10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549-1004

Form 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2006
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from           to

Commission file number 1-143

GENERAL MOTORS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

STATE OF DELAWARE	38-0572515
(State or other jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
300 Renaissance Center, Detroit, Michigan	48265-3000
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code

(313) 556-5000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ     Accelerated filer o     Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o     No þ

As of October 31, 2006, there were outstanding 565,611,157 shares of the issuer’s common stock par value $12/3.

Website Access to Company’s Reports

General Motor’s (GM’s) internet website address is www.gm.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are available free of charge through our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission.

THIS PAGE LEFT BLANK INTENTIONALLY

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Explanatory Note

General Motors Corporation previously announced preliminary consolidated net loss for the third quarter of 2006 as $115 million in its earnings release as furnished in a Form 8-K dated October 25, 2006. The consolidated net loss has been reduced by $24 million to a net loss of $91 million. The reduction in net loss is attributable to additional loan sales that had not been previously reported by GMAC LLC.

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

INDEX

			Page No.
		Part I — Financial Information
	Item 1.	Condensed Consolidated Financial Statements (Unaudited)		4
		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2006 and 2005		4
		Condensed Consolidated Balance Sheets as of September 30, 2006, December 31, 2005, and September 30, 2005		5
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2006 and 2005		6
		Notes to Condensed Consolidated Financial Statements		7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		33
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		70
	Item 4.	Controls and Procedures		70
		Part II — Other Information
	Item 1.	Legal Proceedings		71
	Item 1A.	Risk Factors		73
	Item 2(c).	Purchases of Equity Securities		78
	Item 6.	Exhibits		79
Signatures				80
Amended Bylaws
General Motors Acceptance Corporation Quarterly Report
Section 302 Certification of the Chief Executive Officer
Section 302 Certification of the Chief Financial Officer
Certification of the Chief Executive Officer to 18 U.S.C. Section 1350
Certification of the Chief Financial Officer to 18 U.S.C. Section 1350

3

PART I

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Item 1.   Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
	(Dollars in millions except per share amounts)
Net sales and revenues
Automotive sales	$	39,524		$	38,363		$	126,886		$	115,844
Financial services and insurance revenues		9,364			8,819			27,286			25,580
Other income		—			—			1,356			—
Total net sales and revenues	$	48,888		$	47,182		$	155,528		$	141,424
Costs and expenses
Automotive cost of sales		36,576			38,130			122,941			113,184
Selling, general, and administrative expenses		5,852			6,886			19,119			19,855
Interest expense		4,850			4,059			13,610			11,450
Provisions for financing and insurance operations credit and insurance losses		1,066			978			2,736			2,693
Other expenses		1,443			—			2,651			812
Total costs and expenses		49,787			50,053			161,057			147,994
Loss before income tax benefit, equity income (loss) and minority interests		(899	)		(2,871	)		(5,529	)		(6,570	)
Income tax benefit		(867	)		(1,107	)		(2,328	)		(2,324	)
Equity income (loss) and minority interests		(59	)		100			176			342
Net loss	$	(91	)	$	(1,664	)	$	(3,025	)	$	(3,904	)
Loss per share attributable to common stock, basic and diluted	$	(.16	)	$	(2.94	)	$	(5.35	)	$	(6.90	)
Cash dividends per share	$	0.25		$	0.50		$	0.75		$	1.50
Weighted average common shares outstanding, basic and diluted (millions)		566			566			566			565

Reference should be made to the notes to condensed consolidated financial statements.

4

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

	September 30,			December 31,			September 30,
	2006			2005			2005
	(Dollars in millions,
	except share information)
ASSETS
Current Assets
Cash and cash equivalents	$	17,802		$	15,187		$	13,695
Marketable securities		107			1,416			1,437
Total cash and marketable securities		17,909			16,603			15,132
Accounts and notes receivable (less allowances)		9,022			7,758			7,800
Inventories (less allowances)		14,825			13,851			13,755
Net equipment on operating leases (less accumulated depreciation)		6,569			6,993			7,302
Deferred income taxes and other current assets		10,698			8,877			9,778
Total current assets		59,023			54,082			53,767
Financing and Insurance Operations
Cash and cash equivalents		3,089			15,539			21,394
Investments in securities		80			18,310			16,575
Finance receivables, net		117			180,793			177,082
Loans held for sale		—			21,865			17,581
Assets held for sale (less allowance)		282,955			19,030			18,748
Net equipment on operating leases (less accumulated depreciation)		13,325			31,194			30,670
Other assets		4,181			27,694			27,975
Total Financing and Insurance Operations assets		303,747			314,425			310,025
Non-Current Assets
Equity in net assets of nonconsolidated affiliates		2,030			3,291			4,260
Property, net		38,893			38,466			37,860
Intangible assets, net		1,649			1,862			1,674
Deferred income taxes		23,496			22,849			20,731
Other assets		40,740			41,103			41,101
Total non-current assets		106,808			107,571			105,626
Total assets	$	469,578		$	476,078		$	469,418
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable (principally trade)	$	27,113		$	26,182		$	26,784
Loans payable		1,346			1,519			1,509
Accrued expenses		40,183			42,665			43,280
Total current liabilities		68,642			70,366			71,573
Financing and Insurance Operations Liabilities
Accounts payable		32			3,731			3,102
Liabilities related to assets held for sale		272,725			10,941			12,319
Debt		10,073			253,217			245,794
Other liabilities and deferred income taxes		4,762			28,946			29,298
Total Financing and Insurance Operations liabilities		287,592			296,835			290,513
Non-Current Liabilities
Long-term debt		31,414			31,014			30,929
Postretirement benefits other than pensions		34,211			28,990			27,445
Pensions		15,937			11,214			9,877
Other liabilities and deferred income taxes		19,426			22,023			16,273
Total non-current liabilities		100,988			93,241			84,524
Total liabilities		457,222			460,442			446,610
Minority interests		1,212			1,039			829
Stockholders’ equity
$12/3 par value common stock (outstanding, 565,611,157; 565,518,106; and 565,504,852 shares)		943			943			943
Capital surplus (principally additional paid-in capital)		15,316			15,285			15,281
Retained earnings (accumulated deficit)		(1,101	)		2,361			9,295
Accumulated other comprehensive loss		(4,014	)		(3,992	)		(3,540	)
Total stockholders’ equity		11,144			14,597			21,979
Total liabilities and stockholders’ equity	$	469,578		$	476,078		$	469,418

Reference should be made to the notes to condensed consolidated financial statements.

