Ladies and gentlemen, welcome to the General Motors First Quarter 2020 Earnings Conference Call. As a reminder, this conference call is being recorded Wednesday, May 6, 2020. I would now like to turn the conference over to Rocky Gupta, Treasurer and Vice President of Investor Relations.

Thanks, Dorothy. Good morning and thank you for joining us as we review GM’s financial results for the first quarter of 2020. A 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. We’re joining you from separate remote locations today. On the call this morning, I’m joined by Mary Barra, GM’s Chairman and CEO; Dhivya Suryadevara, GM’s Executive Vice President and CFO; and Dan Berce, President and CEO of GM Financial. Before we begin, I would like to direct your attention to the forward-looking statements on the first page of the chart set. As usual the content of the call will be governed by this language. I will now turn the call over to Mary Barra.

Thanks, Rocky, and good morning everyone. Thanks for joining. This quarter we have a lot to cover. So, I want to begin by updating you on our plans to safely restart our operations. Then we will share the specifics of our COVID-19 activities and our first quarter financial performance. Our work to resume production has been an ongoing process, and I am pleased to report that based on conversations and collaboration with unions and government officials, we are targeting to restart the majority of our manufacturing operations in the U.S. and Canada the week of May 18 under extensive safety measures. We made this decision with the safety of our employees as our top priority and I want to thank them for their patience and their commitment through this process. Ever since we suspended our operations in March, our teams have been collaborating internally and externally to understand and share the best practices to be able to return to the workplace. This includes the global safety standards we implemented when we reopened our facilities in China as well as Korea, which remained open during the COVID-19 outbreak there. I will go into additional details about the extensive return to the workplace safety protocols in a few minutes. As we prepare to go back, our thoughts continue to go out to everyone around the world who has been personally affected by COVID-19 and the well-being of our employees remains our top priority. Early in this crisis, we recognized that while our operations in North and South America were suspended we had the capability to quickly support production of crucial ventilators and personal protective equipment. On March 17, we were introduced to ventilator manufacturer Ventec. With tremendous collaboration that included UAW leadership and suppliers, we began shipping ventilators from our Kokomo, Indiana facility just one month later. We are fulfilling a government order for 30,000 ventilators to be completed by the end of August. In Brazil, we are leading a federal government task force to repair ventilators. In addition, we are making masks, face shields, and gowns in several of our facilities for both health workers and for our employees. As of yesterday, we have donated one million masks to hospitals in the United States. We are proud of the employees who have volunteered to do this work following the footsteps of generations of automotive employees who had supported the greater good during times of crisis. Now, let’s shift to the quarter. We entered this crisis better positioned financially because of the many business transformation actions we have taken over the past several years to improve our competitiveness. As we suspended operations, we also moved quickly to preserve our liquidity and protect the business. In March, we suspended guidance for the year and implemented significant austerity measures and drew down our revolving credit facilities. Last month we also suspended our quarterly dividend and share repurchases. So, let’s take a look at the numbers. In the first quarter, we delivered net revenue of $32.7 billion, EBIT-adjusted of $1.2 billion, EBIT-adjusted margin of 3.8%, EPS diluted adjusted of $0.62, adjusted automotive free cash flow of negative $900 million, and a ROIC-adjusted of 13.2% on a trailing four-quarter basis. The outbreak significantly affected EBIT-adjusted in the quarter and we expect an even greater impact in Q2 because of the production stoppage, a phased restart, and what we believe will be lower market demand. Importantly, our work on safety early in the quarter ensured we could deliver on our commitment to near-term launches like our full-size SUVs and getting parts to our dealers. In Arlington, we completed the build-out of the previous generation of full-size SUVs and the planned conversion for all new models. We will begin shipping the first units to dealers in early June. And our customer care and aftersale warehouses employees across the country have been supplying parts to dealers so they can take care of our customers and also keep their service businesses running. Our EV and AV work continues uninterrupted even as many of our engineers work remotely. That means producing the production timing of key entries like the GMC Hummer EV, the Cadillac Lyriq crossover EV, and the Cruise Origin AV remained fully on track. While the world has changed dramatically under COVID, the importance of Cruise mission to transform for the better is unchanged as is Cruise importance to our vision of a world with zero crashes, zero emission, and zero congestion. Cruise continues to make very rapid progress toward its initial goal of superhuman driving performance. While on-road testing has been reduced under COVID, Cruise has maintained a presence on road in Phoenix, Arizona and in recent weeks has restarted driving in San Francisco in support of the community by autonomously delivering food and other essentials to those most in need. These activities combined with Cruise's cutting-edge simulation capabilities have enabled the team to continue to make rapid progress during this period. As you know, Cruise is well-capitalized, and this is especially important and an advantage for us during these volatile times. We have and will continue to grow our team by recruiting and retaining the very best engineering and leadership talent. So let’s shift to our dealers. We know many of them have been heavily impacted by the