General Motors Company (GM) Q4 2013 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the General Motors Company Fourth Quarter 2013 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded, Thursday, February 6, 2014. I would now like to turn the conference over to Randy Arickx, Executive Director of Communications and Investor Relations. Please go ahead, sir.

Thanks, Operator. Good morning and thank you for joining us as we review the GM financial results for the 2013 calendar year. Our press release was issued this morning and the conference call materials are available on the Investor Relations website. We’re also broadcasting this call live on the web. Before we begin, I would like to direct your attention to the legend regarding forward-looking statements on the first page of the chart set. The content of our call will be governed by this language. This morning, Mary Barra, General Motors' Chief Executive Officer will provide opening remarks followed by a review of the financial results by Chuck Stevens, Executive Vice President and CFO; Mary Barra will then conclude the remark portions of our call with some closing comments. After the presentation portion of the call, we'll open the line for questions from the analyst community. In the room today, we also have Tom Timko, Vice President, Controller and Chief Accounting Officer; and Jim Davlin, Vice President Finance and Treasurer to assist and answer your questions. Now I'll return the call over to Mary Barra.

Thanks, Randy and thanks for everyone for joining the call today. We did lot of hard work with GMT have made stronger than it was with just one short year ago. With all that headlines, I don't ever repeat them here. And surprise to say, during the last 12 months, we've received a flurry of great moves from Moody, J.D. Power, Consumer Reports, the automotive instant guides, (inaudible) and more. All of this element can help through the way for GM to this S&P 500, achieve an investment grade rating to clear out common stock dividend and report larger earnings in North America. These are all important milestones, but they are just milestones. We have more work to do and our sense of urgency will not let out one day. Our plan remains the same, we need to operate profitably everywhere we can change, deliver compelling design, excellent quality and a great ownership experience, strengthen and grow our brand, further strengthen our focused balance sheet and generate the kinds of financial returns that earn confidence of our long-term investors. All right, let’s turn to slide two and a take closer look at our 2013 financial results. To start, we delivered a record 9.7 million vehicles which is up 0.5% from 2012. Deliveries in United States and China combined increased by more than 0.5 units, although this was partially offset by declines in other markets, include Europe, parts of South America and in our consolidated international operations. Our global market share was even with 2012 and that revenue increased by more than $3 billion to just over $155 billion. Net income to common stockholders was $3.8 billion, that’s down from 2012, largely due to incremental tax expense and special items. Our automotive business meanwhile generated $11 billion in net cash from operating activity, that’s a 14% increase from 2012. Turning to EBIT adjusted, we earned $8.6 billion, which is a $700 million increase, we now have delivered EBIT adjusted totaling almost $32 billion over 16th consecutive profitable quarters. As I indicated before, we are not really want to be in terms of profitability but our solid and consistent profitability combined with our focused balance sheet has allowed us to level our capital budget at roughly $8 billion annually. It’s been a long time since our products and plant teams have been able to work in such a stable funding environment and believe me it’s a very welcome change. [And the insurance] in and of itself has made us more efficient and it help us deliver more award winning products with higher quality. Beginning to our EBIT adjusted results, you can see on the slide that we were up in North America, Europe reduce the prices and our international operations in South America were both down. North America in particular is riding the wave of new products, with our Cadillac and truck launches helping to drive higher earnings. The transition to our all new light-duty pickup was well executed. Especially a very orderly and profitable sell-down of the old models and the CTS from Cadillac was the smoothes launch in our GM carrier. (Inaudible) GM financial increased its earnings and forecast in addition to helping us sell more cars and trucks. Finally, our adjusted automotive free cash flow was $3.7 billion which means the end of the year with just over $38 billion of liquidity. If you turn to the next slide, I’ll review some additional highlights to provide more contexts. Let’s start with Cadillac. We have a long journey ahead of us with Cadillac to increase favorable opinion and such as consideration. But the early results of our global growth strategy are encouraging. Last year Cadillac leveraged the all new XTS and the ATS which was the 2013 North America Car of the Year become the best selling full line luxury brand. Now we are launching the CTS, the ELR, the ATS Coupe and the Escalade and these vehicles represent some of the finest designing engineering work that General Motors has done. At year end, our dealers in China and America delivered more than one million cars and crossovers were the best year in the brands 110-year history. Chevrolet delivered more than 5 million vehicles which was enough for the brands third consecutive year of record sales. Market share was up in Brazil and Mexico, and the retail market share was up in United States. Some of the key drivers in United States was the Impala which was named consumers report Best Sedans, the Corvette Stingray which was the 2014 North American Car of the Year and the Silverado which was the 2014 Northern American Truck of the Year. This year GM is launching 15 new products in United States and four of them are high volume Chevrolet Truck and SUV. In China we have announced plans for four new or redesign Chevrolet in 2014, including a new compact SUV for that fast growing segment. Finally, Opel/Vauxhall delivered more than one million vehicles and ended 2013 with it’s first European market share increase in 14 years, thanks to the Mokka and the ADAM. I’ll share just a few more highlights, so you can see how these milestones really drove our business results last year. To start, Chevrolet, Buick, Cadillac and GMC all increased their retail market share in the United States where we earned record transaction prices that drove an EBIT adjusted margin in North America of 7.8%, that’s up from 7.2% in 2012 so we made good progress on profitability, especially in the second half of the year as we expected. In the third and fourth quarter our margin was 8.4% which is up a bit more than two-third percentage points from the same period a year ago. In the South America we had another profitable year. We’re getting traction both the cost and the revenue sides of the equation in South America. For example, we ended the year with higher market share in Brazil and we were able to reduce our material and logistic costs through localization. We also reduce overcapacity in high-cost parts of the country and launched new products with higher margins. Heading into 2014 about 75% of our sales in Brazil will be from new or redesigned products of the Chevrolet (inaudible) up from about 25% in 2011. Sales in China set a new record with more than 3 million deliveries, that’s up 11.4% from the year ago. One of the highlights that the Chevrolet Malibu fleet sales nearly doubled. In Europe we record had year-over-year revenue increase in the second half and this shows that (inaudible) are making a tremendous progress. And as I mentioned earlier we achieved an investment grade rating from Moody’s ratings. That’s a lot of momentum which we will build on in a number of ways this year. In North America for example our entire pick-up and full sized SUV line up would be all new designs. Our 2015 model year Chevrolet and GMC full sized SUVs are on their way to dealers. And our 2013 heavy duty pick-up launched in the quarter and finally our new mid-sized pick-ups launching this fall. Later today, we unveil the new Chevrolet City Express small cargo van at the Chicago Auto Show. It will also be on sale this fall. Across Europe and South America meanwhile GM Financial will start to contribute to grow as it consolidates consumer revenue businesses we brought from LA. And in China, we are expecting a higher sales in 2014 and a richer mix over time, going in part from Cadillac growth. All right, let's move to the next part of the call. Chuck I’d like to turn the flow over to you for a detailed look for the year and the quarter. I’ll return at the end for some closing comments.