5

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Nine Months Ended
	September 30,
	2006			2005
	(Dollars in millions)
Net cash used in operating activities	$	(5,340	)	$	(7,256	)
Cash flows from investing activities
Expenditures for property		(5,376	)		(5,048	)
Investments in marketable securities — acquisitions		(10,627	)		(14,473	)
Investments in marketable securities — liquidations		11,591			16,348
Net change in mortgage servicing rights		(65	)		(101	)
Increase in finance receivables		(55,603	)		(6,781	)
Proceeds from sales of finance receivables		66,859			27,802
Proceeds from sale of business units/equity investments		10,524			—
Operating leases — acquisitions		(13,772	)		(12,372	)
Operating leases — liquidations		5,266			5,029
Investments in companies, net of cash acquired		(331	)		1,367
Other		(654	)		(1,018	)
Net cash provided by investing activities		7,812			10,753
Cash flows from financing activities
Net decrease in loans payable		1,267			(6,289	)
Long-term debt — borrowings		66,430			49,194
Long-term debt — repayments		(76,384	)		(50,834	)
Cash dividends paid to stockholders		(424	)		(863	)
Other		2,931			5,020
Net cash used in financing activities		(6,180	)		(3,772	)
Effect of exchange rate changes on cash and cash equivalents		176			(120	)
Net decrease in cash and cash equivalents		(3,532	)		(395	)
Cash and cash equivalents reclassified to assets held for sale		(6,303	)		(509	)
Cash and cash equivalents at beginning of the period		30,726			35,993
Cash and cash equivalents at end of the period (a)	$	20,891		$	35,089

(a) Consists of cash and cash equivalents of $17,802 million classified as current assets and $3,089 million from Financing and Insurance Operations as of September 30, 2006, and $13,695 million classified as current assets and $21,394 million from Financing and Insurance Operations as of September 30, 2005.

Reference should be made to the notes to condensed consolidated financial statements.

6

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1.   Financial Statement Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. for interim financial information. In the opinion of management, all adjustments (consisting of only normal recurring items) that are necessary for a fair presentation have been included. The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. The condensed consolidated financial statements include the accounts of General Motors Corporation and domestic and foreign subsidiaries that are more than 50% owned (collectively referred to as the Corporation, General Motors, GM, we, or us), principally GMAC LLC, the successor to General Motors Acceptance Corporation (GMAC). In addition, GM consolidates variable interest entities (VIEs) for which it is deemed to be the primary beneficiary. GM’s share of earnings or losses of affiliates that are less than 50% owned is included in the consolidated operating results using the equity method of accounting when GM is able to exercise significant influence over the operating and financial decisions of the investee. GM encourages reference to the GM Annual Report on Form 10-K for the period ended December 31, 2005, filed separately with the United States Securities and Exchange Commission (SEC).

All material inter-company accounts and transactions have been eliminated.

GM’s Automotive and Other Operations reportable operating segment consists of:

•  GM’s four automotive regions: GM North America (GMNA), GM Europe (GME), GM Latin America/Africa/Mid-East (GMLAAM), and GM Asia Pacific (GMAP), which together constitute GM Automotive (GMA); and

•  Other, which includes the elimination of intersegment transactions, certain non-segment specific revenues and expenditures, including legacy costs related to postretirement benefits for certain retirees of Delphi Corporation (Delphi) and other companies, and certain corporate activities.

GM’s Financing and Insurance Operations (FIO) reportable operating segment consists of GMAC and Other Financing, which includes financing entities that are not consolidated by GMAC. GMAC provides a broad range of financial services, including consumer vehicle financing, full-service leasing and fleet leasing, dealer financing, car and truck extended service contracts, residential and commercial mortgage services, vehicle and homeowners’ insurance, and asset-based lending.

Consolidation of GM Daewoo

On February 3, 2005, GM completed the purchase of 16.6 million newly issued shares of common stock in GM Daewoo Auto & Technology Company (GM Daewoo) for approximately $49 million, which increased GM’s ownership in GM Daewoo to 48.2% from 44.6%. No other shareholders in GM Daewoo participated in the issue. On June 28, 2005, GM purchased from Suzuki Motor Corporation (Suzuki) 6.9 million shares of outstanding common stock in GM Daewoo for approximately $21 million. This increased GM’s ownership in GM Daewoo to 50.9%. Accordingly, as of June 30, 2005, GM began consolidating GM Daewoo.

7

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 1.   Financial Statement Presentation — (continued)

The following unaudited financial information for the three and nine months ended September 30, 2006 and 2005 represents amounts attributable to GM Daewoo on a basis consistent with giving effect to the increased ownership and consolidation as of January 1, 2005. The pro forma effect on net income (loss) is not significant compared to equity income recognized.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2006		2005		2006		2005
	Actual		Actual		Actual		Pro Forma
	(Dollars in millions)
Automotive sales	$	1,906	$	1,438	$	5,310	$	4,485

Change in Accounting Principle

On January 1, 2006, GM adopted Statement of Financial Accounting Standards No. 156, “Accounting for Servicing of Financial Assets” (SFAS No. 156), which (1) provides revised guidance on when a servicing asset and servicing liability should be recognized, (2) requires all separately recognized servicing assets and liabilities to be initially measured at fair value, if practicable, (3) permits an entity to elect to measure servicing assets and liabilities at fair value each reporting date and report changes in fair value in earnings in the period in which the changes occur, (4) provides that upon initial adoption, a one time reclassification of available-for-sale securities to trading securities for securities which are identified as offsetting an entity’s exposure to changes in the fair value of servicing assets or liabilities that a servicer elects to subsequently measure at fair value, and (5) requires separate presentation of servicing assets and liabilities subsequently measured at fair value in the balance sheet and additional disclosures. GM recorded a reduction to retained earnings as of January 1, 2006 of $13 million, net of tax, as a cumulative effect of a change in accounting principle for the adoption of SFAS No. 156.

New Accounting Standards

In December 2005, the Financial Accounting Standard Board (FASB) released FASB Staff Position (FSP) SFAS No. 123R-3, “Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards,” which provides a practical transition election related to accounting for the tax effects of share-based payment awards to employees. The Corporation is currently reviewing the transition alternatives and will elect the appropriate alternative no later than January 1, 2007.

