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Edited Transcript of GM earnings conference call or presentation 29-Oct-19 2:00pm GMT

Q3 2019 General Motors Co Earnings Call

DETROIT Oct 31, 2019 (Thomson StreetEvents) -- Edited Transcript of General Motors Co earnings conference call or presentation Tuesday, October 29, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Dhivya Suryadevara

General Motors Company - Executive VP & CFO

* Mary T. Barra

General Motors Company - Chairman & CEO

* Rocky Gupta

General Motors Company - VP & Treasurer

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Conference Call Participants

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* Adam Michael Jonas

Morgan Stanley, Research Division - MD

* Christopher Patrick McNally

Evercore ISI Institutional Equities, Research Division - MD

* Dan Meir Levy

Crédit Suisse AG, Research Division - Director & Senior Equity Research Analyst

* Emmanuel Rosner

Deutsche Bank AG, Research Division - Director & Research Analyst

* Itay Michaeli

Citigroup Inc, Research Division - Director and VP

* John Joseph Murphy

BofA Merrill Lynch, Research Division - MD and Lead United States Auto Analyst

* Joseph Robert Spak

RBC Capital Markets, Research Division - Analyst

* Rod Avraham Lache

Wolfe Research, LLC - MD & Senior Analyst

* Ryan J. Brinkman

JP Morgan Chase & Co, Research Division - Senior Equity Research Analyst

* Stephen Bruce Hunt

Barclays Bank PLC, Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the General Motors Company Third Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded Tuesday, October 29, 2019.

I would now like to turn the conference over to Rocky Gupta, Treasurer and Vice President of Investor Relations.

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Rocky Gupta, General Motors Company - VP & Treasurer [2]

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Thanks, Dorothy. Good morning, and thank you for joining us as we review GM's financial results for the third quarter of 2019. Our press release was issued this morning, and the conference call materials are available on the GM Investor Relations website. We are also broadcasting this call via webcast.

I'm joined today by Mary Barra, GM's Chairman and CEO; Dhivya Suryadevara, GM's Executive Vice President and CFO; and a number of other executives.

Before we begin, I would like to direct your attention to the forward-looking statements on the first page of the chart set. The contents of our call will be governed by this language.

I will now turn the call over to Mary Barra.

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Mary T. Barra, General Motors Company - Chairman & CEO [3]

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Thanks, Rocky, and good morning, everybody, and thank you for joining. As you know, we have a ratified labor agreement, and I am very glad that our highly skilled employees are back to work building winning cars, trucks, crossovers and components.

From the outset, our goal was to reach an agreement that works for our shareholders, our employees and our company, as we confront the realities of a rapidly transforming industry. Our contract does the right thing for our employees without compromising competitiveness or flexibility. It includes an improved path forward for our in-progression and temporary workers that will create more engagement and a motivated team. This is foundational for improving job satisfaction, health and safety, quality and productivity, all of which will strengthen the future of this company and create shareholder value. The contract also affirms our commitment to a strong U.S. manufacturing base with planned investments totaling $7.7 billion. We'll secure the future of our Detroit-Hamtramck assembly plant with an all-new electric pickup truck that builds on our established truck leadership. We're also moving forward on an opportunity to bring battery cell production to the Mahoning Valley in Ohio, which would create 1,000 manufacturing jobs.

Before I continue, I want to thank our dedicated suppliers. They were in constant contact with us throughout the work stoppage and ensuring us they will be ready for a prompt, safe restart once the new contract was ratified. And I'd also like to thank our dealers who helped us sustain our momentum in the marketplace, and they worked very hard to minimize the inconvenience to our customers caused by our limited ability to ship service and repair parts. To speed up recovery and get parts flowing to dealerships, comprehensive plans are in place to allow the network to recover as quickly as possible. So now we are moving forward as one team.

However, we have a lot of work to do in many areas as the lost profits from the work stoppage were significant. In a few minutes, Dhivya will talk about the financial impact of the strike and our full year outlook. Overall, in the third quarter, we delivered net revenue of $35.5 billion, EBIT adjusted of $3 billion, EBIT-adjusted margin of 8.4%, EPS-diluted-adjusted of $1.72, automotive-adjusted free cash flow of $3.8 billion and a ROIC adjusted of 21.9% on a trailing 4-quarter basis.

Looking at North America, we delivered strong business performance in the quarter, which was unfavorably impacted by the strike in the United States and increased warranty and retail costs related to our previous-generation full-size pickup trucks and full-size SUVs. Overall, retail deliveries rose 6% year-over-year, led by double-digit gains in light-duty Chevrolet Silverado and GMC Sierra pickups and strong demand for our all-new heavy-duty pickup trucks.

Cadillac continues to capitalize on its expanding crossover portfolio in the United States and China. In the U.S., Cadillac crossover deliveries increased by 67% in the quarter, led by the segment-leading XT4 and the all-new XT6, which is gaining momentum in the market. In China, the XT4 and the new XT5 helped drive deliveries up 11% amidst lower industry sales. With the XT6 joining the lineup, we expect Cadillac will further strengthen its position in China's growing luxury SUV segment.

Our luxury sedan portfolio updates continue with the launch of the all-new CT5 midsize luxury sedan in China this quarter, followed early next year by the U.S.-built CT5 and CT4 in North America.

Finally, as we look at meeting customer demand, our U.S. dealerships finished the third quarter with a healthy level of inventory. As the strike continued, our teams worked tirelessly to ensure we could ship as many vehicles as possible to our dealers. However, with no additional vehicles in the pipeline for many weeks, our dealer inventories will be temporarily leaner than we'd like. The team is doing everything in its power to restore our supply of vehicles back to normal levels.

Regarding our international operations, in China, the business environment remains challenging and volatile. Year-over-year industry vehicle sales declined nearly 11% in the quarter. We underperformed relative to the industry, mostly because of segment shifts and lower demand for outgoing models, partially offset by growth in Cadillac delivery. In addition to taking appropriate cost actions, we are improving our product mix. We launched 7 new models in third quarter with plans to launch 5 new and refreshed models in the fourth quarter. In addition, the team continues to focus on accelerating cost-reduction initiatives to improve performance given the business environment.