Thanks Mary, on Slide 4 we provided a summary of our 2013 calendar year GAAP and non-GAAP results. Net revenue for the year was a $155 billion, up 2.1% from prior year. Excluding the impact of FX translation, revenue was up 3.6% for the year. Our GAAP operating income was $5.1 billion, up from a large loss in the prior period due entirely the special items. Net income to common stockholders was $3.8 billion and diluted earnings per share came in at $2.38. As Mary indicated, the decline from the prior year was largely due to increased tax expense and unfavorable special items. Our automotive net cash from operating activities was a $11 billion or $1.4 billion increase from 2012. For our non-GAAP measures, EBIT adjusted was $8.6 billion in 2013 and EBIT adjusted margin was 5.5% as improved as an core operating performance across most of the business was partially offset by challenging environment and consolidated international operations. Finally, our adjusted automotive free cash flow was $3.7 billion for the year, $600 million decrease in 2012 largely due to the timing and sales allowances. On Slide 5 we provide the EBIT adjusted by region for 2012 and 2013. GMNA’s EBIT adjusted from significantly the $7.5 billion driven by new products. GME had an EBIT adjusted loss of $800 million, an improvement of more than $1 billion from 2012 driven by lower depreciation and amortization, and material and logistic savings. GMIO get EBIT adjusted at $1.2 billion, down significantly from the prior year as the challenging environment and consolidated operations more than offset the improved performance in China. GMSA’s EBIT adjusted was down slightly to $300 million for 2013 due to FX headwinds. GM Financial had record earnings before taxes of $900 million and corporate and eliminations was $500 million expense. This totals to an EBIT adjusted of $8.6 billion, an increase of $700 million from 2012. On slide 6, we provide an explanation of the $700 million increase in year-over-year EBIT adjusted. Our EBIT adjusted was $7.9 billion for 2012. Volume was a $100 million as the impact of increased wholesale volumes in GM North America will partially offset by declines in GMIO and GM Europe. Mix was unfavorable $400 million, primarily due to unfavorable country mix in GMIO and unfavorable vehicle mix in GME, partially offset by favorable vehicle mix in GMSA. Price was $2.4 billion favorable for the year due to the strength of our new vehicle introductions in GM North America and price actions to offset FX impacts in GM South America. Total costs were flat as lower fixed costs in Europe were offset with higher material costs in North America associated with recently launched products. Other was $1.4 billion unfavorable, primarily due to FX challenges in South America associated with the Venezuelan bolivar, Argentinean peso and Brazilian real. Slide 7 identifies special items for the fourth quarter and calendar year that had an impact on our earnings per share. I am not going to go through the entire list, but the items in 2013 primarily relate to strategic actions we announced in GMIO, the wage litigation in Korea, as well as the sale of certain non-core assets. At the top of the slide, our net income to common stockholders in the fourth quarter of 2013 was $900 million and our fully diluted earnings per share was $0.57. The special items listed had a net $200 million unfavorable impact to net income to common stockholders and a $0.10 unfavorable impact on earnings per share. For the 2013 calendar year, our net income to common stockholders was $3.8 billion and our fully diluted earnings per share was $2.38. Special items had an unfavorable impact on net income to common stockholders of $1.3 billion and $0.80 unfavorable impact on earnings per share. Moving on to the result for the fourth quarter on slide 8, our net revenue was $40.5 billion, a $1.2 billion or 3% increase from the prior year. Excluding the effect of FX translation, fourth quarter revenues increased approximately 4.8%. Our Q4 2013 GAAP operating income included $1.4 billion of unfavorable special items as detailed on chart 7. The prior year GAAP operating income performance also included significant unfavorable special items in the quarter. Net income to common stockholders was $900 million, flat compared to the prior year periods. Earnings per share for the quarter were $0.57 on a diluted basis, compared to $0.54 for the same period in the prior year and our automotive net cash from operating activities improved significantly to $2.8 billion, primarily due to the absence of the pension settlement contribution made in the prior year. Our EBIT adjusted was $1.9 billion for the fourth quarter, including $200 million in restructuring costs, overall a $700 million improvement from the prior year. An EBIT adjusted margin was 4.7%, up 1.5 percentage points from Q4 2012. Our adjusted automotive free cash flow was $1.1 billion, flat compared with the prior year period. On slide 9 we provide the EBIT adjusted by region for the fourth quarters of 2012 and 2013. GMNA EBIT adjusted was $1.9 billion. GME had an EBIT adjusted loss of $300 million, GMIO had EBIT adjusted of $200 million and GMSA EBIT adjusted was at breakeven for the quarter. GM Financial earnings before taxes was $200 million, double the prior year period. Corporate and eliminations was $100 million expense. This totals to an EBIT adjusted of $1.9 billion for the fourth quarter of 2013, up $700 million from the same period in 2012. Slide 10 shows our consolidated EBIT adjusted for the last five quarters. At the bottom of the slide, we again show the revenue and margins for the quarter. Our consolidated wholesale vehicle sales were 1.7 million vehicles in the fourth quarter, essentially flat compared to the prior year and our global market share decreased 0.2 percentage point to 11.4%. On slide 11 we provide an explanation of the $700 million increase in year-over-year consolidated EBIT adjusted for the fourth quarter. In Q4 2012, our EBIT adjusted was $1.2 billion. Volume was flat as wholesale volume increases in GM North America were offset by decreases in GMIO and GM South America. The mix is $300 million unfavorable primarily due to country mix and increased whole sale of both passenger cars in GM North America and unfavorable in country mix in GMIO partially offset by favorable mix in GM South America. Price was $1.4 billion favorable for the quarter due to the strength of our recently launched cars and trucks in GM North America and actions we’ve taken to offset FX in GM South America. Total costs were flat as lower fixed costs in Europe were offset by higher material costs in North America associated with our recently introduced cars and trucks. Other was $500 million unfavorable primarily due to FX challenges in GM South America associated with the Venezuelan Bolivar, Argentine Peso and the Brazilian Real. This totals $1.9 billion for the fourth quarter. We now move on to our segment results for the key performance indicators for GM North America on Slide 12. For the fourth quarter of 2013, our total U.S. market share was 17.2% and our retail share was 15.9%. Retail share increased two tenth of a percentage point from the prior year as our fleet market share decreased due to the repositioning of the Chevrolet Impala and generally lower fleet sales. Our incentives for the quarter were 10.6% of average transaction price, which put us at a 107% of the industry average. Slide 13 we showed GMNA’s EBIT adjusted for the last five quarters. At the bottom of the slide, revenue is $25.1 billion in the fourth quarter up $2.3 billion from the same quarter of 2012. GMNA’s EBIT adjusted margin was 7.5% for the fourth quarter and 8.4% for the second half of 2013, an improvement of over 200 basis points compared to the second half of 2012. This is a clear inflection point as it democrats strong progress toward our mid-decade goal of 10% margins. Our U.S. dealer inventory was 748,000 units at the end of the fourth quarter. The increase from the prior year due to industry growth and the continued launch of our all new Chevy Silverado and GMC Sierra. We’re closely watching U.S. industry and our own inventory levels and we will maintain our disciplined approach to balancing supply on demand. GMNA whole sale vehicle sales were 863,000 units for the quarter, 37,000 vehicle increase from the prior period. Turning to Slide 14, we provide the explanation of the increase in GMNA’s EBIT adjusted which rounds to 700 (inaudible). North America’s EBIT adjusted was $1.1 billion for the fourth quarter of 2012. Volume was $300,000 favorable associated with the 37,000 unit vehicle increase in whole sales. Mix was $300 million unfavorable primarily due to country mix and increased whole sales of passenger cars. Price was $1.2 billion favorable driven by our recently launched vehicles. Costs were $500 million unfavorable which can be more than explained by increase in material costs associated with recent advanced vehicles. Other was $100 million favorable due to FX. This nests some EBIT adjusted of $1.9 billion. On Slide 15, GME reported an EBIT adjusted loss of $200 million for the fourth quarter, a $400 million improvement from the prior year. Revenue was $5.3 billion for the quarter, up $100 million from the prior year and the second consecutive quarter of year-over-year quarterly revenue growth. The EBIT adjusted margin in region was negative 6.5%. Europe’s wholesale vehicle sales for the quarter stayed constant at 269,000 units and market share in the fourth quarter was 7.9%, a 0.4 percentage point decline from 2012 driven by lower sales of Chevrolets. On Slide 16, we provide the major components of Europe’s $400 year-over-year increase in EBIT adjusted on a rounded basis. Volume