In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments,” which amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS No. 133) and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” (SFAS No. 140). This statement amends SFAS No. 133 to permit fair value remeasurement for any hybrid instrument that contains an embedded derivative that otherwise would require bifurcation. This statement also eliminates the interim guidance in SFAS No. 133 Implementation Issue D-1, which provides that beneficial interests in securitized financial assets are not subject to the provisions of SFAS No. 133. Finally, this statement amends SFAS No. 140 to eliminate the restriction on the passive derivative instruments that a qualifying special-purpose entity (SPE) may hold. This statement is effective for all financial instruments acquired or issued in the first fiscal year beginning after September 15, 2006. Management is assessing the impact on GM’s financial condition and results of operations.

In April 2006, the FASB issued FSP FIN 46R-6, “Determining the Variability to Be Considered in Applying FASB Interpretation No. 46R,” which requires the variability of an entity to be analyzed based on the design of the entity. The nature and risks in the entity, as well as the purpose for the entity’s creation are examined to determine the variability in applying FIN 46R, “Consolidation of Variable Interest Entities.” The variability is used in applying

8

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 1.   Financial Statement Presentation — (continued)

FIN 46R to determine whether an entity is a VIE, which interests are variable interests in the entity, and who is the primary beneficiary of the VIE. This statement was effective for all reporting periods beginning after June 15, 2006. Management has adopted the provisions of FSP FIN 46R-6. This interpretation did not have a significant effect on GM’s consolidated financial position or results of operations.

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48), which supplements SFAS No. 109, “Accounting for Income Taxes,” by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only if it is “more-likely-than-not” to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized. Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any necessary adjustment would be recorded directly to retained earnings in the period of adoption and reported as a change in accounting principle. This Interpretation is effective as of the beginning of the first fiscal year beginning after December 15, 2006. Management is assessing the impact on GM’s financial condition and results of operations.

In July 2006, the FASB issued FSP No. 13-2 “Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction,” (FSP 13-2) which amends SFAS No. 13, “Accounting for Leases,” by requiring lessors to recalculate the rate of return and periodic income allocation for leveraged-lease transactions when there is a change or projected change in the timing of income tax cash flows related to the lease. FSP 13-2 requires lessors to use the model in FIN 48 to determine the timing and amount of expected tax cash flows in leveraged-lease calculations and recalculations. FSP 13-2 is effective in the same period as FIN 48. At the date of adoption, the lessor is required to reassess projected income tax cash flows related to leveraged leases using the FIN 48 model for recognition and measurement. Revisions to the net investment in a leveraged lease required when FSP 13-2 is adopted would be recorded as an adjustment to the beginning balance of retained earnings in the period of adoption and reported as a change in accounting principle. Management does not expect this guidance to have a material effect on GM’s financial condition and results of operations.

In September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108 “Quantifying Financial Misstatements” which expresses the Staff’s views regarding the process of quantifying financial statement misstatements. Registrants are required to quantify the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. The techniques most commonly used in practice to accumulate and quantify misstatements are generally referred to as the “rollover” (current year income statement perspective) and “iron curtain” (year-end balance sheet perspective) approaches. The financial statements would require adjustment when either approach results in quantifying a misstatement that is material, after considering all relevant quantitative and qualitative factors. This bulletin is effective for financial statements for the first fiscal year ending after November 15, 2006. Management does not expect this guidance to have a material effect on GM’s financial condition and results of operations.

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements,” which provides a definition of fair value, establishes a framework for measuring fair value and requires expanded disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The provisions of SFAS No. 157 should be applied prospectively. Management is assessing the potential impact on GM’s financial condition and results of operations.

9

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 1.   Financial Statement Presentation — (concluded)

In September 2006, the FASB issued SFAS No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, which amends SFAS No. 87 “Employers’ Accounting for Pensions” (SFAS No. 87), SFAS No. 88 “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits” (SFAS No. 88), SFAS No. 106 “Employers’ Accounting for Postretirement Benefits Other Than Pensions” (SFAS No. 106), and SFAS No. 132R “Employers’ Disclosures about Pensions and Other Postretirement Benefits (revised 2003)” (SFAS No. 132R). This Statement requires companies to recognize an asset or liability for the overfunded or underfunded status of their benefit plans in their financial statements. SFAS No. 158 also requires the measurement date for plan assets and liabilities to coincide with the sponsor’s year end. The standard provides two transition alternatives related to the change in measurement date provisions. The recognition of an asset and liability related to the funded status provision is effective for fiscal year ending after December 15, 2006 and the change in measurement date provisions is effective for fiscal years ending after December 15, 2008. Based on available information from the last measurement dates for the defined benefit pension and other postretirement benefit plans and reflecting potential variability in actuarial assumptions, such as discount rates and asset returns, and plan experience, GM estimates that the impact due to the recognition at December 31, 2006 of previously unrecognized amounts would reduce shareholders’ equity in the range of $18 billion to $25 billion, after tax, before assessing the realizability of deferred tax assets resulting from the adoption of SFAS No. 158 of approximately $4 billion to $5 billion as well as other deferred tax assets recorded prior to the adoption of SFAS No. 158. Also, the adoption of SFAS No. 158 would result in a reduction of deferred tax liabilities of approximately $6 billion to $9 billion. The actual impact of the recognition provisions of SFAS No. 158 will not be known until year-end valuations are available and the deferred tax assets are assessed for realizability. We are currently evaluating the measurement-date provisions of SFAS No. 158 to determine if it will be possible for GM to early adopt the new measurement dates coinciding with GM’s fiscal year for all plans for 2007.

In October 2006, the FASB issued FSP No. 123R-5 “Amendment of FASB Staff Position FAS No. 123R-1”. This FSP amends FSP FAS No. 123R-1, “Classification and Measurement of Freestanding Financial Instruments Originally Issued in Exchange for Employee Services under SFAS No. 123R” to clarify that freestanding financial instruments that were originally issued as employee compensation subject to SFAS No. 123R and subsequently modified solely to reflect an equity restructuring that occurs when the holders are no longer employees, should continue to be subject to the recognition and measurement provisions of SFAS No. 123R if certain conditions are met. The provisions in this FSP are effective for the first reporting period beginning after October 10, 2006. Management does not expect this guidance to have a material effect on GM’s financial condition and results of operations.

Change in Presentation of Financial Statements

In periods presented prior to June 30, 2006, GM presented separate supplemental financial information for its reportable operating segments. GM’s pending sale of a controlling interest in GMAC has resulted in certain GMAC assets and liabilities being presented as held for sale for periods presented beginning June 30, 2006, therefore the supplemental statements were no longer meaningful.

