GM Earns $1.3 Billion Or $2.25 Per Share In First Quarter 2004

DETROIT - General Motors Corp. today reported earnings of $1.3 billion, or $2.25 per diluted share of GM common stock, in the first quarter of 2004. These results represent an increase of 24 percent from the year-ago period, when GM earned $1.0 billion, or $1.84 per share, from continuing operations and before special items. Revenue rose 3.1 percent to $47.8 billion.

The year-ago results exclude a gain of $505 million, or $0.90 per share, from the sale of GM Defense. The year-ago results also exclude Hughes Electronics (Hughes), which was split off from GM in late 2003 and is now reported for 2003 as a discontinued operation. Including the gain from GM Defense, GM earned $1.5 billion, or $2.74 per share, in the first quarter of 2003 from continuing operations. There were no special items in the first quarter of 2004.

"Our financial results in the first quarter reflect continued progress," said GM Chairman and Chief Executive Officer Rick Wagoner. "General Motors Acceptance Corp. had yet another record quarter, and our automotive operations, led by very strong results at GM Asia Pacific, reported a 12-percent increase in earnings. "GM continues to improve in key areas such as productivity and quality. Even more important, our many new products around the world are being well received," Wagoner said. "But, we still have more work to do to improve our profitability, as we face a challenging competitive environment, continuing high health-care costs and the effects of the artificially weakened Japanese yen."

GM financial results described throughout the remainder of this release exclude special items and Hughes unless otherwise noted. See Highlights for reconciliation of adjusted results to results based on Generally Accepted Accounting Principles (GAAP).

GM Automotive Operations

GM's global automotive earnings increased 12 percent in the first quarter of 2004 to $611 million from $546 million in the prior-year period, despite lower production levels in North America and Europe. The increase was driven by improved results in the GM Latin America/Africa/Mid-East and Asia Pacific regions, offset by lower earnings in North America and higher losses in Europe. GM's global market share increased in the first quarter of 2004 to 13.7 percent from 13.6 percent in the year-ago period, with three out of four regions gaining share.

GM North America (GMNA) earned $451 million in the first quarter of 2004, compared with $548 million in the first quarter of 2003, principally reflecting a tough pricing environment, lower production volumes, and continued high pretax health-care costs of approximately $1.5 billion per quarter. GM's market share in North America rose to 26.4 percent in the first quarter of 2004, from 26.1 percent in the year-earlier period.

"The automotive market in North America remains very competitive, and our results reflect that," Wagoner said. "We're pleased with our new vehicles and our progress in rebuilding many of our brands, such as Cadillac and Chevrolet. But, improving market share and profitability remain an important priority."

GM's aggressive product assault so far this model year includes the Chevrolet Malibu, Equinox and Aveo, the Pontiac GTO, the Cadillac CTS-V, and the GMC Canyon and Chevrolet Colorado. The rollout continues with the introduction of additional new and important vehicles later this year, such as Saab 9-2X, the Hummer H2 SUT, the Cadillac STS, the next-generation Chevrolet Corvette, the Buick LaCrosse, the Chevrolet Cobalt and the Pontiac G6.

GM Europe (GME) reported a loss of $116 million in the first quarter of 2004 compared with a loss of $65 million in the year-ago quarter, reflecting continued pricing pressure, higher foreign-exchange losses and launch costs for the new Opel Astra. GM's market share in Europe declined slightly to 9.5 percent in the first quarter of 2004 from 9.6 percent in the year-ago period.

"Our first-quarter financial results in Europe were below expectations," Wagoner said. "Going forward, we expect to see improved results through the balance of the year as we ramp up production of the new Astra, which has been well received."

GM Asia Pacific (GMAP) earned $275 million in the first quarter of 2004, up from $75 million in the year-ago quarter. Continued strong performance by Shanghai GM in China, Holden in Australia, smaller losses at GM-Daewoo Auto & Technology Co. and improved results from GM's equity alliances in Japan contributed to GMAP's overall performance. GM's market share in the Asia Pacific region rose to 4.7 percent in the first quarter from 4.3 percent a year ago, led by gains in China and India.

"GM Asia Pacific continues to deliver impressive growth and financial results," Wagoner said. "I'm especially pleased that our position in the rapidly growing China market continues to strengthen as we expand our vehicle lineup, production capacity, sales and market share."

GM Latin America/Africa/Mid-East (GMLAAM) earned $1 million in the first quarter of 2004, an improvement from the year-ago loss of $12 million. Higher production volumes and improved results in Venezuela and South Africa offset continued losses in Brazil. GM's market share in the GMLAAM region rose to 17.1 percent in the first quarter of 2004 from 15.7 percent a year ago.

GMAC

General Motors Acceptance Corporation (GMAC) reported record first-quarter earnings of $786 million, up from $699 million a year ago, as increased profitability in GMAC's financing and insurance operations offset moderating earnings at its mortgage unit. Both GMAC's North American and international financing operations posted strong performances with combined earnings of $442 million in the quarter, up $140 million from a year ago, reflecting lower credit-loss provisions and improved off-lease remarketing results. First quarter earnings at the insurance group were $91 million, up $65 million from a year ago, due to continued growth in underwriting income and improved investment-portfolio performance. Earnings at the mortgage group totaled $253 million, down from last year's record earnings of $371 million; this was a result of lower mortgage-origination volume versus the prior year and decreased pricing margins resulting from reduced mortgage-refinancing activity.

"GMAC remains a critical contributor to GM's business and financial results," Wagoner said. "The benefit of GMAC's balanced business portfolio was clear in the first quarter, as increased profitability in its financing and insurance sectors more than offset lower profits in its mortgage activities." Cash and Liquidity

GM generated approximately $1.4 billion in automotive cash in the first quarter of 2004. Cash, marketable securities, and assets of the Voluntary Employees' Beneficiary Association (VEBA) trust invested in short-term fixed-income securities totaled $23.5 billion at March 31, 2004, excluding financing and insurance operations, compared with $26.9 billion on Dec. 31, 2003. As previously announced, GM contributed $5 billion to its VEBA trust in the first quarter of 2004.

Looking Ahead

GM continues to expect improved economic conditions in the United States in 2004, resulting in total U.S. industry vehicle sales of approximately 17.3 million units. Reflecting this robust U.S. market, GM's strong first-quarter results, the positive environment in Asia Pacific and GMAC, and a lower corporate tax rate, GM is increasing its 2004-calendar-year earnings estimate to approximately $7.00 per share, excluding special items and at current dilution levels. This compares with the previous target of $6.00 to $6.50 per share and represents a further step toward GM's mid-decade target of earning at least $10 per share.

For the second quarter of 2004, GM expects to earn approximately $2.00 to $2.25 per share, excluding special items. In the first quarter of 2004, GM's effective tax rate was 21 percent and GM expects a lower effective tax rate in the second quarter due to anticipated tax settlements. Excluding these settlements, GM's effective tax rate is expected to be about 21 percent on an ongoing quarterly basis.