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 UBS Investment Research
                                                                                                                                                   12-month rating                                                                          Neutral
 General Motors Company                                                                                                                                                                                           Prior: Not Rated
                                                                                                                                                   12m price target                                                                            US$37.00
                                                                                                                                                                                                                                                      -
 Why buy now? No near-term catalysts…                                                                                                              Price                                                                                            US$33.89

    Why buy now? GM lacking near-term catalysts                                                                                                    RIC: GM.N BBG: GM US

 Overall, the combination of: 1) cautious Q4 guidance; 2) a weak North American                                                                                                                                     15 December 2010
 product launch schedule; 3) full-pension re-measurement at year end; 4) aggressive
 breakeven targets in Europe; and 5) slowing growth in China cause us to believe                                                                   Trading data
 GM lacks near-term catalysts required to move the stock. Our Neutral rating is                                                                    52-wk range                                                                          US$34.78-33.25
 mostly based on the fact that we cannot articulate a great reason to buy right now.                                                               Market cap.                                                                                       US$53.3bn
                                                                                                                                                   Shares o/s                                                                               1,572m (COM)
     Solid opportunities longer-term                                                                                                               Free float                                                                                                         72%
 While we focus on the lack of near-term catalysts above, we do like GM longer-                                                                    Avg. daily volume ('000)                                                                                   15,852
 term. More specifically, product launch schedule improvements in North America
                                                                                                                                                   Avg. daily value (m)                                                                                 US$541.6
 should drive market share stabilization in 2012, and this should allow GM to take
 better advantage of the SAAR recovery in its most profitable market.                                                                              Balance sheet data 12/10E
                                                                                                                                                   Shareholders' equity                                                                              US$25.3bn
    What’s changed since bankruptcy?
                                                                                                                                                   P/BV (UBS)                                                                                                         2.1x
 Since 2006, GM has cut hourly headcount in the US by over 40%, lost 30% of
 capacity, and cut the number of brands to four from eight. GM has also                                                                            Net Cash (debt)                                                                                   US$12.6bn
 substantially improved its liquidity, removing all of its US hourly OPEB
                                                                                                                                                   Forecast returns
 obligations and moving to a net-cash position.
                                                                                                                                                   Forecast price appreciation                                                                                 +9.2%
     Valuation: Initiating with a Neutral rating and a $37 price target                                                                            Forecast dividend yield                                                                                            0.0%
 Our $37 price target is based on a sum of the parts valuation that attributes: 1) $22                                                             Forecast stock return                                                                                       +9.2%
 to core auto operations; 2) $6 to Chinese JVs; 3) $5 to the present value of the                                                                  Market return assumption                                                                                           5.6%
 NOLs; 4) $3 to Delphi; and 5) $1 to the remaining Ally ownership. We place a 4x                                                                   Forecast excess return                                                                                      +3.6%
 EV/EBITDAP multiple on GM’s core auto operations (5.5x traditional 2011
 EV/EBITDA), which is a slight discount to our Ford multiple at 5x.                                                                                EPS (UBS, US$)
                                                                                                                                                                                                          12/10E                                               12/09
                                                                                                                                                                                      From                    To                      Cons.                   Actual
                                                                                                                                                   Q1                                     -                 0.47                          -                    (9.66)
                                                                                                                                                   Q2                                     -                 1.02                          -                    (9.56)
                                                                                                                                                   Q3                                     -                 1.36                          -                    (4.69)
 Highlights (US$m)                                     12/08                12/09              12/10E              12/11E              12/12E      Q4E                                    -                 0.26                          -                    (3.51)
 Revenues                                        147,732.00           104,589.00           126,840.00          136,994.00          146,146.00      12/10E                                 -                 2.70                       3.40
 EBIT (UBS)                                       (5,368.00)          (11,510.00)            5,269.10            6,269.79            8,179.07      12/11E                                 -                 4.30                       3.90
 Net Income (UBS)                                (17,441.00)          (15,130.00)            5,038.62            8,016.59           10,532.79
 EPS (UBS, US$)                                      (30.13)              (36.63)                2.70                4.30                5.65      Performance (US$)
 Net DPS (UBS, US$)                                     0.50                 0.00                0.00                0.00                0.00      50.0
                                                                                                                                                            Stock Price (US$)                                                                       Rel. S & P 500
                                                                                                                                                                                                                                                                        120

                                                                                                                                                                                                                                                                        100
 Profitability & Valuation                      5-yr hist av.                12/09              12/10E              12/11E               12/12E    40.0
                                                                                                                                                                                                                                                                        80
 EBIT margin %                                            0.7                 -11.0                 4.2                 4.6                  5.6   30.0
                                                                                                                                                                                                                                                                        60

 ROIC (EBIT) %                                            3.6                (50.5)               12.3                17.6                 23.1    20.0
                                                                                                                                                                                                                                                                        40

 EV/EBITDA (core) x                                         -                     -                 5.2                 4.4                  3.3   10.0
                                                                                                                                                                                                                                                                        20

 PE (UBS) x                                                 -                     -               12.5                  7.9                  6.0    0.0                                                                                                                 0
                                                                                                                                                          10/07

                                                                                                                                                                  01/08

                                                                                                                                                                          04/08

                                                                                                                                                                                  07/08

                                                                                                                                                                                          10/08

                                                                                                                                                                                                  01/09

                                                                                                                                                                                                          04/09

                                                                                                                                                                                                                  07/09

                                                                                                                                                                                                                            10/09

                                                                                                                                                                                                                                    01/10

                                                                                                                                                                                                                                            04/10

                                                                                                                                                                                                                                                      07/10

                                                                                                                                                                                                                                                              10/10




 Net dividend yield %                                       -                     -                 0.0                 0.0                  0.0
                                                                                                                                                                            Price Target (US$) (LHS)                      Stock Price (US$) (LHS)
 Source: Company accounts, Thomson Reuters, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for                            Rel. S & P 500 (RHS)
 abnormal and economic items at the analysts' judgement.                                                                                           Source: UBS
 Valuations: based on an average share price that year, (E): based on a share price of US$33.89 on 14 Dec 2010 18:13 EST
                                                                                                                                                                                              www.ubs.com/investmentresearch
 Colin Langan, CFA                                                        Julie Heckman
 Analyst                                                                  Associate Analyst
 colin.langan@ubs.com                                                     julia.heckman@ubs.com
 +1-212-713 9949                                                          +1 212 713 8593




 This report has been prepared by UBS Securities LLC
 ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 35.
 UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
 have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making
 their investment decision.
General Motors Company 15 December 2010


Contents                                                                                                       page         Colin Langan, CFA
                                                                                                                                             Analyst
Investment Thesis                                                                                                     3      colin.langan@ubs.com
                                                                                                                                    +1-212-713 9949
   —   Initiating With a Neutral Rating .............................................................................3
                                                                                                                                  Julie Heckman
Key Questions                                                                                                         6             Associate Analyst
   —   1) What’s changed since bankruptcy?..................................................................6               julia.heckman@ubs.com
                                                                                                                                     +1 212 713 8593
   —   2) What’s the value of GM’s non-core assets? .....................................................6
   —   3) Can GM really gain share in Europe?.............................................................11
   —   4) Can leasing offset US share pressure? ..........................................................13
   —   5) Are incentives down for good? .......................................................................15
   —   6) Just how important is BRIC? ..........................................................................17
   —   7) What are GM’s pension risks?........................................................................19
Valuation                                                                                                           24
Financial Outlook                                                                                                   26
   —   Earnings Outlook................................................................................................26
   —   Fixed & Variable Cost Outlook ...........................................................................27
   —   Cash Flow Outlook.............................................................................................29
Appendix                                                                                                            31




                                                                                                                                              UBS 2
General Motors Company 15 December 2010


Investment Thesis
Initiating With a Neutral Rating
Overall, the combination of: 1) cautious Q4 guidance; 2) a weak North
American product launch schedule; 3) full-pension re-measurement at year end;
4) aggressive breakeven targets in Europe; and 5) slowing growth in China
cause us to believe GM lacks near-term catalysts required to move the stock.
Our Neutral rating is mostly based on the fact that we cannot articulate a great
reason to buy right now. That said, we do like GM longer-term, as
improvements to its North American product launch schedule should help the
company better take advantage of the SAAR recovery in 2012.

What’s changed since bankruptcy? Since 2006, GM has cut hourly headcount
in the US by over 40%, lost 30% of capacity, and cut the number of brands to
four from eight. GM has also substantially improved its liquidity, removing all
of its US hourly OPEB obligations and moving to a net-cash position.

GM’s non-core assets can add as much as $27bn in additional value. Due to
the size and nature of GM’s non-core assets, we have separately valued them in
our sum of the parts valuation. We believe the combination of NOLs, Chinese
JVs, Delphi, and remaining Ally ownership can add as much as $27bn in value.

The expectation to gain share in Europe is slightly aggressive. Gaining share
in Europe is one of the key growth opportunities GM is currently marketing to
investors. However, we feel its targets are aggressive given: 1) excess capacity
and difficult operating fundamentals in the region; and 2) few volume-based
Opel refreshes.

US share under pressure, though leasing helps. GM is launching only two
high-volume vehicles over the NTM (Cruze and Sonic). These will face tough
competition from Ford (3 launches), which could pressure GM’s US share.
While AmeriCredit is an opportunity to improve financing terms and lease
penetration, we still expect GM to lose 50bps of share in 2011, so any positive
leasing impact will only slightly mitigate its tepid 2011 launch schedule.

“Produce to demand” could keep incentives sustainably below the industry.
While we believe GM’s new “produce to demand” strategy can keep average
incentives sustainably lower long-term, they will likely tick up next year due to
the company’s weak product launch schedule.

North America provides a better opportunity than BRIC near-term. We’ve
already published our view that North America is a bigger near-term opportunity
than BRIC. As such, while we expect GMIO to benefit from leading shares in
emerging markets, we also believe GM’s leverage to North America will be the
bigger driver of profitability over the next few years.

Pension re-measurement headwinds remain. Though GM re-measured 2/3 of
its US hourly pension in Q3, US salaried and non-US plans will still need to be
re-measured at yearend. We expect this to increase unfunded status by $5bn (net
of contributions).




                                                                                    UBS 3
General Motors Company 15 December 2010


Sensitivity Analysis
Every 1m units of US auto sales boosts GM’s EPS by ~$1.00. In comparison,
the same unit increase in China would only boost EPS by ~$0.05.

Consensus Expectations
Currently, there are six published sell-side estimates on GM. Consensus for          We do not believe consensus is
2010 is $3.40 vs. UBSe $2.70; while consensus for 2011 is $3.90 vs. UBSe             properly reflecting GM’s Q4 guidance
$4.25. Overall, we do not believe 2010 consensus is properly reflecting GM’s         that EBIT would be significantly lower
Q4 guidance that Q4 EBIT would be significantly lower than the first three           than the first three quarters.
quarters. YTD, EPS are about $2.44, or ~$0.81 per quarter. Our Q4 estimate of
$0.26 is significantly below this run rate, per GM’s guidance.

Risk Analysis
GM mitigated a number of its former risks in bankruptcy and has emerged a            The biggest near-term risk is that
much healthier and more streamlined business. Given the company has                  demand for upcoming product
corrected its liquidity issues, the biggest near-term risk is that demand for        launches is weaker than expected.
upcoming product launches is weaker than expected, which could cause it to
relatively underperform on a share basis despite the SAAR recovery. We also
view the new (and unproven) management team as a risk, given the limited track
record and lack of prior industry experience. Finally, there is risk that consumer
demand shifts back towards cars vs. trucks faster than GM can launch new
product offerings in the subcompact and small car segments -- in which case it
would probably face additional market share pressure and margin compression.

Forthcoming Catalysts
We’ve already stated our view that GM lacks the right near-term catalysts            We’ve already stated our view that GM
required to move the stock. That said, upcoming events include: 1) December          lacks the right near-term catalysts
SAAR (reported in the first week of January); and 2) GM’s Q4 earnings call,          required to move the stock.
which will occur in early April.

Valuation and Price Target Basis
Our $37 price target is based on a sum of the parts valuation that attributes: 1)
$22 to core auto operations; 2) $6 to Chinese JVs; 3) $5 to the present value of
the NOLs; 4) $3 to Delphi; and 5) $1 to the remaining Ally ownership. We place
a 4x EV/EBITDAP multiple on GM’s core auto operations (5.5x traditional
2011 EV/EBITDA), which is a slight discount to our Ford multiple at 5x.

Sensitivity Analysis: VCAM
See the Appendix for our VCAM valuation and sensitivity analysis.

Environmental, Social, & Governance Issues
Stricter CAFE standards through 2016 are pushing the US auto industry to make
a more concerted effort to minimize the environmental impact of its products
(our June 2010 report, "Which Technologies will benefit most from Fuel
Economy Regulations?" discusses our view on these standards and which
technologies will be most important for automakers to meet them). Specific to
GM, the company has made ramping its small car segment a long-term strategic
priority, with the goal of better balancing its portfolio across small and large
vehicles. More small and sub-compact vehicle launches should reduce total
carbon footprints for the company. Further, the Volt (the company's most

                                                                                                                       UBS 4
General Motors Company 15 December 2010


advanced hybrid offering) went to market in November. Since then, GM has
made a significant push to increase production and future spending on this plug-
in vehicle.

Stake Ownership
Prior to GM's IPO, the equity was owned by the US government (61%), the
UAW VEBA (18%), the Canadian government (12%), and creditors from Old
GM (10%). During the IPO, the US government sold 478m shares to the public.
As a result, the US government's ownership fell from 61% to 29% and the
public shareholders acquired 32% of the equity. The government ownership may
be diluted from in-the-money warrants issued to creditors, the mandatory
convertible preferred, restricted stock grants, stock contributions to the pension
plan, and UAW warrants (currently out of the money at $42/share).