Note 2.   Assets Held for Sale

Loss on Controlling Interest in GMAC — Held for Sale

On April 2, 2006, GM and its wholly owned subsidiaries, GMAC and GM Finance Co. Holdings Inc., entered into a definitive agreement pursuant to which GM will sell a 51% controlling interest in GMAC for a purchase price of $7.4 billion to FIM Holdings LLC (FIM Holdings). FIM Holdings is a consortium of investors including Cerberus FIM Investors LLC, the sole managing member, and Citigroup Inc., Aozora Bank Limited, and a

10

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 2.   Assets Held for Sale — (continued)

subsidiary of The PNC Financial Services Group, Inc. GM and the consortium will invest $1.9 billion of cash in preferred limited liability company interest in GMAC, with $1.4 billion to be invested by GM and $500 million to be invested by the consortium. The transaction is subject to a number of U.S. and international regulatory and other approvals. GM expects to close the transaction in the fourth quarter of 2006.

For the three and nine months ended September 30, 2006, GMAC’s earnings and cash flows are fully consolidated in GM’s Condensed Consolidated Statements of Operations and Statements of Cash Flows. However, as a result of the agreement to sell a 51% equity interest, certain assets and liabilities of GMAC have been classified as held for sale in GM’s Condensed Consolidated Balance Sheet at September 30, 2006. Pursuant to the requirements of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” GM has ceased depreciation on the GMAC long-lived assets that are classified as held for sale in GM’s consolidated financial statements. The following table presents GMAC’s major classes of assets and liabilities classified as held for sale:

	September 30, 2006
	(Dollars in millions)
Cash and cash equivalents	$	6,303
Marketable securities		19,261
Finance receivables net		181,298
Loans held for sale		24,996
Account and notes receivable		7,651
Inventories (less allowances)		554
Net equipment on operating leases (less accumulated depreciation)		24,347
Other assets		20,368
Allowance to reflect assets held for sale at fair value less cost to sell		(1,823	)
Total assets held for sale	$	282,955
Accounts payable	$	4,215
Notes and loans payable		237,563
Deferred income taxes		1,502
Accrued expenses and other liabilities		29,445
Total liabilities related to assets held for sale	$	272,725

The table above represents 100% of the respective assets and liabilities that are held for sale as of September 30, 2006, which excludes the asset and liability balances as of September 30, 2006 relating to items (i) through (vi) below, which will be retained by GM. The transaction will result in the divesture of a 51% interest in GMAC. The held for sale asset and liability balances at September 30, 2006 may differ from the respective balances at closing.

Prior to consummation of the transaction, (i) certain assets with respect to automotive leases owned by GMAC and its affiliates having a net book value of approximately $4.1 billion will be dividended to GM, (ii) GM will assume or retain certain of GMAC’s postemployment benefit obligations, (iii) GMAC will dividend to GM certain entities that hold a fee interest in certain real properties, (iv) GMAC will pay dividends to GM in an amount not to exceed GMAC’s 2006 net income prior to the acquisition, (v) GM will repay certain indebtedness owing to GMAC and specified U.S. intercompany unsecured obligations owing to GMAC which shall be no greater than $1.5 billion and (vi) GMAC will make a one-time distribution to GM of approximately $2.7 billion of cash to reflect the increase in GMAC’s equity value resulting from the transfer of a portion of GMAC’s net deferred tax liabilities arising from the conversion of GMAC and certain of its subsidiaries to limited liability company form. The total value of the cash proceeds and distributions to GM after repayment of certain intercompany obligations and before it purchases

11

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 2.    Assets Held for Sale — (concluded)

preferred limited liability company interests of GMAC will be approximately $14 billion over three years, comprised of the $7.4 billion purchase price and a $2.7 billion cash dividend at closing and other transaction related cash flows including monetization of certain retained assets over three years.

GM recognized a non-cash impairment charge of approximately $600 million and $1.8 billion in Other Expenses in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2006 to reflect the GMAC assets classified as held for sale at the lower of carrying value or fair value less costs to sell. The charges are comprised of impairment of the carrying value of GMAC assets held for sale, partially offset by 51% of the effects of unrecognized net gains reflected in GMAC’s other comprehensive income. After the sale of the 51% controlling interest, the remaining 49% interest in GMAC, with carrying value based on GM’s historical cost, will be reflected in GM’s financial statements using the equity method of accounting.

As part of the transaction, GM and GMAC will enter into a number of agreements that will require GMAC to continue to allocate capital to automotive financing consistent with historical practice, thereby continuing to provide critical financing support to a significant share of GM’s global sales. While GMAC will retain the right to make individual credit decisions, GMAC will commit to fund a broad spectrum of customers and dealers consistent with historical practice in the relevant jurisdiction. Subject to GMAC’s fulfillment of certain conditions, GM will grant GMAC exclusivity for 10 years for U.S., Canadian, and international GM-sponsored retail and wholesale marketing incentives around the world, with the exception of Saturn branded products.

As part of the agreement, GM will retain an option, for 10 years after the closing of the transaction, to repurchase from GMAC certain assets related to the automotive finance business of the North American Operations and International Operations of GMAC. GM’s exercise of the option is conditional on GM’s credit rating being investment grade or higher than GMAC’s credit rating. The call option price will be calculated as the higher of (i) fair market value or (ii) 9.5 times the consolidated net income of GMAC’s automotive finance business in either the calendar year the call option is exercised or the calendar year immediately following the year the call option is exercised.

The agreement is subject to the satisfaction or waiver of customary and other closing conditions, including, among other things, (i) receipt of ratings for the senior unsecured long-term indebtedness of GMAC and Residential Capital Corporation, a wholly owned subsidiary of GMAC, after giving effect to the transactions contemplated by the agreement, of at least BB and BBB-(or their respective equivalents), respectively, and an A.M. Best rating for GMAC’s significant insurance subsidiaries of at least B++, (ii) that no material adverse effect will have occurred with respect to the business, financial condition or results of operations of GMAC, which includes any actual downgrading by any of the major rating agencies of GM’s unsecured long-term indebtedness rating below CCC or its equivalent, and (iii) the receipt of required regulatory approvals and licenses. The agreement may be terminated upon the occurrence of certain events, including the failure to complete the transaction by March 31, 2007.

