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General Motors Company (NYSE:GM)

Vehicles Sales Conference Call

February 1, 2012, 11:00 a.m. ET

Executives

Jim Cain – GM Communications

Don Johnson – VP, U.S. Sales Operations

Alan Betty – Chevrolet VP

Brian Sweeney VP of Buick GMC

Kurt Mcneil – VP Cadillac

Yingzi Su Senior Economist

Analysts

Chris Ceraso – Credit Suisse

John Murphy – BofA Merrill Lynch

Adam Jonas – Morgan Stanley

Rod Lache – Deutsche Bank Securities

Brian Johnson – Barclays Capital

Patrick Archambault – Goldman Sachs

Himanshu Patel – JPMorgan

H Peter Nesvold – Jefferies & Co.

Colin Langan - UBS

Itay Michaeli – Citi

Ben Klayman – Reuters

Mike Haley – Automotive News

Craig Trullo – Bloomberg News

Alisa Priddle – Detroit Free Press

Darwin Hathaway – TheTruthAboutCars.com

Deanna Durbin – The Associated Press

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the January 2012 U.S. sales conference call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct the question-and-answer session for the analyst and then for the media. (Operator Instructions).

As a reminder, this conference is being recorded, Wednesday, February 1, 2012.

I would now like to turn the conference over to Jim Cain, GM Communications. Please go ahead, sir.

Jim Cain

Good morning, everybody, and thank you for joining us. And welcome to our January 2012 U.S. Sales call. Joining us today is Don Johnson, our Vice President of U.S. Sales Operations, along with the Vice President of each of our sales channels.

Before we begin, I just want to remind everybody that our press release and the contents of the call are covered under our normal forward-looking statements disclosure, which you can read in the press release.

And with that, we’ll turn the floor over to Don, thank you.

Don Johnson

Great, thanks Jim, and good morning, everybody. As we always do every month, we’re going to review our sales results, we’ll dig in to the industry dynamics a little bit, and then I’ll take your questions.

I suppose you’ve read by now, General Motors reported total sales for the month of January of 167,962 units. Now that’s about 6% lower than January 2011, which was, as you all know, a very strong month for us. And consequently, we did beat a lot of the expectations for the month.

When we look at the industry the SAR in January looks to be in the 13.5 to 13.6 million light vehicle range, which roughly equal to where we were in December 2011, and in line with our estimates for the full year of 2012.

As we look at our market share, we’re estimating that our share will come in 18.8, 18.9% so although those year-over-year sale changes look a little bit challenging, subsequently, our share of the business is very good news.

And importantly, we delivered this result with incentive spending that is very competitive, and actually lower than many of our full line competitors. When we express it as a percentage of average transaction prices, our incentive spend was about 9.8% of ATP, and that’s almost three percentage points lower than where we were a year ago.

So turning back to our sales results, January was paced again by Chevrolet, especially Chevrolet passenger cars, which were up 13% year-over-year. Now that 13% increase for Chevy cars was enough to drive GM’s total passenger cars sales up 3% and that offset the impact of some of our discontinued vehicles.

And it’s really the success of our new fuel efficient cars that tells the story. As an example, our sales of the Chevrolet Cruze. Cruze sales were up 10% versus January 2011, and 15% of those retail sales were the 42-mile-per-gallon Cruze Eco model.

Sonic sales, again continued very strong. Sales were 57.12 in January. That’s about the same as December, and with the low seasonal in January, again that’s very strong performance from Sonic, and that’s up 109% compared with the [inaudible] that it replaced.

Now when we look at Cadillac sales, the luxury segment in January was actually down. So even though Cadillac sales year-over-year were down, Cadillac will gain share in the retail luxury segment with another performance from SRX and a continued emphasis on retail sales, and really supporting Cadillac residuals.

For Buick, sales of the Buick LaCrosse, which now has the 36-mile-per-gallon eAssist powertrain as standard equipment, were up 6%. And on a retail bases, LaCrosse had its best January either. And eAssist models currently are representing about 20% of sales.

