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GM Reduces its Losses in the First Quarter

General Motors has reported a preliminary total global operational net loss of $323 million for the first quarter of 2006—about a $1-billion improvement from the first quarter of 2005—and an increase in revenue of 14.1% to a record $52.2 billion. Excluding special items but including the effect of the $681 million health-care charge ($1 billion pretax), GM reported a preliminary adjusted loss of $529 million.

Global automotive operations posted a $929-million loss, a $1.053-billion improvement from the first quarter of 2005. Global automotive sales rose to $43.490 billion, up 16.3% from the first quarter of 2005. GM North America (GMNA) reported an adjusted loss of $946 million in the first quarter of 2006, including $484 million of the retiree health-care settlement charge.

The current GMNA results compare to an adjusted loss of $1.5 billion a year ago. Higher production volumes, improved mix and better net pricing contributed $1.1 billion of improvement to GMNA operating earnings, offset in part by the health-care charge. Revenue per unit sold in GMNA was significantly higher in the quarter versus a year ago, mostly attributable to better pricing and richer mix, according to GM.

We are very pleased with the market’s reaction to our launch products. In the first three months of the year, our new products accounted for about 30% of our total sales—more than double where we were a couple of years ago. We’re especially encouraged by the early sales of the Chevrolet Tahoe, GMC Yukon, and Cadillac Escalade [full-size SUVs]. And we’re pleased with the reaction last week to the new Saturn Sky and Aura at the New York Auto Show.

—Rick Wagoner, GM Chairman and CEO

Global automotive sales rose 4.4% in the first quarter to 2.2 million units as strong sales in GM’s Asia Pacific and Latin American regions were partially offset by declines in the United States and Canada. In the United States, GM’s first-quarter light-duty vehicle sales dropped 5.2% to 950,317 units, down from 1,002,569 units for the same period last year.

GM sales outside of North America grew 15.9% (up 148,000 vehicles), more than twice the industry growth rate of 7.4%. Global market share was down slightly to 13.2% from 13.3% a year ago.

Our strong global sales performance during the first quarter was fueled by the growth of GM’s global brands—Chevrolet, HUMMER, Saab and Cadillac—in key markets. These brands account for one out of every two GM vehicles sold globally and complement our well known regional brands like Opel, GMC and Holden.

—Rick Wagoner

GM Europe reported adjusted earnings of $88 million in the first quarter of 2006, compared to the year-ago loss of $92 million, reflecting improved pricing, continued progress in reducing structural and material costs, better mix and lower warranty and policy costs.

Chevrolet sales in Europe contributed to the solid first-quarter results, growing 8.1% compared with regional growth of 4.5%. Chevrolet sales in Russia grew 23% over the same period last year. In addition, Saab posted sales growth of 27.7% in the region. Overall, Saab showed significant financial improvement and sold more than 34,000 vehicles worldwide, up 23.2% against the same period last year and an all-time first-quarter record.

GM Asia Pacific (GMAP) reported adjusted earnings of $81 million in the first quarter of 2006, up from $70 million a year ago, reflecting improved sales volumes in China and higher sales volumes from GM Daewoo. Chevrolet sales in the region grew 62% compared with year-ago levels, outpacing the region’s industry growth rate of 9%. Chevrolet sales in China (up 180%) and India (up 19.3%) powered much of this growth.

GM Latin America/Africa/Middle East (LAAM) reported adjusted earnings of $56 million in the first quarter of 2006, up from $31 million in the same period last year. This reflects a significant improvement in Brazil. Total LAAM sales hit an all-time high of 230,100 units, up 26% from a year ago.

Chevrolet sales in LAAM grew 27.4% compared with the same period a year ago and compared to an industry growth rate of 19%. Chevrolet’s sales performance in Argentina (up 18%), Brazil (up 26.8%) and Venezuela (up 57%) accounted for most of this growth.

GM’s results for the first quarter of 2006 are preliminary and may be revised prior to the filing of GM’s first quarter report in early May, depending on factors such as the final determination of the accounting treatment for the retiree health-care settlement agreement.


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