GM EARNS $225 MILLION, OR $0.50 PER SHARE, IN FIRST QUARTER

DETROIT — General Motors Corp. (NYSE: GM) today reported that it earned $225 million, or $0.50 diluted earnings per share, in the first quarter of 2001 — excluding special items — on revenues of $42.6 billion. The results exclude the $12 million, or $0.03 per share, favorable effect of the initial adoption of an accounting change (SFAS No. 133) relating to the treatment of derivatives. Including the accounting change, GM's first-quarter 2001 income totaled $237 million, or $0.53 per share.

GM's first-quarter performance, although better than expected, was down significantly from the record $2.80 per share in the first quarter of 2000 on net income of $1.8 billion and revenues totaling $46.9 billion.

GM financial results described throughout the remainder of this release exclude the special item relating to SFAS No. 133 unless otherwise noted.

"Our first-quarter performance was better than expected, considering significantly reduced production volumes in North America," said GM Chairman Jack Smith. "While the economic and competitive environment is challenging, we remain focused on our key customer and business priorities."

GM President and Chief Executive Officer Rick Wagoner said, "The entire GM organization is moving fast to bring new products to market, grow our business, and improve our financial performance. We are committed to doing even better by aggressively attacking costs while we focus on bringing innovative new products and services to markets around the world."

Strong first-quarter earnings at General Motors Acceptance Corp. (GMAC) and lower costs in the North American automotive business only partially offset the effect of lower vehicle sales and intense pricing pressures in North America and Europe.

GMAC earnings of $431 million in the first quarter reflected lower interest rates and increased wholesale business, partially offset by weaker vehicle-residual values. Mortgage operations also continued to perform very strongly in this period.

The significant decline in automotive earnings versus last year's first quarter are attributable primarily to North America and Europe. GM North America's (GMNA) income was $120 million in the first quarter of 2001, down more than $1.1 billion from the same period last year, as net price fell 1.0 percent and vehicle sales to dealers fell by more than 300,000 units, reflecting significant first-quarter production cuts designed to reduce dealer inventories.

"Continued progress in reducing costs helped offset the nearly 20-percent reduction in North American production volume. Our dealer inventory levels are much improved compared with levels at the end of last year," Wagoner said. "Our U.S. and North American market share was stable in the first quarter and up from the fourth quarter of 2000. While the North American industry volume is down compared with the record highs of last year, we are still seeing a lot of underlying strength in demand. As we continue to roll out new products and expand industry-leading services such as OnStar, we are focused on growing our market share and our revenue base."

GM Europe (GME) lost $86 million during the first quarter, down significantly from a profit of $221 million in the same quarter last year. Results were primarily affected by lower volume, continued pricing pressures, particularly in the United Kingdom, a shift in demand to smaller, lower-profit vehicles, and unfavorable country mix. While vehicle deliveries were down in line with the overall industry, GME's market share increased slightly during the quarter, and Opel/Vauxhall was the number-one brand for passenger-car sales in Western and Central Europe in the month of March. "We've taken tough actions to restructure our European operations, but the market is proving to be weaker than expected. We are focusing intensely on our new product introductions to strengthen our brands, and we are pushing even harder to reduce costs to meet the pricing challenges in this demanding market," Wagoner said.

GM's Latin America/Africa/Mid-East (GMLAAM) region increased its profitability to $6 million in the first quarter of 2001, primarily from improved volume. The Asia Pacific (GMAP) region had a loss of $20 million in the first quarter, which was more than accounted for by losses at GM's affiliate Isuzu.

Hughes' net loss of $96 million in the first quarter of 2001 was related primarily to the continued growth of DIRECTV. Hughes added 441,000 net new DIRECTV subscribers in the first quarter, bringing the total subscriber base to 11.2 million.

LOOKING AHEAD

General Motors continues to expect that total U.S. vehicle sales in calendar-year 2001 will be about 16.5 million units.

While there are considerable uncertainties in the economic environment, the present consensus among automotive analysts that GM is expected to earn approximately $0.95 per share for the second quarter of 2001 is consistent with GM's internal expectations.

"We have a number of major vehicle introductions this year in key market segments throughout the world as we continue to strengthen our global portfolio," Wagoner said.

Key new products in North America include the Chevrolet Avalanche; the Chevrolet Trailblazer, GMC Envoy and Oldsmobile Bravada midsize sport utilities; the Cadillac Escalade and Escalade EXT; Buick Rendezvous, and the Saturn VUE.

In Europe, the new Corsa and Zafira offerings, Astra convertible, Speedster, Vivaro commercial van, and improved availability of diesel engines are important for building market momentum.

In Latin America, the Chevrolet Zafira and Grand Vitara are new entries, joining the Celta, which was introduced last year.

The Buick Sail, the third distinct model from the Shanghai GM joint venture, and the Chevrolet Blazer and the S-10 crewcab pickups, which will be produced by the Jinbei GM joint venture, are important entries in this key growth market.

The Zafira was recently introduced in Asia and is produced at GM's Thailand plant. GM will begin production in September of a small Chevrolet 4X4 lifestyle vehicle at Suzuki's Kosai plant in Japan. That vehicle will initially be sold in Japan and Australia.