was flat with the prior year. Mix was $100 million favorable driven by increased sales of the Malta and Insignia. This is an encouraging sign as this is the first favorable European mix in several quarters. Price was $100 million unfavorable due to competitive pressure in the region. Cost was $500 million favorable primarily due to $200 million in lower depreciation and amortization, $100 million in favorable material performance and $100 million in savings and fixed costs. Other was $100 million unfavorable primarily due to FX. This totals the GME’s EBIT adjusted loss of $300 million for the fourth quarter of 2013. On slide 17, we show GMIO’s EBIT-adjusted for the most recent periods. In the fourth quarter, EBIT-adjusted was $200 million including equity income from our joint ventures of $400 million, partially offset by a loss of $200 million in consolidated international operations. At the bottom of the slide, GMIO's revenue from our consolidated operations was $4.9 billion, down $1.4 billion from the prior year. GMIO’s EBIT-adjusted margin from consolidated operations was a negative 2.2%, a significant decline from the prior year as we continued to encounter challenging dynamics across consolidated international operations. On average, net income margin for our China joint ventures was 7.6%, a 1.5% decrease from the prior year, primarily driven by higher competitive pricing pressures and increased manufacturing costs associated with two new plants coming on line in the near future. GMIO had wholesale vehicle sales of 259,000 for its consolidated operations and 865,000 for the China JVs. GM market share in the Asia-Pacific region remain constant compared to the prior year due to the continued growth of China market, offset with declines in the balance of the region. Turning to slide 18, we provide the major components of GMIO’s $500 million decrease in EBIT-adjusted. The impact of volume was $200 million unfavorable, primarily due to decreased wholesale units in the Middle East and RGM countries. Mix was $200 million unfavorable due to country mix and price was $100 million unfavorable due to pricing pressure in the Middle East. Cost was $100 million favorable because of materials and logistics savings. Other was $100 million unfavorable due to foreign exchange and a slight decline in equity income from our China JVs. This totals the GMIO’s fourth quarter 2013 EBIT-adjusted of $200 million. On slide 19, we move on to GMSA region and look at EBIT-adjusted for the last five quarters. At the bottom of the slide, revenue was $4.1 billion in the fourth quarter, a $300 million decrease from 2012. The EBIT-adjusted margin in the region was 0.7%, a significant decrease from the prior year period. South America’s wholesale vehicle sales were 260,000 units, down 20,000 units compared to the fourth quarter of 2012. Although, our market share in the quarter rose to 17.8% on the strength of our sales in Brazil and Argentina. On slide 20, we look at the components of the $100 million year-over-year decrease in South American operations. Volume was $100 million unfavorable due to the decline in wholesales. Mix was $100 million favorable, primarily due to increased sales of our successful new products in Brazil such as the Onix, Prisma and S-10. Price was $300 million favorable due to actions we have taken to offset unfavorable foreign exchange and the sustained strength of pricing on our new products launched in Brazil. Cost was $100 million unfavorable due to charges related to the decision to terminate production of our legacy product. Other was $300 million unfavorable due to the Venezuelan Bolivar, Argentinian peso and the Brazilian real currencies. Slide 21 provides a look of adjusted automotive free cash flow for the fourth quarter. From our net income to common stockholders of $900 million, we add back the impact of non-controlling interests, preferred dividends and the undistributed earnings allocated to Series B and then deduct GM Financial earnings to arrive at an automotive income of $900 million for the fourth quarter of 2013. We had $200 million in non-cash special items and our depreciation and amortization was a $1.5 billion expense. Working capital was $200 million source of cash. The $1.3 billion decline in the prior year was due to a decline in payables as we experienced more payment cycles in the fourth quarter of 2013. U.S. pension and OPEB cash payments exceeded expenses by $300 million in the quarter. The prior year period included the $2.3 billion contribution to settle and annuitize our seller retention plan. Other was a $200 million source of cash, a $700 million improvement from the prior year largely due to an increase in deferred taxes and an increase in dividends from our China joint ventures. This total was down to automotive net cash provided by operating activities of $2.8 billion. We have $1.8 billion of capital expenditures in the quarter. In addition, we exclude the interest associated with the prepayment of the Canadian Healthcare Trust debt. This totals to our adjusted automotive free cash flow of $1.1 billion, flat compared to the prior year. The positive cash flow helped improve our liquidity position on Slide 22 to $38.3 billion including $27.9 billion in cash and marketable securities. Debt increase to $7.1 billion compared to the prior year and due to our recent $4.5 billion refinancing transactions. $3.2 billion of the proceeds from the new debt was used to redeem Series A preferred shares that had a book value of $2.4 billion. The remaining $1.2 billion was used after the fourth quarter end to retire the Canadian Healthcare Trust notes. Series A preferred stock is $3.1 billion after the most recent redemption. Our total U.S. qualified and non-qualified pension plans are underfunded by $7.2 billion, a significant improvement versus a year ago which we will further discuss in a moment. Our non-U.S. pension plans were underfunded by $12.4 billion at the end of the fourth quarter and our global unfunded OPEB liability is $6.3 billion. On Slide 23 we will take a look at the funded status of our global and U.S. pension plans for the past four years. At the end of 2013 we had a global pension benefit obligation of $99 billion. The first time our global PBO was under $100 billion since 2002. Our global pension underfunded position improved $7.9 billion to $19.9 billion from 2012 to 2013. The first time our global underfunded position has been under $20 billion since 2007. As I relate to our U.S. pension plans, our underfunded status at the end of 2013 improved to $7.3 billion, nearly half of the underfunded amount in 2012. The timing and combined effects of raising discount rates, asset returns and other items partially offset by interest and service cost resulted in a $6.7 billion improvement to the funded status in our U.S. clients. Slide 24 provide the summary of our auto financing activities. GM Financial reported the results this morning and will hold their conference call at noon. Our U.S. sub-prime penetration in the fourth quarter remained constantly to prior year at 7.2%. Our U.S. lease penetration is 20.8% in Q4, up 6.1 percentage points from the prior year as we continue to [distant] average. Lease penetration in Canada is at 20.4%, an increase of 14.3 percentage points. GM New Vehicles as a percentage of GM Financial loan and lease originations grew significantly as our financing subsidiary continues to grow its leasing and subprime footprint. GM Financial’s percentage of GM’s U.S. consumer sub-prime finance and leasing remained fairly constant at 19% in the quarter. GM Financials annualized net credit losses improved to 2.1% and their earnings before tax were $225 million for the fourth quarter. I will now highlight a few items of note for Q1 2014 on Slide 24. January 2, this year we indicated that we do not expect our quarterly earnings scale to follow a typical seasonal trends in 2014. We expect Q1 earnings to be approximately 10% to 15% of total 2014 calendar year earnings. Restructuring charges included in Q1 EBIT adjusted are expected to be approximately $300 million primarily related to the bulk plant closing in Germany and the strategic actions we’ve announced in GMIO. We expect a weaker GM South America Q1 result giving extremely volatile conditions in Venezuela, reducing production in the quarter. Additionally, given the governmental policy actions and currency fluctuations within the region over the past few weeks, a risk profile has increased. We also have increased marketing process associated with supporting our vehicle launches. Additionally, we will have volume and mix headwinds in GMIO as we change over for the launch of the full-size truck and full-size SUVs in the middle of these. On Slide 26, we remind you the slide that we shared at the conference in January. Q1 as we discussed, will be significantly weaker than seasonal trends. Q2 and Q3 we expect to be similar their trend. However, Q4 will be stronger as restructuring costs are front loaded in the year and China will benefiting from their new vehicle launches. Finally on Slide 27, we remind you of our 2014 calendar year outlook. We plan to take the advantage of the strength in North America and China to fund our restructuring efforts around the globe. We expect EBIT adjusted for 2014 to be modestly improved over 2013, while EBIT adjusted margins are expected to be similar to last year on a consolidated level. Restructuring charges for the calendar year will be significantly higher than recent historical trend. We expect to incur over $1 billion in restructuring expense and cash payments in 2014, primarily related to the Bochum plant closure in Germany and the strategic actions we announced in GMIO. Now here is Mary with her closing remarks.

