---

DCR Maintains General Motors and GMAC Ratings at 'A-'

5 August 1998

DCR Maintains General Motors and GMAC Ratings at 'A-'

    CHICAGO, Aug. 5 -- Duff & Phelps Credit Rating Co. (DCR) has
maintained the debt ratings of General Motors Corporation (GM) and its
financial subsidiary, General Motors Acceptance Corp. (GMAC), after GM
announced that its board of directors approved a spin or split-off of GM's
Delphi Automotive Systems components group.
    The senior, unsecured debt of GM and GMAC is rated 'A-' (Single-A-Minus),
GM's preference stocks are rated 'BBB+' (Triple-B-Plus) and GM and GMAC's
commercial paper is rated 'D-1' (D-One).  GM and GMAC had total debt
outstanding at June 30, 1998 of approximately $98 billion.
    A Delphi split-off would heighten the focus on the core rating issues
for GM's North American automotive operations, which include GM's ability to
hasten the new model turnover in its product portfolio and strengthen its
market share as well as to further improve its cost productivity, including
the ability to better resolve competitive issues with its labor unions as
national contract negotiations loom in Autumn 1999.
    A stand-alone Delphi, whose 1997 sales of $31.4 billion would place it
in the Fortune 25, would have better opportunity to grow the non-GM portion of
its business, which is currently approaching 20 percent of sales, and would
compete on more equal terms with other major independent automotive suppliers.
However, Delphi will continue to face the general challenge of the intense
pricing pressure being exerted by automakers, as well as the specific
challenge of addressing a few underperforming businesses, most of which were
particular focal points in GM's recent labor strife.
    GM expects to give its first indication of proforma capitalization in a
prospectus filing for an initial public offering of up to 20 percent of
Delphi, which is planned for early 1999.
    With GM's North American operations returning to full production after
last week's labor strike settlement, generation of free cash flow will return
to its previous strong levels.  This should allow GM to rebuild cash balances
toward the levels previously targeted as cyclical protection as well provide
some flexibility to minimizing the impact of a Delphi split-off on GM's
capitalization, especially since GM's manufacturing debt level is modest.
However, non-pension retirement benefit liabilities, which are very large for
GM and Delphi, include a significant amount of unfunded 'legacy costs' for
operations that Delphi has closed or divested in recent years, and the
assignment of these liabilities between GM and a stand-alone Delphi may become
a key rating concern.