When you look at the sort of more performance for less fuel benefit of the eAssist powertrain, it really only tells half of the story. The other half is the overall refinement of eAssist and it really is impressing customers.

So while we’re on the subject vehicle electrification, let me briefly update you on the Chevrolet Volt. As we acknowledged during the month, sales in January were clearly impacted by the safety investigation and the exaggerated negative coverage.

Now that the dust has settled though, we’re looking to get back on track and make the most out of new developments like the fact that Volts will soon be eligible for HOV lane access in California.

But importantly, we are going to take this one month at a time. We’re going to keep production in line with demand when we resume shipping vehicles in early February.

So before I move on, I want to touch again briefly on crossover and truck sales, as well as our fleet mix. Year-over-year our crossover sales were down 18% from January of last year, despite a 6% sales increase for the Chevrolet Equinox. So the Equinox continues to show a lot of strength.

Meanwhile, our truck sales, and in this I’m including full size pickups, vans, and full size SUVs. They were down about 6%, in line with our overall reduction.

I think it’s worthwhile pointing out that large pickups and SUVs are following their normal seasonal pattern, which means that the segments typically decline in volume from December to January, and typically represent a smaller share of the total industry. So that’s expected.

Now this January, this impact was exaggerated somewhat by the pull ahead of some sales ended in December, due to the expiration of the Accelerated Depreciation tax benefit.

I’d also like to remind all of you about an important point that we made on last month’s sales call about launch-related downtime in our truck plants. Now as we plan for these down weeks in 2012, we are managing our overall truck production and our inventories to meet demand, which we expect will continue to be strong, given a slowly improving economy and stable fuel prices.

Now in the fleet side of the business, total fleet sales increased about 26%. Now this increase was across all segments of the business, specifically driven by a 13% increase in commercial sales, a 40% increase in government sales, and a 29% in sales to daily rental companies.

Now as you know, a lot of our daily rental customers do prefer to time their purchases to take advantage of higher residual value early in the year. So that’s essentially what’s happening. Some of this is simply meeting what our customers are looking for in terms of delivery timing.

When you look at the entire year, we are planning for our total fleet mix in 2012 to be pretty consistent with what we saw in 2011.

And then finally, before we open the line for questions, I’d like to just say a few words about our launch plans for 2012, which are aggressive and timely given our expectations for industry growth in that slow but steadily improving economy.

In January, our Fairfax Assembly plant began production of the 37-mile-per-gallon 2013 Chevrolet MalibuEco, which is arriving in dealerships as we speak. This summer, we will launch a new 4-cylinder and turbo powertrain for the Malibu, and they’ll be arriving in showrooms about the same time as the new 2013 Chevrolet Spark.

In late spring, Cadillac will launch its new XTS large sedan, and then late summer, it’s new ATS luxury sports sedan. Late in 2012, Buick will launch the new Encore crossover, which made its début at the North American International Auto Show.

Next week at the Chicago Auto Show, GMC will introduce the new Acadia, which also will go in to production in late 2012, and we have several other new products that will be announced over the course of the year.

I mention all of this to reinforce a strategy that we’ve been executing since well before the GM IPO, and that is it all starts with great products. As strong as our Chevrolet, Buick, GMC, and Cadillac showrooms are today, by the end of this year, we’re going to have all new or significantly freshened cars and crossovers, in segments that represent more than 60% of the retail light vehicle industry. And our dealers are going to be delivering these products in some of the newest facilities in the industry.

As we speak, thousands of our U.S. dealers are executing facility programs that will enhance customer shopping, sales, and service experience. And I don’t think there’s a more powerful way to communicate values like optimism, strength and quality and the combination of great new products and fresh modern facilities.

Okay, that’s it for my remarks, it’s now time to open up the lines for Q&A. Joining us today are Chevrolet Vice President Alan Batty, Brian Sweeney, Vice President of Buick GMC, Cadillac Vice President Kurt Mcneil, and Senior Economist, Su Yingzi Su. Let’s take some questions, please.

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen, we will now proceed with the analyst portion of the question-and-answer session. (Operator instructions). Our first question that comes from the line of Chris Ceraso, with Credit Suisse. Please proceed with your question.