In South America, we continue to take steps to improve the business and protect our strong franchise while navigating FX and other macro challenges. In September, we launched the all-new 2020 Chevrolet Onix Plus in Brazil. It is the first model in South America from our new global family of vehicles and carries a 5-star safety rating. During its initial month on sale, customer demand greatly outpaced available supply, and we are doubling our production this month. The Onix hatchback follows next month. And together, we believe these new vehicles will further strengthen our Chevy brand leadership and Onix position as the region's best-selling vehicle.

As we execute our turnaround plan for international operations, we continue to take decisive steps to achieve sustainable profitability in every market we participate and cease operations that are not. Earlier this week, we announced our intent to cease selling Chevrolet vehicles in Indonesia over the coming quarters.

Turning to our EV progress. Chevrolet is launching the 2020 Bolt EV with battery improvements that enable an EPA estimated 259 miles of all-electric range on a full charge at the same price. The more powerful battery pack is the same size and weight as previous year's models, but its greater energy density delivers 21 additional miles of range, and that's more value to our customers. It builds on our industry leadership in improving battery range and reducing battery cell cost per kilowatt hour, and we expect this progress to continue.

The 2020 Bolt also retains what our customers love about this vehicle: instant torque, excellent ride and handling and a 0 to 60 time of just 6.5 seconds.

And on the AV front, Cruise increased its testing and validation miles during the quarter and increased its community engagement and relationship building. In addition to Cruise, GM and Honda continued their joint development of a new purpose-built shared autonomous vehicle.

So to recap, our strong operating performance in the quarter was supported by our robust sales of trucks and crossovers in the United States. We've also made significant progress on our transformational cost initiatives. GM has achieved $2.4 billion in transformation cost savings since 2018 and is on track to realize our 2019 target. Because of additional planned investments in U.S. manufacturing, we will revise our year-end 2020 cost-savings target to a range between $4 billion and $4.5 billion. We will take all of the necessary steps to achieve as much as possible to our original savings target.

The strike did have a big impact on our Q3 EBIT-adjusted results and will also significantly impact our Q4 results. Most of our 2019 strike-related production losses will not be recovered in 2019 because of capacity constraints. Therefore, we are revising our 2019 EPS-diluted-adjusted and automotive -- adjusted automotive free cash flow guidance. Our full year updated EPS-diluted-adjusted outlook is now in the range of $4.50 to $4.80, and our new adjusted automotive free cash flow guidance is 0 to $1 billion. I have asked the GM team to find every offset now that production has resumed, and I am confident they will find many opportunities.

So with that, I will turn it over to Dhivya.

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [4]

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Thanks, Mary, and good morning, everybody. Today, I want to disclose our performance for the quarter, the impact of the strike, the labor agreement, and finally, our outlook for the year.

In the third quarter, we generated $35.5 billion in net revenues, $3 billion in EBIT-adjusted, 8.4% margin, $1.72 in EPS-diluted-adjusted and $3.8 billion in adjusted automotive free cash flow. The EBIT-adjusted impact of the strike in the third quarter was $1.3 billion on a gross basis. This reflects lost production of a richer product mix as we launched our high-content, high-margin, heavy-duty crew cabs as well as the impact of lost aftermarket sales. This impact was partially offset by approximately $300 million in strike-related favorable timing items. Net of these timing items, the EPS during the quarter was lower by approximately $0.52 and the adjusted automotive free cash flow was lower by approximately $400 million due to the strike.

Adjusting for the impact of the strike, EPS would have been $2.24, an all-time quarterly record. The $1.72 EPS-diluted-adjusted also includes a $0.15 loss from Lyft and PSA revaluations.

Now let's take a closer look at North America. North America delivered EBIT adjusted of $3 billion, up $200 million year-over-year, and 10.8% margin driven by our heavy-duty truck performance, our crossover performance and the benefits from our cost actions. This was partially offset by the impact of the strike, warranty costs and lower pension income. Our newly launched heavy-duty trucks contributed favorably to volume, mix and price during the quarter. Market share for our large pickup trucks continues to improve, up 5 percentage points in Q3 year-over-year. We started deliveries of our heavy-duties in Q2, and we have gained 6 percentage points in market share since the launch. Our light-duty pickup trucks improved 6.8% at retail in Q3 year-over-year to over 40% as we rolled out diesel and other cab variants. We will have the same launch cadence strategy for the heavy-duty as we did for the light-duty with the rollout of double cabs next followed by regular cabs.

Switching to crossovers. U.S. deliveries grew 29% year-over-year with the Chevrolet Blazer and Cadillac XT6 providing strong contributions to our results.

Let's move to GM International. For the third quarter, EBIT adjusted in GMI was down $200 million year-over-year driven by lower equity income in China. Continued industry weakness and pricing pressure resulted in Q3 equity income down $200 million year-over-year from record Q3 2018 levels. We did see slight benefits from improved mix, partially due to our recently launched vehicles.

A few comments on GM Financial, Cruise and our core segment. GM Financial posted record quarterly revenue of $3.7 billion in the third quarter and record EBT-adjusted of $700 million, primarily as a result of portfolio growth. Cruise costs were $300 million for the quarter, on track with approximately $1 billion communicated previously for the full year as we increase our head count.

Core segment costs of third year -- sorry, third quarter were $500 million, unfavorable $400 million year-over-year, primarily due to net loss of $280 million from Lyft and PSA investments in the third quarter of this year, compared to $170 million gain from our PSA investment in the third quarter of last year. We have made significant progress on our transformational cost-savings initiatives with $2.4 billion achieved since 2018. We're on track with our 2019 target of $2 billion to $2.5 billion, achieving $1.9 billion year-to-date and $800 million in the third quarter.

Let me update you on our outlook for the calendar year. The recent strike has obviously had a negative impact on our financial performance in Q3 and more so in Q4. We estimate the calendar year EPS-diluted-adjusted impact to be approximately $2 per share and adjusted automotive free cash flow impact to be approximately $5.5 billion, including the impact of working capital unwind. The $2 in EPS reflects lost production of a richer mix, lost aftermarket sales, start-up and ramp costs and is net of a higher U.S. tax rate on lost earnings.

While we continue to work on strike recovery efforts, we anticipate that only a small portion of the losses sustained during the strike can be recovered this year due to capacity constraints. Factoring in all of this, our updated 2019 EPS-diluted-adjusted outlook is in the range of $4.50 to $4.80.