Thanks Chuck. In summary, we expected a year of modest growth in automobile industry volumes and followed GM results. More importantly, we are working to accelerate and work under wage to improved results on our way to becoming profitable everywhere we do business. As you know, our medium-term objective include earning 10% EBIT adjusted margins in North America, achieving breakeven results in Europe by mid decade, delivering mid-single-digit EBIT adjusted margins in South America, posting higher earnings in China and turning an improved results at our consolidated international operation. We clearly have a lot of work ahead to make all of our regions viably and consistently profitable. This is going to be a multiyear journey that we will see brand building, significant reductions in material and logistics cost and overall lower fixed cost. We are working on all of these things simultaneously in a very coordinated and fully aligned way. For example, about 70% of our Chevrolet volume in the United States will be delivered through unabated dealership by year end, up from about 60% today. The global business services team is beginning to implement strategies that are designed to significantly reduce our administrative cost. And we expect that this year we achieve through our product development, purchasing and brand strategy will improve every year. Rest assured, we are confident that we have the team, the product and the plans in place to get it done. I know we’ve covered a lot of ground today and I’m eager to hear what’s on your mind. So let’s turn out to the Q&A portion of our call. Randy?

Okay. Operator, we are ready for questions, please.

Thank you. (Operator Instructions) The first question comes from the line of Rod Lache with Deutsche Bank. Please go ahead.

Good morning everybody. Could you hear me?

Hi, Rod.

Hey. Couple of things, first just focusing on North America. In Detroit, I think you suggested that the earnings improvement from ‘13 to ‘14 would be similar to what we saw from 2012 to 2013. It’s around a $1 billion. It looks like you got a couple of percent volume growth, maybe 3% volume growth that could be $800 million. You just did $1.2 billion of positive pricing a quarter. So was hoping you can just give us a little bit more color? Are you essentially saying that maybe because the market share isn’t where you like it to be, pricing will come down or are you a little bit more cautious on volume or mix?

Rod, we haven’t really changed our outlook from what we shared back in January at the Deutsche Bank conference. And New York is the key driver year-over-year from a North American perspective. Industry, we still expect to be in the range of $16 million to $16.5 million, notwithstanding some of the challenges we had in January associated with weather. We expect mix to be a tailwind of year-over-year really driven by new vehicle launches. Pricing and new product will be up year-over-year with pricing on material will be down as we continue to see more competitive actions specifically impact carryover product. And we expect cost to be up year-over-year. Engineering D&A will be up. Advertising will be up to support brand building and launch and the material content on new products. As I indicated back in January, there actually, we would expect another step function improvement year-over-year, really being driven by the improved industry and our new product launches and some pretty favorable pricing on new products.

