Debt Rating For General Motors Group of Companies

DBRS is confirming the ratings based on the ultimate parent
General Motors Corporation ("GM" or "the Company") and the trends on the
long-term ratings remain Negative.  The rating action follows today's
announcement by GM that it has signed a final definitive agreement to
invest $251 million for a 42.1% stake in a new automotive company.  This
new automotive company will acquire selected domestic and foreign assets
of Daewoo Motor Company of Korea.  The transaction is expected to close
within two to three months pending court and government approvals.  GM
can easily fund the investment from existing cash resources ($17.3
billion in cash and marketable securities at the end of March 2002).
The investment will have minimal impact on the Company's financial
position and will be accounted for on an equity basis.

 

GM's financial position is improving.  The balance sheet continues to
strengthen with net liquidity (cash net of debt) rising to 2.3 billion
at the end of March 2002.  Profitability is also showing signs of a
recovery led by improvements in its North American operations.  However,
the Company continues to face a number of challenges: (1) Although
overall North American market share has stabilized on gains made in
trucks, market share in cars continues to erode and the outlook remains
a challenge.  GM's car plants are running at less than full capacity
utilization, and the Company has limited ability to make other cuts to
capacity in the U.S. before current union contracts expire in September
2003. (2) Intensifying competition in the North American markets
necessitates the continuing use of high sales incentives, which depress
profit margins. (3) GM's international operations, particularly Europe,
continue to underperform. (4) The recent rise in the Company's cost of
raising funds in the capital markets will also weigh on earnings.

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