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Fourth Quarter Earnings Total $255 Million, or $0.60 Per Share

FOR RELEASE: January 16, 2002

GM Earns $1.5 Billion, or $3.23 Per Share In Calendar-Year 2001

Fourth Quarter Earnings Total $255 Million, or $0.60 Per Share
Click here for webcast General Motors 2001 Highlights - Q4 Financial Results
General Motors Consolidated Statements of Income 4th Quarter '01
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  • MARKET MOMENTUM, COST REDUCTIONS, STRONG CASH GENERATION ARE KEY DRIVERS
  • GMAC HAS SEVENTH-STRAIGHT YEAR OF EARNINGS GROWTH

DETROIT — Market-share gains spurred by strong new product entries coupled with an intense focus on reducing costs partially offset relentless price pressures as General Motors Corp. earned $1.5 billion, or $3.23 diluted earnings per share, in calendar-year 2001 on revenues of $177.3 billion, excluding special items. That compares with earnings of $5.0 billion, or $8.58 per share, and revenues of $183.3 billion in the prior year, excluding special items. Including special items, GM had net income of $601 million, or $1.77 per share, in 2001; this compares with $4.5 billion, or $6.68 per share, in the prior year.

GM earned $255 million, or $0.60 per share, in the fourth quarter of 2001, including the approximately $97 million, or $0.14 per share, unfavorable effect of the currency devaluation in Argentina. This compares with $609 million, or $1.15 per share, in the fourth quarter of 2000, excluding special items. There were no special items in the fourth quarter of 2001. GM financial results described throughout the remainder of this release exclude special items unless otherwise noted (see Highlights).

"Our performance in 2001 was quite strong considering all of the challenges we faced, and we intend to continue building momentum throughout the coming year," said GM Chairman Jack Smith. "Our market-share gains demonstrate that GM's dedication to developing innovative new products is paying off in the marketplace. Our focus in the coming year is to build on our market success and make further improvements in our financial performance."

"We're in good shape to meet the tough competitive challenges in the year ahead," said GM President and Chief Executive Officer Rick Wagoner. "We gained momentum in the fourth quarter with our great products and the highly successful Keep America Rolling marketing campaign, ending the year with low U.S. dealer inventories. As we continue to introduce more new models this year, and intensify our focus on efficiencies and cost reductions, we're well-positioned when the economy rebounds."

Cash, marketable securities, and assets of the Voluntary Employees’ Beneficiary Association (VEBA) trust invested in short-term fixed-income securities, excluding Hughes, totaled $11.5 billion at Dec. 31, 2001, compared with $11.0 billion at Sept. 30, 2001.

GM AUTOMOTIVE OPERATIONS

GM's global automotive operations earned $708 million in calendar-year 2001, compared with $3.9 billion in 2000. Fourth-quarter earnings totaled $66 million versus $393 million in the prior-year period. Wholesale volume declined approximately 8 percent in calendar-year 2001, and approximately 6 percent in the fourth quarter, compared with the same periods of 2000.

Lower sales volume and strong pricing competition affected results in North America, where GM's annual wholesale vehicle sales declined 11 percent from prior-year levels. Similar pricing pressures affected Europe, along with the shift in consumer preference toward smaller, less-profitable vehicles and unfavorable country mix. Net price retention in calendar-year 2001 was negative 1.3 percent in both North America and Europe.

Results in the Asia-Pacific region were driven by strong profitability and market leadership by Australia-based Holden. In the Latin America/Africa/Mid-East region, market share was the highest for a fourth quarter in 12 years and sales volume increased. However, pricing pressure from the supplier community, based partially on the decline in value of the Brazilian currency, and unfavorable product mix offset these gains.

GM increased its calendar-year market share in the United States for the first time since 1990, as its strong truck lineup broke the industry record for truck sales. Sales of full-size pickups were the best since 1978, and GM shattered the all-time industry sport utility vehicle (SUV) sales record, becoming the first manufacturer to sell more than one million SUVs in a calendar year. GM's share of the U.S. truck market increased 2.2 percentage points to 29.2 percent for 2001, while total vehicle share increased 0.3 percentage points, totaling 28.1 percent for the year. Particularly significant was the improved mix of retail sales as GM continued to focus its sales efforts on the more profitable retail side of the business. Retail sales increased 2.8 percentage points to 81.6 percent of all GM U.S. sales.

GM also gained market share in the GM North America (GMNA), Latin America/Africa/Mid-East (GMLAAM), and Asia-Pacific (GMAP) regions, while holding share steady in GM Europe (GME). GM's global market share totaled 15.1 percent in 2001, compared with 15.0 percent in 2000. Combined sales of GM and its automotive alliance partners – Fiat Auto, Fuji Heavy Industries (Subaru), Isuzu Motor Corp., and Suzuki Motor Corp. – represented 23.7 percent of the global automotive market in 2001, compared with 23.3 percent in the prior year.