                                                                                     UBS 5
General Motors Company 15 December 2010


Key Questions
1) What’s changed since bankruptcy?
Table 1 outlines major differences in GM’s operating structure pre and post
bankruptcy. Since 2006, the company has cut hourly headcount in the US by
over 40%, lost 30% of capacity, and cut the number of brands to four from eight.
In addition to this operational streamlining, GM has also substantially improved
its liquidity—removing nearly all of its OPEB obligations and moving to a net-
cash position. Overall, we believe the combination of these cost cuts plus a
recovery in SAAR makes the company very well positioned to benefit from
operating leverage in North America over the next few years.
Table 1: GM Pre vs. Post Bankruptcy Snapshot                                       The combination of cost cuts and the
                                                                                   SAAR recovery makes GM well
                                              2006      2008         2010
                                                                                   positioned to benefit from operating
Headcount & Capacity Reductions
                                                                                   leverage in North America.
Global Headcount                          280,000      243,000      208,000

US hourly headcount                       89,000       62,000       51,000

Straight Time Capacity (North America)   5,218,750    5,242,000    3,741,000

Dealer & Brand Reductions

# of Brands                                    8          8            4

# of US Dealers                            6,901        6,273        5,023

# of Global Dealers                       23,885       21,602       21,002

Balance Sheet Improvements (m)

Net Debt                                 ($12,321)    ($31,382)     $7,730

Unfunded Pensions                         $4,938      ($25,499)    ($27,805)

Unfunded OPEB                            ($51,066)    ($32,921)     ($9,922)

   Pension PBO                           ($107,960)   ($118,130)   ($132,017)

   OPEB PBO                              ($68,005)    ($42,890)     ($9,922)

Source: Company reports, AutoNews, CSM, UBS

2) What’s the value of GM’s non-core assets?
Due to the size and nature of GM’s non-core assets, we have separately valued      We believe non-core assets can add as
them in our sum of the parts valuation. More specifically, we believe the          much as $27bn in additional value.
combination of NOLs, Chinese JVs, Delphi interest, and remaining Ally
ownership can add as much as $27bn in additional value to the company. Table
2 below outlines our respective estimates for each of GM’s non-core
components. Afterwards, we discuss the valuation methodologies for each asset
in more detail.




                                                                                                                    UBS 6
General Motors Company 15 December 2010


Table 2: Non-core Asset Valuation Summary

               Asset                      Estimated Market Value

NOLs                                                $8,500

China JVs                                           $10,700

Delphi                                              $4,800

Ally & Other                                        $2,500

Total Non Core Assets                               $26,500

Source: UBS estimates

How much are the NOLs worth? We think $8.5bn…

To date, NOLs have offered little value to automakers in a historically
unprofitable US auto industry. However, because bankruptcy restructuring
lowered breakeven points and removed debt, GM’s profitability is expected to
be much more sustainable. This means that previously worthless NOLs can
provide long-term value to the company.

While some media reports have highlighted values for GM’s tax assets of as          Though we’ve heard of values as high
much as $45bn, we believe the $18.8bn NOL is the only tax asset that should be      as $45bn for GM’s tax assets, the most
separately valued. Table 3 below breaks down GM’s tax assets as of 2009, and        appropriate figure is the $19bn NOL.
shows that on a net tax asset basis, it does have ~$45.4bn in assets.

Table 3: GM’s Tax Assets as of 2009                                                 GM’s financials make it easy to see why
                                           Assets             Liabilities
                                                                                    some media reports have pointed to
                                                                                    $45bn as the right value for this non-
Post Retirement Benefits                    4,194                  0
                                                                                    core asset.
Pension and Other                           8,876                  406

Warranties, Claims, Discounts               3,940                  75

PPE                                         7,709                  278

Intangibles                                 1,650               4,984

Tax Carry-forwards                         18,880                  0

Misc US                                     5,844               1,269

Misc Non US                                 3,306               1,944

Total                                      $54,399             $8,956

Net Tax Asset                              $45,443

Source: Company reports

However, looking back at historical financials shows that even in periods of        In periods of strong profitability, GM
strong profitability (eg, 1995), GM included many of the same items in its tax      included many of the same items in tax
asset breakdown as it does today. Assuming these items are part of the normal       assets that it does today, so we exclude
course of business, the only real stand-out is the $18.8bn carry-forward. Table 4   these in our NOL valuation.
shows that the difference between total tax assets in 2009 and 1995 is about
~$18bn – or exactly the value of the NOL. As such, we believe this is the most
relevant asset to value.




                                                                                                                      UBS 7
General Motors Company 15 December 2010


Table 4: Tax Asset Comparison of Profitable vs. Unprofitable Periods                 The difference between total tax assets
Tax Assets                                           2009              1995
                                                                                     in 2009 and 1995 is ~$18bn – or the
                                                                                     value of the current NOL.
Post Retirement/Pension Benefits                     13,070           20,795

Warranties, Claims, Discounts                        3,940             3,634

PPE                                                  7,709             2,083

Intangibles                                          1,650             870

Tax Carryforwards                                    18,880            1,209

Misc US                                              5,844             6,894

Misc Non US                                          3,306             1,141

Total Tax Assets                                    $54,399           $36,624

Tax Asset Difference                                                  $17,775

Source: Company reports

Getting to $8.5bn. In late August we wrote a report on hidden assets, which
valued non-core items like NOLs and JVs for Ford and the suppliers. Applying a
similar analysis to GM points to an additional $8.5bn (or $5/share) of NOL
value. For more information, please see our report titled Industry Profits Unlock
Hidden Value.

Table 5 below provides an overview of our NOL valuation methodology. We
estimated the net present value of GM’s NOLs by estimating the regional
earnings needed before these NOLs can be fully utilized. We also haircut these
NOLs based on the probability that they will expire before utilization. Lastly, we
discounted the tax cash savings at a 15% cost of capital.

Table 5: NOL Valuation Methodology

                                             Years to
Region              Gross          Haircut    Utilize         NPV

US                  14,000          10%         8             6,300

S America              300          0%          1             280

Canada               1,400          10%         5             790

Europe               1,800          20%        +10            460

Other                1,300          50%        N/A            660

TOTAL               18,800                                    8,490

Source: Company reports, UBS estimates

Interestingly, given that the bulk of NOLs are in the US, GM’s expected pension      Since most of GM’s NOLs are in the US,
contributions will likely push out the timing for their use. We estimate $16.3bn     continued pension contributions will
in pension funding will generate income tax expenses under IRS reporting – and       likely push their use further out.
this will delay the realization of the NOL cash savings by about three years.

How much are the China JVs worth? We think ~$11 bn…

GM’s presence in China consists of three JVs: 1) SGM (49% ownership); 2)             GM’s presence in China is based on
SGMW (44% ownership); and 3) FAW (50% ownership). The current operating              three JVs with: 1) SGM (Shanghai GM);
structure in China is such that the government only allows foreign automakers to     2) SGMW (SAIC); and 3) FAW.
operate as JVs with the Chinese domestics. At Q3, the two largest Chinese JVs
had provided ~$1.1bn in after-tax equity income to GM (see Chart 1), with
SGM the majority of the contribution. While GM does not disclose it, we back

                                                                                                                       UBS 8
General Motors Company 15 December 2010


into an FAW estimate based on information provided for SGM & SGMW and
total GMIO equity income. YTD, we estimate FAW to be slightly unprofitable.
Chart 1: SGM & SGMW Equity Income Contribution (2007- 2010 YTD)                                                      SGM makes up the majority of Chinese
                                                                                                                     JV equity income, followed by SGMW
     1200                                                                                          $1,100            and FAW. We estimate FAW to be
                                                                                                                     slightly unprofitable in 2010 YTD.
     1000
                                                                         $764
      800

      600
                      $430
      400                                     $312

      200

        0
                      2007                    2008                          2009                  2010 YTD



Source: Company reports


At book value, SGM and SGMW are worth ~$5bn and ~$1bn, respectively (we
estimate FAW has a BV of less than $500m). As Table 6 shows, the Fresh Start
Accounting process significantly increased the values of SGM and SGMW by
nearly 400% post-bankruptcy, as accountants re-assessed the fair value of these
assets. The additional $3.5bn in value for SGM is broken into: 1) $2.9bn of
goodwill; 2) $0.6bn of intangible assets; and 3) $38m of higher property in PPE.

Table 6: Pre vs. Post Bankruptcy JV Book Values                                                                      Fresh Start accounting has increased
                                                                                                                     the book values of GM’s largest JVs by
                                                                                                     Fresh Start
                                                Post-Bankruptcy              Pre-Bankruptcy           Increase       4-5x.
BV of SGM                                                $4,937                     $1,076              4.6x

BV of SGMW                                               $579                        $158               3.7x

Source: Company reports

Getting to $10.7bn. As Table 7 below shows, our $10.7bn estimate is the mid-                                         We use a bull-bear case scenario
point of a bull-bear scenario analysis applied to the Chinese JVs.                                                   analysis and take the mid-point of these
                                                                                                                     two estimates to value China.
Table 7: Bull-Bear Scenario Analysis for Chinese JVs

            Bull Case (P/E)             Base Case (Dividend Discount)                  Bear Case (Book Value)

Equity Income                 1,400    Current Dividend            600             SGM 12/31/09             4,937

PE Multiple                    15x     Growth                      15%             SGMW 12/31/09             579

FV                            21,000   Cost of Capital             21%             FAW (Other)               400

Minority Discount              30%                                                 Income                   1,400

                                                                                   Dividend                  -600

NPV                          $14,700   NPV                        $10,700          Book Value               $6,716

Source: Company reports, UBS estimates

The bear case treats each of the three JVs at book value. To calculate 2011 year-
end book value, we added this year’s expected equity income contribution of
$1.4bn and subtracted out the annual dividend of $600m. On the other end, the

                                                                                                                                                       UBS 9
General Motors Company 15 December 2010


bull case treats the JVs as a Chinese OEM and applies a 15x multiple (the
average for a Chinese OEM) to $1.4bn in equity income, then haircuts this value
down by a 30% lack of control premium, which is typical for a minority interest
ownership. However, we think the bull case is too bullish given: 1) the Chinese
government is likely more biased to domestics vs. foreign players; 2) intellectual
property concerns; 3) the likelihood that pricing pressure will probably increase;
and 4) general share volatility in emerging markets (see our discussion on BRIC
for additional information).

As such, we take the average of our bull and bear case to get a $10.7bn mid-                 Our $10.7bn average estimate is
point estimate. To support this value, we applied a dividend discount model                  supported by a DDM, which also puts
analysis to the $600m annual dividend. Under this analysis, a 15% growth rate                the present value of the dividends at
(~20% long-term unit growth less pricing and EPS pressure) and a 21% cost of                 $10.7bn.
capital (reflects the high risk inherent in the Chinese market) generates a
$10.7bn estimate, which is in-line with our bull/bear case values.

How Much is Delphi Worth? We think $5bn…

We estimate Delphi is valued at about $12bn, which is a reflection of $3bn in
net cash plus 6.0x annualized 2010 EBITDA of $1.5bn (the 6.0x multiple is
consistent with the average supplier multiple on 2010 EBITDA). While GM’s
disclosures on its ownership in Delphi are limited, it does disclose that its stake
in the first $2bn in Delphi proceeds is about 53%, while its stake in any proceeds
over $7bn is 35%. GM does not disclose its ownership interest from $2bn to
$7bn; and therefore we estimate this interest is about 40%, or the lower end of
the 35%-53% range on the other distributions. With these assumptions, we
estimate GM’s take in Delphi is about $4.8bn. See Tables 8 and 9 for further
details.
Table 8: Delphi Valuation                                      Table 9: GM Estimated Delphi Ownership

YTD EBITDA                               $1,138                 First $2bn (53%)                   $1,069

Annualized EBITDA                        $1,517                 Over $7bn (35%)                    $1,753

Market EV to EBITDA                       6.0x                  Estimated 40% $2bn to $7bn         $2,000

Core EV Range                            $9,104                 Total GM Value                     $4,822

Cash                                     $3,705                 Estimated Ownership                 40%

Debt                                     ($301)

Pension & OPEB Post-Tax                  ($499)

Total EV                                 $12,009

                                                               Source: Company reports, UBS estimates
Source: Company reports, UBS estimates


How much is Ally worth? We think book value…

To value Ally, we applied the same lack of control discount that we did for                  We apply the same 30% lack of control
China (30%) to the current book value of $3.5bn. As Table 10 shows, this                     discount to Ally’s BV to get an estimate
generates a value of $2.4bn. While GM currently owns 16.6% of Ally, this is                  of $2.4bn.
expected to fall to 10% by the end of 2011, given provisions outlined in the
company’s bank holding contract—which essentially mandate it to sell.




                                                                                                                              UBS 10
General Motors Company 15 December 2010


Table 10: Ally Valuation Methodology

Ally Book Value                           20,977

GM Share                                  16.6%

GM BV                                     3,482

Minority Discount                          30%

NPV                                       $2,400

Source: Company reports, UBS

3) Can GM really gain share in Europe?
Gaining share in Europe is one of the key growth opportunities GM is currently                                                         GM has guided to 9.5% and 10.3%
marketing to investors. The company’s financials disclose an expectation for                                                           European share in 2011 and 2014– but
9.5% share in Europe by the end of 2011 – and growth in share to 10.3% by                                                              we feel these targets are aggressive.
2014. However, given the extreme amount of excess capacity in Europe
(estimated at as much as nine plants according to the Harbour report) and our
view that GM’s product launch schedule will not be strong enough to materially
alter weak consumer perceptions of Opel, we view these targets as aggressive.

For perspective, we have provided GM’s historical European share and segment
EBIT in Charts 2 and 3 below. Given that share fell from 9.3% to 8.4% between
2008 and 2009, and further, is expected to fall another 30bps (to 8.1%) at the
end of 2010, we have difficulty seeing how GM will more than make up the
difference in a year. Further out, we find increasing share by nearly 200bps over
the next four years to be aggressive, especially given the lack of volume-based
Opel launches through 2012. Finally, it is largely believed that GM is more
dependent on corporate fleet vs. retail in Europe due to higher corporate fleet
penetration in Germany and higher rental volumes, which generally does not
bode well for its retail share. As for EBIT, we expect GME to remain
unprofitable through 2011 before slightly turning more positive there on out.

Chart 2: GM’s European Market Share (2000-2010)                                             Chart 3: Historical & Expected GME Segment EBIT


    12.0%                                                                                        $1,000                                                                                                          $664
                                                                                                                                                                                                    $555
              10.2%                                                                                $500                                                                                          $255
    10.0%          9.6% 9.0% 9.2%
                                  9.3% 9.3% 9.0% 9.4% 9.3%                                           $0
                                                                              8.4% 8.1%
      8.0%                                                                                        ($500)
                                                                                                                                                                                         ($341)
                                                                                                ($1,000)
      6.0%                                                                                      ($1,500)
                                                                                                ($2,000)                                                                         ($1,351)
      4.0%
                                                                                                ($2,500)
      2.0%                                                                                      ($3,000)
                                                                                                ($3,500)                                                             ($3,260)
      0.0%
                                                                                                           2000
                                                                                                                  2001
                                                                                                                         2002
                                                                                                                                2003
                                                                                                                                       2004
                                                                                                                                              2005
                                                                                                                                                     2006
                                                                                                                                                            2007
                                                                                                                                                                   2008
                                                                                                                                                                          2009
                                                                                                                                                                                 2010E
                                                                                                                                                                                         2011E
                                                                                                                                                                                                 2012E
                                                                                                                                                                                                         2013E
                                                                                                                                                                                                                 2014E
              2000

                     2001

                            2002

                                   2003

                                          2004

                                                  2005

                                                         2006

                                                                2007

                                                                       2008

                                                                              2009

                                                                                     2010




Source: Global Insight                                                                      Source: Company reports, UBS estimates


Restructuring Plan Overview

In an effort to reverse Opel weakness and some of the excess capacity in                                                               GME’s restructuring plan aims to
Europe, GM has laid out a restructuring plan that aims to: 1) cut European                                                             correct: 1) weak consumer perception
capacity by 20%; 2) reduce labor costs by ~$320m/year; and 3) refresh Opel in                                                          of the Opel brand; and 2) and excess
an effort to increase consumer perception of the brand and improve GM’s                                                                capacity in the region.