Sale of GMAC Commercial Mortgage

On March 23, 2006, GM (through GMAC) sold approximately 78% of its equity in GMAC Commercial Mortgage for approximately $1.5 billion in cash. Subsequent to the sale, the remaining interest in GMAC Commercial Mortgage is reflected under the equity method. At December 31, 2005 and September 30, 2005, GMAC Commercial Mortgage’s assets and liabilities had been classified as held for sale in GM’s Condensed Consolidated Balance Sheet.

12

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 3.   Inventories

Inventories included the following:

	September 30,			December 31,			September 30,
	2006			2005			2005
	(Dollars in millions)
Productive material, work in process, and supplies	$	7,108		$	5,471		$	6,329
Finished product, service parts, etc.		9,208			9,871			8,729
Total inventories at FIFO		16,316			15,342			15,058
Less LIFO allowance		(1,491	)		(1,491	)		(1,303	)
Total inventories (less allowances)	$	14,825		$	13,851		$	13,755
Financing and Insurance Operations Off-lease vehicles		—			503			420
Total consolidated inventories (less allowances)	$	14,825		$	14,354		$	14,175

At September 30, 2006, FIO off-lease vehicles totaling $554 million are presented as held for sale.

Note 4.   Goodwill and Acquired Intangible Assets

The components of intangible assets were as follows:

	Gross Carrying		Accumulated		Net Carrying
	Amount		Amortization		Amount
	(Dollars in millions)
September 30, 2006
Amortizing intangible assets:
Patents and intellectual property rights	$	522	$	188	$	334
Non-amortizing intangible assets:
Goodwill						768
Pension intangible asset						547
Total goodwill and intangible assets					$	1,649
September 30, 2005
Amortizing intangible assets:
Patents and intellectual property rights	$	510	$	108	$	402
Non-amortizing intangible assets:
Goodwill						529
Pension intangible asset						743
Total goodwill and intangible assets					$	1,674
Financing and Insurance Operations
Amortizing intangible assets:
Customer lists and contracts	$	63	$	41	$	22
Trademarks and other		29		18		11
Total		92		59		33
Non-amortizing intangible assets:
Goodwill						3,092
Total goodwill and intangible assets						3,125
Total consolidated goodwill and intangible assets					$	4,799

13

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 4.   Goodwill and Acquired Intangible Assets — (concluded)

At September 30, 2006, FIO goodwill and intangible assets totaling $1,738 million and $62 million, respectively, are presented as held for sale.

Estimated amortization expense, excluding FIO, in each of the next five years is as follows: 2007 — $56 million; 2008 — $52 million; 2009 — $45 million; 2010 — $23 million; and 2011 — $16 million.

The changes in the carrying amounts of goodwill for nine months ended September 30, 2006, and 2005, were as follows:

							Total
	GMNA			GME			Auto & Other			GMAC			Total
	(Dollars in millions)
Balance as of December 31, 2005	$	383		$	374		$	757		$	2,446		$	3,203
Goodwill acquired during the period		10			—			10			73			83
Impairment		—			—			—			(828	)		(828	)
Reclassification of GMAC goodwill to assets held for sale (a)		—			—			—			(1,738	)		(1,738	)
Transfer of business unit (See Note 16)		(63	)		63			—			—			—
Effect of foreign currency translation and other		(34	)		35			1			47			48
Balance as of September 30, 2006	$	296		$	472		$	768		$	—		$	768
Balance as of December 31, 2004	$	154		$	446		$	600		$	3,274		$	3,874
Goodwill acquired during the period		—			—			—			7			7
Reclassification of GMAC goodwill to assets held for sale (b)		—			—			—			(130	)		(130	)
Effect of foreign currency translation and other		(8	)		(63	)		(71	)		(59	)		(130	)
Balance as of September 30, 2005	$	146		$	383		$	529		$	3,092		$	3,621

(a)	Included in Other Assets in table of assets and related liabilities of GMAC held for sale in Note 2.
(b)	At September 30, 2005, GMAC’s Commercial Mortgage segment goodwill of $130 million was reclassified to assets held for sale.

With the changes in key personnel in the Commercial Finance business, GMAC initiated a goodwill impairment test, in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets” (SFAS No. 142), outside of the annual goodwill impairment testing period. A thorough review of the business by the new leadership, with a particular focus on long-term strategy, was performed. As a result of the review, the operating divisions were reorganized, and the decision was made to implement a different exit strategy for the workout portfolio and to exit product lines with lower returns. These decisions had a significant impact on expected asset levels and growth rate assumptions used to estimate the fair value of the business. In particular, the analysis performed during the third quarter incorporates management’s decision to discontinue activity in the equipment finance business, which had a portfolio of over $1 billion, representing approximately 20 percent of Commercial Finance business average assets outstanding during 2006.

The fair value of the Commercial Finance business was determined using an internally developed discounted cash flow analysis based on five year projected net income and a market driven terminal value multiple. Based upon the results of the assessment, an impairment charge of $828 million was recorded during the third quarter of 2006. See Note 15.

14

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 5.   Investment in Nonconsolidated Affiliates

Nonconsolidated affiliates of GM identified herein are those entities in which GM owns an equity interest and for which GM uses the equity method of accounting, because GM has the ability to exert significant influence over decisions relating to their operating and financial affairs. GM’s significant affiliates, and the percent of GM’s current equity ownership or voting interest in them include the following: Japan — Fuji Heavy Industries Ltd. (FHI) (sold during fourth quarter of 2005, 20.1% at September 30, 2005), Suzuki (3.7% at September 30, 2006, and 20.4% at September 30, 2005); China — Shanghai General Motors Co., Ltd (50% at September 30, 2006 and 2005), SAIC GM Wuling Automobile Co., Ltd (34% at September 30, 2006 and 2005). Information regarding GM’s share of income (loss) for all nonconsolidated affiliates (as described above) in the following countries is included in the table below:

	Three Months
	Ended				Nine Months Ended
	September 30,				September 30,
	2006		2005		2006		2005
	(Dollars in millions)
Italy	$	—	$	—	$	—	$	32
Japan	$	—	$	45	$	21	$	140
China	$	88	$	86	$	258	$	218
Korea	$	—	$	—	$	—	$	17

In April 2006, GMAC signed a definitive agreement to sell its entire interest in a regional home builder. In the second quarter of 2006, GMAC recognized a gain of $415 million on the sale of such equity interest. Under the equity method of accounting, GMAC’s share of pretax income recorded from this investment was approximately $42.4 million and $35.2 million for the nine months ended September 30, 2006 and 2005, respectively.