"To translate our market success into higher profits, our global automotive operations continue to focus on improving quality and increasing productivity, and our entire company is concentrating on reducing costs," Wagoner said. "We've targeted significant reductions in material and structural costs for 2002, in addition to reducing non-product-related capital expenditures."

In the 2001 Harbour Report, GM’s manufacturing operations outpaced all other multi-plant manufacturers in North America with an overall productivity improvement of nearly 8.5 percent. In addition, GM scored the biggest improvement of any automaker in the 2001 J.D. Power & Associates initial quality survey. GM not only achieved the highest quality gains, but also led all U.S. automakers and is closing the gap with the best Japanese manufacturers.

General Motors is receiving very positive reaction from the three new production vehicles and five concept cars that were unveiled to automotive journalists from around the world last week at the 2002 North American International Auto Show in Detroit. "The excitement that these vehicles generated amplifies the overall enthusiasm our products are generating in the market," Wagoner said. "We intend to build on this momentum by introducing nearly 40 new products between now and 2003, including six in the crucial entry-level market. This is continuing evidence that GM’s aggressive product program, focused on great designs, excellent handling and innovation, is paying off."

GM vehicles have received more than 70 awards since the beginning of 2001, including the following highly influential citations:

  • Motor Trend "SUV of the Year" – GMC Envoy
  • Motor Trend "Truck of the Year" – Chevrolet Avalanche
  • "North American Truck of the Year" – Chevrolet TrailBlazer
  • AutoWeek North American International Auto Show Awards – Cadillac Cien and Pontiac Solstice concept cars
  • "International Van of the Year" – First Place: Opel Vivaro; Second Place: Opel Combo
  • Brazilian Automotive Press Association "Popular Car of the Year" – Chevrolet Celta; "SUV of the Year" – Chevrolet Tracker (Vitara)

GMAC

For 2001, GMAC achieved income growth for the seventh consecutive year and posted record earnings for the third-straight year. GMAC's 2001 earnings of $1.8 billion were 9.4 percent higher than during the prior year.

GMAC's fourth-quarter earnings in 2001 of $435 million were up $26 million, or more than 6 percent, from a year ago. Earnings from Financing Operations increased as higher asset levels and the positive impact from lower market interest rates more than offset weaker residual values and higher credit losses. For the quarter, Insurance Operations posted higher earnings as increases in underwriting income more than offset lower capital gains. Mortgage Operations were down slightly year-over-year but still achieved the second highest quarterly profit as strong new origination volumes kept pace with the high refinancing activity.

HUGHES

Calendar-year losses at Hughes totaled $525 million for 2001, compared with $303 million in the prior year. Hughes lost $131 million in the fourth quarter of 2001, compared with a loss of $74 million in the prior-year period, primarily because of the cost of adding DIRECTV subscribers.

Hughes revenues were up 4 percent in the fourth quarter of 2001. Total DIRECTV subscriptions increased to 12.3 million, with approximately 518,000 more subscribers than in the third quarter of 2001, an increase of 4.4 percent. Total subscriptions were up 1.5 million from year-end-2000 levels.

PROFIT SHARING, INCENTIVE COMPENSATION

Based on GM's financial results in 2001, there will be no profit-sharing payments to hourly workers in the United States. In addition, there will be no annual incentive awards for GM executives, or enhanced variable pay for eligible U.S. and Canadian salaried employees.

LOOKING AHEAD

GM has forecast total U.S. industry vehicle sales to be in the range of 15.0 million to 15.5 million units, and industry sales in Europe of approximately 18.5 million units. Sales in the Latin America/Africa/Mid-East and Asia-Pacific regions are expected to be relatively flat compared with 2001. U.S. dealer inventories are lean at less than 1 million units, and first-quarter North American production is expected to increase 7 percent over the first quarter of 2001. Net price retention in the first quarter is expected to be consistent with the prior guidance for the calendar year at approximately negative 1 percent. Based on these factors and considering the high-degree of economic uncertainty, GM's earnings target for the 2002 calendar year, excluding Hughes, remains at $3.00 per share, and first-quarter earnings are now expected to be approximately $1.00 per share. Including Hughes, the targets are approximately $2.60 per share for the calendar year, and $0.90 per share for the first quarter.

# # #

In this press release and related comments by General Motors management, our use of the words "outlook," "expect," "anticipate," "estimate," "forecast," "project," "likely," "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.

NOTE: This release constitutes pages 1 through 5, the Highlights encompass pages 6 through 14 and Consolidated Statements, pages 15 through 21.