                                                                                                                                                                                                                 UBS 11
General Motors Company 15 December 2010


overall image as a more stable company. As aforementioned, the result of these
efforts should be a market share of 10.3% and 22.5m vehicle sales by 2014 (up
from 8.4% share and ~18m units currently).

Opel lacks large refresh. While recent Opel launches (Meriva, Astra, and           Given most of the Opel refreshes are
Insignia) have been well received by the press in Europe, they have generally      not on volume-based products, we are
underperformed as a result of the uncertainty surrounding GM’s stability.          wary of GM’s ability to get to 10.3%.
Looking forward, the Opel product quality improvement plan is expected to
replace 50% of GM’s current portfolio in Europe. However, we are somewhat
cautious of its ability to materially alter consumer perceptions, given the
majority of refreshes will be on non-volume products. Specifically, the Corsa
(35%+ of GM’s European production volumes) is not expected to launch until
2013, while the Astra (23% of volumes) was already refreshed in Q409. As
Table 11 shows, most of Opel’s other models are <10% of total production.

Table 11: Current and Upcoming Platform Changes

     Model               Brand   % of 2010 Production   Next Model   Last Update   The Corsa and the Astra make up ~50%
     Corsa               Opel            37%              2013          2006       of GM’s European production volumes
     Astra               Opel            23%              2016          2009       – but neither will be refreshed in 2011
    Insignia             Opel           13%               2015          2009
                                                                                   or 2012.

     Meriva              Opel           10%               2016          2010

     Zafira              Opel            7%               2012        pre-2006

     Vivaro              Opel            4%               2013        pre-2006

    Combo                Opel            3%               2011        pre-2006

     Regal               Buick           2%              unknown        2010

    Movano               Opel            1%              unknown        2010

    Ampera               Opel            n/a               n/a       new in 2013

Source: Global Insight

Cutting capacity and labor costs. On the capacity side, the majority of GM’s
20% capacity cut will be derived from closing a plant in Antwerp, Belgium; on
the labor side, GM has reached an agreement with the European labor unions to
lower labor costs by $323m/year. GM also plans to reduce headcount by 8.3k
workers by the end of 2011, which we estimate to be ~$500m-$650m in savings.
To finance this plan, GM initially requested funding support from various
European governments. However in June, the German government denied this
request, so GM decided to finance GME restructuring internally. Given that 1)
we expect GME to lose $1.4bn in 2010; and 2) our view that restructuring
savings will fall short of break-even next year, we forecast a $300m loss (-
$1.4bn segment EBIT + $0.3bn in wage concessions + $0.7bn in headcount
reduction).

Overall, while we expect GM’s restructuring plan can improve its position in       We believe weak market fundamentals
Europe, we do not think Antwerp alone can correct the capacity issue in the        will plague Europe for longer than GM’s
region. In addition, the market is very competitive (while VW leads with nearly    current forecasts imply.
20% share, a number of players compete to hold the next 8-10%, including GM
and Ford). As such, despite GM’s intentions, we believe weak market
fundamentals will continue to plague Europe for longer than GM is forecasting.



                                                                                                                    UBS 12
General Motors Company 15 December 2010


4) Can leasing offset US share pressure?
Our discussion of GM’s European restructuring above highlights our view that                                           We are also somewhat cautious of
near-term share gains in Europe could be difficult. We take a similar stance on                                        near-term North American retail share.
North America – not because of weak market fundamentals, but because GM
faces a number of tough competitor launches in the small car segment, which
could pressure sales of the Cruze and the Sonic (formerly the Aveo). Table 12
below details upcoming launches, and shows that despite GM’s most anticipated
products, the competitive dynamic in small cars could put its total retail share at
risk over the next year.

Table 12: Key GM Competition in the Small/Compact Car Segment                                                          Both the Cruze and Sonic face very
     Cruze Competition              Launch Time             Sonic Competition                   Launch Time
                                                                                                                       tough competition.

         Ford Focus                    2011                     Ford Fiesta                           Q210

        Honda Civic                    2011                    Nissan Versa                           Q211

      Hyundai Elantra                  2011

Source: CSM

While GM’s product cadence improves into 2012 and beyond, we expect share
to stay flat sequentially through 2014. Further, as Charts 4 - 5 show, share
differentials between GM, Ford, and Toyota have greatly narrowed over the last
10 years. Perhaps the biggest threat going forward, however, is Hyundai, which
is expected to move from 7.8% at 2010 to 8.7% by 2016.

Chart 4: GM’s Historical and Expected US Market Share                                                                  We do not expect GM to gain share
                                                                                                                       over the next four years.
    35.0%
              28.6% 28.1%
    30.0%                 27.4% 26.1%
                                             24.4% 23.6%
    25.0%                                                   22.2%
                                                                     19.8% 19.0%
                                                                                 18.5% 18.5% 18.5% 18.5%
    20.0%
    15.0%

    10.0%
     5.0%
     0.0%
                                                                              2010E

                                                                                      2011E

                                                                                              2012E

                                                                                                       2013E

                                                                                                               2014E
               2002

                      2003

                             2004

                                      2005

                                              2006

                                                     2007

                                                              2008

                                                                      2009




Source: Ward’s, UBS estimates




                                                                                                                                                        UBS 13
General Motors Company 15 December 2010


Chart 5: Historical and Expected US Market Shares (2002-2014)


      35.0%
                28.6%
      30.0%
                                                                                                                                                                                                        18.5%
      25.0%                                                                                                                                                                                               16.5%
                      20.0%
      20.0%                                                                                                                                                                                                 14.6%
                                                                                                                                                                                                              8.7%
      15.0%
                       10.4%
      10.0%
       5.0%                 3.6%

       0.0%
                     2002



                                     2003



                                                   2004



                                                                 2005



                                                                                   2006



                                                                                                 2007



                                                                                                          2008



                                                                                                                       2009



                                                                                                                                          2010E



                                                                                                                                                            2011E



                                                                                                                                                                              2012E



                                                                                                                                                                                           2013E



                                                                                                                                                                                                             2014E
                                                                                    GM           Ford     Toy ota              Hy undai


Source: Global Insight, UBS estimates


Can Americredit leasing offset share pressure in NA & Europe?

Over the last two years, GM has not been able to offer financing terms that are                                                                      An increase in GM’s leasing share
as strong as some of its competitors. This is mostly attributable to the lack of a                                                                   could help offset any retail pressure
captive financing arm. As a result, CNW estimates GM’s total leasing share fell                                                                      over the next few years.
to 17% last year (vs. 22% industry), from as high as 33% in 1999 when
Ally/GMAC was wholly owned (this was above the industry at 32% during the
same time period).

Chart 6: Historical Leasing Share (GM vs. Industry)                                                     Chart 7: 2009 Leasing Share

              33%
    35.0%       32%                                                                                         35%       31%        30%
                                                                                                            30%                             25%
    30.0%                                                                                                                                              22%          22%       22%
                                                                                                            25%
                                                                                                            20%                                                                       17%          16%
    25.0%                                                                                  22%
                                                                                                            15%                                                                                             10%
    20.0%                                                                                 17%               10%
                                                                                                                 5%
    15.0%
                                                                                                                 0%
              1999



                              2001



                                            2003



                                                          2005



                                                                            2007



                                                                                          2009




                                                                                                                                             Honda
                                                                                                                                  VW




                                                                                                                                                       Industry

                                                                                                                                                                    Hyundai
                                                                                                                      Toyota




                                                                                                                                                                               Ford




                                                                                                                                                                                                   Nissan
                                                                                                                                                                                      GM




                                                                                                                                                                                                            Chrysler

                                            GM                   Industry


Source: CNW Research                                                                                    Source: CNW Research


Importantly, we note that the difference in the CNW data above (17%) vs. the
estimated leasing share provided by GM (7%) is mostly a result of the fact that
CNW includes third-party leases like financial institutions (non-captive),
independent leasing companies, and corporate fleets in its data. However, given
both estimates still show that GM is well below the industry, we do not believe
the discrepancy hinders our view on the company’s opportunity in leasing.

Given GM’s recent weakness in leasing relative to the industry, we feel
AmeriCredit might provide a nice opportunity for it to gain back share –
especially if Europe and North America experience retail share pressure. As it
relates to AmeriCredit, the company plans to expand into a new regional lease

                                                                                                                                                                                                                  UBS 14
General Motors Company 15 December 2010


program at the end of Q111, which is aimed to help grow its leasing business
from the current 17% to industry levels of 22%. Overall, we expect that higher
lease penetration in 2011 will slow the magnitude of the 2009 and 2010 share
losses (at 240bp and 80bps, respectively), to only 50bps in 2011. That being said,
the 50bp movement still represents a loss.

5) Are incentives down for good?
Industry incentives are down 2.5% YTD, interestingly driven by declines at the                      The D3 “produce to demand” strategy
Detroit 3 (down 4.9%) vs. the transplants. This marks a significant shift away                      has caused YTD incentives to fall 5%
from past trends, which have historically been characterized by heavy D3                            for the domestics, better than the
incentivizing, as overproduction drove more markdowns needed to clear                               industry at -2.5%.
inventory. However, since recovering from the downturn, Ford and GM have
emphasized a new pricing strategy, which aims to keep production in-line with
demand, inventories lower, and prices and profit margins higher. This has
helped to increase profitability in 2010, and, as Autodata shows, also lower
incentives. Further, according to our November dealer survey, dealers do not
expect incentives to change next year, which implies that “produce to demand”
is working and that perhaps the new pricing strategy and permanently lower
incentives are sustainable for the domestic OEMs.

Chart 8: Average Total Incentives (car + truck)                      Chart 9: Y/Y Growth in Average Total Incentives (car + truck)


     4,000                                                                55%
     3,500
                                                                          35%
     3,000
     2,500                                                                15%

     2,000
                                                                          -5%
     1,500
     1,000                                                               -25%
                                                                                 1999


                                                                                        2001


                                                                                                      2003



                                                                                                              2005


                                                                                                                      2007



                                                                                                                               2009
              1998


                     2000


                            2002


                                     2004


                                            2006


                                                       2008


                                                              2010




                               D3           Industry                                           GM              D3            Industry


Source: AutoData                                                     Source: AutoData


As it relates to GM, the company has seen YTD incentives fall by 4.8% y/y to
$3,395, better than Ford (+5.1%) and the industry (-2.5%). Chart 10 below
breaks out monthly incentive levels for GM, the D3, and the industry.




                                                                                                                                        UBS 15
General Motors Company 15 December 2010


Chart 10: YTD Incentive Trends                                                                                       In the last few months, GM has
                                                                                                                     continued to narrow the gap with both
    $4,000                                                                                                           domestic and industry average
                                                                                                                     incentives.
    $3,500

    $3,000

    $2,500

    $2,000

    $1,500

    $1,000
                  1/10   2/10       3/10   4/10       5/10   6/10    7/10      8/10       9/10      10/10    11/10


                                                 GM          D3             Industry


Source: AutoData


Inventory Update

As Chart 11 below shows, while GM’s car and truck inventories have ticked up
over the last six months, they are still below median levels seen in 2000-2008
when the company followed its old “over-produce, over-incentivize” strategy.
Most recently, November days were 76, below the historical median of 94.
Further, they are well within the high-low historical range. That said, mix will
likely be negative in Q4 as the GMT900 pick-up days of supply was 112 days,
higher than the Ram (99) and the F-Series (68). Overall though, given GM’s
new pricing strategy we would expect inventory days of supply to remain at the
lower end of its historical range, implying limited inventory restocking in 2011.
Chart 11: GM Days Sales Outstanding                                                                                  While GM’s inventory levels have ticked
                                                                                                                     up since May, they are still well below
                                                                                                                     2000-2008 median levels.
  150

  130
  110
    90
    70
    50

    30
         Jan     Feb     Mar        Apr    May        Jun    Jul     Aug        Sep           Oct    Nov       Dec

               High/Low 2000-2008                 Median 2000-2008                     2009                 2010


Source: Ward’s


Will the low incentives trend last?

By lowering incentives, GM’s “produce to demand” strategy has also caused                                            Contribution margins could come
contribution margins to rise. We estimate these have increased $2,300 to                                             under pressure next year if a weak
$10,500/vehicle in 2010. However, given the company’s relatively weaker                                              launch schedule causes GM to chase
product launch schedule heading into 2011 (which we’ve already discussed),                                           share with incentives.
contribution margins could come under pressure next year if lower than


                                                                                                                                                     UBS 16
General Motors Company 15 December 2010


expected demand causes GM to chase share with incentives. However, as the
launch schedule improves in 2012, contribution margins should stabilize.

6) Just how important is BRIC?
Prior to GM’s IPO, we published two industry reports discussing the relative          We expressed our view that North
growth opportunities in both BRIC and the US. These reports concluded that            America is a bigger NT growth
while emerging markets are an important strategic growth outlet for automakers        opportunity than BRIC prior to the IPO.
over the long-term, the US recovery has much bigger near-term potential. (For
additional information, please see our reports titled: 1) The US (not BRIC) is Key
NT Growth Market – published November 11, 2010; and 2) 10% Margins in the
“New” US Auto Industry – published November 15, 2010). As such, while we
expect GMIO to benefit from its presence and leading market shares in
emerging markets, we also believe that, like Ford, GM’s leverage to North
America will be the bigger driver of profitability over the next few years.

Earnings sensitivity to China is low

Over 50% of GMIO’s sales volume comes from China. However, using the                  Every 1m units sold in China only
company’s current market share and the pricing and margin data we gathered in         translates into ~$100m in profits. This
our aforementioned BRIC report, the earnings impact is not that significant.          contribution is 5x smaller than that of
More specifically, we estimate that every 1m new units sold in China only             North America.
translates into ~$100m of incremental operating profit—vs. the US at nearly 5x
more contribution per 1m units. Table 13 outlines the math behind these
assumptions, and supports our view that North America is currently the biggest
regional opportunity for GM.

Table 13: China vs. US – Profit Contributions

                                China            US

Avg price/unit                    $15,000         $27,000

Avg operating margin                    10%           10%

Per unit profit                    $1,500          $2,700

Current GM Share                        13%           19%

@ 1m units                        130,000         190,000

Profit Contribution           $195,000,000    $513,000,000

50% JV impact                   97,500,000             NA

Earnings Contribution to GM     97,500,000     513,000,000

Source: UBS estimates

GM BRIC Share – can current levels determine future share?