Chris Ceraso – Credit Suisse

Thank you, good morning. Just a couple of questions. Can you give us some details on the ATS launch, I don’t know if you’ve mentioned anything about pricing yet, or what the powertrain options are going to be out of the gate, if it’s going to be staggered like you’re doing with the Malibu. And then maybe what sort of ballpark share of the really tough entry lux market you think you can achieve.

Kurt Mcneil

Yes, Chris, this is Kurt Mcneil. Yes, we have not announced details on startup production, which will be late summer. We have not announced pricing yet, we’re still finalizing that, quite frankly. There will be three engine options, which we talked about here when we launched the car in Detroit. They’ll be the 2.5 liter base powertrain, a 2 liter turbo, and then a 3.6 liter V6. And right now our plan is to introduce the car with all three. So as far as volumes or share projections, we aren’t going to go there for right now. Obviously, we think we got a great product, we think it will be very competitive, but it’s obviously a very competitive segment as well.

Chris Ceraso – Credit Suisse

And then just one follow up, a bigger picture across the whole GM network on all four brands. Has there been any dealer creep, I think a big part of the bankruptcy was the reduction in the dealer body, which I think has helped pricing in the industry, but has there been an increase in the number of dealers over the last, say 12 months?

Don Johnson

No, there hasn’t. I mean, we still have what I call some puts and takes out there. There’s still a couple of places we want to be, but nothing significant at all.

Chris Ceraso – Credit Suisse

Okay, thank you.

Operator

Our next question comes from the line of John Murphy, with Bank of America. Please go ahead.

John Murphy – BofA Merrill Lynch

Good morning, guys. I just wanted to focus on pickups from three aspects. First, I mean, the inventory is still relatively low, reverses some of the targets you talked about last year. And there’s been an indication that you’ll ramp up inventory in front of some of the downtime that you’re taking in the second and third quarter. I’m just wondering when we’ll see that inventory increase and to what absolute level, sort of, your talking, as far as building the inventory. And then also on that, just there was some talk about the merchandizing for pickups, or incentives, being pulled back in January. I’m just curious if you saw that as well, if you think that was driving some of the weakness in your pickups. And if there might be some increase in merchandizing going forward.

Don Johnson

I guess a couple of comments. First of all, in terms of the inventory, yes, we’re down about 189,000 units right now. We’re pretty comfortable with that level of inventory. We haven’t planned out precisely what our levels are going to be every month other than we’ll be in that 200, you know, plus or minus around that 200,000 range, depending again when the specific down weeks are.

The key is that by the end of the year, we want to make sure that we’re in the same ballpark that we ended 2011 in.

As far as incentives, you know industry wide, incentives dropped off December to January. Not sure it was any more dramatic on a percent of ATP business in the full-size pickup segment. Segment was off, as we expected, in January it’s always off. There was a little bit of that pull ahead in to December. I think last month we were estimating it was 1,000 to 1,500 units for us. Based on what we’ve seen in January, it could have been a little bit higher, it could have been closer to 2,000, but not materially higher, still in that range.

Outlook going forward, don’t know what the incentive environment might look like in pickup trucks. I think we’ll simply continue to maintain our competitive position and gain the share that we’ve been getting.

John Murphy – BofA Merrill Lynch

And Don, just one quick housekeeping question. You mentioned the GMC Acadia as an all-new model in late 2012. I’m just curious, is that a mid-cycle major or is that an all-new model?

Don Johnson

It’s a significant change to the look of the vehicle.

John Murphy – BofA Merrill Lynch

Okay, thank you.

Operator

Our next question comes from the line of Adam Jonas, with Morgan Stanley. Please proceed with your question.

Adam Jonas Morgan Stanley

Hi, thanks. Good morning, everyone. A question for Alan on the sale down of the old Malibu, as you kind of ramp up the Eco. Given that you introduce the new model with just the Eco trim, are you going to be making the new and old side-by-side, like how much longer would you do that? Or can you just kind of dynamic at a dealership, will be having the old and new side-by-side before you bring in the new engines in the summer?