Okay. Can you talk a little bit about the first quarter in North America. Obviously, you got these two big launches, how significant they -- headwind is that and maybe just thinking longer term into 2015 or beyond. You are talking about getting the 10% margins by mid decade, is it reasonable to assume that you see that kind of progressing positively from '14 to '15 and then beyond. And what are some of the things that we should be thinking about is elements of improvement when we look at next year?

Okay. Yeah, first to the first quarter results or expectations for North America, clearly when you shut down full size SUV and go through a launch along with heavy duty pickups that has an impact on overall volumes and mix. On the other side, we're filling out our pipeline, with a new CTS and continue to get good traction on trucks. So I would say that the big kind of headwinds in North America really related to the launch cadence associated with wholesale utilities and heavy duty trucks as well as some incremental marketing expense related to the Super Bowl in the Olympics along with launches. Relative to our journey to 10% EBIT margins, nothing has changed versus the discussions we had in the past along with that. It is a three to four tranche phase in journey, the first, in 2013 was really driven by new products and improved margins associated with that and improve retail share we got. In 2014 we expect another step really driven primarily by product with some efficiencies on manufacturing and SG&A starting to filter into the latter part of the year. Going into 2015, we really start to expect to get some traction on cost, material, logistics, as we start to launch new products. And then, the last piece is really business model leverage and that's really all about driving improved retail share and improved loyalty, taking full advantage of global connected customer and that's can be kind of a last pieces as we moved through the cycle, so nothing to really change from what we've discussed in the past.

So just to clarify, you would think that 15 would be better than 14 even though when you look at new products, are probably going to be a record is a percent with the overall portfolio in '14?

Our expectations -- we were on our continuing upward trend in margins from ‘13 through mid-decade. Nothing has changed versus that.

Thank you. The next question comes from the line of John Murphy with Bank of America. Please go ahead.

Good morning. Just the first question on Slide 26, Chuck, you alluded to with the first quarter there being $300 million of restructuring charges. But given the cadence that you’re strong there, it would have appeared that actually went higher in the first quarter. Do you think it sort of aided for the restructuring charges through the course of the year?

In general terms, we talked about $1.1 billion. In Q1, we’re looking at this on a year-over-year basis. In Q1, I would expect that 30% to 35% of those restructuring charges were hit and then kind of worked its way down on the timeline through the rest of the year. The big restructuring items in Q1, number one there’s going to be a fairly significant charge associated with the bulk enclosure. We’ve got ongoing activities, their hidden restructuring and GMIO primarily related to severance payments as we start to look to hold an employee. And then the impact of the San Jose closure in Brazil and the severance enclosure related costs associated with that. So those are the three big items along with Chevrolet Europe in Q1. And you know again, as I think about the year, I would say that you know, more front -- of the $1.1 billion more front end loaded in the first quarter and then mitigating going through Q2 to Q4 coming down from there.

Okay, that’s very helpful. Then a second question on Slide 17. You kind of -- had alluded to when you’re talking about IO that there was a lot of competitive pressures on pricing. Are you seeing the Japanese taking advantage of the weaker yen outside of North America, in other markets? Is that kind of what you’re getting at there?

And we’ve seen that trend all year starting back in the first quarter of 2013 and it really is market specific. So we’ve really seen a lot of price pressure in Australia. For instance, Japanese are pretty strong and they primarily import from Japan. We’ve seen price competitiveness in South East Asia again; another area where the Japanese dominate and we’ve seen price pressure there. So it appears to me that they’re more overt about taking advantage of the weaker yen in those markets that they have been here in North America or the U.S. specifically.

Okay. And then just last, Mary, obviously product is a key focus of yours and the company’s now and it sounds like you’re making bigger and bigger investments in the product cadence is good here in the short-term and this is really seems to be the sweet spot in your product cycle. But as we look out into ’15, ’16 and ’17, once we get through the pickup trucks and the SUVs and the small and mid SUVs are launched in the next couple of years. I mean, do you think you be able to keep this very significant product cadence going forward or we are going to see a low after we get through this search? I mean, can you guys kind of commit, replacing 15% to 20% to 25% of your product portfolio, I am talking about the U.S. sort of on a consistent basis, let something you think you have the product engine to do now?

Absolutely, I mean, I think its -- most of our product cadence is really well product through the next four or five years. In addition to strong products and looking at what are the opportunity to commit significant changes whether it’s a powertrain, whether it’s electrification as we look at what the marketplace and what really the customer is looking for in the vehicle. So I feel very confident that we’ve got a good product cadence as we go out through the next several years and specifically with (Inaudible) in the vehicles that are on power train.

Great. Thank you very much.

Thank you. The next question comes from the line of Colin Langan from UBS. Please proceed.

Oh! Great. Thanks for taking my question. Any color in China, the margin was down rather significantly, I mean, is that, do you feel confident, you could get back those margins back where they were because you indicated was the combination of both pricing which sound like something that might be lingering for awhile and also about the new plans creeping up?

Yeah. For the fourth quarter specifically, the biggest driver that was the incremental cost associated to bring two clients. And we’ve talked about the pricing dynamic in China all year and that is a pretty competitive market. Looking forward, we expect to see continue margins in North -- in China in the 9% range. And then continuing price competitiveness, but our mix is going to improve substantially as we launch a number of SUVs in that market. So and Cadillac, we’re going to triple sales of Cadillac in China between 2013, 2015. So we would expect to continue see price headwind but we’re going to offset that with much improve mix and our expectation is, we hold margins somewhere in the 9% range.

Okay. And then thinking in GMIO outside of China, is it look like the GMIO consolidated got slightly worst from Q3. I thought, Q3 have some higher launching costs that were headwind. Why the sequential weakness in the region?

One, there is restructuring charges in GMIO in the fourth quarter of roughly $17 million. Two, as we start to prepare for the launch of the full-size SUVs and the trucks in the Middle East there was a lying down take there because they are selling down the GMT900 inventory that they have. So that’s was the headwind to large extent and mix and price from that standpoint. So those were the two big drivers quarter-to-quarter. But, I can say actually this, the region outside of China very, very tough dynamic there. We made a couple of road -- took a very decisive actions with the Chevrolet Europe decision that we made and the Australia decision and the whole purpose of that was to improve the foundation for growth going forward and there is more work to do in the number of other countries.

And then, GM South America, what was the size of the product termination impact, anymore specific and in fact there were product that were not effect your volume in the region going forward?