As Charts 12-15 show, GM has a leading market share in Brazil, Russia, and            GM has leading market shares in Brazil,
China. While share in India is in the single-digit percentages, GM is still one of    Russia, and China.
the top 5 players there. Of the four markets, we believe Brazil is likely the most
sustainable for GM, given its Top 3 market share and profitability. On market
share, we expect that GM, VW, and Fiat will operate a near oligopoly in Brazil,
given shares of 15%-20% each. Further GM should benefit from a profitability
perspective, given 100% of its products are produced locally. All of this said, the
head of GM’s South American unit recently commented that margins in the
industry have come down due to price competition, and further, we also suspect
that higher R&D may contribute to margin weakness near-term.


                                                                                                                        UBS 17
General Motors Company 15 December 2010


Chart 12: 2010 Market Share – Brazil                                              Chart 13: 2010 Market Share – Russia


                         Others, 12%
                                                  Fiat, 22%
                    Toy ota, 3%

                                                                                                       Other, 28%                      Av tov az, 27%
                   Honda, 3%
                    PSA, 5%

            Nissan, 5%
                                                                                                    Gaz Group,
                                                            VW, 21%
                     Ford, 10%                                                                         5%                               Hy undai, 11%

                                                                                                       Ford, 6%                   Nissan, 9%
                                       GM, 19%                                                                          GM, 8%
                                                                                                            VW, 7%


Source: Global Insight                                                            Source: Global Insight

Chart 14: 2010 Market Share - India                                               Chart 15: 2010 Market Share – China


                 Toy ota, 3%
                                  Others, 12%
                                                                                                                                 VW, 11%
                    Ford, 3%
                                                        Suzuki, 33%                                                                     GM , 14%
                    GM, 4%
                                                                                               Others , 46%
             Mahindra, 9%
                                                                                                                                          Changan, 8%

                 Hy undai, 11%                                                                                                          FAW, 6%

                                                Tata, 26%                                                        Toy ota, 5%       Hy undai , 6%
                                                                                                                        Dongfeng, 5%


Source: Global Insight                                                            Source: Global Insight


However, given the BRIC auto industry is still very young, we do not view
current shares as indicative of future strength. See Tables 14 and 15 below,
which show that over the last ten years, share movements have been volatile in
the two most currently popular BRIC auto markets (China and Brazil).

Table 14: Historical, Current, and Expected Shares in Brazil

  2000                              Share        2010                     Share     2015                                 Share

   1      VW                        28.4%         1      Fiat             23.5%       1      Fiat                        23.0%

   2      Fiat                      25.6%         2      VW               22.2%       2      VW                          20.3%

   3      GM                        23.3%         3      GM               20.1%       3      GM                          17.4%

   4      Ford                       8.7%         4      Ford             9.7%        4      Ford                         8.6%

   5      Renault/Nissan             4.0%         5      PSA              5.1%        5      Honda                        6.0%

   6      PSA                        2.2%         6      Hyundai          4.9%        6      PSA                          5.9%

   7      Toyota                     1.8%         7      Renault/Nissan   4.8%        7      Renault/Nissan               5.5%

   8      Hyundai                    1.5%         8      Honda            3.8%        8      Hyundai                      5.2%

   9      Daimler                    1.4%         9      Toyota           2.9%        9      Toyota                       4.5%

  10      Honda                      1.4%         10     Mitsubishi       1.3%       10      Mitsubishi                   1.5%

Source: Global Insight


                                                                                                                                                        UBS 18
General Motors Company 15 December 2010


Table 15: Historical, Current, and Expected Shares in China

 2000                            Share    2010                              Share   2015                             Share

   1      Changan                21.2%     1       GM                       14.1%    1     GM                        12.3%

   2      VW                     17.9%     2       VW                       11.0%    2     VW                        10.6%

   3      FAW                    12.4%     3       Changan                  9.6%     3     Changan                   8.9%

   4      GM                     7.7%      4       Shanghai Automotive      8.6%     4     Shanghai Automotive       8.3%

   5      Beijing Automotive     6.2%      5       Hyundai                  6.2%     5     Hyundai                   5.3%

   6      Shanghai Automotive    6.0%      6       Toyota                   4.9%     6     Toyota                    5.2%

   7      China Brilliance       3.9%      7       FAW                      4.6%     7     Chery                     4.2%

   8      Dongfeng               3.9%      8       Renault/Nissan           4.3%     8     Renault/Nissan            4.1%

   9      PSA                    2.8%      9       Beijing Automotive       3.9%     9     Beijing Automotive        4.0%

  10      Suzuki                 2.8%      10      Honda                    3.9%     10    Honda                     3.9%

  24      Ford                   0.3%      13      Ford                     3.5%     14    Ford                      3.7%

Source: Global Insight

7) What are GM’s pension risks?
In mid-September, we published a pension report analyzing the impact of lower                                   The biggest takeaway we have for GM’s
discount rates on automaker and supplier EPS in 2011 (for additional                                            pensions is to call out the fact that only
information, please see our note titled Pension Risks Manageable, dated                                         2/3 of its plan had been re-measured as
September 19, 2010). We have applied a very similar analysis for GM below.                                      of Q310.

The biggest takeaway we have for thinking about GM’s pensions is the fact that
currently only 2/3 of its US plan has been re-measured, which is understating the
reported figure provided in Q3 on a pre-contribution basis. More specifically, in
Q3, GM only re-measured ~2/3 of its US hourly pension plan. While the
reported Q310 unfunded status figure ($29.4bn) accounts for this re-
measurement, US salaried and non-US plans will still need to be re-valued at the
end of this year—and we estimate this will increase unfunded status by another
$5bn. However, as Table 16 below shows, net of $6bn in contributions, total
adjusted unfunded status actually shrinks slightly to $27.8bn from the original
$29.4bn reported at Q310.

Table 16: Pension Re-measurement Adjustment                                                                     We estimate the remaining re-
                                                                                                                measurement of pensions and OPEB
                                         Pension                 OPEB
                                                                                                                will increase unfunded liabilities by
Q310 Unfunded Status                     29.4bn                     9.4bn
                                                                                                                $4.9bn (prior to contributions).
US Salaried                              +3.0bn

Non US                                   +1.4bn                  +200m

US                                                               +300m

Contributions                             -6bn

Total Adjusted Unfunded Status           $27.8bn                 $9.9bn

Source: Company reports, UBS




                                                                                                                                                   UBS 19
General Motors Company 15 December 2010


Despite unfunded status, GM’s pensions are an income benefit

Looking forward, we note the benefit to pension expense (income) that results                               GM will incur pension benefits, not
after amortized losses were wiped out post bankruptcy. As a result, though                                  expenses, as a result of Fresh Start
GM’s pension plan remains unfunded, the company should actually generate                                    Accounting.
non-cash benefits to earnings through 2012. Table 17 details the math and shows
that because this year’s discount rate (4.56%) is nearly half the expected return
(8.5%) and actuarial costs will be zero, the negative impact of service and
interest costs does not offset the benefit of higher expected plan asset returns.

Table 17: GM Pension Benefit Walk (2011)

                                                                               GM Specific      GM 2011
 Pension Expense Component                        Formula                        Calcs          Line Item

                                 = benefits incurred by employees in current
Service Cost                                                                   flat with 2010    ($515)
                                 period

                                                                                = 4.56% *
Interest Cost                    = discount rate * beginning PBO                                ($4,919)
                                                                                $107.8bn

                                                                                 = 8.5% *
Expected Return on Plan Assets   = expected ROA * beginning plan assets                          $7,600
                                                                                 $89.4bn

                                                                               wiped out in
Amortization                     = a component of actuarial gains                                  $0
                                                                               bankruptcy

                                                                               wiped out in
Curtailment & Other              = a component of actuarial gains                                  $0
                                                                               bankruptcy

Pension Benefit (Expense)                                                                        $2,166

Source: Company reports, UBS

Determining the 2011 PBO, Plan Asset Returns, & Funded Status

As aforementioned, GM re-measured 2/3 of its US pension, which amounts to a                                 Applying a 4.56% discount rate to our
$5.8bn headwind (the remaining 1/3 is salaried). Assuming flat service cost and                             sensitivity curve yields a ~$10bn
a standard interest cost formula, we estimate GM’s US pension PBO to be                                     actuarial loss for 2010; while plan asset
$107bn. As for plan asset returns, GM disclosed actual returns were better than                             returns should be better than the
the expected 8.5%. As such, we took the expected returns of equity, fixed                                   expected 8.5% provided last year.
income, and real-estate index returns and multiplied them by GM’s plan asset
mix to estimate plan assets of ~$89bn.




                                                                                                                                              UBS 20
General Motors Company 15 December 2010


Table 18: Historical & Expected US Pensions (2007-2012)

                                  2007        2008        2009       2010E       2011E     2012E

Beginning Benefit Obligation     85,422      85,277      98,012      101,571    107,878    104,337

Service Cost                       627         527         216         515        515       515

Interest Cost                     4,931       5,493       2,578       5,352      4,919      4,758

Actuarial Gains/Losses           (2,452)      5,684       3,102       9,761        0          0

Benefits Paid                    (7,574)     (8,862)     (3,938)     (9,321)    (8,976)    (8,533)

Amendments                        3,635       1,218        (13)         0          0          0

Curtailments & Other               688        8,798       1,614         0          0          0

   Ending Benefit Obligation     85,277      98,135      101,571     107,878    104,337    101,076

Beginning Plan Assets            101,392     104,070     78,493      84,500     89,416     94,140

Actual Return on Plan Assets     10,073      (11,350)     9,914       8,237      7,600      8,002

Benefits Paid                    (7,574)     (8,862)     (3,938)     (9,321)    (8,976)    (8,533)

Other                              179         90          31         6,000      6,100      4,200

   Ending Plan Assets            104,070     83,948      84,500      89,416     94,140     97,809

   Funded Status                 18,793      (14,187)    (17,071)    (18,462)   (10,196)   (3,267)

Source: Company reports, UBS estimates

Table 19: Historical & Expected Non-US Pensions (2007-2012)

                                    2007        2008       2009      2010E      2011E      2012E

Beginning Benefit Obligation       22,538      23,753     21,392     24,374     24,139     24,230

Service Cost                        486         410         157       385        385        385

Interest Cost                      1,143        1,269       602      1,294      1,125      1,129

Actuarial Gains/Losses             (1,486)      (965)      1,592     1,400        0          0

Benefits Paid                      (1,287)     (1,390)     (714)     (1,414)    (1,419)    (1,440)

Curtailments & Other               2,359       (3,082)     1,345     (1,900)      0          0

   Ending Benefit Obligation       23,753      19,995     24,374     24,139     24,230     24,304

Beginning Plan Assets              11,506      13,308      8,616     14,027     14,796     15,361

Actual Return on Plan Assets        492        (2,863)     1,201     1,383      1,184      1,229

Benefits Paid                      (1,287)     (1,390)     (714)     (1,414)    (1,419)    (1,440)

Employer Contribution               848         977        4,287      800        800        800

Other                              1,749       (1,946)      637        0          0          0

   Ending Plan Assets              13,308       8,086     14,027     14,796     15,361     15,950

   Funded Status                  (10,445)    (11,909)    (10,347)   (9,343)    (8,869)    (8,354)

Source: Company reports, UBS estimates

Determining the pension expense

There are four major components to pension expense: service costs, interest
costs, expected plan asset returns, and changes in actuarial gains/losses. As
aforementioned, GM incurs a net benefit from through 2012 as a result of Fresh
Start Accounting. While this will boost EPS, EBITAP will not be impacted.




                                                                                                     UBS 21
General Motors Company 15 December 2010


Table 20: Historical & Expected US Pension Expense                                                                                               Note the change in amortization and
                                         2007           2008            2009               2010E            2011E              2012E
                                                                                                                                                 other expected to begin in 2010; this
                                                                                                                                                 creates a non-cash benefit to EPS.
Service Cost                                (627)           (527)            (497)              (515)            (515)               (515)

Interest Cost                            (4,931)        (5,493)          (5,655)            (5,352)          (4,919)             (4,758)

Expected Return on Plan Assets             7,983           8,043             6,857              6,553            7,600            8,002

Amortization                             (2,931)        (1,394)          (1,144)                    1                 0                  0

Curtailment & Other                          (45)       (3,823)          (1,969)                    0                 0                  0

   Net Pension Expense                      (551)       (3,194)          (2,408)                 687             2,166            2,729

Source: Company reports, UBS estimates

Table 21: Historical & Expected Non-US Pension Expense

                                         2007               2008             2009           2010E            2011E               2012E

Service Cost                                 (486)             (410)           (157)             (385)             (385)               (385)

Interest Cost                             (1,143)            (1,269)           (602)           (1,170)           (1,125)             (1,129)

Expected Return on Plan Assets                984               969             438                975            1,179                1,224

Amortization                                 (447)             (688)                 0             (18)              (28)                (28)

Curtailment & Other                          (156)             (270)             (9)               (30)                   0                  0

   Net Pension Expense                    (1,248)            (1,668)           (330)             (628)             (359)               (318)

Source: Company reports, UBS estimates

OPEB Analysis

Lower discount rates also result in actuarial gains on other employee retirement                                                                 OPEB obligations are not currently
obligations, so we did the same exercise for OPEB as for pensions. However,                                                                      funded by automakers—so plan asset
whereas pensions have two components negatively affecting pension expense                                                                        performance is moot and only discount
(lower discount rates and weaker than expected asset returns), OPEB only has                                                                     rate changes impact OPEB expense.
one. Therefore, only changes to the discount rate negatively impact OPEB
expense. Tables 22 and 23 outline GM’s funded OPEB status and expenses.
Table 22: Historical & Expected OPEB Obligations

                                    2007             2008              2009              2010E            2011E               2012E

Beginning Benefit Obligation       68,328            64,013         31,059               9,585             9,922              10,165

Service Cost                        415               273               79                 54               54                  54

Interest Cost                      3,808             3,744             980                488               484                 496

Actuarial Gains/Losses             (3,358)          (19,361)           1,796              520                0                   0

Benefits Paid                      (4,900)           (4,934)        (1,770)              (666)             (636)               (620)

Curtailments & Other                (280)            (845)          (22,559)              (59)              341                 341

   Ending Benefit Obligation       64,013            42,890            9,585             9,922            10,165              10,436

Beginning Plan Assets              16,939            16,303         10,702                 31                0                   0

Actual Return on Plan Assets       1,183               0               1,909               0                 0                   0

Employer Contribution              2,617             3,177             1,598               0                 0                   0

Other                               110                0            (12,580)              (31)               0                   0

   Ending Plan Assets              16,303            9,969              31                 0                 0                   0

   Funded Status                  (47,710)          (32,921)        (9,554)              (9,922)          (10,165)            (10,436)

Source: Company reports, UBS estimates


                                                                                                                                                                                  UBS 22
General Motors Company 15 December 2010


Table 23: Historical & Expected OPEB Expense

                                         2007        2008        2009         2010E       2011E        2012E

Service Cost                               (415)       (273)           (79)      (54)        (54)              (54)

Interest Cost                            (3,808)     (3,744)       (980)        (488)       (484)             (496)

Expected Return on Plan Assets            1,400       1,281              0            0           0              0

Amortization                                442       1,386              1            8           8              8

Curtailment & Other                             19    3,465       (2,148)         (3)             0              0

   Net OPEB Expense                      (2,362)      2,115       (3,206)       (537)       (530)             (542)

Source: Company reports, UBS estimates

Reduction of healthcare inflation risk

Prior to the UAW/VEBA concessions of 2007, automakers took on the burden
of paying out retiree healthcare costs. However, as part of the 2007 concessions,
these obligations were transferred to the UAW (for GM, the transfer occurred
during bankruptcy), which removes most of the healthcare inflation risk for
automakers. Historically, healthcare inflation was significantly underestimated,
which caused numerous large upward revisions in the size of these OPEB
obligations over the last decade. Tables 24 and 25 below highlight the risk
reduction related to these structural cost changes. Discount rate sensitivities
have been reduced by nearly 100%, while healthcare inflation rates have been
completely erased.