Alan Batty

Yes, you basically articulated the way it will be. I mean, we start now with the Eco, that runs through the first half of the year. The current one, the Malibu will run through that period, and then we’ll transition through the summer period in to the new model.

Adam Jonas Morgan Stanley

Okay. Question on the Verano, who’s buying this car? How much of its fleet? When I say who’s buying, I mean are you winning business from other – current Buick owners or Lexus, or the Germans. Just kind of, any idea of the demographics so far? And then again, how much of that is fleet?

Brian Sweeney

It’s Brian Sweeney here, just a couple of quick comments on Verano. I mean, we’re still pretty much pulling cars in to the mix, so we’re just shy of a 1,000 sales right now, probably about 2,400 cars in dealer inventory. I’d say, some of our early buyer reads, you know 1 in 4, of close to 1,000 have come out of imports, is what the dealers have been telling of us. 52% of those sales are been Conquest, almost half. And we’re really just now starting to ramp up our advertising efforts, and it gets really strong as we get in to March and the NCAA Tournament. So, so far so good, really good. Yes, none in fleet, no fleet.

Adam Jonas Morgan Stanley

None in fleet?

Brian Sweeney

No.

Adam Jonas Morgan Stanley

Okay. And just finally, Kurt, Cadillac last month, or last couple months you were talking about the competitors getting aggressive. I think you called out Mercedes or BMW, or both. Still seeing the competitive pricing in the segment from the Germans, or any change there? Thanks.

Kurt Mcneil

Yes. Still seeing – still seeing it, not quite as aggressive, but based on our data, BMW outspent us by plus 400 bucks a car, and Mercedes about 50 bucks a car. So still aggressive, not quite as crazy as the month of December.

Adam Jonas Morgan Stanley

Great, thanks a lot.

Operator

Our next question comes from the line of Rod Lache, with Deutsche Bank. Please proceed with your question.

Rod Lache – Deutsche Bank

Thanks. A couple of things. First I was hoping you could give us a little bit more color on the new Encore. What kind of volumes would a product such as that be targeted for. And what are the sort of competitive products out there that this would be competing against?\

Don Johnson

At Encore, we revealed it at the auto show, but you know, we’re not going to make any sales or volume projections. It’s really, it sits in that entry lux, you know, compact, crossover. So it’s a segment that there aren’t a lot competitors in, so we think we’re going to pave the way and lead the way there. So we’ll just wait and see. It’s about a year away from decent ground stock and a flow of product.

Rod Lache – Deutsche Bank

Okay. And just related to the trucks, if you could just – I’m hoping you might be willing to clarify. You’ve given us quite a bit of information on the down weeks. Can you just give us a sense of when exactly those happen. I know quite a bit of that, it should be happening in the second quarter?

Don Johnson

Yes, we’re actually spreading it out quarter-to-quarter fairly evenly. I think there’s a difference of one week, quarter-to-quarter, but it’s pretty even over the quarter, which makes sense for us from a sales standpoint so we don’t have to build – we have to do a little inventory in advance, but so we don’t have to over build while we turn around and deplete it.

Rod Lache – Deutsche Bank

So you are seeing some down time in Q1 as well?

Don Johnson

Yes.

Rod Lache

Okay. Thank you.

Operator

Our next question comes from the line of Brian Johnson, with Barclay’s Capital. Please proceed with your question.

Brian Johnson - Barclay’s Capital

Yeah, I just want to – because we have not talked about it for a while – talk about the financing side. Just statistics, GM Financial, GMAC and lease penetration and then more color. What are you seeing in terms of the financing market? The senior loan officer survey noted continued loosening of credits. Are you getting near primes and subprimes back into new cars, or do they still support mainly in the used car market?

Don Johnson

Yeah. You have a number of things happening in your questions there, so let me start by talking about the subprime financing market. We have increased our penetration – we are up around 7.4% for January. The industry is about 5.9, so again with the acquisition of Americredit, now GM Financial and the increased aggressiveness of the Ally, we are seeing an overall penetration consistently exceed the industry, which we would have expected.