crisis, and we are supporting them in a number of ways, including Shop-Click-Drive. This is a leading e-commerce tool that completes much of the vehicle purchase transaction online. When combined with dealers making contactless home deliveries, it’s a powerful tool for our dealers and for our customers. An additional 750 dealers have enabled Shop-Click-Drive since the COVID outbreak. So now, 85% of the U.S. dealer network is participating in Shop-Click-Drive. Of these, 90% offered a touchless home delivery experience. In an industry that is down 40%, Shop-Click-Drive interactions are up 41%, so visits are at an all-time high. And stay tuned for improvements to Shop-Click-Drive as we are working aggressively to add eight new features and capabilities in the coming weeks. Finally, putting people first also means taking care of our customers, many of whom have been financially affected by the pandemic. GM Financial is offering case-by-case solutions including late fee waivers and OnStar is offering its crisis assist services and free WiFi to keep customers connected to emergency resources and to loved ones. In short, we are positioned to manage through the near-term market dynamics because of swift actions that we took to preserve liquidity, our uninterrupted work on our EV and AV portfolio, our on-time launch strategies for our full-size SUVs, our continued ability to supply parts to dealers who need them, and by leveraging e-commerce and contactless tools like Shop-Click-Drive. In the coming days, as we get closer to resuming our operations, we will share our complete return to work playbook first with our employees and then with other stakeholders. However, today I will briefly share a high-level review of the safety procedures we are putting in place. This applies to everyone entering our facilities. Our approach meets or exceeds CDC and World Health Organization guidelines, and as I mentioned earlier, is informed by the global standardized processes we developed for use in China and Korea, as well as input from our union leadership. We have already applied these protocols to Kokomo, Arlington, Warren, and in our customer care and aftersale operations. Where our coronavirus safety protocols have been in place, we have not seen a confirmed case of community spread in our facilities. We have also shared our protocols with our suppliers as they return to work because our supply chain is key to our ability to resume production. When anyone enters a facility, they will do a self-assessment questionnaire and they will have their temperature screened. Our protocols also require frequent hand washing, additional cleaning of workstation and common areas, continued physical distancing, wearing a mask, and in some cases wearing a mask and safety glasses. We will also increase time between shifts to further promote physical distancing as people enter and exit the worksites. Now, I’d like to shift to our regional performance in Q1. In North America, we were tracking toward a very solid quarter until we suspended our operations. Sales of full-size pickups outpaced the industry by double-digit percentages and drove year-over-year improvements in market share and financial results. As we begin to replenish the pipeline, trucks and full-size SUVs will remain a very high priority. Overall retail and fleet volumes were down in April, but we continue to see resilience in truck deliveries. In April, GM’s incentives for light-duty pickup trucks were below the segment average. As I said earlier, we remain 100% committed to the EV technology and products we showed in March as well as our agreement to jointly develop and manufacture two all-new electric vehicles for Honda, based on our EV technology. Honda will also make our OnStar and driver assist technologies available in these vehicles. This collaboration builds on our existing partnership in EV, AV, and the fuel cells space. It demonstrates our EV cost and technology leadership and will help us deliver a profitable EV business through increased scale and capacity utilization. Turning to our international operations, China was our first major market affected by COVID-19. It put downward pressure on an already weak industry and we experienced a significant year-over-year decrease in volumes and equity income. Production has resumed in China under strict safety protocols and dealers are beginning to report improved retail traffic. Following the strongest impact in February, the industry started to pick up in March and GM China’s sales posted gains in April year-over-year. We expect to see gradual recovery as a result of our strong mix of new products and the positive impact of government subsidies. However, the outbreak will still affect our overall 2020 results. Also, in GM International, we announced we will wind down vehicle sales and design and engineering operations in Australia and New Zealand and retire the Holden brand in 2021. We will instead focus on sales of GM specialty vehicles. In Thailand, we will sell our Rayong manufacturing facility and withdraw Chevrolet from the domestic market and end vehicle sales by the end of the year. These measures build on the comprehensive strategy we laid out in 2015 to take actions in markets that do not earn an adequate return on investment. In South America, we continue to work with our stakeholders to turn around the business and capitalize on our leading volume and market share in the region. We will continue to take decisive steps to further accelerate our actions to improve the business. We will streamline and integrate our product portfolio, implement additional austerity measures, take pricing actions, and optimize our manufacturing footprint in terms of capacity utilization as well as work to increase localization efforts. Before I turn it to Dhivya, I want to assure you that our leadership team is acting on everything within our control to protect our employees and the business during these uncertain times. With the same result and discipline we have demonstrated for years, we will continue to focus on conserving cash and preserving our liquidity without sacrificing investments in key product programs and technology that will lead us into the future. In addition, we are actively working to accelerate our transformation and seize opportunities in this environment. With that, I’ll turn things over to Dhivya.