Yeah. I would like to avoid giving the specific product because we still sell them. So it was in the ballpark of $60 million to $70 million in Q4 on that product termination, fundamentally it's writing off the two and this is normal, that’s why it’s not restructuring and it’s not special. I mean when we end production, normal production of a vehicle, there is many unamortized herein, we write it off. So that’s was the impact there.

And why the decisions there to terminate the product all of the sudden?

As we look at our, again, the 2012 plan, we saw actually four legs to that, rationalize portfolio and sell new products, where we make more money than the product that replace and this is just part of the rationalization of reducing our reliance or eliminating legacy products, we don’t make very money on those.

Okay. Just one last question, the $600 million GM clear wage. Was that approved and how much of that will be cash and the very implications from your cost structure, obviously that’s a settlement, then I think the wager there now is kind of changing going forward?

Yeah, we accrued similar liability in 2012 when we had an unfavorable ruling and this specific litigation. We reversed it fundamentally because a very related case had a favorable ruling and internal and external counsel deemed the probability of exposing that to be low. So we reversed that. One part of the ruling that we’re still working through is the go forward provision. So this is the retroactive piece as the ruling came down in the (inaudible) case, the impact on go forward wages, you would improve bonuses et cetera and the calculation of (inaudible). So that could have a headwind on a go forward basis from a wage perspective, but we’re still working through the details on that.

And from the cash perspective, there is no cash outflow from the --

Not specific to the special item at all. No, it was a total non-cash transaction both sides.

Thank you. The next question comes from the line of Brian Johnson with Barclays. Please proceed.

Yes, good morning. I want to ask a question that’s really kind of targeted at Mary using the pickup truck market share is kind of a microcosm of how you might be thinking about pricing and promotion, how that might differ from -- for our management teams. So if you look at it, you’re trailing three months large pickup truck share was around 34%, 35%. That’s like 300 basis earnings below the 2012 headline. I certainly remember in the mid-2000s that withdrawal would be time for employee pricing for everyone. So I want to understand -- you know it is actually 33.9%. How are you thinking about that share? Is that your target given the new trucks at least in the half ton segment of the market? And what leads to change vis-à-vis product and or your pricing and or competitor actions to reboot that or it’s share kind of fine where it is?

Well, a couple of points; first the truck has gotten great review from a multitude of sources externally in one North American truck of the year. So we’re very confident in the product. We are still getting all the plans online that build that vehicle. If you look at it there has been -- you know, our new product is very effective in selling out the old product. And so there are still 13 to 14 out in the market place. So I think we still have room to get going. We will maintain our pricing discipline, but we will also walk in and react to the market to make sure we’re competitive within the market. But I’m very confident that we have solid full truck out. If you look at -- as I mentioned before, we have the heavy duty trucks coming out. In the first quarter, we’ve got the SUV and then the third part of our strategy is the mid-sized truck that will be coming out in the fall. So there’s just still a lot of going forward and we have a lot of confidence in these product and we’ll still maintain our pricing discipline.

And on the CV side, I asked this question a few quarter ago. But maybe you have a different perspective. It seems like we’re seeing kind of a global CUV boom. You’re talking about some product actions that kind of put you in that. But I guess the question is why do they seem somewhat late to some of these regions and is there a lesson learned there either around cycle time or getting the right balance between global platforms and local market demands that you’re going to kind of make different -- try to do differently going forward?

I think we have success with the Chevy Trax and the (inaudible) and the Opel Malta making that a very good success story. We have an SUV coming in China. This is a setting of the market that continues to grow and we’re going to get in and seize that. In some cases, I wish we were a little faster in getting the product into the market place. But we have a complete cadence that we’re working through and you know we have I think very good products that we’ve announced and are out in the market and what we’ll have upcoming. Again it’s a significant part of the market and I think we’ve got the right products cadence as we go forward.

Thank you. The next question comes from the line of Adam Jonas with Morgan Stanley. Please go ahead.

Thanks everybody. I’ve got a couple of questions. The first question is for chuck and then one for Mary. Chuck, any guidance on the pension expense year on year given how you finished up?

We're looking at overall relatively flat year-over-year. This year, we looked at all for 2013, I had one, but as I look into 2014, relatively flat, nothing material one way or the other.

Great. Chuck, what's for Chinese JV dividend now, meaning on trailing 12 months, how much you pull out of the business, it used to be around a $1 billion just curious, how much higher or similar it is?

Fundamentally, we will end up giving dividends relatively equal to the equity income over time.

Over time but any delay -- because I know it's based on the prior year and there's certain payout, I'm just curious can you quantify how much came out last year?

I'll have to get back with you on that Adam, I think it was slightly below the equity income in 2013, which we expect to catch-up this year.

Great.

$1.7 billion was the number in 2013.

So slightly below that?

No, that was the number that we got which was slightly below the equity income.

Okay, thank you. And then lastly, Chuck, GM Financial, you guys are guiding for stable profit this year, but I'm curious why when we're getting all these new consolidated operations coming in, any kind of one-offs that don't repeat or is it new headwinds that you're allowing for?

Yeah, I think there's incremental costs in building out the platform to help grow in the U.S. to take that business to 20% across all of the different aspects of the business lease financing. And also some integration in systems costs in the international business, there's a lot of work to do, over there from the systems perspective, so I would call it a non-recurring one-time investment in the business.

And Mary just lastly if you were to isolate the single biggest challenge or threat facing the company, both in your domestic market and then separately in your international markets, I'd love to hear your thought and if you were to highlight the biggest threats, for us?

I guess I will --

I'm a glass half empty kind of guy, so sorry.

Okay, and I'm a glass half-full kind of person, so I would characterize it as opportunities, I mean clearly I think we've got a strong product themes, I think we're getting the recognition in the product cadence that we need to continue to build our brands. I think we all know that there's a multi-year activity, you don't, recovering one year or two -- from a historical perspective, when we look what's in the car park, that's a huge opportunity. So winning products and my goal is that everything that we choose to compete in and around the world, we're going to win in those product. As we continue to do that we've got to work on the other three [Ps], as it relates to making sure we go to the market strongly, continue to build the brands. I still see there's tremendous opportunity in China, we have the three brands there, Buick is being very strong, Cadillac is a huge opportunity and there's a still a lot of room for Chevrolet in China so obviously those are great opportunities. Third, you've got to really focus on maintaining our cost structure. I think we've got a lot of good activity going on in very coordinated way to make sure we're not just looking at cost here or cost there, but systematically looking at our overall cost structure, whether it's been the fixed cost of the business or the material cost of the logistics, so I think that's another huge opportunity and we'll keep our focus on each of those.