Within that mix, GM Financial is doing a little bit more than Ally is, but Ally’s still doing a great job in that segment there.

When we look at lease penetration, in January, our penetration was just about 13%. That’s still, again, a lag in the industry and some of that has to do with our mix because we more pickups, which lease a little bit less, but we are pretty happy around that level. I think we have been talking about being in the 13-15% range, so we are pretty close there. And again, in that regard, Ally is still our main lease partner, although GMF has done a great job of including their capabilities, expanding into our dealers’ network, so they’re growing that business as well.

Brian Johnson - Barclay’s Capital

If you think of your full year sales plan, are you looking to buying more deeply as part of your sales plan, or is that pretty much up to Ally and GM Financial and you will take what you can get, or the dealers are having other sources they can use for that?

Don Johnson

Again, the dealers have multiple sources they can access, and in general, it is really the decision of the financing institution. But I would say there’s more confidence on the part of the financial institutions, as relationships again continue to strengthen with the dealers, we’re hearing from our dealers that buying paper in general is pretty good right now; I wouldn’t say there are a lot of complaints that they are not buying deep enough – you will always hear some of those, but in general I would say the relationship is pretty good.

Brian Johnson - Barclay’s Capital

Okay, thanks.

Operator

Our next question comes from the line of Patrick Archambault with Goldman Sachs. Please proceed.

Patrick Archambault – Goldman Sachs

Hi, good morning. Two questions - one broader, one housekeeping – I think CSM has put out that they expect – or IHS I should say – a 30% increase in North America exports this year out of the region. Can you talk a little bit about that opportunity and how it pertains to you, you know, with increasing number of cars on global platforms, one would assume you are in an increasing position to take advantage of that.

On the housekeeping item, is it possible to give us a preliminary read on the retail SAR this month versus where it came in last month?

Don Johnson

Yeah, I will start with the retail SAR that we think is going to come in around 11 million. Last month it came in around 11.7, so the retail SAR will be down a little bit.

Just on the export opportunity, again, I don’t have any specifics for you. In that regard, I think this call is really more about domestic sales, so if you want to get into that in a little bit more detail, we can dig up some facts and Jim can get back to you.

Patrick Archambault – Goldman Sachs

Okay, if I may substitute then a question on the luxury market, I believe you said at the beginning of the call that the Cadillac weakness that you saw for the month was in line with weakness that you had seen in that broader segment. Can you tell us a little bit about the expectations for the luxury market within the U.S. over the coming year and the trends you are seeing?

Kurt Mcneil

Yeah, Patrick, this is Kurt Mcneil. The reference goes specifically to the fact that if you look at retail luxury as a percent of industry, it came it at roughly 13.1% last year. And our early data for the month of January was showing that luxury was pretty weak, maybe as low as 11.3% of industry. So I think it’s a couple things. I think it’s, you know, Mercedes, BMW are very aggressive in December. Obviously tax implications going into the end of the year, so it was a big luxury end of the year, which is typically the case. So it’s not completely surprising to see luxury fall off, which is kind of what’s pulling through in the numbers.

We’re still bullish. We see, you know, the industry improving and we certainly see luxury improving as a percent. Stock market volitility has something to do with that. If things calm down a little bit I think we’ll see some good, you know buying and strength there. So we’re still bullish, obviously we’ve got some exciting new products to launch, so we’re pretty excited about what the year has to offer.

Patrick Archambault – Goldman Sachs

Okay, great. Thank you very much.

Operator

Our next question comes from the line of Himanshu Patel with JPMorgan. Please proceed with your question.

Himanshu Patel – JPMorgan

Hi. I’m sorry, I wanted to just go back to two questions. The Encore, is it going to have a powertrain change or is it just sort of interior – I’m sorry, the Acadia, will that have a powertrain change at all or is it just interior and exterior?

And then I want to go back to the subprime question. Do you guys have any data on just the level of kind of retention or loyalty rate to the brand of a subprime consumer versus a prime consumer?

