GM Reports Preliminary Second Quarter Financial Results

* Record automotive revenue of $45.9 billion
* Reported net income of $891 million, adjusted net income of $1.4 billion
* Adjusted automotive operating cash flow of $1.1 billion
* Improved liquidity position of $27.2 billion

DETROIT – General Motors Corp. (NYSE: GM) today released its preliminary financial results for the 2007 second quarter, marked by record automotive revenue driven by strong sales in key growth markets, improved net income, and solid operating cash flow.

“We again saw improved results in sales, income and cash flow this quarter, driven by the continued successful implementation of our business strategies,” said Rick Wagoner, GM chairman and chief executive officer. “In particular, our heavy commitment to key growth markets around the world really paid off in strong growth and earnings. In North America we continue to make progress with our focus on great new products, a disciplined sales and marketing strategy, and structural cost reduction, although profitability remains close to breakeven"

GM reported net income of $891 million, or $1.56 per diluted share, for the second quarter of 2007, an improvement of $4.3 billion compared with a reported net loss of $3.4 billion, or $5.98 per diluted share, in the year-ago quarter.

The results for the second quarter 2007 included $520 million, or $.92 per diluted share, in net special items, including $374 million in charges associated with GM’s support of the bankruptcy and reorganization of Delphi and various GM North America (GMNA) restructuring-related charges. Details on the special charges are included in the “Highlights” section of this news release.

GM posted 2007 second-quarter adjusted net income, excluding special items, of $1.4 billion, or $2.48 per diluted share, compared to $1.1 billion, or $2.03 per diluted share, in the year-ago quarter.

GM Automotive Operations

GM’s global automotive net income from continuing operations totaled $764 million on an adjusted basis in the second quarter of 2007 (reported net income from continuing operations of $618 million), compared to an adjusted net income of $367 million (reported net loss from continuing operations of $3.48 billion) in the second quarter 2006. Results for GM’s automotive operations, specifically GMNA, exclude Allison Transmission which is now classified as a discontinued operation and an asset held for sale, pending the close of the previously-announced sale transaction.

GM’s global sales volume surpassed 2.4 million units in the second quarter, up marginally from the same quarter a year ago. Global market share was down slightly at 13.3 percent, compared to 13.7 percent in the year-ago period, driven by a softer U.S. market, a reduction in fleet sales, and a disciplined incentive strategy. GM market share outside of North America increased to 9.4 percent in the second quarter 2007, compared to 9.2 percent in the second quarter 2006.

GMNA had adjusted net income from continuing operations of $78 million in the second quarter 2007 (reported net loss from continuing operations of $39 million), compared to adjusted net loss of $94 million from continuing operations (reported net loss from continuing operations of $3.95 billion) in the second quarter 2006. The net income improvements reflect favorable mix and reduced structural costs. These savings were partially offset by lower volume, favorable policy and warranty (P&W) adjustments in the prior-year period and unfavorable foreign exchange.

“It’s true that our North America team has made huge improvements, and we appreciate everyone’s hard work. But our current earnings clearly demonstrate we’ve got more to do,” Wagoner said.

“We remain focused on growing revenue in North America by introducing great new cars and trucks, and enhancing our revitalized sales and marketing strategy. At the same time, we must continue to address our key areas of cost disadvantage such as healthcare. Going forward, we need to generate adequate profitability and cash flow to fund new product and key technology investments, like bio-fuel and hybrid-powered vehicles, to better position our business for sustainable growth.” Wagoner added.

GM Europe (GME) posted adjusted net income of $236 million for the quarter (reported net income of $217 million), compared to $143 million in the second quarter of 2006 (reported net loss of $39 million). The results mark the best quarterly performance for GME since the second quarter of 1996. The improved earnings were driven by favorable pricing, combined with solid structural cost performance associated with the region’s ongoing restructuring.