Touching on CapEx. We expect 2019 CapEx of approximately $7.5 billion this year due to timing and early achievement of commitments. Updating for this and the impact of the strike, we expect adjusted automotive free cash flow guidance in the range of 0 to $1 billion.

I would like to provide some additional perspective around this guidance. The underlying EPS and free cash flow guidance is consistent with the range given in January. We have experienced a highly unusual situation with the shutdown of our North American operations for 6 weeks. We are restarting our operations very close to year-end and the speed of production ramp and timing factors are very difficult to predict at this point. We have provided the best estimated outlook given the information that we have to date.

Next, I want to briefly talk about the impact of our new labor agreement. The new agreement preserves our competitiveness, manufacturing flexibility and balance sheet strength without compromising earnings power. We have maintained the mix of our North American manufacturing footprint, maintained the ability to adjust our workforce in response to changing industry levels, protected the balance sheet with no increase to defined benefit pension obligations and no payments or increased obligations to retirees. We maintained breakeven levels in the 10 million to 11 million unit range in the U.S. and therefore preserved our ability to navigate through a downturn. It is important to note that while this labor agreement is inflationary, we expect to offset incremental economics over the contract period with productivity initiatives.

Finally, I want to briefly touch on 2020. While we will provide full guidance in February, let me help frame the year by outlining a number of puts and takes. Headwind for 2020 include likely lower industry volumes, downtime and ramp-up for the launch of our full-size SUVs, higher depreciation and continued volatility in China and in South America. Opportunities in 2020 include full year of heavy-duty truck production, transformational cost savings and product launches, including the Corvette, Encore GX, Trailblazer and our global family of vehicles. The ability to recover lost production during the strike in 2020 will depend on industry performance and our capacity availability as we already run our full-size truck plants at maximum 3-shift capacity. Lastly, as a result of our decision to invest in our Detroit-Hamtramck plant, we will incur operating costs that were outside the scope of our original transformation plan. While this slightly revises our year-end cost-savings target to $4 billion to $4.5 billion, we will work to find every opportunity to maximize the cost-savings potential. We are committed to our capital plan of approximately $7 billion annually and our long-term financial trajectory, including 10% core EBIT-adjusted margins and improving our free cash flow conversion.

In summary, the underlying business remained strong and our guidance is consistent with the range given in January, excluding the impact of the strike. We have a labor agreement that preserves our competitiveness and flexibility, and we expect to offset economics over the contract period with productivity. The environment is more challenging than just a few months ago, but the entire team is focused on our execution, both over the short and the long term.

This concludes our opening comments, and we'll now move to the Q&A portion of the call.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Joseph Spak with RBC Capital Markets.

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Joseph Robert Spak, RBC Capital Markets, Research Division - Analyst [2]

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Just to start on maybe some of the cash flow dynamics you mentioned, the CapEx lowered this year and that seems a part on timing and early achievement. Can you -- can we get some color on each factor? I guess I want to gauge how much of the timing could impact 2020 on free cash flow. I know you said, on average, $7 billion per year, but it seems like maybe 2020 might be a little bit higher than that.

And then also related to free cash, with the working capital unwind in the fourth quarter, how much should we expect to recover into 2020?

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [3]

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Yes. Joe, I would say from a CapEx standpoint, the early achievement of the CapEx commitments in 2019 does not impact our commitment to achieve $7 billion in 2020, so that commitment remains intact. From a timing perspective, even though we'll pull forward in 2019, we still think we can achieve that.

To your question on free cash flow impact, obviously, there's a flow-through from the profit impact into free cash flow. In addition to that, we see working capital and sales allowance and policy and warranty and so on, timing items are driving the remaining amount there. So the $5.5 billion comprises of the lost profit and the working capital unwind. CapEx remains intact, and that's the map to get to the $5.5 billion.

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Joseph Robert Spak, RBC Capital Markets, Research Division - Analyst [4]

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Okay. And I know, Dhivya, you said recovery of volume next year is dependent on the market. And as you noted, you're running all out on the trucks. But if we assume an environment in 2020 similar to '19, like just back of the envelope, I was sort of just looking at the calendar and counting days and make some assumptions. It seems like you might be able to get back 50% to 60% of it. Is that reasonable?

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [5]

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I think it's really hard to call that now, Joe, partially because you also need to figure out what the truck industry is going to be like, i.e., the segment share within the industry. And to your point, we are running those all out. It's difficult to add overtime on top of overtime. So we will recover every unit that we possibly can. It's just difficult to predict now at this point what that would look like.

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Operator [6]

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Your next question comes from the line of Rod Lache with Wolfe Research.

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Rod Avraham Lache, Wolfe Research, LLC - MD & Senior Analyst [7]

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A couple questions. First, looks like the adjusted free cash flow with the adjustments you're making would have put this year's free cash flow at $5.5 billion to $6 billion, if it wasn't for the strike. And it appears that you've got another $1 billion to $1.5 billion of savings for next year. The original number was closer to $2 billion, and it sounds like the variance there was Hamtramck. So what's evolved in your thinking on Hamtramck since earlier in the year?

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Mary T. Barra, General Motors Company - Chairman & CEO [8]

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So when we made the transformation announcement last year, although we had a battery electric truck in our plan, as we continue to evolve that and look at the full range of what we can do there to really maintain our truck leadership position and grow that into battery electric trucks, we looked at Detroit-Hamtramck as a great opportunity and counting on getting an appropriate labor agreement there. And so we think this is a good investment, positions us well to lead in battery electric trucks as well as internal combustion trucks. And so that's -- as that portfolio as we further planned it, it became clear that we could be more efficient doing that work there.

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Rod Avraham Lache, Wolfe Research, LLC - MD & Senior Analyst [9]

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Okay. On North America and GM Financial, looked like they were very strong this quarter. Obviously, there's unusual items that affect both of those right now. Could you just talk a little bit about those aside from just the things like launch? But did you make any adjustments to pre-existing warranties in North America? And how should we be thinking about the cadence for GM Financial going forward and what that may mean for releasing cash from that business?

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [10]

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Sure. From a North American standpoint, yes, it was a very strong quarter. The cadence of our heavy-duty launch helped a lot from a mix standpoint since we're rolling out crew cabs for the most part, and that will normalize as we roll out the other variants as well.