Don Johnson

Yeah, we haven’t given details on powertrain for the all-new Acadia and the details, but we’ll have that in Chicago here, what, next week. So there’s a lot of good stuff in Chicago. We want to keep it as a surprise for Chicago. We couldn’t reveal it all today.

Himanshu Patel – JPMorgan

The second question was loyalty and subprime.

Don Johnson

I don’t have that information at my fingertips. Again, if you’re looking for some insight, we can dig out some, but we do have some info, it’s a little bit limited but we can try and see what we have for your separately.

Himanshu Patel – JPMorgan

Just directionally, I mean, do you think it’s lower?

Don Johnson

No. I don’t expect it to be. Once you build a stronger relationship with a financial institution like a GMF or an Ally that’s providing you good service, that should help build loyalty. I don’t – I think – I wouldn’t expect it to be low at all. I’d expect it to be higher.

Himanshu Patel – JPMorgan

Thank you.

Operator

Our next question comes from the line of Peter Nesvold with Jefferies. Please go ahead.

H Peter Nesvold – Jefferies & Co.

Good morning. I think most of my questions on the month have been answered. Just one thing that wasn’t clear to me, you know, you talked several times about having – taking downtime in 2Q, 3Q for the K2XX changeover. I think I remember you saying in the past that you would not produce the T900 and the K2XX concurrently. How does that work? As you’re sort of rolling through these changeovers, you know, do you – the ones that are changed over to the K2XX, do they not become operational until all the plants are changed over?

Don Johnson

That’s actually done in parallel, so you can make the – some of the initial tooling changes and then start in – keep in parallel building the old product.

H Peter Nesvold – Jefferies & Co.

Okay. All right, that’s helpful then. Thank you.

Operator

Our next question comes from the line of Colin Langan with UBS. Please proceed with your question.

Colin Langan - UBS

Good morning. Did you have any color on the impact this month from the inventory restocking of some of the Japanese automakers? Is that helping the SAR at this point or is that a neutral factor? And also, if you could comment on whether that was actually a help as well as this month?

Don Johnson

I mean, it’s actually – based on what we’ve seen so far, I would call it a bit of a mixed bag. There’s still some of that impact but based on the Japanese reported sales, which you know, you’ll also be seeing, they don’t appear to be up any more than the industry overall on a retail basis. If anything, they’re a little stronger, they appear to have been a little bit stronger on fleet, which may indicate that they’re starting to, you know, get back into that market which they would likely only do if they had fairly strong inventory. But it doesn’t seem to be a big impact on the retail SAR right now.

Colin Langan - UBS

And any impact from the weather this month? It was unseasonably warm.

Don Johnson

I would hesitate to go back to the weather when it – as it impacts sales. I don’t think so. I don’t think it’s a big impact.

Colin Langan - UBS

And just one last one. The pace of the sales for the month, did they get strong towards the end of the month or…

Don Johnson

No, it was pretty steady. I mean, we always get a, you know, a little bit better last weekend, but generally, I would say pretty safe.

Colin Langan - UBS

Okay, thank you very much.

Operator

The following question will conclude the analyst portion following this question, we will proceed with the media portion of the question-and-answer session. (Operator instructions).

The final analyst question comes from the line of Itay Michaeli with Citi. Please proceed with your question.

Itay Michaeli – Citi

Great, thank you. On the 9.8% incentive to ATP ratio, I think you mentioned, can you show what that looked like relative to the industry?

Don Johnson

Yes. The industry – let’s see, we were down year over year almost three percentage points percent of ATP. The industry year over year was down about one percentage point.

Itay Michaeli – Citi

Okay, great. And then on the Acadia redesign, so we expect similar actions for the Traverse and Enclave, perhaps in early 2013 or how soon thereafter will those vehicles receive redesign as well?

Don Johnson

Actually, we haven’t announced anything in that regard.

Itay Michaeli – Citi

Okay, then maybe just a quick only lastly. Have you seen any favorable impact on Volt, either sales or traffic since the recent marketing blitz post the closing of the investigation?

Alan Betty

Yeah, this is Alan Betty. We just haven’t had enough time right now to be able to track anything that would be able – but I’d be able to portray to you, it should be accurate. It’s just too soon at this point.

