a broad range of new innovative Opel products, while taking aggressive actions to reduce costs in all areas of the business."

Cash and net liquidity held steady during the third quarter. Cash, marketable securities, and assets of the Voluntary Employees' Beneficiary Association (VEBA) trust invested in short-term fixed-income securities, excluding Hughes, totaled $11.0 billion at Sept. 30, 2001, compared with $11.1 billion at June 30, 2001.

GMAC

GMAC achieved record third-quarter earnings of $437 million, a $36 million or 9-percent improvement over the third quarter of 2000. GMAC's results were driven by the continued strong performance of its core auto financing operations. Financing operations benefited from higher asset levels and lower interest rates, which more than offset continuing weakness in off-lease residual values and higher credit losses.

Income from insurance operations was down slightly in the third quarter of 2001 as improved underwriting results were offset by lower capital gains, reflecting general weakness in the equity markets. Mortgage operations continued to post strong results, with origination volume in both residential and commercial mortgage sectors growing at a record pace.

GM NORTH AMERICA

GMNA earned $445 million in the third quarter of 2001, excluding the charge of $194 million for the previously announced September 2002 closing of its Ste. Therese, Quebec, assembly plant. Including that special item, GMNA earned $251 million. The $445 million earnings performance compares with $728 million earned in the third quarter of 2000, when industry demand was at near-record levels.

Continued cost improvements and a favorable mix of products were offset by lower volume and unfavorable pricing. Third-quarter-2001 production fell 6 percent, wholesale vehicle sales declined about 7 percent, and net vehicle pricing was unfavorable compared with the prior-year period.

GM's share of the U.S. truck market increased 2.9 percentage points to 28.6 percent during the third quarter of 2001, compared with the same period last year. GM captured 27.7 percent of the total U.S. vehicle market in the third quarter, compared with 27.4 percent in the prior-year period.

GM sold more full-size pickups than any industry competitor during the first nine months of 2001. Combined sales of the Chevy Silverado, Avalanche, and the GMC Sierra increased more than 10 percent compared with the same period last year. GM's full-size utility sales continued at a record pace for the first nine months, outselling the nearest competitor by more than 196,000 units. GM's overall lineup of utilities gained 1.5 percentage points of market share during the first nine months of 2001.

The GMC Envoy was named Motor Trend's 2002 sport utility vehicle (SUV) of the year last week, a prestigious award for a solid new product in an important segment. In addition, four GM vehicles captured top rankings in the J.D. Power and Associates 2001 Automotive Performance, Execution And Layout (APEAL) Study. GM had the highest number of top-ranked models among the big three that consumers consider to be "most appealing." Pontiac Aztek, Chevy TrailBlazer, Cadillac Escalade and Chevrolet Corvette ranked best in the highly competitive entry, midsize, luxury SUV, and premium sports car segments, respectively.

OTHER AUTOMOTIVE REGIONS

Tough price competition and unfavorable product mix and country mix were key factors in GME's loss of $287 million in the third quarter of 2001. That compares with a loss of $181 million in the third quarter last year.

GM Asia Pacific (GMAP) had net income of $60 million in the third quarter of 2001, a significant improvement from the loss of $10 million in the third quarter of 2000. The improvement primarily resulted from stronger performance by GM's Thailand operations and GM's joint venture in Shanghai, China.

GM's Latin America/Africa/Mid-East (GMLAAM) region incurred a loss of $6 million in the third quarter of 2001, compared with net income of $31 million in the same period last year. The region's economy was affected by financial turmoil in Argentina and weakening in Brazil, the primary automotive market.

HUGHES

Hughes' loss of $142 million in the third quarter of 2001, excluding special items, was primarily related to the costs of continued growth of DIRECTV. Hughes lost $227 million during the period including special items. Hughes had a loss of $88 million in the third quarter of 2000. Hughes added approximately 491,000 net new DIRECTV subscribers in the third quarter, bringing the total subscriber base to 11.8 million.

LOOKING AHEAD

"There is considerable uncertainty regarding the strength of the key automotive markets during the balance of the year and in 2002," Wagoner said. "We're buckling down to enhance our cost position while remaining very aggressive in our effort to maximize revenue and grow market share."

GM currently estimates that in the fourth quarter of 2001 total industry sales in the United States will be down approximately 6 percent compared with the prior-year period, bringing industry sales for the calendar year to approximately 16.8 million units. Total industry sales in Western and Central Europe are expected to be down approximately 5 percent in the fourth quarter, compared with the fourth quarter of 2000. Net vehicle prices in North America are expected to be down approximately 1.3 percent for the fourth quarter and calendar-year 2001, compared with the prior-year periods. The change in 2001-calendar-year net price to negative 1.3 percent versus prior guidance of negative 1.0 percent is attributable primarily to downward pressure on auction prices for used cars due to daily rental fleet reductions. The negative pricing trend also is expected to continue in Europe.

GM's fourth-quarter production schedule for North America remains at approximately 1,270,000 vehicles, a 7 percent reduction from the same quarter last year. Based on this, fourth-quarter earnings are now expected to be approximately $0.50 per share.

For calendar year 2002, GM's preliminary outlook is for total U.S. vehicle sales in the low- to mid-15-million-unit range. Industry sales in the Western and Central European market are likely to be down about 3 percent and in the low-17-million-unit range.

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In this press release and related comments by General Motors management, our use of the words "outlook," "expect," "anticipate," "estimate," "forecast," "objective," "plan," "designed," "goal" and similar expressions is intended to identify forward looking statements. While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, actual results may differ materially due to numerous important factors that are described in GM's most recent report on SEC Form 10-K (at page II-10,11) which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. Such factors include, among others, the following: changes in economic conditions, currency exchange rates or political stability; shortages of fuel, labor strikes or work stoppages; market acceptance of the corporation's new products; significant changes in the competitive environment; changes in laws, regulations and tax rates; and, the ability of the corporation to achieve reductions in cost and employment levels to realize production efficiencies and implement capital expenditures at levels and times planned by management.