Thanks, Mary, and good morning everybody. We’re experiencing unprecedented times as a result of this pandemic and given this backdrop, we’re providing increased transparency into our cost structure, balance sheet, and key drivers of liquidity. As you all know, coming into this, we had already taken a number of actions over the past few years to strengthen the company, including addressing underperforming businesses across various international markets and maintaining a strong investment-grade balance sheet. Additionally, the transformation actions that we took in late 2018 and the recent focus on improving cash flow has put us in a much better position today as we face these challenging market conditions. Our liquidity continues to be very strong at $33.4 billion at the end of the first quarter. Even in an extreme scenario with zero production, our current levels of liquidity will take us into Q4 of 2020. In addition, the capital markets continue to be open as a way to access additional layers of liquidity to take us beyond that timeframe. With that, let me give you an overview of the drivers of our cash flow. First, let me touch on revenue. While revenue from vehicle sales have been minimal over the past few weeks, our high-margin after-sales and OnStar businesses continue to operate at a reduced rate. Looking at outflows, outflows are primarily comprised of three buckets; the ongoing cash cost and unwind of negative working capital. On the cost front, we have aggressively reduced our ongoing costs through significant austerity measures and used a zero-based budgeting approach. Some of the more notable cost actions include significant cuts to our advertising and other discretionary spends, compensation deferments, and certain employee furloughs. After these austerity measures, we expect our ongoing cash cost, including tax, interest, and pension, to be approximately $2 billion per month. These cost austerity measures will normalize as production and demand normalize. Next, let’s move to CapEx. As you know, our expected spend for the year prior to the crisis was $7 billion. We’ve deferred certain non-critical CapEx programs related to product refreshes and CapEx varies from quarter to quarter and it’s expected to be $1.5 billion in Q2. This is a deferral of 25% of our planned CapEx for Q2, but it does not impact near-term programs like our full-size SUVs and strategic investments in EV and AV programs will continue as planned. Additionally, we are in a unique position as we have transitioned past the necessary investments in our full-size trucks, SUV, and crossover franchises. Finally, let’s look at the third bucket, which is the unwind of our negative working capital. At the end of March, our net AR/AP was $13 billion of which $10 billion flexes with production and typically unwinds in less than 60 days. Therefore, a bulk of these payments are behind us in April with some additional payments in May, after which it trails off. We also had finished goods inventory in transit of $2 billion, which we expect to liquidate during the same time period. In addition, we have sales allowances to the tune of $10 billion, which normally pay out over four to five months, but this will flow with lower demand. Putting all these pieces together and acknowledging it’s difficult to predict how the production will evolve, we still wanted to offer some helpful context on how to think about the second quarter in the absence of guidance. We are targeting a May 18 restart date for production in our North American plants. As we follow our new safety protocols, production ramp will be gradual, starting with one shift for a period and increasing to two or three shifts as appropriate. So, if you look at a scenario in which global production is down 60% to 70% year-over-year for Q2 with an $8 million to $10 million U.S. SAAR backdrop, we can expect a total cash flow outflow of $7 billion to $9 billion, including the cash cost and CapEx at the rates that I referenced above, a working capital unwind of $3 billion to $4 billion, a sales allowance unwind of $2 billion to $3 billion, mitigated by contributions from vehicle sales, aftersales, and OnStar of $3 billion to $4 billion along with dividends from China and GM Financial, and other liquidity actions of $1 billion to $2 billion. In other words, three quarters of the net cash outflow in Q2 can be attributed to working capital and sales allowances, which demonstrates our ability to meaningfully reduce our cost during times of stress. Assuming the production normalizes further in Q3, we would expect working capital to rewind on a pro-rata basis, all else equal, with sales allowances dependent on production and demand. Let me reiterate that these factors are inherently difficult to predict given the volatility in demand and production timing and levels. Our expected North American EBIT breakeven of 10 million to 11 million units is still intact. From a free cash flow perspective, excluding managed working capital, we expect to generate cash in North America at demand levels only slightly higher than the EBIT breakeven, primarily due to pension income and CapEx versus depreciation levels. On a global basis, we expect breakeven automotive free cash flow, excluding managed working capital, at 25% reduced demand from 2019 levels, which generally implies the U.S. industry sales of 13 million units. A couple of points on additional liquidity measures we’ve taken recently. As you know, we drew on our $16 billion of revolving credit facility; we renewed our 364-day revolver and extended the majority of our three-year revolver by one year. We also suspended dividends and share repurchase programs, and continue to look at other options to further shore up liquidity. Before I comment on the quarter, I do want to share some key metrics for GM Financial and how they are weathering the crisis. GM Financial was well capitalized going into this with strong underwriting standards and a history of managing successfully through downturns. Typically, GM Financial is inherently cash generative during downturns as assets liquidate faster than debt, creating excess liquidity as the balance sheet strengthens in an environment with low sales. GM Financial leverage was 9.3 times as of March 31, below the 10 times managerial target as well as below the support agreement threshold of 11.5 times. GMF would be able to sustain losses of approximately $2 billion at its current balance sheet size before requiring any capital under the support agreement with GM. GMF earnings before tax will be lower this year as credit losses are expected to increase to 2% to 2.5% and residual values decline 7% to 10% in 2020 in line with industry expectations. We have stress-tested GMF’s balance sheet under draconian credit and residual value loss scenarios, considerably more severe than what the industry experienced during the global financial crisis. Under a scenario of doubling both the credit loss expectations and the residual value decline in 2020, GM will still not be required to contribute capital. GM received $400 million dividend from GM Financial in Q1 and is expected to receive at least another $400 million this year. GM Financial liquidity is also robust at $23.9 billion at the end of Q1 supporting at least six months of cash needs without access to capital markets. During the current crisis, GMF’s strong origination and customer support initiatives are partially mitigating the impact of a lower sales environment. Now, let me frame up the quarter’s results for you, focusing on the underlying performance of the business. Q1 results of $0.62 in EPS-diluted adjusted include a $0.28 loss from Lyft and PSA revaluations. Q1 EBIT-adjusted of $1.2 billion reflects an estimated $1.4 billion impact from the pandemic with GMNA accounting for about half of it; China, $300 million; GM Financial, $300 million; and GMI, $100 million. The adjusted automotive free cash flow in the quarter was a burn of $900 million, reflecting normal seasonality, partially offset by an increased dividend from GM Financial, lower CapEx, and positive working capital timing. The free cash flow impact of the pandemic is expected to be an outflow of $600 million. Looking at North America, while our retail sales have clearly been impacted with Q1 down 10.5% and April down 35% year-over-year, full-size pick-up trucks have shown resiliency due to the strength of our new truck portfolio as well as the segment’s trend in geographies that have so far been less impacted by the pandemic. Our inventory levels remain lean and well positioned as we came out of the strike. We ended April with 550,000 units of inventory. Let’s move to GM International. China equity income loss in Q1 was less than $200 million despite a reduction of wholesales more than 60% year-over-year demonstrating the resilience of the China business during the downturn and the significant austerity actions that the team has taken to mitigate the impact. We are starting to see signs of recovery in China as production has completely restarted and dealer traffic across the industry has increased to 70% of pre-COVID levels at the beginning of April. As the effect of the virus subsides, we expect to revert to a quarterly equity income run rate of $200 million. We continue to expect dividends to be paid from our China operations between Q2 to Q4 consistent with prior years. In South America, in addition to lower production, we’re facing an ongoing FX rate headwind. We’re focused on taking price, leveraging our global family of vehicles, and driving additional cost actions to mitigate these challenges. A few comments on Cruise and our Corp segment. Cruise costs were $200 million for the quarter, consistent with expectations. Corp segment costs were $400 million negative, unfavorable $600 million year-over-year, primarily due to a net loss of $400 million from Lyft and PSA in the first quarter of this year, compared to a $400 million gain in our PSA and Lyft investments in the first quarter of last year. We’ve made significant progress in our transformational cost savings initiatives of $3.6 billion achieved in 2018. We’re on track to our target of $4 billion to $4.5 billion, achieving another $300 million in Q1. In summary, the Q1 results demonstrate that the company entered this crisis from a position of strength. The actions we’re taking position us to come out of this downturn strong and allow us to capitalize on the recovery and future opportunities. The entire team is committed to executing our strategy while continuing to have a laser focus on the cost structure, the balance sheet, and improving cash flow. This concludes our opening comments and we’ll move to the Q&A portion of the call.