Itay Michaeli – Citi

Great. Thanks so much.

Operator

Our next question comes from the line of Ben Klayman with Reuters. Please proceed with your question. Mr. Klayman, your line is open. Please go ahead.

Ben Klayman – Reuters

Yeah, hi, Don. This is Ben. Last year at this time you guys were criticized obviously for the incentives that you laid out there and you’ve been much more disciplined and you’re cutting back and was down this year. And the industry obviously sort of was in tune with that, it was also down. Yet the sales pace was, you know, held steady from December, so I just want to get your thoughts as to what’s driving that and how you see the consumer mood.

Don Johnson

You know, I would characterize the consumer mode as continued to be one that has an element of caution. You know, we’re still seeing some volitility in some of the economic news, but in general it is much more positive than it was let’s say six months ago. So we – it tells us that our forecast for the year of a slowly growing industry ending up between 13.5 and 14 light is still bang on. I mean, our – what January’s coming in at is just about bang on with our forecast. As you say, it’s basically flat to what we saw in December, so I think we’re seeing continuation of the kind of growth incentive that we saw start to pick up in the fourth quarter of 2011.

Ben Klayman – Reuters

Thank you.

Operator

Our next question comes from the line of Mike Haley with Automotive News. Please go ahead.

Mike Haley – Automotive News

Thanks, guys. Last year after the heavier incentives you put on in January and February last year, Don, you talked about keeping in line with industry trend, but also sort of keeping your competitors off balance. It seems like you’ve more or less stuck to that trend line so I’m just wondering if that sort of uneven incentive strategy is still the plan?

Don Johnson

I would say our plan is to continue to be competitive. You know, we’ve maintained a level of discipline in our incentive spend, in our production matching demand, even in our communications and we don’t certainly see varying from that – that business discipline. I think it’s served us very well. It doesn’t mean that we’re going to – that we’re not going to do something in the market to try to take advantage of an opportunity we see, but I do think that you’re going to see us continue to be predictable and then basically do what we say we’re going to do.

Mike Haley – Automotive News

Okay. And just briefly on crossover sales, it looks like they were down for I guess the second straight month. I know you said Equinox is up, but Enclave, Acadia, Traverse were all down. Is that a matter of where they’re at in their lifecycle or is there anything else going on competitively with crossover sales?

Don Johnson

No, I think a couple of things are happening. First of all, you know, HHR is out of our portfolio now. That was about 7,000 units last year. Our crossovers will continue to be very strong. Equinox, we said was up 6%, Equinox and Terrain, very, very good acceptance in the market, really keeping the momentum going month in, month out. So I think it’s more, you know, the year-over-year comparison extremely strong January sales for those models last year and then losing the HHR this year.

Mike Haley – Automotive News

Okay, thanks.

Operator

Our next question comes from the line of Craig Trullo with Bloomberg News. Please go ahead.

Craig Trullo – Bloomberg News

Hi, Don. I wanted to follow up on some of the questions about lending and I mentioned there’s still the vast majority of the loans you’re doing are through Ally and now through GM Financial, but is there some participation by other lenders and can you speak to – as to just how competitive it’s getting as it’s looking like we’ve gained some momentum with the sales pace that, you know, has been pretty steady over the last few months and now inventory issues seem to be behind us?

Don Johnson

Yeah, I think certainly there are other lenders that our dealers use. I mean, you know, Wells Fargo would be another one that’s quite prominent and you know, aggressively going after our dealer’s business. So you know, there are multiple lenders out there and I do think that business is getting increasingly more competitive, which you would expect as they look at other loss ratios which are looking pretty good since we’ve started to come out of the recession, as we’re starting to feel more comfortable with the creditworthiness of the consumer and net-net, I think from the consumer standpoint, the dealer standpoint, and our standpoint, that’s all good because that means that you know, they’re going to be in their fighting for every consumer they can get their hands on without being, I would say, irresponsible. You know, I do think the financial institutions have done a good job of making sure that they access the credit risk accurately.