To your question on warranty, we had a $700 million year-over-year unfavorable and that was primarily driven by the K2 warranty cost that Mary mentioned in her remarks as well as there was a onetime favorable item in 2018 of last year which does not repeat in 2019. So from a year-over-year delta perspective, that impacts as well.

And in Q3, I'd say, rather, we go through a normal true-up process from a warranty perspective, and there were some top-ups relative to that as well, but that was on the smaller side of things, that should capture that. From an GM Financial perspective, the biggest item I'd point to is the fact that residual values have been coming in stronger than what we had previously accounted for. So as you go forward there, you may want to think about some kind of a normalization there. The offset to that would be the continued growth in the size of the book as they move closer towards full captive. Those are the normalizing items from a GM Financial perspective.

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Rod Avraham Lache, Wolfe Research, LLC - MD & Senior Analyst [11]

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Okay. And just to clarify, in North America, I was asking about the incentive accruals. You had over 700,000 units of inventory and I would have presumed that you'd make some adjustments just given the prospects for declining inventory. But was there anything unusual there? And can you tell us what your expectation is for Q4 production at this point?

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [12]

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Yes. I'd say nothing specifically on the incentive side. It will obviously be -- it'll be vehicle by vehicle and will be driven by market dynamics and nothing specifically to point out there from a true-up or whatever perspective. From a Q4 production, we are now back up and running and all of our plants are running all out. And like we said, we're going to take the opportunity to get any extra units that we can and that's all we can comment on at this time. And since we're still in ramp-up and we're trying to maximize the number of units, we'll have more to share about that when we report Q4.

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Operator [13]

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Your next question comes from the line of John Murphy with Bank of America.

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John Joseph Murphy, BofA Merrill Lynch, Research Division - MD and Lead United States Auto Analyst [14]

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A first question, just around the labor agreement and the special attrition buyout program. It looks like it's only targeting about 2,000 workers. But based on sort of what I've been able to dig up, it seems like half of your workers are senior, meaning they're getting defined benefit pensions and natural attrition on an annual basis is about 2,000 workers. So just curious why the special attrition program and that buyout might not target more workers. And then over time, in the next 3 years, before the next contract, would that impact sort of natural attrition? Meaning, would we still expect to see 2,000 per year? So first, just why isn't it a larger program? And second, what kind of impact would it have on natural attrition over time?

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Mary T. Barra, General Motors Company - Chairman & CEO [15]

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I think a couple of things you have to think about is, first of all, one big component of the special attrition program was to give people choices. Although we have jobs for everybody that was impacted by the unallocation of the 3 plants, we wanted to give them options and so there's a target there from that perspective. And the other thing is you can -- we think that, again, people wait and look to see if there's going to be a special attrition program, but then we also do see the natural attrition over the course of the agreement. So I would expect that to continue. And that's how we size what we thought the SAP should be.

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John Joseph Murphy, BofA Merrill Lynch, Research Division - MD and Lead United States Auto Analyst [16]

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Okay. And Mary, when we think about the -- those attritions, whether it be special or sort of natural over the next few years, what is your plan as far as backfilling for those workers? I mean would they be replaced one for one with in-progression workers or entry-level workers? Or could they be folks that get hired out in California to work on crew? Just trying to understand sort of the thought process of what -- how to size the labor force going forward.

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Mary T. Barra, General Motors Company - Chairman & CEO [17]

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Well, I think there's many different components of the labor force. There's a Cruise labor force. There's our salary workforce and then there's our representative workforce. And I think your question is directed at the representative workforce. We're going to continue to work on productivity, and we have opportunity there. We also have a lot of opportunity to continue to improve our manufacturing processes. We've done a lot of work this year on complexity optimization, and we're driving that in from a design for manufacturability perspective into how we design vehicles. We've also been able to find more and more opportunities for reuse without impacting a customer's view of the vehicle as being all-new, especially when you look at some of the architectural components. We also have a program we've been working on for many years called built-in quality level 4. And by the end of the year, virtually all of our plants will have achieved built-in quality 4 -- built-in quality level 4, which leads to, first, better health and safety and better quality as measured by 2 months' and 12 months' warranty performance.

So we see, I'll say, traditional productivity improvements. We see efficiencies on how we design vehicles and components from a DFMEA perspective, and then we see the results coming from our built-in quality level 4. All of those things are going to help us make sure we optimize the workforce and optimize our manufacturing costs.

As we need to hire additional workers, we'll utilize both temps, and I'm very proud of the fact that we provided an appropriate path to permanent employment for our temporary workforce and then also maintain the in-progression flow. So we'll utilize both of those depending on the plan and the situation at that plant.

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John Joseph Murphy, BofA Merrill Lynch, Research Division - MD and Lead United States Auto Analyst [18]

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Got you. That's helpful. Then just on the SUV launch, is there any change in timing for next year on the SUV launch given what's happened with the strike?

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Mary T. Barra, General Motors Company - Chairman & CEO [19]

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We haven't specifically said when those launches, they will occur, and we'll roll out all 3 versions next year. And of course, the team is working to do everything possible to make sure we have successful high-quality launches with minimizing the impact of the acceleration curve. So those -- we still will get all those done next year, and I'm not going to give any more specifics on timing.

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John Joseph Murphy, BofA Merrill Lynch, Research Division - MD and Lead United States Auto Analyst [20]

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Okay. And then just lastly, there's been a lot of negative comments on pricing, and some came from one of your crosstown rivals, but also sort of in the press. Yet the quarter, on your majors, you put up a $400 million positive, but more importantly, you put up a $200 million positive on your carryovers. I mean what are you seeing in the pricing, sort of the competitive landscape for pricing? I mean in that -- and is that $200 million positive from carryovers, was that benefited by some shortages during the strike? Or are you actually seeing some real net positive price on carryovers?

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [21]

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Yes. From a majors perspective, I'd say it's mainly driven by our heavy-duty and the variance of the light-duties that we have recently launched. So those were strong, and that's really the truck franchise that's driving that. On the carryover side, the outgoing model from a car perspective, we reduced our incentives on that quite a bit. From a crossover standpoint, we were disciplined as well. So overall, I would say positive carryover in net price. That's going to be quarter-to-quarter, John. It's going to vary based on seasonality and so on and so forth, but it's our intent to stay disciplined. And as you can see in the quarter, with the net majors that I just talked about, we have grown share for both light-duties as well as heavy-duties. We plan on continuing on that path of being disciplined.

