Society of Automotive Analysts' Leaders Believe GM Will Emerge Stronger After Bankruptcy,...

Society of Automotive Analysts' Leaders Believe GM Will Emerge Stronger After
Bankruptcy, But Suppliers Will Be Hit Hard

DETROIT, June 1 /PRNewswire-USNewswire/ -- General Motors will emerge a
stronger, more competitive company after bankruptcy, but it will take time and
the supply base will suffer along the way, and many may face bankruptcy
themselves, according to the Society of Automotive Analysts, a leading U.S.
organization providing insights and analysis of the global automotive
industry.

"Despite months of media coverage warning us of the increasing likelihood of
this event, it is still difficult to grasp," said Tom Libby, SAA president.
"GM was not just another auto company. For decades it was THE auto company,
and in many ways it was THE industrial company of the world. GM will emerge
from bankruptcy a much more competitive company, and, in hindsight, the
changes that are being forced upon the company through bankruptcy are ones
that should have occurred many years ago."

Through the bankruptcy process GM will shed more than $79 billion in debt,
eliminate half its brands, reduce labor costs substantially, shrink its dealer
network by 40% and close several U.S. assembly plants. Libby pointed out that
GM's U.S. market share, after selling or discontinuing four brands, may fall
below that of its chief U.S. rival Ford, the first time this has occurred
since the early 20th century. Given GM's complexity, the company is expected
to stay in bankruptcy for much longer than the much smaller Chrysler, which
may emerge from bankruptcy as early as this week.

"Through these and other actions, the company will become much more
competitive with its Asian competitors, though in the near term it will have
limited funds with which to develop new products, and it also will be run at
least in part by the U.S. government, which becomes a majority owner," Libby
said.

"Through this entire process, a New General Motors needs to continue to be
global focused, seeking scale and restructuring the dealer, capacity and back
office footprint," said Michael Robinet, SAA board member and vice president,
Global Vehicle Forecasts, CSM Worldwide. "These goals have been achieved -
combined with a much lighter balance sheet and obligations portfolio. GM can
now function on a level playing field with its global competitors. There is
still much heavy lifting to come, though the New GM has a structure which can
allow for success in the future."
Regardless, the bankruptcy will hit the supply base hard.

"Although GM's filing was anticipated, today is a dark day for GM, the workers
and the economy," said Laurie Harbour-Felax, SAA vice president and president,
Harbour-Felax Group. "But the coming days will be darker for the supply base,
which will likely fall even harder. It won't be just the Tier One suppliers,
but the very vulnerable Tier Two and Three suppliers."

The Obama Administration is estimating it will take 60-90 days for the New GM
to emerge from bankruptcy. However, IHS Global Insight believes there is a
high probability that this timing is achievable since a prolonged GM
bankruptcy could significantly harm the U.S. economy just as it is starting to
show some signs of recovery. Thus, the Administration will likely do
everything possible to minimize the time the New GM stays in bankruptcy.

"While we believe that GM will emerge quickly from bankruptcy and that GM has
a high probability of eventually becoming a sustainable successful business,
we have some concerns with the speed and robustness of GM's forecasted
recovery," said Rebecca Lindland, SAA board member and director of automotive
research for North and South America, IHS Global Insight.

In particular, GM's forecasts for market volume, GM market share and the
resulting GM factory unit sales are somewhat higher than IHS Global Insight's
forecasts. GM is estimating an outbound market share of 18.4-18.9% in its
documents. IHS GI has a GM market share stabilizing at 17.2-17.4% from
2009-2014.

This share difference coupled with GM's more optimistic forecast for total
market volume results in GM's forecast for GM factory unit sales being higher
than our FUS forecast by as much as 20% in 2010. The difference in the
estimates narrows as time goes on, but even by 2014, GM's estimate for factory
sales is 5% higher than IHS Global Insight's estimate, putting in jeopardy the
timeline to profitability for GM.

"Like all domestic auto companies, GM faces a perception issue," Lindland
said. "Many American consumers are not yet willing to accept that GM, Ford and
Chrysler can build vehicles with the same appeal and quality as their Asian
counterparts. Taking GM and Chrysler through bankruptcy will only worsen the
situation."

She points out that one of the risks to the forecast is that in order for GM
to stabilize market share, we have to assume that GM can attract enough
younger (Gen Y) buyers to replace the domestic-loyal buyers of older
generations (Depression Gen, Quiet Gen) that are aging out of the market.

"GM is banking on exciting upcoming products like the Chevy Volt, Chevy Cruze,
and the newly available Chevy Camaro to help with perception issues. This
allows GM to halt its market share decline at around 17.2-17.4%. If GM can't
accomplish this, their market share will continue to slide, further weakening
their recovery plan," she said.

About the Society of Automotive Analysts
The Society of Automotive Analysts (SAA) is the leading U.S. organization in
providing insights and analysis of the global automotive industry. SAA is
dedicated to providing outstanding educational programs and superior
networking opportunities to its members. SAA offers conferences, programs, its
website and other forums in which to discuss, debate, and learn about a broad
variety of subjects and timely industry issues. With a membership of over
three hundred industry professionals, SAA holds some six meetings annually at
which various facets of the automotive industry are reviewed and analyzed.

SAA's Board of Directors includes four respected automotive industry analysts
who can be reached at the following e-mail addresses for additional commentary
:

Tom Libby: TGLibby@AOL.com
Laurie Harbour-Felax: LFelax@harbourfelax.com
Michael Robinet: MichaelRobinet@csmauto.com
Rebecca Lindland: Rebecca.Lindland@globalinsight.com

SOURCE Society of Automotive Analysts

Society of Automotive Analysts Headquarters, 800-704-0051