Despite industry pressures in Germany, Europe’s largest vehicle market, GME set a quarterly sales record of 574,000 units, up five percent over the second quarter 2006. The new Opel Corsa small car and the Chevrolet Captiva compact SUV continued to perform especially well. In addition, GME’s multi-brand strategy continues to gain momentum. Chevrolet had record sales of 115,000 units, up 34 percent. GME growth in key Eastern European markets was strong, especially in Russia, where unit sales were up 106 percent over the second quarter 2006, and share was up 3.9 percentage points.

GM Asia Pacific (GMAP) recorded adjusted net income of $237 million in the second quarter (reported net income of $227 million), which marks a second-quarter net income record for the region, and compares with $164 million in the same quarter a year ago (reported net income of $376 million, which included $212 million from the sale of GM’s equity interest in Isuzu). The improvements were largely driven by strong performance at GM Daewoo and GM China. GM enjoyed eight percent sales growth in the Asia Pacific region, and GM China set a new volume record with 234,000 units in the quarter, up over six percent year-over-year. GM sales in South Korea were up 20 percent, and India was up 46 percent aided by the success of the newly-introduced Chevrolet Spark.

GM Latin America, Africa and Middle East (GMLAAM) continued to leverage explosive regional growth and its traditionally strong position in the region. GMLAAM posted its best quarterly net income in a decade with adjusted earnings of $213 million (reported net income also $213 million), compared to $155 million in the same quarter last year (reported net income of $139 million). Improvements in net income were driven primarily by volume growth and favorable pricing. GMLAAM set a volume record for the quarter, selling over 293,000 units, up 20 percent year-over-year. GM sales performance was highlighted by an all-time sales record in Venezuela, and second quarter records in Argentina, Brazil, Chile, Colombia, Egypt, and the Middle East Operations.

“As we head into the second half of the year, we’re optimistic about continued growth prospects in key emerging markets. In the U.S., the economy and auto market outlook remains challenging, but we’ll continue our future product and technology investments, while staying focused on growing our revenue and improving our cost competitiveness,” Wagoner said. “ We look forward to the U.A.W. negotiations as an opportunity to continue to address issues that are important to the company, the union and our employees.”

In addition to strong year-over-year performance in automotive operations, GM also recognized adjusted net income of $401 million in Corporate Other and Other Financing (reported net income of $27 million). This represents a $517 million improvement over the second quarter 2006, principally related to reductions in income tax contingencies.

GMAC

As a standalone company, GMAC Financial Services reported net income of $293 million for the second quarter 2007, compared to $787 million in the second quarter 2006 which included a one-time gain on the sale of a regional homebuilder of $259 million. GM recognized $139 million in net income attributable to GMAC as a result of its 49 percent equity interest as well as accrued preferred dividends. Financial performance at GMAC represents a $598 million improvement over the first quarter 2007, which was significantly affected by pressures in the U.S. nonprime mortgage market.

“We’re pleased that GMAC returned to profitability in the second quarter, with significantly better results than the first quarter. GMAC’s auto financing and insurance businesses continues to post strong results while the company continues to progress in addressing the challenging conditions in the residential mortgage market,” Wagoner said.

GMAC’s automotive finance, insurance and other operations (excluding Residential Capital, LLC (ResCap)) generated more than twice the net income of these same operations in the year-ago period. Despite continued challenges in the residential mortgage industry, ResCap significantly reduced losses in the second quarter.

Cash and Liquidity

GM generated adjusted operating cash flow of $1.1 billion in the second quarter of 2007, up from $600 million in the year-ago quarter, and continues to maintain a strong liquidity position.

Cash, marketable securities, and readily-available assets of the Voluntary Employees’ Beneficiary Association (VEBA) trust totaled $27.2 billion as of June 30, 2007, up from $24.7 billion on March 31, 2007. The balance includes $1.4 billion net cash raised through a convertible debt offering in May 2007, which replaced $1.1 billion in convertible debt that was redeemed in March 2007.

As announced in June 2007, the sale of the Allison Transmission business will further bolster GM’s liquidity, with proceeds of approximately $5.6 billion. The sale is expected to close in the third quarter 2007.