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John Joseph Murphy, BofA Merrill Lynch, Research Division - MD and Lead United States Auto Analyst [22]

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And Dhivya, in the competitive environment, have you seen any deterioration there? I mean I understand you guys are pretty disciplined, but I mean are you seeing sort of any kind of warning signs out there?

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [23]

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I think there's definitely months where you see some competitive activity and then it normalizes and so on, but we're launching. We're going with our cadence, and we're -- the strength of the product that we've put out is driving our market share gains this time.

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Operator [24]

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Your next question comes from the line of Itay Michaeli with Citi.

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Itay Michaeli, Citigroup Inc, Research Division - Director and VP [25]

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Just a first question with inventory now being leaner, can you talk about opportunities you might have in Q4 and beyond to optimize for mix and pricing? Should we expect trim mix to get richer over the next several months as you try to kind of manage your inventory situation?

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [26]

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We're going to try and build everything that we can get, Itay. From a mix perspective, we will continue down the path of rolling out the richer mix from an HD standpoint. LD as well, we will try and maximize the trim mixes that are most profitable as we go forward. So we're going to be opportunistic as we go along. And the other aspect is, obviously, from a country mix standpoint, there's places where we -- that are more profitable and there's places that are less profitable, and we're going to direct the amount of inventory that we have towards the more profitable places as well. So we will be opportunistic. It's hard to obviously size that at this time and we will provide more detail in Q4.

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Itay Michaeli, Citigroup Inc, Research Division - Director and VP [27]

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That's helpful. Then -- and just secondly, Dhivya, on the 2020 puts and takes, I think you mentioned lower industry volume as a headwind. Can you give a little more detail about what you're thinking of regionally and globally? Does that include the truck franchise because pickup truck industry sales has still been obviously strong throughout 2019? Any additional color will be helpful there.

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [28]

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Yes. I think we still have another couple of months here to go to see what happens here. But in 2020, we do think that China will remain volatile. South America will remain volatile. And here in the United States, with the economic growth moderating here in the recent past and the next year or so, we're anticipating, we're still planning for a lower industry, still healthy industry, but a lower industry in 2020. And we're going to have to -- as we move forward here in the next few months before we give guidance, we'll put more specificity around that. But any more than that, it's too early to tell.

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Itay Michaeli, Citigroup Inc, Research Division - Director and VP [29]

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Great. Then just lastly on Cruise, I think back in July, Cruise mentioned that they would accelerate testing and validation in the balance of 2019. Any update there that you can share in terms of miles driven or the overall activity that Cruise is undergoing in the second half?

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Mary T. Barra, General Motors Company - Chairman & CEO [30]

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I would say -- I'm not going to give you a specific mileage, but they are doing exactly what they indicated they would do in the summer time frame. I would say it's going really well as they meet their milestones and as they continue to develop the autonomous technology. So very much on track. And not only on the technology, but also the work that they're doing in San Francisco in the community to make sure that the consumer is ready, understands the technology and trusts the technology. So both of those plans are perfectly on track.

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Operator [31]

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Your next question comes from the line of Adam Jonas with Morgan Stanley.

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Adam Michael Jonas, Morgan Stanley, Research Division - MD [32]

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Mary, over the next 5 years, will GM spend more R&D and CapEx dollars on EVs or internal combustion vehicles?

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Mary T. Barra, General Motors Company - Chairman & CEO [33]

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I believe it will be EVs.

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Adam Michael Jonas, Morgan Stanley, Research Division - MD [34]

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And do you think that -- do EVs require less labor than internal combustion vehicles, all else equal?

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Mary T. Barra, General Motors Company - Chairman & CEO [35]

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I mean I think you have to look at the entire vehicle. Clearly, from an electrification perspective, it's simpler, from a component perspective, than it is from an internal combustion engine. But one of the key things that we've done is worked on light-weighting because light-weighting is so important across every component. And from a body structures perspective, that light-weighting generally requires a little bit more labor. So overall, I think it's somewhat less, but I think you've got to look at the whole vehicle, not just the propulsion system.

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Adam Michael Jonas, Morgan Stanley, Research Division - MD [36]

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And just I wanted to have a couple of questions on Corvette. And I know Mark's not on the call here so maybe we can follow up with him. But Mary, what do you think of a Corvette SUV?

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Mary T. Barra, General Motors Company - Chairman & CEO [37]

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Well, I appreciate that you think our Corvette franchise is very strong. I'm not going to talk about future. I can't wait for the world to be able to drive the C8 because it's an outstanding vehicle and the value -- the performance is, I think, just sets a new bar. And then the affordability, I think, is something we're really proud of and is very true to the Chevrolet brand. So I will just share with you, we look at a variety of things as we move forward but we recognize the strength of the Corvette brand. Right now, we're focused on getting the C8 out and then the other variants, including the convertible. So very excited about that product and what it will do for the company.

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Adam Michael Jonas, Morgan Stanley, Research Division - MD [38]

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Okay, Mary. I appreciate that. But I won't ask about electric Corvette either right now. We can save that for later. Finally then, just you mentioned on China, I think when you were talking about 2020, you expected China to be a headwind. Can you elaborate a little bit more there on what was the market, what was the volume assumption or mix or price assumption within that? Any other color on the China headwind comment, if I got that correctly, for 2020 versus 2019?

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Mary T. Barra, General Motors Company - Chairman & CEO [39]

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Yes. Adam, I think it's a little early to call it. I mean there's so much going on right now as you look at the volatility in China. Look at where -- we're still in the middle of really trying to understand where the trade talks are going to land and how that's going to impact the overall economy. So we are seeing a very volatile environment and we're also seeing a lot of pricing pressures. And then as we look forward as we roll out more EVs, initially, we're going to see some margin headwind there. So I think when you look at all those things in '20, we'll have more color for that as we do the February earnings call for Q4, but those are the things that we're seeing right now that we think will carry into 2020.

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Operator [40]

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Your next question comes from the line of Ryan Brinkman with JPMorgan.

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Ryan J. Brinkman, JP Morgan Chase & Co, Research Division - Senior Equity Research Analyst [41]

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Could you provide an update in terms of the impact of the new labor accord on your downturn resiliency in North America? Can you remind us of your latest estimate of North America breakeven expressed in terms of U.S. light-vehicle SAAR and whether the contract changes that breakeven level?

