General Motors (GM) manufactures cars and trucks, with brands such as Buick, Cadillac, Chevrolet, and GMC. GM also builds cars through its GM Daewoo, Opel, Vauxhall, and Holden units. Financing and insurance activities are conducted by Ally Financial (formerly known as GMAC), of which GM owns about a 10% stake. Throughout its financial woes, GM has received billions of dollars in loans from the Canadian and US governments, negotiated concessions with labor unions, and jettisoned brands. The auto giant went through a six-week bankruptcy protection in 2009; it issued an initial public offering and returned to the stock market in 2010.
The government owned more than 60% of GM when it emerged from Chapter 11 in mid-2009. Responding to a wave of willing investors, GM's stock opened at the top of the price range set by the car maker. The IPO kept on pace during its first day and took in approximately $15.8 billion, excluding the sale of preferred shares and an overallotment option. It was the second-largest IPO in US history (behind Visa's almost $20 billion in 2008).
The Treasury Department's now owns about 32%. The remainder is held by a group of minority interests, including the Canadian federal government and a United Auto Workers retiree health care trust.
GM was split into two companies when it emerged from Chapter 11 -- General Motors and Motors Liquidation (the name for leftover assets). In 2011 a federal judge approved a plan to liquidate General Motors' assets that GM let go in bankruptcy. Motors Liquidation sold the majority of its assets, which encompassed almost 90 industrial sites (including the Pontiac assembly plant and Grand Rapids stamping plant) in 14 states, which cleared the way for GM bondholders to receive stock in the new company.
Laying the foundation for a public offering, GM made $2.8 billion in net income during the first half of 2010 despite a modest rise in sales. In addition, it bolstered investor and car dealer confidence in mid-2010 with its acquisition of auto finance company AmeriCredit, now General Motors Financial Company. The $3.5 billion purchase created a wholly owned lending arm, an advantage that GM has not had since it sold the majority of GMAC (now Ally Financial) in 2006.
The carmaker had gained momentum in improving its balance sheet in early 2011 by selling off its interest in Delphi Automotive for $3.8 billion. (GM's Class A interest was created in 2009 concurrent with the formation of Delphi.) On its heels, GM shed its preferred shares in Ally Financial for $1 billion; the deal netted GM roughly $300 million.
Retaking its spot as the world's largest car maker from Toyota and driving into a market share of about 12% worldwide and 19% in the US, GM enjoyed a net income of $9.2 billion and a jump of about 11% in total net sales and revenue in 2011. As of year-end 2011 GM's liquidity (cash and marketable securities) was $31.6 billion.
A big focus for GM has been to raise the quality of its cars and trucks, which had long been a source of criticism for the company. To this end, the company has concentrated its resources on the Buick, Cadillac, Chevrolet, and GMC brands; HUMMER, Pontiac, and Saturn brands were discontinued. The smaller portfolio also forced a reduction in dealerships. GM's North American dealerships declined from about 6,450 in 2009 to more than 5,000 in 2011. Recently, top-selling models have included the Chevrolet Equinox and Cruze, the GMC Terrain, Buick LaCrosse, and Cadillac SRX.
GM's efforts to improve its products include developing energy-saving models, such as the Chevrolet Volt, an electric car powered by a lithium-ion battery, introduced in late 2010. The company plans to introduce the Chevrolet Spark electric car in 2013. GM also formed a partnership with Segway to develop a two-wheeled, two-seat electric vehicle. The company additionally negotiated a deal in late 2010 with the United Auto Workers (UAW) union that will allow GM to pay an entry-level wage to 40% of unionized workers who make the subcompact Sonic at the Orion Township, Michigan, assembly plant. GM also has about 20 FlexFuel cars available in the US.
More than 72% of GM's 2011 sales were outside the US. Emerging markets, including Brazil, Russia, India, and China, accounted for more than 43% of 2011 sales. Accordingly GM has been focusing on various international efforts.
In 2012 GM and Peugeot announced that they would form an alliance to share vehicle platforms, components and modules, and to establish a global purchasing joint venture. The companies hope the partnership will create annual savings of $2 billion within five years. As part of the deal, GM will pay $400 million to $470 million (depending on market conditions) for a 7% stake in Peugeot.
Another European project is the restructuring of the Opel/Vauxhall brands. These plans include an agreement with European labor representatives that calls for the payment of up to €265 million ($349.5 million) to employees if planned spending goals for some product programs aren't met. As of 2011 GM met the goals.
However, the company's European strategy has included some divestment. In early 2010, GM sold Saab Automobile to Dutch sports car maker Swedish Automobile (formerly known as Spyker Cars) in a cash and stock deal valued at more than $400 million.
Outside Europe, GM is focusing on the world's largest pool of potential drivers. The company signed a two-year deal with joint venture partner Shanghai General Motors in early 2011 to ship Cadillacs, Buicks, and Chevrolets to China. The agreement came on the heels of the trade and investment agreements made between Chinese President Hu Jintao and the US.
Additionally, the company operates a financing venture with Chinese joint venture partner Shanghai Automotive Industry Corporation (SAIC). In 2010 GM raised its stake in joint venture SAIC-GM-Wuling Automobile from about 34% to 44% for a price of about $52 million.
The company also exports the low-cost Chevrolet Sail, made by Shanghai GM, a joint venture with SAIC Motor, to Chile, Ecuador, and Algeria, with plans to add India as another export target. The Sail is GM's first passenger car from an international brand to be exported. GM and SAIC have also developed an electric car prototype based on the Sail.
In late 2010 GM and SAIC created Shanghai Chengxin Used Car Operation and Management, a joint venture that sells used vehicles in China. The joint venture, the first of its kind in China, uses current Shanghai GM distributors for used car sales and service facilities across the country.
GM's stock offering acknowledged a dearth of auto industry experience among its management, which could impact the auto maker's future performance. The CEO role changed faces in 2010, the fourth time since 2009. The latest shift, Edward Whitacre -- a long-time CEO of AT&T until his retirement in 2007 -- assumed the post in December 2009. He stepped down as CEO in September, and retired as chairman at the end of 2010. His replacement, Daniel Akerson, began tackling the tough job selling GM to investors in a lackluster economy. He was appointed director by the government after GM emerged from bankruptcy; although he brings solid financial experience gained from private equity firm The Carlyle Group, he is a former telecommunications executive and, as are his fellow directors, new to the auto industry.