Thank you very much, indeed.

Thank you. The next question comes from the line of Patrick Archambault from Goldman Sachs. Please go ahead.

Yeah, Thank you for squeezing me in. Couple of questions, just on the outlook. I know that the Trade Auto Show wasn't a long ways away but since then you've had a bit of a currency crisis, which has clearly impacted fourth quarter results, likely to impact fourth quarter and it's likely to be a big impact to your point? And first, Europe, especially considering you had a -- I think was it $100 million of restructuring in the number, it seems to have come in pretty well. Even though the outlook hasn't changed, would you consider the upside-downside regionally to have shifted a little bit, in particular the question would be for Latin America and Europe?

I think that's a reasonable characterization, as I indicated in the comments earlier. The risk profile on South America over the past several weeks has increased significantly. We still see, no line of sight and a resolution to the business operations in Venezuela, and at the same time Argentina seems to be a bit more -- significantly more fragile. So I would say the risk profile has increased and in South America I would say emerging market, currencies that move sideways pretty significantly across the world over the past several weeks. All right were not just sitting back and watching this happen, we’re taking you know aggressive actions where we can from both the price and cost perspective to address that. So I would say you know more downside risk now than we had you know a month or so goal on South America and I would say on the basis of how we finished in some of the momentum that feels like we’re starting to get into new year if I was more bullish on outlook versus you know two or four weeks ago I would say Europe feels like you know there could be some upside there.

And thank you, and particularly on the price increase of Europe I think if, I don’t have the page in front of me but you know it was sort of may be a slight negative but you know how would you characterize the pricing environment I mean with volume starting to pick up there, is that something that you anticipate is getting better?

No, and let me go back and make sure that we understand that the reference to outside of Europe let’s start with the foundation for 2014 because we need to declare on that. When we talked about 2014 versus 2013 we said that was going to be a transition here in Europe. Number one, our new key launch is in the most critical segments the GMC segment don’t happen to the latter part of 2014 and 2015, so you know we think that that’s going to be a dynamic that they are going to have to manage to. We also said that we expect a continued price headwinds in the market and I think in our case it's estimated by you know the age of the portfolio in the GMC segment. We’ve got significant year-over-year restructuring charges as a headwind in Europe as well and Russia. Russia is consolidated and part of European operations now with the weakness of the ruble gets created as a talked about back in January and not really a year-over-year headwind. So in the context of say you know we had that a lot and European results are as I indicated before are going to be down year-over-year and margins are going to be down year-over-year primarily driven by restructuring charges in Russia I think that you know my senses from that foundation that is probably some outside but it’s still going to be down year-over-year because of the restructuring primarily.

Okay, that’s very helpful to frame that and last question for me is just on the North America walk. You know I guess one thing that I didn’t sort of expect was the negative impact of mix I mean obviously was offset by tremendous pricing but you know can you just explain that a little bit I mean I guess you said country mix which I suppose would be Canada and Mexico but and sort it's the price just given the truck production that that would have been negative.

Yeah, you know I would say the mix results in the fourth quarter a bit of anomaly I mean we had indicated for the year that we are going to be flat to slightly positive on mix in North America, we ended up flat. We indicated for 2014, next it was going to be a tailwind and we continue to see that. The fourth quarter one, we had compared to year-over-year, every proportion of production allocated to Canada and Mexico so that had a headwind. Number two, in general, our passenger cars versus struts as a percentage of total sales or total production were up year-over-year, and then the last thing which really was a significant impact, there was a number of full-size pickups in blue from Mexico to United States but didn’t get passed that pay point or recognition point before in the year and that created another anomaly in mix, I would be view this as more than anomaly than a trend.

Okay, so those trucks will get recognized in the first quarter.

Yep.

Thank you, next question comes from the line of (inaudible) please go-ahead.

Another question regarding the North American walk-in so what do you mean for the 2014 outlook, your cost headwind on year-over-year basis worsened little bit to assist the run rate that we had seen in the past couple of quarters that about you know 500 million or so and you are pointing specifically to its being the materials included and then you the new products that you’ve been launching, so how should we think about that on the go forward basis, is that sort of run rate you think about the cost increases or was that a little bit more because of the launches?

Well, I think it's time to -- launch is the one you recognized, I’m talking specifically about Q4. Pricing and new products primarily, the new trucks that is well the Impala, the Corvette, CTS was favorable over a $1 billion and pricing on new products. The materials cost that goes along with that, so there is new content, right, features on the vehicles were $600 million to $700 million. So that's a big portion of the cost headwind in Q4. But net-net, it was accretive to earnings at $300 to $400 million or 30% to 40% variable margins. And that's the kind of dynamic you typically have when we launch a new product. So as I talked about 2014 before similar to 30, price was going to be up, primarily on new and major, material costs will be up and newly launched products but net of those two is positive to EBIT and that trend will continue.

Understood. That's very helpful. And then more strategically maybe for Mary, as you sort of settling the renewal, what are your strong near-term priorities and specifically if you can highlight if there is any sort of directional change that you would like to implement from the previous management?

Sure. There is no right or left turn. I think our growth opportunity is to accelerate the -- from a focus perspective is keeping a strong customer focus. We've got to continue to make sure that we've the right vehicles out there with the right quality. We have work to do but we're on it and building strong brand. We need to continue to maintain our focus balance sheet and again, one of our key areas of focus is to operate profitability everywhere we operate. And we know we have to work to do on that. So we are focused on that. I think one of the opportunities, that’s creating the President position and I was very involved in putting that role together. I think there are opportunities across our regions that we can seize more quickly to have a very stronger go-to-market strategies also to make sure that we are seizing the opportunities in the product portfolio more quickly and really managing on a global basis. So, again, it's really to move forward with the plan and I think we've got a strong foundation, but we really need to now take advantage of it.

Great. Thank you very much.

Thank you. The next question comes from the line of Ryan Brinkman with J.P. Morgan. Please go ahead.

Hi, good morning. Thanks for taking my question. I know you don't host monthly sales calls in the U.S. any longer. So, I got to ask in this form, whether you have any comments on the slower start in software GM sales in January? Are you able to quantify the impact of weather on your sales and shares, I think some of the regions in the U.S. where you share was a bit lower like California or maybe less impacted by the winter storms? It looks like you're maintaining your full year start outlook, so just maybe comment on how much of January slowdown industry wide and for GM is related to potentially one-off factors?