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [42]

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Yes. Ryan, what we had previously talked about is the breakeven level of 10 million to 11 million units for the U.S. This contract will not change that. And how -- why that is, is basically the comment that Mary made about productivity and other efficiencies offsetting the economics of the contract will certainly play into that. And in addition to that, from a flexibility standpoint, what we have modeled in our downturn assumptions is the ability to adjust the level of workforce based on what's happening in the industry and certain levels of supplemental unemployment benefits that go with that. And that does not change based on this contract, which is primarily the driver of maintaining the downturn assumptions the way they are.

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Ryan J. Brinkman, JP Morgan Chase & Co, Research Division - Senior Equity Research Analyst [43]

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Okay. That's helpful. And I was encouraged in the release that you attributed the softer than industry sales in China to demand -- to lower demand for your outgoing products. Could you please provide us an update on the incoming product in China? Earlier in the year, you were relatively optimistic about the sales and profit potential from new launches, including the first of, I think, the so-called GEM architecture. Can you talk about how the sales and cost of the launch vehicles has trended relative to your expectation in China?

And then finally, it would be great, too, if you could update us with regards to the extent to which you have or have not detected any perceived bias against U.S.-based brands in the aftermath of trade or other tensions in that market.

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Mary T. Barra, General Motors Company - Chairman & CEO [44]

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Sure, sure. And Ryan, first off, we haven't really seen -- and we monitor on a weekly basis, we really haven't seen any negative sentiment, so we think that's very positive. And we are in the middle of the launches for the year. We had 11 majors, including the Buick VELITE, which is a battery electric vehicle; the Buick Encore; Buick Encore GX; the Chevrolet Onix; the Chevrolet Trailblazer and Tracker; and then the Cadillac XT6 and then some Baojun products as well. And then there were several very important MCMs with -- across Buick for the LaCrosse and the Verano as well as the Chevrolet Monza and the Cadillac XT5.

So I think as you look at all of those vehicles into a market with the uncertainty and the economic issues or the macro issues in China, I would say they're all on track. You were correct to note that we did have our first of the Chevrolet Onix, which is the global family. It's one of many launches in China and it is on track. However, we did mention in my remarks that it is doing exceptionally well in South America because it's at the heart of the market in the biggest segment. So I think we need to see these vehicles get into the marketplace, and I think a lot we'll see as we get into next year as well, but the launches are on track. I do think, though, as some of them as we -- we did see a more significant dropoff than we thought we would with the outgoing vehicle.

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Operator [45]

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Your next question comes from the line of Brian Johnson with Barclays.

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Stephen Bruce Hunt, Barclays Bank PLC, Research Division - Research Analyst [46]

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This is Stephen Hunt on for Brian Johnson. Just wanted to drill back down on the potential to recoup some of the lost production, particularly on the T1 pickup truck side into 2020. I guess assuming kind of an overall stable large pickup market into 2020, is it fair to say that GM is already running at max capacity and that from a production schedule standpoint tentatively as we think about 2020, there's really no potential to make up that lost production, especially if we get upside to the large pickup market? Or is there any kind of scope for some weekend work as we think through 4Q and into 2020?

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [47]

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Yes. I would say that your assumption is correct in an industry level and a truck penetration level that's similar to what we have today where we already have scheduled weekend time and a lot of other overtime on a regular basis. We have these plants working max overtime. So the ability to add additional days is limited. We will obviously try and find any voluntary opportunities to do overtime beyond that, but it's not something I would call my baseline at this point.

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Stephen Bruce Hunt, Barclays Bank PLC, Research Division - Research Analyst [48]

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Understood. And then in terms of the revised UAW contract impact, we outside have got to about $150 million gross labor inflationary impact in 2020, ramping up to about $350 million in 2023. Just wondering if that's kind of ballpark correct. And then also can you quantify the buckets of the dollar savings offsets from attrition buyouts, absenteeism and other productivity initiatives?

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Mary T. Barra, General Motors Company - Chairman & CEO [49]

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Yes, yes. I think if we -- given I said more broadly is that we really believe the inflationary elements of the contract or the economics that we can offset with productivity and there's plans well established. We don't know yet exactly how the special attrition program is going to play out. People have till the end of the year to sign up for that. So I think what you hear from us, though, is a team that is committed to finding the right offsets to go for and maintain and improve our competitiveness.

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Stephen Bruce Hunt, Barclays Bank PLC, Research Division - Research Analyst [50]

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Okay. Just in terms of the gross inflationary labor cost impact, was that -- is that ballpark directionally correct in terms of $100 million in 2020 ramping up to $350 million in 2023?

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Mary T. Barra, General Motors Company - Chairman & CEO [51]

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Well, I mean, I think if you look at -- there's some parts of the contract that are easy to do the math on and -- but I think there's others that -- we'll look to see how it plays out. And some of it depends on the workforce, depends on how many people take the special attrition program, depends on the industry as we go forward. So I'm not going to put projections that far out.

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Stephen Bruce Hunt, Barclays Bank PLC, Research Division - Research Analyst [52]

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Okay. And then just last clarifying question. In terms of the revised transformational restructuring savings of $4 billion to $4.5 billion, does that include the productivity initiatives you outlined? Or would that potentially provide some upside to get back to the original target of $4.5 billion?

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Mary T. Barra, General Motors Company - Chairman & CEO [53]

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I think, first, we're going to work to offset and then we're going to keep going. We won't stop when we get there. So I think over time there's upside, especially on the broader elements we've talk about, how we continue to improve, how we design vehicles that affects the manufacturing costs and our ability to continue to build quality and station and improve our quality systems. So all of those things are going to contribute. And although we revised it based on the decision we made largely related to Detroit-Hamtramck, we're going to continue to push the organization to continue to find cost opportunities. And I would say that's the goal we set for the end of 2020. It's not like after that we stop. At that point, we'll evaluate the business and look for the next round of cost savings that we can drive into the business and commit to from an improving shareholder value perspective.

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Operator [54]

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Your next question comes from the line of Dan Levy with Crédit Suisse.