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

Good morning, everyone. Thanks for all of those details. Just first on the housekeeping side, I just wanted to make sure, Dhivya, I heard you correctly, were you saying that the EBIT breakeven corresponds with 10 million to 11 million U.S. SAAR and the free cash flow breakeven corresponds with around the 13 million SAAR. Is that correct?

Yeah, that’s correct, Rod. EBIT breakeven for North America at 10 million to 11 million. And if you look at cash flow breakeven for North America, it would just be slightly higher than that. And when you factor in the negative, the cash burn that you have from International as well as the Corp segment, you would need more SAAR to cover that and that’s how you get to 13 million units.

Okay. But you were referencing North America. I presume you meant the equivalent of a U.S. SAAR for the North American business.

That’s correct.

Okay. Thanks for clarifying. Could you talk a little bit about now that you’re kind of plotting this restart, what kind of trajectory are you expecting from here? Obviously, at one point you were expecting to do something close to a 10% margin, but that’s going to be affected by the level of production. And then secondly, pricing looks very good considering everything that we’re seeing with respect to incentives and also the trajectory of used car prices. Is that something that you view as aberrational and what kind of used vehicle pricing environment have you assumed both for the auto business as well as GM Financial?

Sure. So…

Hey. I’ll answer... Go ahead, Dhivya.

Go ahead, Mary.

I would say, and on the margin question, I think we’re very focused on restarting. As I mentioned, we will start in a very cadence and thoughtful way of first shift and then growing to two or three shifts depending on the plant and the demand. I think it’s too early to forecast margin predictions, but what I would say is we will continue to be laser-focused on our cost structure. I think through this process of going into a zero-base cost environment, we have found areas where we think we can be much more efficient as we move forward. So, we’ll be looking to be very cash conscious as we go forward and seize the opportunity as we start building. And Dhivya, do you want to talk about the pricing?