Table 24: Discount Rate Risk Reduction (in bns)                                                                       Without VEBA obligations, GM’s
                                                                                                                      discount rate sensitivities fall to $100m;
                                                               2006               2008                2010
                                                                                                                      meanwhile, healthcare inflation rate risk
25 bp increase                                                 -$1.8              -$0.2               -$0.1
                                                                                                                      has been reduced to zero.
25bp decrease                                                  +$1.7             +$0.2                +$0.1

Source: Company reports

Table 25: Healthcare Inflation Rate Risk Reduction (in bns)

                                                               2006               2008                2010

+1% in trend rates                                              +6.0             +$0.4                    -

-1% in trend rates                                             -$5.0              -$0.4                   -

Source: Company reports




                                                                                                                                                         UBS 23
General Motors Company 15 December 2010


Valuation
As we’ve discussed, GM has several non-core assets that merit a sum of the
parts valuation rather than a more traditional EV to EBITDA (which would
value these assets at book value). See Table 26 for a summary of their impact.

Table 26: Non-Core Asset Valuation Summary                                           We estimate the market values of non-
                                                                                     core assets are about $19bn higher
Non-Core Assets                           Market Value   Book Value    Value/Share
                                                                                     than their book values ($4/share), which
China JVs                                     $10,700          5,916         $6
                                                                                     adds $10/share to our valuation.
Ally Ownership                                $2,400                         $1

Delphi Stake (~50%)                           $4,822           1,912         $3

NOLs                                          $8,500                         $5

BV Other Equity Investments                    $108            $108          $0

BV Minority Interests                         ($971)          ($971)        ($1)

Total                                         $25,559         $6,965        $14

Source: UBS estimates

As Table 27 shows, we apply a 4.0x EBITDAP multiple to GM’s core auto                Our 4.0x valuation multiple is a
business, reflecting traditional EBITDA adjusted for pension and OPEB income.        discount to the 5.0x multiple we use for
Our 4.0x multiple is a discount to the 5.0x multiple we use for Ford, and at the     Ford, and toward the lower end of GM’s
lower end of GM’s past valuation range (4.0x-6.0x). The discount vs. Ford is         past valuation range (4.0x-6.0x).
due to: 1) expected market share headwinds; 2) the US government/UAW
ownership overhang; 3) management’s limited track record (CEO appointed
four months ago); and 4) uncertainty surrounding Europe’s turnaround ($1.4bn
loss in 2010). That said, if non-core assets were valued at book, GM’s valuation
would reflect a 5.5x 2011E EBITDAP multiple (or a slight premium to Ford).

Table 27: Enterprise Value Calculation




Source: UBS estimates




                                                                                                                      UBS 24
General Motors Company 15 December 2010


Our EV calculation is complicated by the expected shift in GM’s balance sheet,
as GM’s plan to repay debt and pay down pensions impacts our net liabilities
estimate. We value unfunded pensions within enterprise value after a 35% tax
rate, reflective of the tax shield generated by funding these plans. Of note, as
GM funds its pensions, it will be able to draw on the pension tax assets. We
expect gross pensions to increase by $5bn on lower discount rates; however, this
is partially offset by $12bn in expected funding in Q4 and 2011. See Chart 16.

Price Target Basis
Our $37 price target is based on a sum of the parts valuation that attributes: 1)
$22 to core auto operations; 2) $6 to Chinese JVs; 3) $5 to the present value of
the NOLs; 4) $3 to Delphi; and 5) $1 to the remaining Ally ownership. We place
a 4x EV/EBITDAP multiple on GM’s core auto operations (5.5x traditional
2011 EV/EBITDA), which is a slight discount to Ford at 5.0x.
Chart 16: GM Enterprise Calculation
                                                       Q3 2010                                          2011
 Debt & Prds
 Debt                                                     8,600                                      4,600     (a)
 Preferred Stock                                          9,000                                     10,500     (b)
 Total Debt                                              17,600                                     15,100
 Other Liabilities
 Unfunded Pension After Tax                             19,100                                     12,400      (d)
 Unfunded OPEB After Tax                                 6,100                                      6,600
 Total Other Liabilities                                25,200                                     19,000

 Total Liabilities                                     42,800                                     34,100
 C urrent C ash                       33,500                                                      33,500
 Cash Inflow: Pfrd IPO                                                                              4,000      (b)
 Cash Outflow: Debt Retirement Q4                                                                  (3,900)     (a)
 Cash Outflow: UAW Pfrd Payment Q4                                                                 (2,500)     (b)
 Cash Outflow: Pension Funding Q4                                                                  (6,000)     (d)
 Cash Outflow: Pension Funding 2011                                                                (6,100)     (d)
 Cash Inflow: Operating C ash Flow NTM                                                              6,100
 Cash                                 33,500                                                      25,100

 Net Liabilities                                        9,300                                      9,000

 Normalized Enterprise Value                                                                      77,000

 Equity Value                                                                                     68,000

 Total Shares                                                                                           1863

 Value per Share                                                                                        $37

(a) reflects announced debt repayments in Q4 2010
(b) reflects $4bn in recently issued preferred stock less $2.5bn of recently tendered preferred stock
(d) reflects $5bn headwind from pension re-measurements less impact of $12.1bn contributions
Source: Company reports, UBS estimates


VCAM Support for $37 price target

Our $37 price target is also consistent with our VCAM DCF valuation, which
uses at 10% cost of capital and 2% long-term growth. Please see Table 33 for
our DCF inputs and Chart 24 for our DCF sensitivities in Appendix 1.




                                                                                                                     UBS 25
General Motors Company 15 December 2010


Financial Outlook
Earnings Outlook
We forecast EPS will increase from $2.70 in 2010 to $4.30 in 2011. The
increase reflects a $3.0bn increase in net income and a $2.8bn increase in EBIT.
The $2.8bn EBIT increase reflects a $1.4bn increase in N America, a $1bn
increase in Europe (expect $300m loss vs. GM target of breakeven), and a
$930m increase in other income (mostly attributed to AmeriCredit). These
benefits should be offset by S America and GMIO, as these regions will be
accelerating product development, which will likely result in some moderate
margin deterioration. Other factors expected to boost net income include lower
interest expense and higher equity income (higher China JV earnings).

Chart 17: Net Income Analysis 2010E to 2011E

     $9,000
                                                                                                                           110      380
     $8,500                                                                                                     490
                                                                                                                                            8,020
     $8,000                                                                                        930
                                                1,010             180              350
     $7,500
     $7,000
                                    1,350
     $6,500
     $6,000
     $5,500
                 5,040
     $5,000
     $4,500
     $4,000
                 2010E            N America     Europe          S America          GMIO       Other EBIT      Interest    Equity   Other     2011E
                                                                                                             Ex pense     Income


Source: UBS estimates

Table 28: EBIT Outlook by Region

                        2005            2006            2007             2008              2009            2010E         2011E     2012E      2013E

North America           (4,847)         937             251             (7,957)           (11,605)         5,513         6,859     8,523     11,956

Europe                  (553)           473              71             (1,524)           (3,260)          (1,351)       (341)      255        555

South America            345            641             1,181            1,170              888            1,166          987      1,045      1,310

Asia Pacific              34            258             693             (1,020)            (169)            918           569       574        570

Other                   (1,351)         (959)       (1,456)             (1,039)            (418)           (499)          427       604        719

   TOTAL                (6,372)         1,350           740             (10,370)          (14,564)         5,748         8,501     11,002    15,109

Source: UBS estimates

North American Outlook

We forecast a $1.4bn increase in N American operating income in 2011. Our
outlook reflects a $1.4bn benefit from higher industry volumes (+130k units at a
$10,500/vehicle contribution) and a $1.5bn improvement in pension income.
These factors are offset by negative mix and pricing, given the increase in car
mix ($7,000/vehicle headwind vs. truck) as well as higher pricing due to GM’s
aging vehicle launches. We also expect moderately higher fixed costs (mostly
advertising and R&D expenditures).



                                                                                                                                                     UBS 26
General Motors Company 15 December 2010


Chart 18: N American EBIT Analysis 2010E to 2011E

     $9,000
                                                          1,480        1,150
     $8,500
     $8,000
     $7,500                                                                                 420
                                  1,400                                                                       40                6,860
     $7,000
     $6,500
     $6,000
                 5,510
     $5,500
     $5,000
                  2010E           Volume             Pension           Mix &         Other Fix ed            Other              2011E
                                                      Income           Pricing             Costs


Source: UBS estimates

Fixed & Variable Cost Outlook
Aside from market share and industry sales, profitability is driven by structural
(or fixed) costs and variable contribution/unit. The auto industry is highly capital
intensive, with structural costs accounting for a third of total costs. As such, our
earnings and cash flow forecasts are partially driven by our outlook of these cost
components. Table 29 shows the cost components of our NA EBIT outlook.
Table 29: 2010 GM North American EBIT Composition

                Units                            Variable                       Structural                          Auto Operating
                                  *                                    -                               =
              Produced                         Contribution                       Costs                                Earnings

GM                2.7m            *            $10,500/unit            -          $23bn                =                $5.5bn

Source: UBS estimates

Variable Contribution per Unit

Based on estimated structural costs and auto earnings before interest and taxes,
we calculated variable contribution per unit. We estimate GM’s 2010 worldwide
variable contribution will be $7,500/unit, up from $5,700 in 2009. See Chart 19.

Chart 19: Worldwide Contribution per Unit
                                                                                                                                   $7,731




   $9,000
                                                                                  $7,571




                                                                                                                       $7,523
                                                                                                           $7,381
                                                                                              $7,261




   $8,000
                                                 $6,372
                                      $6,231
              $6,049




                                                                       $5,693
                         $5,649




   $7,000
                                                              $5,541




   $6,000
   $5,000
   $4,000
   $3,000
   $2,000
   $1,000
        $0
              2004       2005         2006       2007        2008E 2009E 2010E 2011E 2012E 2013E 2014E



Source: Company reports, UBS estimates



                                                                                                                                            UBS 27
General Motors Company 15 December 2010


In order to better understand worldwide variable contribution, we analyzed
changes in North American and international variable contribution. Charts 20
and 21 below show our estimates for N American and international
contributions. Improved pickup mix and net pricing gains have resulted in more
than a $2,000/vehicle increase to North American contributions.
Chart 20: North American Contribution per Unit                                                                        Chart 21: International Contribution per Unit




                                                                                                                                                                                                                                  $5,510
                                                                    $10,470




                                                                                                                                                                                                                         $5,333
                                                                              $10,033



                                                                                                   $10,022




                                                                                                                                                                                            $5,231



                                                                                                                                                                                                                $5,232
                                                                                                                                                                                                     $5,056
                                                                                          $9,975



                                                                                                             $9,996
   $12,000                                                                                                                $6,000




                                                                                                                                                                 $4,796

                                                                                                                                                                          $4,504
                                                                                                                                                       $4,287
                                                           $8,204




                                                                                                                                                                                   $3,944
   $10,000                                                                                                                $5,000
                                         $7,839
                                $7,752
              $7,534

                       $7,320




                                                                                                                                   $3,467

                                                                                                                                             $3,391
                                                  $6,623


     $8,000                                                                                                               $4,000

     $6,000                                                                                                               $3,000

     $4,000                                                                                                               $2,000

     $2,000                                                                                                               $1,000

         $0                                                                                                                   $0
               2004



                                2006




                                                                                                                                   2004



                                                                                                                                                        2006
                                                  2008E



                                                                    2010E



                                                                                          2012E



                                                                                                             2014E




                                                                                                                                                                          2008E



                                                                                                                                                                                            2010E



                                                                                                                                                                                                                2012E



                                                                                                                                                                                                                                  2014E
Source: Company reports, UBS estimates                                                                                Source: Company reports, UBS estimates


Structural Costs

As aforementioned, about 33% of total automotive costs are structural costs. The
largest costs are payroll, research and development, depreciation, advertising,
pension, and OPEB (see Charts 22 and 23). Structural costs were about 34% of
GM’s sales in 2008. GM previously targeted achieving structural costs equal to
25% of sales by 2010 and 23% of sales by 2013; however, GM has abandoned
these targets after the global contraction in demand. We estimate that GM will
reach structural costs of 23.5% of sales by 2014.
Chart 22: GM Global Structural Cost Analysis, 2005                                                                    Chart 23: GM Global Structural Cost Analysis, 2010

                                                              Healthcare                                                                              Pay roll                        Healthcare Pension
                                                                    10%                  Pension                                                       30%                               1%        0%
                                                                                            4%
               Pay roll                                                                                                                                                                                  R&D
                  33%                                                                   R&D                                                                                                               16%
                                                                                        12%



                                                                                        Adv ert                                                                                                               Adv ert
                                                                                         9%                                                                                                                    9%
                                                                                                                                            Other
                                                                    D&A                                                                                                                              D&A
                                                                                                                                            27%
                            Other                                   17%                                                                                                                              17%
                       15%
Source: Company reports, UBS                                                                                          Source: Company reports, UBS


Tables 30 and 31 show the main elements of structural costs and calculate
variable contribution per unit for GM worldwide and GM North America.