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Dan Meir Levy, Crédit Suisse AG, Research Division - Director & Senior Equity Research Analyst [55]

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Just wanted to follow up on the question on the productivity gains. Could you just give us some color on what initiatives you might be able to pursue or timing? And more specifically, you've obviously been pretty successful with cost saves in the past. I think that's probably one of the reasons why your earnings level has been rather elevated. Just wondering how much the low-hanging fruit may already be exhausted and you're just going to have to dig in a little harder and it's not going to be as easy to find some of these gains.

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Mary T. Barra, General Motors Company - Chairman & CEO [56]

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Well, I think when we look at our comparison that Harbour, or I guess, if Oliver Wyman now does from productivity, we still have opportunities to improve. And it's not just on minutes per hour of -- and the way we design a job, it's much broader than that. And I think we have a lot of opportunities to still tap into as we really optimize our complexity and we leverage reuse. And so those are things that I'm very pleased that the organization has taken to a new level this year, and that will play out over multiple years because a lot of it is if you design the vehicle for design, for manufacturability, doing that now will play out in years when we actually launch the vehicles, be it 2, 3, 4 years from now. And don't underestimate the work that we've been doing on built-in quality level 4 because for the plants that are already there, we definitely see -- just the fact that more vehicles are built in station means they spend no time in repair and that's savings as well. So I believe, although I'm very proud of the manufacturing team of what they've already accomplished and working across with the engineering organization, I think there's still much more to tap into and that's what we do.

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Dan Meir Levy, Crédit Suisse AG, Research Division - Director & Senior Equity Research Analyst [57]

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Great. And then just as a second question, one that's more existential and sort of touching on one of the prior questions. Obviously, one of your publicly stated goals is a 0 emissions future and that probably requires a smaller footprint than what you have in place today. So first of all, does -- a, does this current agreement have any limitations on -- specifying limitations on what you can build for EVs? And then just more broadly, with your 0 emissions future goal, how aligned is your labor partner with you on this goal? Would they ever serve as partners with you along this transition, sort of similar to what we see in Europe and Germany, to addressing the future? Or is the answer simply, look, this is a 4-year agreement. And once it expires, then we'll deal with the future as it comes?

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Mary T. Barra, General Motors Company - Chairman & CEO [58]

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Well, I think in this 4-year agreement, we are dealing with the future. If you look at from an EV perspective, we already built the Chevrolet Bolt EV in our Orion plant in Michigan. Very significant discussions that we had as it relates to the battery electric truck with our -- the UAW as it relates to what we're going to do with Detroit-Hamtramck. So I think what we're trying to do is -- and first of all, there is no limitations. I want to make that very, very clear. But we are committed to the United States and committed to manufacture in the United States. We see a huge opportunity in electrification, and that's why we're investing and I think among the leaders in the EV space, I think we -- our technology road maps that we have for cell development are going to well position us and with the commitments we've made for the better -- our next-generation or architecture, which we call the BEV3. So this was all part of the discussions and I think it signifies what we're doing in Orion and what we'll be doing in Detroit-Hamtramck.

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Dan Meir Levy, Crédit Suisse AG, Research Division - Director & Senior Equity Research Analyst [59]

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I guess more specifically, you have other engine and transmission plants out there that presumably in an EV world are deemed unnecessary. Have there been any sort of discussions with the union in the future on how to deal with these plants that could potentially be unnecessary?

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Mary T. Barra, General Motors Company - Chairman & CEO [60]

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Yes. I think that's over a very long horizon. We still see -- even when you look at the multitude of projections by 2030, is it 15%, is it 30% all EV, that means the balance of the vehicles being sold in the country are internal combustion engine vehicles. We're well positioned because we've renewed all those architectures and we've invested in very efficient internal combustion engine technology that will continue to improve. So I think this is going to play out over a number of years. And there are components in the drive units from an EV perspective that need to be built somewhere. So I think we're looking to do the right thing from a company perspective to drive shareholder value to lead in EVs and do the right thing for our manufacturing footprint and for our employees.

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Operator [61]

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Your next question comes from the line of Emmanuel Rosner with Deutsche Bank.

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Emmanuel Rosner, Deutsche Bank AG, Research Division - Director & Research Analyst [62]

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I was hoping you can provide a little bit more color on your underlying performance this year, excluding the strike to the extent that's possible. Your -- the revised guidance and then you add back sort of the strike impact seems to be $6.50 to $6.80, maybe the lower end of sort of like original guidance. Is there anything -- are there any like specific factors that you see that are playing out maybe on the softer end of what you would have expected before? I mean again, excluding strike, is it at the international level? Is it in China? Is there anything you're seeing in the U.S. that would account for that? And as part of that question, also just trying to understand better the tax rate impact. The new guidance is at the lower tax rate. Is that correct?

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [63]

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Yes. So a number of questions there, so let me address them one by one. The new guidance, $4.50 to $4.80, you're correct, we subtracted the $2 and arrived at -- so it's the original guidance we gave in January less $2. On the upper end, we clipped it by $0.20. As you've seen, we've -- it's been quite a volatile environment in China as well as the macroeconomic volatility we're seeing in South America as well the FX environment that we saw earlier in the year when we gave our guidance is very different from the FX picture that we have today, which is offsetting some of that as well. So I would say that the weakness is predominantly more in the international front, the volatility that we're seeing. And from a North America perspective, as you've seen the performance quarter after quarter, it continues to be strong. From a -- just from a tax rate perspective, the revised tax rate is primarily because the strike impact is you've got to apply the U.S. tax rate to that strike impact, which is about 25% effective tax rate that we're applying there. So if you take our original tax guidance, subtract out the higher tax rate that's applicable on our strike impact, you get to your new and revised tax guidance. So it's consistent. It's just that you're applying a different tax rate than the weighted average tax rate on the strike impact.

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Emmanuel Rosner, Deutsche Bank AG, Research Division - Director & Research Analyst [64]

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Okay. That's great color. And then just was hoping you can give a little bit more color on the puts and takes for 2020 and in particular a few discrete items. You're talking about downtime and ramp-up for the full-size SUV. Anything you're able to quantify in terms of specifically downtime there?

And then you did not mention raw materials as a potential tailwind. I was curious if you can give an update on what is represent this year and then how to think about it for next year?

And then the third discrete item would be warranty. Obviously, a fairly big charge, which you explained for the quarter. How -- does that have a carryover impact as we move into next year?