Yes. From a pricing perspective, things have remained strong, Rod, especially as it relates to the pickup market. A lot of the stats that I referenced, that segment is doing particularly well. Just to give you a data point there. As you know, the segment penetration of the overall industry was 13% to 14%. That’s how it was running before this. And in March, you saw it go up to 18% and then in April to 21%. So, the segment’s continuing very strong and with that the pricing remained strong as well. From a used vehicle perspective, we have assumed about a 7% to 10% decline in 2020 and obviously we’re going to have to see what sticks later on. But Dan Berce is on the call and Dan, I don’t know if you want to add anything to that.

No, no. Dhivya, you’re exactly right that our assumption for used car vehicle pricing is down 7% to 10%. That’s really in line with industry estimates. And in terms of how that’s going to affect retail, obviously, the trade-in value of the vehicle is going to be a little bit less. But as the FinCo, we will take that into account in our underwriting and loan-to-value analysis.

Great. Thank you.

Your next question comes from the line of Joe Spak from RBC Capital Markets.

Thank you. Good morning, everyone. First question, I guess, Mary, I know you said you're not sacrificing investments in key initiatives, but you've also detailed some program delays. You mentioned some of the – CapEx down near-term. So, even though you're clearly pushing forward on some key programs, it does sound like some of these refreshes might be off the table. Is that really just a sort of short-term thing? Or given your sort of likely lower volume outlook over the next couple of years, we should think about those refreshes as sort of just not recurring, which might improve the cash flow and margins on those programs?

I would look at it. First of all, it would be – as we look at those refreshes, it would be a product-by-product or vehicle-by-vehicle decision. But most, I would say, is a delay or taking the time to be – look at what really is going to drive more customer value. So some are delayed, some we may re-scope a little bit more. But I do want to reiterate on our key programs, trucks, full-size SUVs, EVs, AVs, we are making no change. And the engineering team and design teams working on these are doing tremendous work.

Okay. Thanks. And then Dhivya, just maybe, just a comment on what sort of goalposts do you think you need to see to start to maybe repay some of the revolver? Is it just stability and more visibility into the outlook? And has this experience at all changed your longer-term views on either cash-on-hand or total liquidity thresholds?

Yes. I would say, as we – as production comes back online here in the next couple of weeks, that's when you would see, Joe, cash starting to come in, not just from contributions from the vehicle sales but also working capital rewind. So we're going to see that. And as we go forward, as things stabilize, we'll look to rebuild our cash balance as well as pay back the revolver. I would say that the long-term commitment to the strong investment-grade balance sheet and our cash and debt levels remains unchanged, and we will work our way back towards as the environment starts to stabilize here.

Thank you.

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

Great, thank you. Good morning, everyone.

Good morning.

So, it sounds like you're finding some incremental efficiencies through the recent process. I was curious if that also might apply to CapEx going forward. I know you talked about some of the product refreshes, but could we see maybe the $6 billion rate, it sounds like you're running in Q2, become the new normal or is that premature to think in that way?

I wouldn’t necessarily multiply Q2 by four to get the overall level because our capital is – kind of varies by quarter. But we'll continue to look for everything as we reevaluate and understand what the customer really wants and it's going to create value for ways to not only conserve operating costs, engineering costs, but capital as well.

Great. And just secondly, just curious how you're thinking about broadly the GMI turnaround that we spoke about back in February. Could we see a need for additional restructuring? And kind of how do you generally view that trajectory over the next couple of years?

So, I think the steps that we took in Thailand and Australia were very important. We see – there's good work going on in the restructuring we did, and Korea continues to be on track. Looking for recovery in the Middle East as we move forward. I think the real area of focus is South America, and we have taken significant steps over the last few years to turn around that business, taking the breakeven down by 40% and continue to see the impact of the foreign exchange. We have been actively working on what we can do from a South America perspective, specifically focusing in Brazil, and you'll see us take even additional actions there because it's just not acceptable, the performance that we have right now. So it's an area of key focus.

Great. That’s very helpful. Thank you.

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

All right. Good morning. It’s great to hear from all of you. Just a first question I mean, you’re going through this zero cost base analysis because you have the opportunity given sort of the crisis. But I'm just curious, as you also think about sort of the restart of production, if you think about things the same way. And if there may be just a greater focus on restarting and pushing your pickup and SUV volume and maybe letting some other stuff lag. I mean, sort of in the near term, you might have this experiment that you might have much stronger mix that might stick going forward. I'm just curious on sort of the mix in the near term and how you might think about that long-term as you go through the restart process.

Clearly, we’re pleased with the strength of the full-size trucks, and we expect as we roll out the full-sized SUVs, the product – the media reviews of the product are quite strong so we think it's going to be very well received in the marketplace. That is a franchise for us, and we plan on protecting it and growing it. So as we see opportunity, we're definitely going to seize it. And I would say, as you mentioned, we have found areas of savings that as you go through a situation like this, things that seem to be incredibly important when you really challenge them, you find opportunities to save. So we will do that, and we'll be focusing on our key product franchises. I don't know, Dhivya, if you would like to add anything.