In March 2006, GM sold 92.36 million shares of its investment in Suzuki, reducing GM’s equity stake in Suzuki from 20.4% to 3.7% (16.3 million shares). The sale of GM’s interest generated cash proceeds of $2 billion and a gain on sale of $630 million for the nine months ended September 30, 2006. Effective with completion of the sale, GM’s remaining investment in Suzuki is accounted for as an available for sale equity security.

In the second quarter of 2005, GM recorded an impairment charge of $812 million ($788 million after tax) associated with its investment in the common stock of FHI, which is reflected in Other Expenses in the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2005.

15

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 6.   Product Warranty Liability

Policy, product warranty, recall campaigns and certified used vehicles liability included the following:

	Nine Months Ended			Year Ended			Nine Months Ended
	September 30,			December 31,			September 30,
	2006			2005			2005
	(Dollars in millions)
Beginning balance	$	9,128		$	9,315		$	9,315
Payments		(3,304	)		(4,696	)		(3,542	)
Increase in liability (warranties issued during period)		3,510			5,159			4,009
Adjustments to liability (pre-existing warranties)		(426	)		(381	)		(274	)
Effect of foreign currency translation		157			(269	)		(204	)
Ending balance	$	9,065		$	9,128		$	9,304

Management reviews and adjusts these estimates on a regular basis based on the differences between actual experience and historical estimates or other available information.

Note 7.   GMNA Postemployment Benefit Costs

Costs to idle, consolidate or close facilities and provide postemployment benefits to employees idled on an other than temporary basis are accrued based on management’s best estimate of the wage and benefits costs that will be incurred for qualified employees under the JOBS bank provisions of the current labor agreement through the date of its expiration in September 2007, plus estimated costs expected to be paid thereafter taking into account policy changes that GM intends to negotiate into the JOBS program after the expiration of the current collective bargaining agreement. Costs related to the idling of employees that are expected to be temporary are expensed as incurred. GM reviews the adequacy and continuing need for these liabilities on an annual basis in conjunction with its year-end production and labor forecasts. Furthermore, GM reviews the reasonableness of the liabilities on a quarterly basis.

In 2005, GM recognized a charge of $1.9 billion, or $1.2 billion after tax, for postemployment benefits related to the restructuring of its North American operations announced in November 2005 (the GMNA Restructuring). Approximately 17,500 employees were included in the charge for locations included in this action, some leaving the company through attrition and some transferring to other sites.

On March 22, 2006, GM, Delphi and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) reached an agreement (the UAW Attrition Agreement) intended to reduce the number of U.S. hourly employees through an accelerated attrition program (the Attrition Program), as detailed in our Current Reports on Form 8-K filed on March 22, April 13, and June 27, 2006. The agreement provided for a combination of early retirement programs and other incentives designed to help reduce employment levels at GM. Approximately 34,400 GM hourly employees have agreed to the terms of the Attrition Program. As a result of the Attrition Program, in the second quarter of 2006, GM recorded a charge of approximately $2.1 billion to recognize the wage and benefits cost of those accepting normal and voluntary retirements, buy-outs or pre-retirement leaves.

In the first quarter of 2006, GM recorded a favorable adjustment of $136 million to the reserve for postemployment benefits, primarily due to higher than anticipated headcount reductions associated with previously announced GMNA plant idling activities. In addition, in the first quarter of 2006 a charge of $81 million was recorded to reflect GM’s commitment under the Attrition Program to pay a lump-sum to certain UAW and IUE-represented GM retirees with recent retirements.

16

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 7.    GMNA Postemployment Benefit Costs — (concluded)

In the second quarter of 2006, GM recorded a favorable adjustment of $853 million to the reserve for postemployment benefits, primarily due to a higher than anticipated level of participation by employees at idled facilities and facilities to be idled that were previously accrued for under JOBS bank provisions. Those employees’ wage and benefit costs were then included in the accrual made in the second quarter of 2006 under the Attrition Program, referred to previously. In addition, in the second quarter of 2006, GM announced plans to idle a shift at the Lordstown Assembly Plant in 2006 and to idle its service parts operations at the Drayton Plains facility in 2008. A pre-tax charge of $13 million was recorded to recognize future wages and benefit obligations associated with the idling of workforce at these two facilities.

In the third quarter of 2006, GM recorded a favorable pre-tax adjustment of $118 million to the postemployment benefits reserve primarily as a result of the transfer of employees from idled plants to other plant sites to replace those positions held by employees that accepted retirements, buy-outs or pre-retirement leaves. In the first nine months of 2006, GM recorded favorable reserve adjustments amounting to $1.1 billion primarily due to a higher than anticipated level of attrition program participation by employees at idled facilities and facilities to be idled that were previously accrued for under the JOBS bank provisions. The employees’ wage and benefit costs were then included in the charge made in the second quarter of 2006 under the Attrition Program, which is discussed in the above paragraph.

At September 30, 2006, the postemployment benefit cost reserve reflects estimated future wages and benefits of $1.7 billion related to approximately 9,300 employees, primarily located at idled facilities and facilities to be idled as a result of previous announcements and approximately 15,000 employees under the terms of the Attrition Program. At December 31, 2005, this reserve was approximately $2 billion related to the estimated future wages and benefits of approximately 18,400 employees, primarily at idled facilities and facilities to be idled as a result of previous announcements in 2005. The postemployment benefits reserve was $175 million related to numerous facilities and approximately 1,500 employees as of September 30, 2005. The following table summarizes the activity for this reserve:

	Nine Months Ended			Year Ended			Nine Months Ended
	September 30,			December 31,			September 30,
	2006			2005			2005
	(Dollars in millions)
Beginning balance	$	2,012		$	237		$	237
Additions		2,213			1,891			—
Interest accretion		24			12			9
Payments		(1,490	)		(91	)		(73	)
Adjustments		(1,107	)		(37	)		2
Ending balance	$	1,652		$	2,012		$	175

In addition to the postemployment benefit reserves referenced above, as a result of the significant reduction of GM’s hourly employees through the UAW Attrition Agreement, GM recorded a favorable adjustment of $123 million to its sickness and accident, and extended disability benefit reserves in the third quarter of 2006. The reserves recognize future obligations for income replacement, health care costs and life insurance premiums for employees currently disabled and those who may become disabled in the future.