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [65]

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So on the 2020 side, the puts and takes that I gave, predominantly, a lot of industry uncertainty around the globe, that's what I would characterize as a primary headwind. From a downturn -- downtime standpoint, this is a complicated SUV -- full-sized SUV launch. There's a significant amount of change that's happening from the current generation to the next generation. So from a downtime perspective as well as more importantly, the line rate ramp-up post to downtime, we're anticipating an additional headwind year-over-year for full-size SUVs. I don't want to quantify that now since we're still working on how we can optimize the number of units that we're going to be able to put out in 2020. So I will quantify that further in February. But it is safe to assume that there will be a year-over-year headwind from a full-size SUV perspective.

There will also be higher depreciation. That's something I've been consistent with in the past several quarters as our depreciation catches up to our CapEx levels. We've been seeing a secular increase every single year, and that's going to continue into 2020 as well. And obviously, that's noncash as you all know.

From a raw material and tariffs perspective, to your point, I've said this before in prior quarters, there's puts and takes. It's hard to look at just one number and paint it all with the same brush. But steel and aluminum, we've seen tailwinds offset by precious metals, tariffs as well as fuel costs, which impacts our logistics spend. So net-net, we are still at $500 million year-over-year headwind from a 2019 standpoint. We don't see that moderating necessarily into 2020 since the headwinds that I mentioned are likely to continue into 2020. And it's obviously hard to predict the tariff environment that we're going to be in. So that's generally the headwind side. Tailwinds, the remaining cost savings so far, we've achieved close to $2.4 billion of cost savings, and the remaining cost savings are going to be realized over a period of time, according to our revised guidance. You're going to have a full year of heavy-duty trucks and the product launches that I talked about. Hopefully, that gives you some color.

And finally, on the warranty question that you had, we do see that as specific to Q3 of this year. I don't see a tail event into 2020 on that.

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Operator [66]

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Our last question comes from the line of Chris McNally with Evercore.

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Christopher Patrick McNally, Evercore ISI Institutional Equities, Research Division - MD [67]

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I just wanted to jump in on maybe the impact from a working capital standpoint on the change in the cash flow guide. So just really quick, of the $5.5 billion, it looks like $2.8 billion was worse than just the operations. You back out the CapEx, it looks like it's something like a $3.5 billion or $4 billion drain on working capital. Can you just confirm that it was all working capital and there's not any other sort of onetime drivers for the cash outflow? Because we're trying to think about the reversal next year.

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [68]

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Yes. I would say that your EBIT impact seems to be on the low end. Maybe you're talking about the net income impact. So from an EBIT perspective, that's all set up for -- yes, you've got to talk about a growth number there. That, plus the working capital unwind, constitutes most of the $5.5 billion. There's no other like onetime item or whatever else that's out there, but the profit impact that you talked about, that sounds a little understated but it's potentially because of tax rate.

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Christopher Patrick McNally, Evercore ISI Institutional Equities, Research Division - MD [69]

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Okay. Perfect. And then if we could talk about the -- without giving numbers, like when we think about the reversal, that's sometime in the first half, I know you don't want to give guidance, but could you just sort of walk through the timing of how that would play out from an inventory standpoint?

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [70]

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Are you talking about the reversal of working capital or the recovery of profit or both?

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Christopher Patrick McNally, Evercore ISI Institutional Equities, Research Division - MD [71]

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The reversal of working capital.

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [72]

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So reversal of working capital, we think that the low point is probably going to be sometime in November as we cycle through the rest of the unwind, and then payables and receivables will start back up 15 days after we start shipping. That cadence will continue. So we do anticipate that you'll see part of the recovery in the second half of November and into December. And Q1, as you know, it tends to be a negative cash quarter because of our shutdown and the reversal after that. But what you would see from a cash balance standpoint is the recovery starting in the second quarter of next year into the rest of 2020.

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Christopher Patrick McNally, Evercore ISI Institutional Equities, Research Division - MD [73]

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Okay. That's perfect on the timing. And then, Dhivya, this is more like from a communications standpoint. I mean 2020 was already supposed to be sort of a better free cash flow year. I think we've asked that question a couple of different times on the call. But you're already getting the improvement of CapEx, the reduction of pension from cash flow, the income statement and then the FinCo dividend. If we get this working capital benefit in 2020, is it the type of thing that you will actually be able to call out so that we can start to understand what is the true? Because working capital wasn't one of the benefits that we were expecting in 2020 and 2021, which likely will now be sort of in core operations. So is that something that you could back out for the Street as we go into 2020 and 2021?

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Dhivya Suryadevara, General Motors Company - Executive VP & CFO [74]

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We will be very clear about how much of our 2020 free cash flow guidance comes from the working capital rewind. And we will also be clear about how much is the cash-based earnings, i.e., the operating cash flow, if you will, and what that is year-over-year. So from a communications standpoint, we'll certainly be clear about that. And beyond that, you're right, we don't want to talk much more about magnitude of that until February.

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Operator [75]

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Thank you. I'd now like to turn the call over to Mary Barra for her closing comments.

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Mary T. Barra, General Motors Company - Chairman & CEO [76]

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Thank you very much. And thanks, everybody, for participating this morning. If you look for several years, the team at General Motors has been making tough decisions to make our business more resilient and more agile. This discipline will help us overcome the impact of the strike as we continue launching our heavy-duty trucks, the new Cadillac sedan, and as we move forward the upcoming launches such as the mid-engine Corvette and the next generation of full-size SUVs. This leadership team has a proven track record of successfully navigating complex business issues, confronting headwinds and capitalizing on opportunities. And I believe we have the best employees in the industry across the board. They want to work and they come to work every day to do their best, and they want General Motors to succeed and they want to be part of that successful future.

So as we move forward together, we're going to continue to build on the strong foundation we've laid and share -- and allow them to share in the future success of the company. But let me be clear, we're also working hard to lead in both the core and the EV and AV world and create significant shareholder value.

And before I close, I want to let you know that we will host our Capital Markets Day in New York on February 5, 2020. This year, in addition to providing our 2020 outlook, it will include our Q4 and our full year 2019 earnings results. And we'll share additional details about that Capital Markets Day in the near future.

So thanks, everybody, very much. I appreciate your time.

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Operator [77]

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Ladies and gentlemen, that concludes the conference call for today. Thank you for joining.