Yes. I would definitely echo that. And John, as we think about coming back online here, we obviously have a close eye on dealer inventory by vehicle line and all the geographies as well as not all of them are created equal and we have different levels of inventory in different regions. So as we come back online, we will prioritize, to Mary's point, trucks as well as the specific terms and the mixes of the most profitable vehicles as well as geographies that are running right from an inventory standpoint. And we have the visibility into that, and that's how we're going to flex it as we ramp up here.

Okay. And then just a second question. I mean the commitment to Cruise seems like it's unwavering, but there's about $1 billion a year going out the door without any revenue. I'm just curious if you're rethinking that dollar commitment on an annual basis, the potential business and monetization of it. And one phrase that I think you mentioned, superhuman driving experience sounds really appealing to me. Is there the potential that you could bleed some of those technology into your existing product portfolio over the next few years if you don’t see the monetization of an AMoD fleet anytime in the near future?

Well, first, I’m very pleased with the progress that they're making from a technology perspective at Cruise. Just reviewed that earlier this week. So I think that we are continuing to hit milestone after milestone there. So I think that our commitment, as you said, is unwavering. As it relates to bringing the technology into our fleet of vehicles on the road today, that's really occurring through Super Cruise, and we continue to add miles, add roads, and add features. You’ll see us — as well as spread it across the portfolio, starting with Cadillac and then moving to others. So, definitely have an aggressive plan to further roll out and improve the capability of Super Cruise.

One just last one, real quick, on the supply base, just curious how you're monitoring that. If you're seeing any stress in the supply base and if you see this as maybe an opportunity to try to incentivize or push consolidation into maybe, fewer stronger supplier partners that can support you in tough times.

We have been actively working with the entire supply chain. We have – as a regular part of our process, we have a very robust supplier financial risk management process. Obviously, we put that into overdrive as we go through this period. We've been maintaining regular communications with the suppliers and their financial health as well as all the work they're doing for us related to future programs, scheduling, etc. We're also studying the CARES Act and presenting key provisions to the supply base to drive their participation. And then we have identified the high risk areas and are already working on mitigation efforts. So we are very pleased with the partnership that we have with the supply base overall. We'll continue to work with them to make sure we have a strong supply base as we move forward to start and then to continue to grow.

Great. Thank you very much.

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

Thanks, everybody. And Dhivya, that was an absolutely — I mean, you're knocking the cover off the ball on transparency, which is especially appreciated during times like this. I just had to acknowledge that.

Thank you, Adam.

I’m sure everybody on this has already had feedback on that. This is outstanding. So a question for Mary on working with lawmakers and governments kind of managing the recovery, looking beyond this. There's been an increasing kind of percolation around the potential of things, not limited to Cash for Clunkers but things of that nature in the media. I was wondering if you could share thoughts on where you — where GM stands on that. And maybe more importantly, beyond what opportunities can GM and your auto brothers and sisters make — work with governments to kind of take an industry that maybe didn't have enough of a national policy and could really make the most out of the crisis to push forward things like electrification and EV infrastructure. Thanks.

So, Adam, I think it’s a great question and there’s really three elements if I look at it; one, as we start producing vehicles, again, we are watching demand. And I think anything that stimulates demand in these early days that's simple and goes directly to the customer that was purchasing the vehicles, I think that's going to be helpful to get people back into the market because we look a little more broadly, and this is something we've said all along. Programs kind of a Cash for Clunkers, but for older vehicles, we know that every new model year, there's improvements made from a fuel economy and emissions perspective. So getting some of the oldest vehicles off the road would definitely help from an environmental perspective. And then we do think in the few years out, continuing to stimulate EV demand – not permanently because we are on a path to profitability. But getting people into EV so they understand the benefits of EVs, as we work to have a full portfolio as well as have a robust charging infrastructure, I think that’s going to be important as well. And we continue to have that dialogue with many members of government.

Thanks, Mary. And just a follow-up on capital allocation. Now since 2012 GM has repurchased, I think, well over $12 billion worth of stock I think at an average price of over $35 thereabout. Now I’m not trying to put you on the spot here because your investors, for the most part, were really supporting those kinds of moves. But from today’s perspective and kind of as you assess the importance of liquidity and investing in areas where you have advantage and getting back to that, what you call, a very strong investment grade, any comments on whether that – the world has changed? And whether you would expect that perhaps that the drumbeat of, "Give us all your excess cash, please. Let’s get back on the buyback course when things settle," that maybe it’s different going forward?