But you know, we’re seeing, if we just look at all of our loans out in the market, there’s 50% of loans to purchase GM vehicles that are neither Ally or GM Financial.

Craig Trullo – Bloomberg News

And how much of this, you know, increased competition would you – how much of your sales performance over the last few months would you attribute to that credit getting a little bit easier? How much is it helping you guys?

Don Johnson

Craig, that’s really tough to put a number on. I would just say it’s definitely directionally positive, but I can’t put a number on it. I don’t know right now.

Craig Trullo – Bloomberg News

Thanks.

Operator

Our next question comes from the line of Alisa Priddle with Detroit Free Press. Please proceed with your question.

Alisa Priddle – Detroit Free Press

Good morning, gentlemen. I appreciate all of the explanations of some of the individual and segment results, but I know you started the call by touching on the fact that overall, the results are a bit of a worrisome start to the year and I’m just wondering when you sort of look at just the collective message that comes out, if there’s anything that you feel like you need to change or if you think this will in anyway affect public perception?

Don Johnson

Actually, Alisa, it’s to the contrary. And maybe I didn’t articulate it well, but in our view, despite the fact that our sales were down with a tough year-over-year comparison, we beat expectation and in fact, when we look at our share performance we improved over December, so we’re not at all disappointed with where we’ve come to and absolutely does not suggest we make any change to our plan whatsoever as we look at 2012. I would say our industry expectation, our sales in the month came in bang on with what we expected. So we continue to look optimistically towards 2012, meeting the needs of those consumers coming back into the market.

Alisa Priddle – Detroit Free Press

Okay. Thank you.

Operator

Our final question comes from the line of Darwin Hathaway with TheTruthAboutCars.com. Please proceed with your question.

Darwin Hathaway – TheTruthAboutCars.com

Hi. I wanted a breakdown on your Volt fleet sales and I’m also curious to know how you’re other hybrid sales are doing, in particular, how did your LaCrosse EAssist go to fleet?

Alan Betty

Hi, Darwin. This is Alan Betty. I’ll give you the Volt number. The Volt number was 603 units for the month and within that there were 137 fleet sales to commercial fleet customers. I’ll pass over to Brian and he can give you more about the situation on the other EAssist vehicles.

Brian Sweeney

On LaCrosse, I mean, LaCrosse, overall was up 8%, best January ever. And EAssist was about 21% of that business, almost close to 800 sales. We’ve had great reception on EAssist. It’s, you know, probably our fastest turning vehicle in the Buick lineup right now. It’s very good.

Darwin Hathaway – TheTruthAboutCars.com

Are you eAssists going to private individuals or …

Brian Sweeney

Yes. Retail customers. Yes.

Darwin Hathaway – TheTruthAboutCars.com

Okay, Very nice. Thank you.

Operator

Our final question comes from the line of Deanna Durbin with The Associated Press. Please go ahead.

Deanna Durbin – The Associated Press

Hi. Thanks for taking the call. I just wanted to know how many more months are you expecting maybe difficult comps with last year. Is that going to head into – are we going to see the same thing maybe in February or maybe even in March? And also, you mentioned that the Volt cannot drive in HOV lanes in California and when exactly do you expect that to change? I didn’t realize that. Thanks.

Don Johnson

Yeah, and I’ll talk about the comps year over year and then I’ll let Alan handle the California Volt question.

No, we – it’s a good point because we do expect in February we will again have what I’ll call difficult year-over-year comps, and again, we’ll probably focus in the call more on our sequential share performance than just the year-over-year sales comps. So good point.

Deanna Durbin – The Associated Press

Thanks.

Alan Betty

Yeah, Deanna, this is Alan Betty. With regards to your question on the HOV lane, yep, we will be producing a low emission package for Volt which will qualify them and we started to build that in February.

Deanna Durbin – The Associated Press

Okay, thank you.

Operator

This concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Jim Cain.

Jim Cain

Thanks for joining us, everybody. If you have follow-up questions, don’t hesitate to call or email. Have a good day.

Operator

Ladies and gentlemen, this does conclude the conference for today. We thank you for your participation and ask that you please disconnect your lines.

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