                                                                                                                                                                                                                                    UBS 28
General Motors Company 15 December 2010


Table 30: GM Worldwide Variable & Fixed Cost Analysis

                          2004          2005           2006          2007          2008           2009          2010E      2011E      2012E      2013E      2014E

Payroll                 $18,800       $18,200        $20,000       $18,000        $16,800       $12,400        $12,500    $12,600    $12,400    $12,200    $12,300

Healthcare               $4,600        $5,700         $4,100        $2,400        $1,400          $600          $500       $500       $500       $600       $600

Pension                  $2,200        $2,300          $500         $1,600         $800           $800          ($100)    ($1,800)   ($2,400)   ($2,900)   ($3,100)

R&D                      $6,500        $6,700         $6,600        $8,100        $8,000         $6,100         $6,600     $7,000     $7,500     $7,500     $7,500

Advert                   $4,100        $4,800         $4,400        $4,500        $4,300         $2,600         $3,600     $4,000     $4,300     $4,300     $4,300

D&A                      $8,000        $9,300         $8,200        $8,300        $8,300         $8,100         $6,800     $6,600     $6,900     $7,100     $7,600

Other                    $7,800        $8,100         $7,200       $10,200        $10,600       $10,600        $10,900     $9,900     $9,900     $9,900     $9,900

Total Fixed Costs       $52,000       $55,000        $51,000       $53,000        $50,100       $41,100        $40,900    $38,900    $39,100    $38,600    $39,000

Sales                  $160,539       $157,260      $172,206       $176,971      $147,732       $104,589       $126,840   $136,994   $146,146   $158,774   $165,722

Structural / Sales       32.4%         35.0%          29.6%         29.9%          33.9%         39.3%          32.2%      28.4%      26.8%      24.3%      23.5%

Automotive EBIT           $57         ($7,255)         $629         ($488)       ($11,025)      ($14,564)       $5,748     $8,396    $10,891    $15,008    $16,380

Units Produced           8,605          8,452         8,286          8,241         7,053          4,661         6,162      6,514      6,773      7,126      7,163

Contrib per Unit         $6,049        $5,649         $6,231        $6,372        $5,541         $5,693         $7,571     $7,261     $7,381     $7,523     $7,731

Note: Variable contribution per unit is derived from automotive EBIT plus structural costs divided by units.
Source: Company reports, UBS estimates

Table 31: GM North American Variable & Fixed Cost Analysis

                          2004          2005           2006          2007          2008E         2009E          2010E      2011E      2012E      2013E      2014E

Payroll                 $13,200       $12,500        $12,700       $11,400        $9,900         $7,900         $7,900     $8,000     $7,700     $7,400     $7,500

Retired Healthcare       $4,200        $5,300         $3,800        $2,100        $1,100          $700          $300       $300       $300       $300       $300

Pension                  $1,500        $1,300         ($600)         $500          ($600)         $400          ($700)    ($2,200)   ($2,700)   ($3,200)   ($3,300)

R&D                      $4,200        $4,400         $4,300        $5,300        $5,200         $3,900         $4,300     $4,600     $4,900     $4,900     $4,900

Advertising              $2,700        $3,100         $2,900        $2,900        $2,800         $1,700         $2,300     $2,600     $2,800     $2,800     $2,800

Depreciation             $6,400        $7,100         $5,800        $5,600        $5,800         $7,500         $4,500     $4,800     $4,800     $4,800     $5,200

SG&A                     $6,000        $6,800         $6,200        $5,400        $6,600         $5,100         $4,600     $4,100     $4,500     $4,500     $4,500

Total Fixed Costs       $38,200       $40,400        $35,100       $33,200        $30,800       $27,300        $23,300    $22,200    $22,200    $21,500    $21,800

Sales                  $114,392       $104,755      $109,779       $112,448       $86,187       $56,617        $78,851    $83,724    $90,545    $100,167   $108,878

Structural / Sales       33.4%         38.6%          32.0%         29.5%          35.7%         48.2%          29.5%      26.5%      24.5%      21.5%      20.0%

EBIT                     $2,965       ($4,847)         $937          $251         ($7,957)      ($11,605)       $5,513     $6,754     $8,412    $11,854    $13,654

Units Produced           5,464          4,857         4,649          4,267         3,449          1,913         2,752      2,886      3,069      3,328      3,547

Contrib per Unit         $7,534        $7,320         $7,752        $7,839        $6,623         $8,204        $10,470    $10,033     $9,975    $10,022     $9,996

Note: Variable contribution per unit is derived from automotive EBIT plus structural costs divided by units.
Source: Company reports, UBS estimates

Cash Flow Outlook
We forecast GM to generate cash flow from auto operations of $4.5bn in 2010
and $6.1bn in 2011. The improvement is driven by earnings and partially offset
by moderate working capital burn as GM continues to make adjustments to its
payment terms with suppliers to reduce working capital volatility. We anticipate
the majority of this cash flow will pay down unfunded pension liabilities.




                                                                                                                                                              UBS 29
General Motors Company 15 December 2010


Table 32: GM Cash Flow Analysis

                              2009E      Q110   Q210   Q310   Q410   2010E   Q111   Q211   Q311   Q411   2011E   2012E   2013E

Auto Profit                   -15.0      1.2    2.0    2.6    2.8     8.6    1.9    2.7    2.6    2.0     9.1    11.7    15.6

Capex                          -5.4      -0.8   -1.1   -1.3   -1.5    -4.6   -1.5   -1.5   -1.5   -1.5   -6.0    -8.0    -8.0

Depreciation                   11.1      1.8    1.7    1.7    1.6     6.8    1.7    1.7    1.7    1.7     6.6     6.9     7.1

Changes in working capital     -6.9      -0.9   0.6    -1.3   -1.7    -3.3   1.5    -0.3   -1.1   -1.8   -1.7    -0.9    -1.2

Pension/OPEB                   -1.7      -0.3   -0.2   -0.3   -2.3    -3.0   -0.5   -0.5   -0.5   -0.5   -1.9    -2.5    -3.0

Other                          -4.9      0.0    0.0    0.0    0.0     0.0    0.0    0.0    0.0    0.0     0.0     0.0     0.0

Total Auto CFO                -22.9      1.1    3.0    1.5    -1.0    4.5    3.1    2.1    1.2    -0.2    6.1     7.2    10.5

Restructuring                  -2.0      -0.1   -0.1   -0.1   -0.1    -0.4   -0.1   -0.1   -0.1   -0.1   -0.2     0.0     0.0

Pension/OPEB Contrib           0.0       0.0    0.0    0.0    -4.0    -4.0   -1.7   -1.7   -1.7   -1.7   -6.9    -5.0    -0.8

VEBA Withdrawls                0.0       0.0    0.0    0.0    0.0     0.0    0.0    0.0    0.0    0.0     0.0     0.0     0.0

Other                          -2.5      1.1    11.1   0.5    1.3    14.1    -0.2   -0.2   -0.2   -0.2   -0.8    -0.8    -0.8

Changes in Debt                36.1      -1.5   -5.9   0.0    -3.9   -11.3   0.0    0.0    0.0    0.0     0.0     0.0     0.0

DOE Funding                    0.0       0.0    0.0    0.0    0.0     0.0    0.0    0.0    0.0    0.0     0.0     0.0     0.0

Non-Operating Cash             31.5      -0.5   5.1    0.5    -6.7    -1.6   -2.0   -2.0   -2.0   -2.0   -7.9    -5.8    -1.6

Total Cash Flow                8.6       0.6    8.1    1.9    -7.7    2.9    1.1    0.1    -0.8   -2.2   -1.7     1.4     8.9

Liquidity                      22.8      23.4   31.5   33.5   25.7   25.7    26.8   26.9   26.2   24.0   24.0    25.4    34.3

Source: Company reports, UBS estimates




                                                                                                                          UBS 30
General Motors Company 15 December 2010


Appendix
Chart 24: UBS-VCAM Sensitivities for General Motors [GM.N]
                                           Price versus WACC                                                                                                    Price versus Sales Growth
+30.0%
     7.45%                                                                                                   US$44                                          +30.0%                                                         9.1%US$44


+20.0%        8.07%                                                                                          US$40                                          +20.0%                                            7.2%             US$40


+10.0%                    8.80%                                                                              US$37                                          +10.0%                                5.1%                         US$37


  0.0%    +0.6%                         9.67%                                                               US$34             +0.6%                            0.0%                 2.7%                                       US$34
      7.4%            8.5%            9.5%            10.5%            11.5%            12.6%           13.6%           -6.0%            -3.4%              -0.9%           1.6%           4.1%           6.6%             9.1%

 -10.0%                                                 10.71%                                               US$30                                          -10.0% 0.2%                                                        US$30


 -20.0%                                                                        11.98%                        US$27                             -2.7%        -20.0%                                                             US$27


 -30.0%                  Present Value for Given WACC                                                 13.58%US$24
                                                                        Market Price rel. to VCAM Present Value         -6.0%                              -30.0%                                                                US$24
                                                                                                                                            Present Value for Given Sales Growth             Market Price rel. to VCAM Present Value

                                      Price versus EBIT Margin                                                                                               Price versus Capex / Sales [%]
+30.0%                                                                                                   6.1%US$44      +30.0%0.8%                                                                                             US$44


+20.0%                                                                                  5.4%                 US$40      +20.0%                   2.1%                                                                          US$40


+10.0%                                                                 4.7%                                  US$37      +10.0%                                  3.4%                                                           US$37


  0.0%    +0.6%                                       4.0%                                                   US$34        0.0%    +0.6%                                         4.8%                                           US$34
      1.9%            2.6%            3.3%            4.0%             4.7%             5.4%             6.1%                 0.8%               2.1%           3.4%            4.8%        6.1%           7.4%            8.7%

 -10.0%                               3.3%                                                                   US$30      -10.0%                                                              6.1%                               US$30


 -20.0%               2.6%                                                                                   US$27      -20.0%                                                                             7.4%                US$27


 -30.0%1.9%                                                                                                US$24        -30.0%                                                                                              8.7%US$24
                      Present Value for Given EBIT Margin               Market Price rel. to VCAM Present Value                                   Present Value for Given Capex/Sales         Market Price rel. to VCAM Present Value

   Notes:     Sensitivities are derived from assuming Sales Growth, EBIT Margin, or Capex / Sales is flat annually for years 6 through the VCH (year 10).
              Explicit estimates in years 1 through 5 do not vary, and always represent the assumptions on the Inputs Page.
              For each chart, one parameter is varied while the others are held constant. Those held constant are set as they appear on the Inputs Page.
Source: UBS-VCAM




                                                                                                                                                                                                                             UBS 31
General Motors Company 15 December 2010


Table 33: UBS-VCAM Inputs and Valuation for General Motors [GM.N]
Key Inputs                             Years: 1-5*          <=6*               10E             15E             25E        CAGR**
    Sales Growth                             9.6%           3.5%               2.0%            2.0%           2.0%             4.3%
                                                                                                                                         Present Value (per share)                                  US$ 33.62
    Gross Margin                            14.0%          14.5%           13.5%             12.0%           12.0%             5.0%
    SG&A & Other as % of Sales               8.0%           9.0%               9.0%            9.0%           9.0%             5.3%
                                                                                                                                         1-Year Target (per share)                                  US$ 37.24
    EBIT Margin                              6.0%           5.5%               4.5%            3.0%           3.0%             4.4%
    Tax Rate                                 9.1%          30.0%           30.0%             30.0%           30.0%           18.9%      Weighted Average Cost of Capital (WACC) = 9.67%
    Depr. & Non-GWA % Sales                  4.8%           4.6%               4.6%            4.6%           4.6%             2.7% Cost of Debt = Risk Free (US$) + Spread = 3.21% + 1.90% = 5.11%
    Capex as % of Sales                      4.7%           4.8%               4.7%            4.7%           4.6%             7.0% Estimated marginal tax rate (T) = 19.3%
    Acquisitions as % of Sales               0.0%           0.0%               0.0%            0.0%           0.0%         -100.0% Cost of Equity = Risk Free Rate + Levered Beta x ERP
                                                                                                                                        Equity Risk Premium ("ERP") = Global ERP + Country premium
Other Inputs                               Years:           <=6*               10E             15E             25E        CAGR** ERP = 4.00% - 0.50% = 3.50%
    EBIT / Interest Expense [x]                               ?x                ?x              ?x              ?x              NM      Levered Beta = Group Asset Beta x Co. Beta Mult. x [1+(1-T) x (net D/E)]
    Rent Expense as % of Sales                              0.0%               0.0%            0.0%           0.0%              NM      Levered Beta = 0.93 x 2.00 x [1 + (1 - 19.3%) x 19.7%] = 2.16
    R&D Expense as % of Sales                               4.5%               4.5%            4.5%           4.5%              NM      Cost of Equity = COE = 3.21% + (2.16 x 3.50%) = 10.76%
    +/- Earn. Quality Adj. as % of Sales                    0.0%               0.0%            0.0%           0.0%              NM      WACC = [E / TC x COE] + [L / TC x COL] + [D / TC x COD x (1 - T)]
    +/- Oth. UNFCF Adj. as % of Sales                       0.0%               0.0%            0.0%           0.0%              NM      WACC = [83.5% x 10.76%] + [0% x NM ]
    Deferred Taxes as % of Taxes                            0.0%               0.0%            0.0%           0.0%              NM                + [16.5% x 5.11% x (1 - 19.3%)] = 9.67%
    Days Costs in Inventory                                   0.0               0.0             0.0             0.0             NM      Value Creation Horizon (VCH)
    Days Sales in A/R                                         0.0               0.0             0.0             0.0             NM      Industry VCH (Automobiles)                                                 10 years
    Days Costs Payable                                        0.0               0.0             0.0             0.0             NM      +/- Company VCH Adjustment:                                                 0 years
                                                                                                                                        = Company VCH (10-25 years):                                               10 years