17

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 8.   Commitments and Contingent Matters

Commitments

GM has guarantees related to its performance under operating lease arrangements and the residual value of lease assets totaling $636 million. Expiration dates vary, and certain leases contain renewal options. The fair value of the underlying assets is expected to fully mitigate GM’s obligations under these guarantees. Accordingly, no liabilities were recorded with respect to such guarantees.

Also, GM has entered into agreements with certain suppliers and service providers that guarantee the value of the suppliers’ assets and agreements with third parties that guarantee fulfillment of certain suppliers’ commitments. The maximum exposure under these commitments amounts to $61 million.

GMAC has guaranteed certain amounts related to the securitization of mortgage loans, agency loan programs, loans sold with recourse, and the repayment of third party debt. In addition, GMAC issues financial standby letters of credit as part of its financing and mortgage operations. At September 30, 2006 approximately $11 million was recorded with respect to these guarantees, the maximum exposure under which is approximately $7.7 billion.

In addition to guarantees, GM has entered into agreements indemnifying certain parties with respect to environmental conditions pertaining to ongoing or sold GM properties. Due to the nature of the indemnifications, GM’s maximum exposure under these agreements cannot be estimated. No amounts have been recorded for such indemnities.

In connection with certain divestitures made prior to January 1, 2003, GM has provided guarantees with respect to benefits for former GM employees related to pensions and postretirement health care and life insurance. Other than items pertaining to the change in the fourth quarter of 2005 charge with respect to the contingent exposures relating to the Delphi Chapter 11 filing, including under the benefit guarantees, the maximum exposure under these agreements cannot be estimated due to the nature of these indemnities. No amounts have been recorded for such indemnities as the Corporation’s obligations under them are not probable and reasonably estimable.

In addition to the above, in the normal course of business GM periodically enters into agreements that incorporate indemnification provisions. While the maximum amount to which GM may be exposed under such agreements cannot be estimated, it is the opinion of management that these guarantees and indemnifications are not expected to have a material adverse effect on the Corporation’s consolidated financial position or results of operations.

Contingent Matters

Litigation is subject to uncertainties, and the outcome of individual litigated matters is not predictable with assurance. Various legal actions, governmental investigations, claims, and proceedings are pending against the Corporation, including a number of stockholder class actions, bondholder class actions, stockholder derivative suits and ERISA class action and other matters arising out of alleged product defects including asbestos-related claims; employment-related matters; governmental regulations relating to safety, emissions, and fuel economy; product warranties; financial services; dealer, supplier, and other contractual relationships; and environmental matters.

GM has established reserves for matters in which losses are probable and can be reasonably estimated. Some of the matters may involve compensatory, punitive, or other treble damage claims, or demands for recall campaigns, incurred but not reported asbestos-related claims, environmental remediation programs, or sanctions, that if granted, could require the Corporation to pay damages or make other expenditures in amounts that could not be estimated at September 30, 2006. After discussion with counsel, it is the opinion of management that such liability is not expected to have a material adverse effect on the Corporation’s consolidated financial condition or results of operations.

18

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 8.   Commitments and Contingent Matters — (continued)

Delphi Bankruptcy

On October 8, 2005, Delphi filed a petition for Chapter 11 proceedings under the United States Bankruptcy Code for itself and many of its U.S. subsidiaries. Delphi is GM’s largest supplier of automotive systems, components and parts, and GM is Delphi’s largest customer.

GM has worked and will continue to work constructively in the court proceedings with Delphi, Delphi’s unions, and other participants in Delphi’s restructuring process. GM’s goal is to achieve outcomes that are in the best interests of GM and its stockholders, and, to the extent conducive to those goals, that enable Delphi to continue as an important supplier to GM.

Delphi continues to assure GM that it expects no disruption in its ability to supply GM with the systems, components and parts it needs as Delphi pursues a restructuring plan under the Chapter 11 process. Although the challenges faced by Delphi during its restructuring process could create operating and financial risks for GM, that process is also expected to present opportunities for GM. These opportunities include reducing, over the long term, the significant cost penalty GM incurs in obtaining parts from Delphi, as well as improving the quality of systems, components and parts GM procures from Delphi as a result of the restructuring of Delphi through the Chapter 11 process. However, there can be no assurance that GM will be able to realize any benefits.

Delphi filed, on March 31, 2006, motions under the U.S. Bankruptcy Code seeking authority to reject its U.S. labor agreements and modify retiree welfare benefits. The unions and certain other parties have filed objections to these motions. Hearings on these motions were adjourned indefinitely, to allow Delphi, its unions, and GM additional time to focus on reaching comprehensive consensual agreements. While Delphi has indicated to us that it expects no disruptions in its ability to continue supplying us with the systems, components, and parts we need as Delphi pursues its bankruptcy restructuring plan, labor disruptions at Delphi resulting from Delphi’s pursuit of a restructuring plan could seriously disrupt our North American operations, prevent us from executing our GMNA turnaround initiatives, and materially adversely impact our business. Accordingly, resolution of the Delphi related issues remains a critical near term priority.

Delphi also filed a motion on March 31, 2006 under the U.S. Bankruptcy Code seeking authority to reject certain supply contracts with GM. A hearing on this motion was adjourned indefinitely by the court pending further developments related to Delphi’s U.S. labor agreements and retiree welfare benefits as discussed above. Although Delphi has not rejected any GM contracts as of this time and has assured GM that it does not intend to disrupt production at GM assembly facilities, there is a risk that Delphi or one or more of its affiliates may reject or threaten to reject individual contracts with GM, either for the purpose of exiting specific lines of business or in an attempt to increase the price GM pays for certain parts and components. As a result, GM could be materially adversely affected by disruption in the supply of automotive systems, components and parts that could force the suspension of production at GM assembly facilities.

GM is seeking to minimize risk by protecting our right of setoff against the $1.15 billion we owed to Delphi as of the date of its Chapter 11 filing. A procedure for determining setoff claims has been put in place by the Bankruptcy Court. However, the extent to which these obligations are covered by our right to setoff may be subject to dispute by Delphi, the creditors committee, or Delphi’s other creditors, and limitation by the court. GM cannot provide any assurance that it will be able to fully or partially setoff such amounts. However, to date setoffs of approximately $53.6 million have been agreed to by Delphi and taken by GM. The financial impact of a substantial compromise of our right of setoff could have a material adverse impact on our financial position. In addition, the basis, amounts, and priority of any claims against Delphi that GM currently has or may have in the future may be challenged by other parties in interest in Delphi’s bankruptcy proceeding. The scope and results of such challenges cannot be predicted with certainty.