Well, I think we remain committed to our capital allocation framework. So when you first look at – the first pillar is to reinvest in the business to generate an appropriate return, greater than 20% return on invested capital. We’re going to continue to look for those opportunities, and I’m quite excited about the opportunities we have in front of us from an EV and from an AV perspective. So we’ll continue to do that. Clearly – and this demonstrates that it’s vitally important to have that investment-grade balance sheet. And then we’ll look to do what’s right as it relates to our shareholders. Clearly, we need to make sure, though, I think that we stick to that first pillar and what we invest in is going to generate an appropriate return. So that’s our thought, and we remain committed to the allocation process we outlined.

Appreciated.

Thank you, Adam.

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

Yes. Thank you. I just want to follow-up on a bit of the regional variation because, of course, we’re not a monolithic country or a NAFTA area. So first, on the demand side, can you give us a couple of things? One, a little bit of color, since we’re not doing monthly sales calls, on the very strong market share, 39% of our pickup trucks, which by my analysis, leaves dealers at the low end of inventory; b, how that varied just overall demand in April across geographies. And is the Sun Belt in Texas and Florida performing better? And then I’ve got one question on the production side.

Yes. From a dealer inventory and sales perspective, I would say that you cannot paint the entire country with the same brush. In the geographies that are not the coasts, Brian, we’re continuing to see strength in trucks and therefore, lower levels of inventory. So as we start back up here on May 18, our priority will be those regions and those geographies that have performed really well. And just from a regional standpoint as well, I would say, across the country, we’re seeing a commonality as it relates to people buying things online, and I’ll give you a data point an industry that was down about 40%, Shop-Click-Drive was actually up 40%. So that’s something that you’re seeing across the board. So inventories, we are watching. Trucks, we’re watching. And certain geographies, we’re watching, and that’s going to be a focus as we ramp back up here.

And in terms of the drivers of that 39% pickup truck share, there’s a perception that there are incentives but…

Well, I would say you should look at ATP. GMC Sierra had record high ATPs at the levels of incentives that we had. And Brian, you’ve seen that our incentives ebb and flow based on what market tactics our competitors have as well. And just in April alone, which was just last month, our incentives were lower than that of competition. So ATP is higher, discipline continues, and the April incentives are another proof point that this is something that you’ll see up and down, but we’re committed to being disciplined.

And on the production side, to give NAFTA, we’re focused a lot on the Governor in Michigan and the Midwestern states. But can you talk a little bit more about the pace of ramping up, both your plan in Salau as well as the Mexican supply base, which, of course, feeds Arlington and further north?

So we’ve been having regular dialogue with – from country – at the country level as well of both Mexico and the United States as well as working with Governors in key states. And so that gives – we think those have been very constructive. I would also say we’re able to talk about our safety protocol that has been – is very well thought through. It’s three primary focuses of keeping people who are sick or potentially sick out of the plant; maintaining an environment; and then if someone is asymptomatic and is in the plant, a very targeted way to clean and do contact tracing to limit the exposure. And over the last several weeks, we’ve been able to demonstrate that’s been quite successful. And so we think with those protocols and communicating and sharing our plans, we’re in a good position as we talk to country leaders and state leaders. So the conversation has been constructive, and that’s what informs our current plan on 5/18. Obviously, we’ll continue to have dialogue with our unions as well as with the government leaders to do the right thing.

Okay. Thanks.

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

Hi, thanks for taking my questions, which is about your inventory level in the U.S. I think when the nonessential business restrictions began, your lean inventory, as a result of last year’s UAW strike, it put you in a strong relative position as it implies less needed reduction in 2020 of wholesales relative to retail sales. Just curious, though, as the production shutdowns have lasted longer and retail sales have continued, albeit at a lesser rate, but with pickups leading the way, I know the days-on-hand calculation has increased given the abnormally low daily selling rate. But as you look ahead to when the restrictions are lifted and selling rates partly normalize, how are you feeling about your inventory level at that point, including maybe for some of the recently better selling models, such as full-size trucks?

Yes, I would, Ryan, in addition to what I already said, the other data point I would give you is just coming out of the strike, as you pointed out, the dealers have done an exceptionally good job of selling from a low inventory base. They’re selling pretty deep, and they learned to – learned how to operate at a low inventory level. But I would say that as we open back up here, prioritizing trucks and getting them out remains our priority among other vehicle lines. That’s what we’re going to prioritize. And from a days supply perspective, yes, high. But from an absolute perspective, we have seen LD especially start to come down. So we will certainly be looking to replenish that and continue to encourage our dealers to sell deep.

All right. That’s helpful. Thank you.

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

Hi, thank you. Can you just provide us with some color on the $600 million cost tailwind in GM North America in the first quarter? I apologize if I missed it. But the $500 million in performance/other, how much of that reflected the transformation cost saves? And what types of inefficiencies were associated with the downturn? Are there any other sort of onetime benefits that we shouldn’t expect to recur next year?

Yes, I would say, Dan, that the transformation-related savings within that number was about $200 million year-over-year. So that’s the goal that we laid out for ourselves, $4 billion to $4.5 billion. $300 million additional were saved in Q1. The rest of the numbers you’ve cited, I would say, is timing, and I would not extrapolate that into the other quarters.