                         PV Factor         UNFCF     PV[UNFCF]           NOPAT        Enterprise and Equity Valuation
Year               [WACC=9.67%]            [US$ m]       [US$ m]         [US$ m]      Item                                              Value [US$ m]         Notes
2010E                         0.995         5,427          5,402           4,610                      Sum of PV[UNFCF], yrs 1-9                     51,195    [see table at left]
2011E                         0.908         6,053          5,494           5,653                             Mid-year adjustment                    (5,136) [= 5,402 x 95.1%; est. FCF ytd FY2010E]
2012E                         0.828         7,094          5,871           7,381
2013E                         0.755        10,418          7,863         10,668                                  NOPAT (year 10)                     5,691    [see table at left]
2014E                         0.688        11,672          8,033         11,732                        NOPAT Perpetuity (year 10)                   58,875    [= 5,691 / 9.67%]
2015E                         0.628         8,051          5,052           6,604                PV[NOPAT Perpetuity (year 10)]                      25,543    [= 58,875 x 0.434]
2016E                         0.572         6,985          3,997           6,500
2017E                         0.522         6,824          3,561           6,361                       Value of operating assets                    71,603    [= 51,195 - 5,136 + 25,543]
2018E                         0.476         6,624          3,152           6,187
2019E                         0.434         6,385          2,770           5,978                         Value of peripheral assets                  9,039    [estimated as of 13 Dec 2010]
2020E                         0.396         6,131          2,425           5,691                  Value of other assets/(liabilities)              (24,498) [estimated as of 13 Dec 2010]
2021E                             --            --               --              --               Value of non-operating assets                    (15,460) [= 9,039 - 24,498]
2022E                             --            --               --              --
2023E                             --            --               --              --           ADJUSTED ENTERPRISE VALUE                             56,143    [= 71,603 - 15,460]
2024E                             --            --               --              --
2025E                             --            --               --              --                   Short term debt (book value)                   2,096    [estimated as of 13 Dec 2010]
2026E                             --            --               --              --                    Long term debt (book value)                   3,074    [estimated as of 13 Dec 2010]
2027E                             --            --               --              --                    Perferred stock (book value)                  8,424    [estimated as of 13 Dec 2010]
2028E                             --            --               --              --             Book value of debt & debt equivs.                   13,595    [= 2,096 + 3,074 + 8,424]
2029E                             --            --               --              --          Mkt. value/seasonal debt adjustment                          0   [estimated as of 13 Dec 2010]
2030E                             --            --               --              --          Notional debt capitalized oper. leases                       0   [no operating lease capitalization]
2031E                             --            --               --              --                       Value of minority interest                    958   [estimated as of 13 Dec 2010]
2032E                             --            --               --              --                     CLAIMS ABOVE EQUITY                         14,553    [= 13,595 + 0 + 0 + 958]
2033E                             --            --               --              --
2034E                             --            --               --              --                       Total cash & equivalents                  25,595    [estimated as of 13 Dec 2010]
2035E                             --            --               --              --                   Required cash & equivalents                    5,030    [= 104,589 (FY2009 sales) x 4.0%, (max. 25,595)]
                                                                                                      Surplus cash & equivalents                    20,566    [= 25,595 - 5,030]
Notes
All figures are in US$ m, unless noted otherwise.                                                                 EQUITY VALUE                      62,156    [= 56,143 - 14,553 + 20,566, (min. 0)]
* "Yrs. <=6" figure used if yr 1-5 not available, yr 1-5 shown are averages.                      Fully dil. shares outstanding [m]                1,848.6    [estimated as of 13 Dec 2010]
** CAGRs = Compound annual growth rate, 2010E to VCH (2020E)                                    EQUITY VALUE per share [US$]                         33.62    [= 62,156 / 1,849]
WACC Section Abbreviations
TC = total capital, T = marginal tax rate, NM = Not Meaningful                                   1-Year Price Target Calculation
E = market equity value, COE = cost of equity                                                                         Cost of equity                10.76% [see COE calculation above]
D = market value of debt, COD = cost of debt                                                                          Dividend yield                 0.00% [expected]
L = capitalize value of operating leases, COL = cost of leases                               Implied 1-yr price target / sh. [US$]                   37.24    [= 33.62 x (1 + 10.76% - 0.00%)]

Source: UBS-VCAM

.




                                                                                                                                                                                                                   UBS 32
General Motors Company

  Income statement (US$m)                                    12/05                12/06               12/07                12/08                12/09              12/10E        % ch              12/11E         % ch              12/12E         % ch
  Revenues                                              157,260.00          172,206.00           176,971.00           147,732.00           104,589.00          126,840.00          21.3         136,994.00           8.0         146,146.00           6.7
  Operating expenses (ex depn)                        (148,619.00)        (159,888.00)         (165,481.00)         (144,809.00)         (106,785.00)        (114,753.90)           7.5       (124,124.21)           8.2       (131,066.93)           5.6
  EBITDA (UBS)                                             8,641.00          12,318.00            11,490.00              2,923.00           (2,196.00)          12,086.10             -          12,869.79           6.5          15,079.07          17.2
  Depreciation                                           (9,268.00)          (8,159.00)           (8,254.00)           (8,291.00)           (9,314.00)          (6,817.00)        -26.8          (6,600.00)         -3.2          (6,900.00)          4.5
  Operating income (EBIT, UBS)                             (627.00)            4,159.00             3,236.00           (5,368.00)         (11,510.00)             5,269.10            -            6,269.79         19.0            8,179.07         30.5
  Other income & associates                              (3,434.00)          (1,331.00)           (3,068.00)           (8,733.00)           (1,627.00)            2,826.00            -            4,310.82         52.5            5,123.16         18.8
  Net interest                                           (2,873.00)          (2,644.00)           (2,902.00)           (2,345.00)           (2,922.00)          (1,047.79)        -64.1            (554.40)        -47.1            (415.80)        -25.0
  Abnormal items (pre-tax)                                     0.00                 0.00                0.00                 0.00                 0.00                0.00            -                0.00            -                0.00            -
  Profit before tax                                      (6,934.00)              184.00           (2,734.00)         (16,446.00)          (16,059.00)             7,047.31            -          10,026.21          42.3          12,886.44          28.5
  Tax                                                      2,167.00            1,302.00             1,001.00           (1,027.00)             1,456.00            (881.93)            -            (834.62)         -5.4          (1,098.64)         31.6
  Profit after tax                                       (4,767.00)            1,486.00           (1,733.00)         (17,473.00)          (14,603.00)             6,165.37            -            9,191.59         49.1          11,787.79          28.2
  Abnormal items (post-tax)                                    0.00                 0.00                0.00                 0.00                 0.00                0.00            -                0.00            -                0.00            -
  Minorities / pref dividends                                495.00               (8.00)              130.00                32.00             (527.00)          (1,126.75)        113.8          (1,175.00)          4.3          (1,255.00)          6.8
  Net income (local GAAP)                                (4,272.00)            1,478.00           (1,603.00)         (17,441.00)          (15,130.00)             5,038.62            -            8,016.59         59.1          10,532.79          31.4
  Net Income (UBS)                                       (4,272.00)            1,478.00           (1,603.00)         (17,441.00)          (15,130.00)             5,038.62            -            8,016.59         59.1          10,532.79          31.4

  Tax rate (%)                                                 0.00                 0.00                 0.00                0.00                 0.00               12.51             -               8.32        -33.5                8.53          2.4
  Pre-abnormal tax rate (%)                                    0.00                 0.00                 0.00                0.00                 0.00               17.19             -              10.00        -41.8               10.00          0.0

  Per share (US$)                                            12/05                12/06               12/07                12/08                12/09              12/10E        % ch              12/11E         % ch              12/12E         % ch
  EPS (local GAAP)                                            (7.55)                2.61               (2.83)             (30.13)              (36.63)                2.70            -                4.30         59.1                5.65         31.4
  EPS (UBS)                                                   (7.55)                2.61               (2.83)             (30.13)              (36.63)                2.70            -                4.30         59.1                5.65         31.4
  Net DPS                                                       2.00                1.00                 1.00                0.50                 0.00                0.00            -                0.00            -                0.00            -
  Cash EPS                                                      8.83              17.03                 11.75             (15.81)              (14.08)                7.54            -                9.30         23.3               11.09         19.3
  BVPS                                                          9.29              (3.46)              (23.60)             (54.82)                13.52               16.09         19.0               21.32         32.5               28.33         32.9

  Balance sheet (US$m)                                       12/05                12/06               12/07                12/08                12/09              12/10E        % ch              12/11E         % ch              12/12E         % ch
  Cash and equivalents                                  16,603.00            23,912.00            26,688.00            13,966.00           22,813.00            25,739.62          12.8          24,086.40          -6.4          25,588.03           6.2
  Other current assets                                  37,479.00            40,219.00            32,475.00            27,258.00           36,046.00            25,787.00         -28.5          26,795.00           3.9          28,214.00           5.3
  Total current assets                                  54,082.00            64,131.00            59,163.00            41,224.00           58,859.00            51,526.62         -12.5          50,881.40          -1.3          53,802.03           5.7
  Net tangible fixed assets                             38,466.00            41,934.00            43,017.00            39,656.00           18,687.00            19,016.00           1.8          18,416.00          -3.2          19,516.00           6.0
  Net intangible fixed assets                            1,862.00              1,118.00            1,066.00               265.00           45,219.00            43,010.00          -4.9          43,010.00           0.0          43,010.00           0.0
  Investments / other assets                            89,285.00            67,432.00            39,824.00             8,080.00           13,175.00            13,933.00           5.8          15,613.00          12.1          17,513.00          12.2
  Total assets                                         183,695.00           174,615.00          143,070.00             89,225.00          135,940.00           127,485.62          -6.2         127,920.40           0.3         133,841.03           4.6
  Trade payables & other ST liabilities                 73,299.00            62,156.00            64,766.00            58,157.00           41,859.00            43,354.00           3.6          44,385.00           2.4          46,782.00           5.4
  Short term debt                                        1,519.00              5,666.00            6,047.00            15,754.00           10,221.00             1,675.00         -83.6           1,675.00           0.0           1,675.00           0.0
  Total current liabilities                             74,818.00            67,822.00            70,813.00            73,911.00           52,080.00            45,029.00         -13.5          46,060.00           2.3          48,457.00           5.2
  Long term debt                                        31,014.00            33,067.00            33,384.00            29,594.00            5,562.00             2,945.00         -47.1           2,945.00           0.0           2,945.00           0.0
  Other long term liabilities                           62,227.00            77,977.00            74,353.00            71,060.00           49,343.00            44,752.00          -9.3          35,939.18         -19.7          28,450.02         -20.8
  Total liabilities                                    168,059.00           178,866.00          178,550.00           174,565.00           106,985.00            92,726.00         -13.3          84,944.18          -8.4          79,852.02          -6.0
  Equity & minority interests                           15,636.00            (4,251.00)         (35,480.00)          (85,340.00)           28,955.00            34,759.62          20.0          42,976.21          23.6          53,989.01          25.6
  Total liabilities & equity                           183,695.00           174,615.00          143,070.00             89,225.00          135,940.00           127,485.62          -6.2         127,920.40           0.3         133,841.03           4.6

  Cash flow (US$m)                                           12/05                12/06               12/07                12/08                12/09              12/10E        % ch              12/11E         % ch              12/12E         % ch
  Net income                                             (4,272.00)            1,478.00           (1,603.00)         (17,441.00)          (15,130.00)             5,038.62            -            8,016.59         59.1          10,532.79         31.4
  Depreciation                                             9,268.00            8,159.00             8,254.00            8,291.00             9,314.00             6,817.00        -26.8            6,600.00         -3.2            6,900.00         4.5
  Net change in working capital                          (5,466.00)          (8,499.00)            34,156.00              683.00           (9,651.00)            11,754.00            -               23.00        -99.8              978.00      4152.2
  Other (operating)                                      (1,182.00)            3,698.00          (36,392.00)          (6,295.00)           (3,796.00)          (19,689.00)        418.7         (10,292.82)        -47.7          (8,909.16)       -13.4
  Net cash from operations                               (1,652.00)            4,836.00             4,415.00         (14,762.00)          (19,132.00)             4,722.37            -            5,121.77          8.5          10,276.63        100.6
  Capital expenditure                                    (7,896.00)          (7,531.00)           (7,538.00)          (7,530.00)           (5,431.00)           (4,612.00)        -15.1          (6,000.00)         30.1          (8,000.00)        33.3
  Net (acquisitions) / disposals                           1,357.00            1,968.00             5,354.00                0.00           (2,931.00)               (59.00)       -98.0                0.00            -                0.00           -
  Other changes in investments                             8,187.00          11,912.00            (1,790.00)            3,045.00          (10,760.00)             7,317.00            -                0.00            -                0.00           -
  Cash from investing activities                           1,648.00            6,349.00           (3,974.00)          (4,485.00)          (19,122.00)             2,646.00            -          (6,000.00)            -          (8,000.00)        33.3
  Increase/(decrease) in debt                                163.00            1,584.00             (569.00)            7,920.00            46,252.00          (11,281.00)            -                0.00            -                0.00           -
  Share issues / (repurchases)                                 0.00                0.00                 0.00                0.00                 0.00             1,500.00            -                0.00            -                0.00           -
  Dividends paid                                         (1,134.00)            (563.00)             (567.00)            (283.00)                 0.00                  0.00           -                0.00            -                0.00           -
  Other cash from financing                                  480.00          (4,340.00)               242.00            (615.00)           (1,075.00)               265.00            -                0.00            -                0.00           -
  Cash from financing activities                           (491.00)          (3,319.00)             (894.00)            7,022.00            45,080.00          (10,317.75)            -            (775.00)        -92.5            (775.00)         0.0

  Cash flow chge in cash & equivalents                     (495.00)            7,866.00             (453.00)         (12,225.00)             6,826.00           (2,949.38)            -          (1,653.23)             -           1,501.63             -
  FX / non cash items                                    (2,705.00)            (557.00)             3,229.00            (497.00)             2,021.00             5,876.00        -94.0                0.00             -               0.00             -
  Bal sheet chge in cash & equivalents                   (3,200.00)            7,309.00             2,776.00         (12,722.00)             8,847.00             2,926.62            -          (1,653.23)             -           1,501.63             -

  Core EBITDA                                              8,641.00          12,318.00            11,490.00              2,923.00          (2,196.00)           12,086.10             -          12,869.79           6.5          15,079.07          17.2
  Maintenance capital expenditure                        (7,537.34)          (7,373.95)           (7,373.95)           (7,373.95)          (7,373.95)           (7,373.95)          0.0          (7,373.95)          0.0          (7,373.95)          0.0
  Maintenance net working capital                            955.06              723.72               723.72               723.72              723.72               723.72          0.0              723.72          0.0              723.72          0.0
  Operating free cash flow, pre-tax                        2,058.72            5,667.77             4,839.77           (3,727.23)          (8,846.23)             5,435.87            -            6,219.56         14.4            8,428.85         35.5
Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic items at the analysts' judgement. Note: For some companies, the data represents an extract of the full
company accounts.