Yeah. I would say, the impact for us in December and January and it look like, at least if you are seeing here so far in February, was really primarily weather related. The SAAR in the month of January ran at $15.1 million and it was actually down year-over-year. And we over index to the Northeast, North Central, Midwest and that's where the bad weather was. And I would say by and large that had the impact in not only in our sales, but also on the SAAR. The good thing is January is the lowest month of sales from an industry perspective. So you can have a $15 million or $15.1 million SAAR for the month of January and quickly recover. And we would expect to recover most of the sales that we lost in the January as we go through the rest of the first quarter, assuming the weather behaves and into the spring selling season. And we're still holding on our prior view of U.S. industry $16 million to $16.5 million like. So we're going to -- obviously, we're going to continue to monitor our industry and our own inventory levels. And make sure that the industry does recover and it's not, as Mary said earlier, we're going to continue to apply our disciplined approach to managing supply and demand. But right now, nothings really changed based on January results.

Okay. Thanks. That's helpful. And obviously you're returning a lot of capital to shareholders with your new dividend. But I'm curious what your thoughts are relatively to repurchases and if you were to implement the repurchase plan at some point, whether it might make sense to do it sooner rather than later, it gives them the pullback in your shares in your characterization of 2014 as a transition year with much better results to come suggesting that you may not get a another chance to buy your shares so cheaply in the future.

Yeah, I think back in January we laid out a pretty clear planning level -- capital allocation for 2014. One, we’re going to continue to support the capital spend that we need to maintain that product pipeline and continue to enhance that going forward. We’ve got the one plus billion dollars of restructuring that we’re going to have to fund. In 2014, we’ve got the rest of the Ally International Acquisition in the front for $700 million in that business. We did the rest of the Series A redemption which will be a call of $3.9 billion of capital and $2.2 billion of dividend, 1.8 times and $400 million Series A. So that’s $16 billion of capital allocation. And we think that’s a pretty good plan and the dividend really made a strong statement around how we plan to return capital to shareholders. With that said, I think we’ve proven to be opportunistic in the past, you know situations arise and we’ll monitor that we go through the year. The facts, you know fundamentally, the plan that we’ve laid out that we’re executing till this year.

Great, thanks. Then just last questions if you could elaborate on the lower cost in Europe. That looks like overall cost there, hoped to be -- $500 million. And I think restructuring was a drag year-over-year. Can you just remind of that so maybe the underlying costs improved even more sort of pocketed, where did that come from, your distribution bench with PSA, salary personal reductions commodities et cetera? Just trying to -- anything that can help us gauge the sustainability of cost improvement in Europe because people really ask; can you sort of maintain that as volume returns? Thanks.

Yeah, looking specifically at Europe from a cross perspective, overall in the quarter, half a billion -- purchasing, so material performance and some of this will be associated with the Gefco logistics -- alliance that we have our partnership. It was about $100 million in savings, engineering with $100 million in savings. (Inaudible) and D&A $200 million savings offset by -- partial offset by the restructuring. This is not -- extrapolated on our run rate basis going forward when we look at year over results obviously, you know a lot of the actions that was taken over the past couple of year that reduced our roll of fixed cost base, the next big step, once we get past 2014 will be the ongoing savings associated with the call that $200 million to $250 million a year in savings. But I think another thing that maybe underappreciated in some of the views on Europe; we had that significant impairment that we took in 2012 that fundamentally rolls down most of the assets and significant savings in D&A. We’re investing €4 billion or $5 billion, much of that going into tooling. And that depreciable base has started to increase. And we think over the next three or four years, year-over-year we’re going to have increased D&A versus where we were in 2013 as we launched new products. So not all of these are run rate savings. I think we’ve fundamentally driven the business at least on a fixed cost perspective to the right level, we’ll continue to look at streamline that, but not material changes until we get past the bulk enclosure. And then beyond that as it was indicated from the PSA alliance, a lot of material savings will eventuate when we work on the joint programs going forward which are later over the next two or three years.

Great, thank you.

Thank you. The last question for today comes from line of Itay Michaeli from Citi. Please proceed.

Great, thank you. Good morning. Chuck, a question on the North American margin past 10%; I think when you outlined it initially, it was (inaudible) seven to 10 was a third -- product and then two thirds cost savings, split the material logistics. Just wondering how far along are you now on the fixed cost and logistics and perhaps how far along will you be (inaudible) when we close out 2014?

Yeah, think about this in a kind of three big tranches I would suppose. Roughly 100 basis points of the product related -- 100 basis points of material and logistics and 100 basis points kind of business model leverage over time. I think that we -- as we refine this from 2011, 2012 to now, the fixed cost efficiency we’re going to drive and administration SG&A and manufacturing, fundamentally we’ll offset incremental D&A and incremental marketing cost. So the way I think about it -- a good outcome for us would be flat fixed costs as we continue to grow the business. So I’d say, as we get through 2014, kind of the first tranche of product-related margin expansion. We will have fundamentally played out and then the material and logistics piece will start to kick in with the next generation programs. Because that’s where you are really get an opportunity to drive scale and leverage that scale with global architectures and business model leverage as I have talked about earlier would be the latter piece, not in the ‘15 and ‘16 timeframe.

Okay. That’s helpful. And then the question on the 2015 outlook that GMIO consolidated, I think in Detroit you do specifically referred to improvements driven by product launches and restructuring benefits, hoping you could perhaps quantify the restructuring benefits we should expect there in 2015 as well as to have what kind of product refresh rate might you have next year versus this year there?

Yeah, I would just say, eliminating the -- we don’t talk about specific operations within our regional results but we lose money in Chevrolet Europe. So that would be one of those benefits once we get passed that transition. We are looking to significantly improve profitability or reduce our losses in Australia. So those are the two benefits of the actions that we’ve taken that should help improve. We think about product launch cadence, I mean just think about the Middle East, full size SUV, full size pickups, four launches of those products in the Middle East. We have significant work to do in the other markets as well from a launch cadence perspective we’ve talked about. The B-SUV, the Trax, Encore and Mokka, there is more of those coming down the pipeline. And fundamentally, in the emerging market, the BC-type vehicle is going to be very-very important for those markets looking forward. So I think we talked about 2015 being improved from 2014. We didn’t quantify it.

Great. Just quickly lastly, any updated thoughts on the tax rate for 2014?

From a book tax perspective, its going to be in the low 30% range. We made a change in including equity incoming to denominator to be similar with ‘14 industry practice which should take us to 30%, 31%, 32% from where we were in 2013.

Perfect. Thanks so much.

Yes.

Thank you Mr. Arickx. I will now turn the call back to you. Please continue with your presentation or closing remarks.

Thank you, Operator, and thank you everyone for your time today. I appreciate it.

Thank you ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines. Thank you and have a good day.