Okay. And no onetime benefits from cost actions that you took that would reverse next year, so to speak?

No. I wouldn’t say there was anything onetime in Q1. As you said about the austerity measures that we’re taking now, you got to be careful extrapolating that because as the production level normalizes and demand normalizes, you would see some normalizing in the austerity aspect of it, but the transformation will remain on track.

Thanks. Then a question on EV and the investment. We’re obviously in an environment with fairly cheap gas and regulations in the U.S. adjusting to use. And you are obviously primarily exposed to the U.S. So you could make the case that it just lengthens the timeline of EV uptake in the U.S. and actually give you room to take the brakes off EV investment temporarily. So is the rationale for maintaining EV investment right now simply this is your future and there’s just no compromise on that vision even amidst these unprecedented circumstances?

Dan, I think you said it well. Our commitment is unwavering. We think it’s the right path forward. And we think with the Ultium battery platform that we have, the partnership we have with Honda, the strength that we have from China where EVs or new energy vehicles are a key part of being successful in that market positions us extremely well to have a leadership position in EVs with a full range of EV vehicles. So we are looking at every possible angle to continue to accelerate our EVs and our all-EV future.

And cheap gas and change regulations don’t change that, correct?

Well, again, we believe this transformation will happen over a period of time. We’re going to continue also, while we focus on EVs, also focus on our full-size SUVs and full-size pickup franchise that we have. And we continue to make all those products more fuel-efficient and emissions-efficient as well. So I wouldn’t say – I think it helps with supporting our franchises when you have a low gas price. From a regulatory perspective, we’re being driven by what we think is the right thing for the future and where the opportunity will be and to get there and be among the leaders.

Great. Thank you.

Your next question comes from the line of Mark Delaney with Goldman Sachs.

Yes. Good morning. Thanks for taking the question. Retail sales in China are recovering nicely in April, and I think GM said its sales were up year-over-year in China last month. Do you think the pickup in sales in China is a potential illustration of what sales could do in other countries after travel restrictions are lifted? Or do you think there’s something unique to the China market that’s leading to the strength in sales in that country in particular?

Mark, it’s kind of – it’s too soon to call. We’re – we think it’s very good that we’re seeing the recovery in China that is more like a V recovery, but we’re not counting on that. I think there are some factors, though. As you look at people’s desire to have their own vehicle for transportation, that certainly could play into it across the globe as an opportunity. So I think it’s too soon to tell, but we’re very positive about what we see happening in China. And we’re even seeing some uptick after the low in North America, specifically the United States, that didn’t get as low as it did in China.

I have just one – just a follow-up on the China market in particular. Can you just elaborate on what GM has seen in terms of its market share and how you’re thinking about positioning the brand of your franchise there? Thank you.

Well, we continue to see strength with the luxury brand Cadillac. It continues to grow, and we’re at a great point with Cadillac. Now that we have a full portfolio range, we expect to see continued growth there. Clearly, Buick and Chevrolet are both opportunities for us. And we – with the strong product portfolio that we have with launches that we’ve made and will make through this year, we expect to see strength there. And then also with our SGMW partners with the Baojun and the Wuling brand. So when you look at it across the board, we think we’re well positioned across China with the right programs, and we’re looking to grow share in China this year and then move as we move forward.

Your last question comes from the line of John Saager with Evercore ISI.

Thanks. It’s John Saager on for Chris McNally. On the FinCo, we saw the $100 million of charge-off or expected credit losses, which is quite a bit lower than the charge that Ford took last week. Can you walk us through some of your assumptions that went into that? And then just clarify if you can – we can expect a similar hit every quarter. Or is this just for Q1?

Yes. This is Dan. The charge in the quarter was actually closer to $250 million, not the $100 million. Our reserve that we took with the CECL adjustment at the beginning of the year plus the addition puts our retail reserve at about 4.4% of our retail portfolio, which is, I think, indicative of the expectation we have for where losses are going to go over the life of the loans. As Dhivya said in her remarks, we’re expecting annualized losses for 2020 to be in the range of 2% to 2.5%. That’s what we’re reserved for, and we’re certainly watching our credit metrics going forward to see if that estimate is going to hold true or not.

Okay. That makes sense. Thanks.

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

Thank you, operator, and thanks everybody again for joining. We understand the seriousness of the multiple business actions that we have taken, but we believe they are necessary to preserve our liquidity in a very uncertain environment. I want to assure you that the entire management team is working to protect the business so that the restart and recovery began. We will be uniquely positioned to capitalize on new opportunities. We have a track record of making swift, strategic, and tough decisions to ensure our long-term viability and we will continue to do so. And I just have to end on saying the strength of this company has always been its people and I couldn’t be more proud of what everyone has done across the globe to not only support the business and do extraordinary things, but also to support their local communities. I think it just speaks to the character of the GM team. So, rest assured that we will stay focused, and we will do everything we can and everything we’ve learned to emerge as a stronger and better General Motors position to create shareholder value. Thank you very much everyone.

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