                                                                                                                                                                                                                                      UBS 33
Global Equity Research
Americas

Automobile Manufacturers                                                                                                                                            General Motors Company
12-month rating                                                                              Neutral
12m price target                                                                              US$37.00           Valuation (x)                                              5Yr Avg           12/08          12/09        12/10E         12/11E         12/12E
                                                                                                                 P/E (local GAAP)                                                     -              -              -         12.5             7.9            6.0
                                                                                                                 P/E (UBS)                                                            -              -              -         12.5             7.9            6.0
                                                                                                                 P/CEPS                                                               -              -              -          4.5             3.6            3.1
                                                                                                                 Net dividend yield (%)                                               -              -              -          0.0             0.0            0.0
Company profile                                                                                                  P/BV                                                                 -              -              -          2.1             1.6            1.2
General Motors is the third largest automaker in the world.                                                      EV/revenue (core)                                                    -              -              -          0.5             0.4            0.3
Headquartered in Detroit, GM manufactures cars and trucks with                                                   EV/EBITDA (core)                                                     -              -              -          5.2             4.4            3.3
operations and sales in over 120 countries. The company employs                                                  EV/EBIT (core)                                                       -              -              -         12.0             9.0            6.1
208,000 people worldwide. In 2009, new and old GM sold 7.5 million                                               EV/OpFCF (core)                                                      -              -              -         11.7             9.0            5.9
vehicles globally under the following brands: Chevrolet; Cadillac;                                               EV/op. invested capital                                              -              -              -          1.5             1.6            1.4
Buick; GMC; GM Daewoo; Wuling; FAW; Isuzu; Jiefeng, Opel; and
Vauxhall. GM markets the majority of its cars, trucks, and parts                                                 Enterprise value (US$m)                                                      12/08          12/09        12/10E         12/11E         12/12E
through retail dealers in North America, and to distributors and                                                 Average market cap                                                                -              -     53,264.91 53,264.91 53,264.91
dealers outside of North America.                                                                                + minority interests                                                         814.00         708.00         971.00     971.00     971.00
                                                                                                                 + average net debt (cash)                                                22,062.50      15,675.00      (6,326.81) (6,326.81) (6,326.81)
                                                                                                                 + pension obligations and other                                          37,973.00      24,031.80      24,522.50 18,999.65 14,337.01
                                                                                                                 - non-core asset value                                                   (4,340.00)     (7,936.00)     (9,096.00) (10,776.00 (12,676.00
                                                                                                                 Core enterprise value                                                             -              -                         )
                                                                                                                                                                                                                        63,335.60 56,132.75 49,570.11  )

                                                                                                                 Growth (%)                                                 5Yr Avg           12/08          12/09        12/10E         12/11E         12/12E
Value (EV/OpFCF & P/E)                                                                                           Revenue                                                          -2.1         -16.5          -29.2           21.3            8.0            6.7
   12.0x                                                                                               12.0x
                                                                                                                 EBITDA (UBS)                                                    -32.0         -74.6              -              -            6.5           17.2
   10.0x                                                                                               10.0x
                                                                                                                 EBIT (UBS)                                                          -             -          114.4              -           19.0           30.5
    8.0x                                                                                               8.0x
                                                                                                                 EPS (UBS)                                                           -           NM            21.6              -           59.1           31.4
    6.0x                                                                                               6.0x
                                                                                                                 Cash EPS                                                            -             -          -10.9              -           23.3           19.3
    4.0x                                                                                               4.0x
                                                                                                                 Net DPS                                                         -29.3         -50.0              -              -              -              -
    2.0x                                                                                               2.0x
                                                                                                                 BVPS                                                                -         132.3              -           19.0           32.5           32.9
    0.0x                                                                                               0.0x
           12/08                12/09              12/10                  12/11E                    12/12E       Margins (%)                                                5Yr Avg           12/08          12/09        12/10E         12/11E         12/12E
                                    EV/OpFCF (LHS)           P/E (RHS)
                                                                                                                 EBITDA / revenue                                                  5.9            2.0            NM             9.5            9.4          10.3
                                                                                                                 EBIT / revenue                                                    0.7           -3.6          -11.0            4.2            4.6           5.6
                                                                                                                 Net profit (UBS) / revenue                                        NM             NM             NM             4.0            5.9           7.2
Profitability
   10.0%                                                                                               40%       Return on capital (%)                                        5Yr Avg          12/08          12/09        12/10E         12/11E         12/12E
    5.0%                                                                                               20%       EBIT ROIC (UBS)                                                  3.6            NM             NM           12.3           17.6           23.1
    0.0%                                                                                               0%
                                                                                                                 ROIC post tax                                                      -            NM             NM           10.2           15.8           20.8
                                                                                                                 Net ROE                                                         11.7           28.3           46.6          21.7           27.3           27.0
   -5.0%                                                                                               -20%

  -10.0%                                                                                               -40%      Coverage ratios (x)                                          5Yr Avg          12/08          12/09        12/10E         12/11E         12/12E
  -15.0%                                                                                               -60%
                                                                                                                 EBIT / net interest                                                -              -              -            7.3          18.4            NM
                   12/08          12/09          12/10(E)          12/11(E)              12/12(E)
                                                                                                                 Dividend cover (UBS EPS)                                           -              -              -              -              -              -
                                  EBIT margin (LHS)          ROIC (RHS)
                                                                                                                 Div. payout ratio (%, UBS EPS)                                     -              -              -              -              -              -
                                                                                                                 Net debt / EBITDA                                                1.8            NM             0.0           NM             NM             NM
ROE v Price to book value
                                                                                                                 Efficiency ratios (x)                                        5Yr Avg          12/08          12/09        12/10E         12/11E         12/12E
   50.0%                                                                                               2.2x
                                                                                                                 Revenue / op. invested capital                                   4.2           15.8            4.6            3.0            3.8            4.1
   45.0%                                                                                               2.0x
                                                                                                                 Revenue / fixed assets                                           4.0            3.5            2.0            2.0            2.2            2.4
   40.0%                                                                                               1.8x
   35.0%                                                                                               1.6x
                                                                                                                 Revenue / net working capital                                    NM             NM             NM            NM             NM             NM
   30.0%                                                                                               1.4x
   25.0%                                                                                               1.2x
                                                                                                                 Investment ratios (x)                                        5Yr Avg          12/08          12/09        12/10E         12/11E         12/12E
   20.0%                                                                                               1.0x      OpFCF / EBIT                                                     1.9            0.7            0.8            1.0            1.0            1.0
   15.0%                                                                                               0.8x      Capex / revenue (%)                                              4.6            5.1            5.2            3.6            4.4            5.5
                   12/08          12/09          12/10(E)          12/11(E)              12/12(E)
                             ROE (LHS)                       Price to book value (RHS)
                                                                                                                 Capex / depreciation                                             0.9            0.9            0.6            0.7            0.9            1.2

                                                                                                                 Capital structure (%)                                        5Yr Avg          12/08          12/09        12/10E         12/11E         12/12E
Growth (UBS EPS)                                                                                                 Net debt / total equity                                        (54.7)         (36.8)          (0.1)        (48.1)         (31.8)         (27.4)
                                                                                                                 Net debt / (net debt + equity)                                   NM           (57.3)          (0.2)        (99.6)         (48.7)         (38.9)
    150000                                                                                             60.0%
                                                                                                                 Net debt (core) / EV                                                -              -              -        (10.0)         (11.3)         (12.8)
    140000                                                                                             50.0%
                                                                                                               Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill-related charges and other adjustments for abnormal and economic
    130000
                                                                                                       40.0%   items at the analysts' judgement.
    120000                                                                                                     Valuations: based on an average share price that year, (E): based on a share price of US$33.89 on 14 Dec 2010 18:13 EST Market cap(E) may include
                                                                                                       30.0%
    110000                                                                                                     forecast share issues/buybacks.
    100000                                                                                             20.0%

     90000                                                                                             10.0%
                     12/08          12/09         12/10(E)          12/11(E)             12/12(E)
                                                                                                               Colin Langan, CFA                                                          Julie Heckman
                              Revenue (LHS)                  UBS EPS Growth (RHS)
                                                                                                               Analyst                                                                    Associate Analyst
                                                                                                               colin.langan@ubs.com                                                       julia.heckman@ubs.com
                                                                                                               +1-212-713 9949                                                            +1 212 713 8593




                                                                                                                                                                                                                                              UBS 34
General Motors Company 15 December 2010




   General Motors Company

General Motors is the third largest automaker in the world. Headquartered in
Detroit, GM manufactures cars and trucks with operations and sales in over 120
countries. The company employs 208,000 people worldwide. In 2009, new and
old GM sold 7.5 million vehicles globally under the following brands:
Chevrolet; Cadillac; Buick; GMC; GM Daewoo; Wuling; FAW; Isuzu; Jiefeng,
Opel; and Vauxhall. GM markets the majority of its cars, trucks, and parts
through retail dealers in North America, and to distributors and dealers outside
of North America.




   Statement of Risk

The global auto industry is highly cyclical, vulnerable to sudden shifts in
consumer sentiment, employment, interest rates, and general economic activity.
Automobile manufacturers typically have significant unfunded postretirement
liabilities, which may be highly sensitive to asset values, interest rates,
healthcare inflation and other actuarial assumptions. Parts suppliers are further
exposed to customer pricing pressure, shifts in OEM market share, volatile
production schedules, and unforeseen changes in technology. As it relates to
GM, the company mitigated a number of its former risks in bankruptcy and has
emerged a much healthier and more streamlined business. Given the company
has corrected its liquidity issues, the biggest near-term risk is that demand for
upcoming product launches is weaker than expected, which could cause it to
relatively underperform on a share basis despite the SAAR recovery. We also
view the new (and unproven) management team as a risk, given the limited track
record and lack of prior industry experience. Finally, there is risk that consumer
demand shifts back towards cars vs. trucks faster than GM can launch new
product offerings in the subcompact and small car segments -- in which case it
would probably face additional market share pressure and margin compression.



   Analyst Certification

Each research analyst primarily responsible for the content of this research
report, in whole or in part, certifies that with respect to each security or issuer
that the analyst covered in this report: (1) all of the views expressed accurately
reflect his or her personal views about those securities or issuers; and (2) no part
of his or her compensation was, is, or will be, directly or indirectly, related to
the specific recommendations or views expressed by that research analyst in the
research report.




                                                                                       UBS 35
General Motors Company 15 December 2010


Required Disclosures

This report has been prepared by UBS Securities LLC, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and
affiliates are referred to herein as UBS.

For information on the ways in which UBS manages conflicts and maintains independence of its research product;
historical performance information; and certain additional disclosures concerning UBS research recommendations,
please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is
not a reliable indicator of future results. Additional information will be made available upon request.

UBS Securities Co. Limited is licensed to conduct securities investment consultancy businesses by the China Securities
Regulatory Commission.

UBS Investment Research: Global Equity Rating Allocations
                                                                                                  1                                2
 UBS 12-Month Rating                Rating Category                                     Coverage                      IB Services
 Buy                                Buy                                                        51%                            37%
 Neutral                            Hold/Neutral                                               40%                            33%
 Sell                               Sell                                                        9%                            22%
                                                                                                  3                              4
 UBS Short-Term Rating              Rating Category                                     Coverage                      IB Services
 Buy                                Buy                                               less than 1%                            20%
 Sell                               Sell                                              less than 1%                             0%
1:Percentage of companies under coverage globally within the 12-month rating category.
2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within
the past 12 months.
3:Percentage of companies under coverage globally within the Short-Term rating category.
4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided
within the past 12 months.

Source: UBS. Rating allocations are as of 30 September 2010.
UBS Investment Research: Global Equity Rating Definitions
 UBS 12-Month Rating                Definition
 Buy                                FSR is > 6% above the MRA.
 Neutral                            FSR is between -6% and 6% of the MRA.
 Sell                               FSR is > 6% below the MRA.
 UBS Short-Term Rating              Definition
                                    Buy: Stock price expected to rise within three months from the time the rating was assigned
 Buy
                                    because of a specific catalyst or event.
                                    Sell: Stock price expected to fall within three months from the time the rating was assigned
 Sell
                                    because of a specific catalyst or event.




                                                                                                                             UBS 36
General Motors Company 15 December 2010


KEY DEFINITIONS
 Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12
months.
 Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a
forecast of, the equity risk premium).
 Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are
subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation.
 Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do not reflect any
change in the fundamental view or investment case.
Equity Price Targets have an investment horizon of 12 months.

EXCEPTIONS AND SPECIAL CASES
UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management,
performance record, discount; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell:
Negative on factors such as structure, management, performance record, discount.
Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review
Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's
debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating.
When such exceptions apply, they will be identified in the Company Disclosures table in the relevant research piece.



Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are not
registered/qualified as research analysts with the NASD and NYSE and therefore are not subject to the restrictions contained in
the NASD and NYSE rules on communications with a subject company, public appearances, and trading securities held by a
research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any,
follows.
UBS Securities LLC: Colin Langan, CFA; Julie Heckman.


Company Disclosures
 Company Name                                  Reuters     12-mo rating Short-term rating                 Price        Price date
                       6a, 6b, 7, 14,
 General Motors Company
 16                                              GM.N          Not Rated                  N/A         US$33.89       14 Dec 2010

Source: UBS. All prices as of local market close.
Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing
date

6a.    This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment
       banking securities-related services are being, or have been, provided.
6b.    This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities
       services are being, or have been, provided.
7.     Within the past 12 months, UBS Securities LLC has received compensation for products and services other than
       investment banking services from this company/entity.
14.    UBS Limited acts as broker to this company.
16.    UBS Securities LLC makes a market in the securities and/or ADRs of this company.


Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report.




                                                                                                                             UBS 37
General Motors Company 15 December 2010


General Motors Company (US$)
                                                                                                         Price Target (US$)                              Stock Price (US$)

              50.0

              40.0

              30.0

              20.0

              10.0

              0.0
                                 01-Jan-06




                                                                                 01-Jan-07




                                                                                                                                 01-Jan-08




                                                                                                                                                                                   01-Jan-09




                                                                                                                                                                                                                                   01-Jan-10
                     01-Oct-05




                                             01-Apr-06

                                                         01-Jul-06

                                                                     01-Oct-06




                                                                                             01-Apr-07

                                                                                                         01-Jul-07

                                                                                                                     01-Oct-07




                                                                                                                                             01-Apr-08

                                                                                                                                                           01-Jul-08

                                                                                                                                                                       01-Oct-08




                                                                                                                                                                                               01-Apr-09

                                                                                                                                                                                                           01-Jul-09

                                                                                                                                                                                                                       01-Oct-09




                                                                                                                                                                                                                                               01-Apr-10

                                                                                                                                                                                                                                                           01-Jul-10

                                                                                                                                                                                                                                                                       01-Oct-10
         Neutral 2
        Reduce 2
              Buy
              Sell
        No Rating


Source: UBS; as of 14 Dec 2010


Note: On August 4, 2007 UBS revised its rating system. (See 'UBS Investment Research: Global Equity Rating Definitions' table
for details). From September 9, 2006 through August 3, 2007 the UBS ratings and their definitions were: Buy 1 = FSR is > 6%
above the MRA, higher degree of predictability; Buy 2 = FSR is > 6% above the MRA, lower degree of predictability; Neutral 1 =
FSR is between -6% and 6% of the MRA, higher degree of predictability; Neutral 2 = FSR is between -6% and 6% of the MRA,
lower degree of predictability; Reduce 1 = FSR is > 6% below the MRA, higher degree of predictability; Reduce 2 = FSR is > 6%
below the MRA, lower degree of predictability. The predictability level indicates an analyst's conviction in the FSR. A
predictability level of '1' means that the analyst's estimate of FSR is in the middle of a narrower, or smaller, range of possibilities.
A predictability level of '2' means that the analyst's estimate of FSR is in the middle of a broader, or larger, range of possibilities.
From October 13, 2003 through September 8, 2006 the percentage band criteria used in the rating system was 10%.




                                                                                                                                                                                                                                                                                   UBS 38
General Motors Company 15 December 2010




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