19

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 8.   Commitments and Contingent Matters — (continued)

In connection with GM’s spin-off of Delphi in 1999, GM entered into separate agreements with the UAW, the International Union of Electronics Workers — Communication Workers of America (IUE-CWA) and the United Steel Workers. In each of these three agreements (Benefit Guarantee Agreement(s)), GM provided contingent benefit guarantees to make payments for limited pension and OPEB to certain former GM U.S. hourly employees who transferred to Delphi as part of the spin-off and meet the eligibility requirements for such payments (Covered Employees).

Each Benefit Guarantee Agreement contains separate benefit guarantees related to pensions and OPEB. These limited benefit guarantees each have separate triggering events that initiate potential GM liability if Delphi fails to provide the corresponding benefit at the required level. Therefore, it is possible that GM could incur liability under one of the guarantees (e.g., pension) without triggering the other guarantees (e.g., postretirement health care or life insurance). In addition, with respect to pension benefits, GM’s obligation under the pension benefit guarantees only arises to the extent that the combination of pension benefits provided by Delphi and the Pension Benefit Guaranty Corporation (PBGC) falls short of the amounts GM has guaranteed.

The Chapter 11 filing by Delphi does not by itself trigger any of the benefit guarantees. Moreover, Delphi’s filing of motions under the U.S. Bankruptcy Code to reject its U.S. labor agreements and modify retiree welfare benefits does not trigger any of the benefit guarantees. In addition, the benefit guarantees expire on October 18, 2007 if not previously triggered by Delphi’s failure to pay the specified benefits. If a benefit guarantee is triggered before its expiration date, GM’s obligation could extend for the lives of affected Covered Employees, subject to the applicable terms of the pertinent benefit plans or other relevant agreements.

The benefit guarantees do not obligate GM to guarantee any benefits for Delphi retirees in excess of the levels of corresponding benefits GM provides at any given time to GM’s own hourly retirees. Accordingly, if any of the benefits GM provides to its hourly retirees are reduced, there would be a similar reduction in GM’s obligations under the corresponding benefit guarantee.

A separate agreement between GM and Delphi requires Delphi to indemnify GM if and to the extent GM makes payments under the benefit guarantees to the UAW employees or retirees. GM received a notice from Delphi, dated October 8, 2005, that it was more likely than not that GM would become obligated to provide benefits pursuant to the benefit guarantees to the UAW employees or retirees. The notice stated that Delphi was unable at that time to estimate the timing and scope of any benefits GM might be required to provide under the benefit guarantees. Any recovery by GM under indemnity claims against Delphi might be subject to partial or complete discharge in the Delphi reorganization proceeding. As a result, GM’s claims for indemnity may not be paid in part or in full.

As part of GM’s health-care agreement negotiations with the UAW, GM provided former GM employees who became Delphi employees the potential to earn up to seven years of credited service for purposes of eligibility for certain health-care benefits under the GM/UAW benefit guarantee agreement.

As discussed in Note 7, GM together with Delphi and the UAW announced on March 22, 2006 that they had entered into the UAW Attrition Agreement, which is intended to reduce the number of U.S. hourly employees at GM and Delphi through the Attrition Program. When originally executed, Delphi’s participation in the UAW Attrition Agreement was subject to approval by the U.S. Bankruptcy Court for the Southern District of New York (Bankruptcy Court), which has jurisdiction over Delphi’s Chapter 11 proceedings. On April 7, 2006, the Bankruptcy Court declared in a hearing that Delphi’s participation in the UAW Attrition Agreement was approved. The UAW Attrition Agreement provides for a combination of early retirement programs and other incentives designed to help reduce employment levels at both GM and Delphi.

In the UAW Attrition Agreement, GM has agreed to assume certain costs regarding UAW-represented Delphi employees. Specifically, GM agreed to: (1) pay lump sums of $35,000 to certain employees who participate in the Attrition Program; (2) allow Delphi employees who agree to retire under the Attrition Program to flowback to GM

20

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 8.   Commitments and Contingent Matters — (concluded)

for purposes of retirement whereby GM will assume all OPEB obligations to such retiree; (3) subsidize, for an interim period of time, health care and life insurance coverage for Delphi employees participating in a special voluntary pre-retirement program if Delphi reduces or eliminates its health care and/or life insurance coverage provided to active UAW employees; and (4) accept 5,000 active flowback employees, and as a result after they flow back, pay such employee’s wages and benefits and incur pension and OPEB obligations for such employees. The UAW Attrition Agreement provides that for such costs, other than the $35,000 lump sum payment, GM will have a prepetition, general unsecured claim assertable against the bankruptcy estate of Delphi under certain existing agreements. This claim is subject to the rights of parties in interest to object to allowance on any grounds other than the claim did not arise under the terms of the pre-existing contractual agreements between GM and Delphi. GM believes that the UAW Attrition Agreement will enhance the prospects for GM, the UAW and Delphi to reach a broad-based consensual resolution of issues relating to the Delphi restructuring, but significant obstacles remain.

As of September 30, 2006 approximately 12,400 UAW-represented Delphi employees had elected one of the retirement options available under the UAW Attrition Agreement.

On June 29, 2006 the Bankruptcy Court approved a motion by Delphi to offer similar attrition packages and a buyout program to approximately 8,500 hourly employees represented by the IUE-CWA and a buyout program to hourly employees represented by the UAW, many of whom were not eligible for the earlier offer. As of September 30, 2006 approximately 6,300 IUE-CWA-represented Delphi employees and approximately 1,400 UAW-represented Delphi employees had elected to participate in these attrition and buyout programs. GM and Delphi will share the cost of these programs. GM will have an allowed prepetition, general unsecured claim against the estate of Delphi for payments that it makes under the buyout program and a prepetition, general unsecured claim for costs, other than the $35,000 lump-sum payment, incurred in the IUE-CWA attrition program assertable against the estate of Delphi under certain existing agreements. This claim is subject to the rights of parties in interest to object to allowance on any grounds other than that the claim did not arise under the terms of the pre-existing contractual agreements between GM and Delphi. In addition, the basis, amounts, and priority of any claims against Delphi that GM currently has or may have in the future may be challenged by other parties in interest in Delphi’s bankruptcy proceeding. The scope and results of such challenges cannot be predicted with certainty. The estimated cost to GM of these programs is comprehended in the charge of $5.5 billion recorded by GM in the fourth quarter of 2005 related to GM’s contingent exposure related to Delphi’s bankruptcy filing.

GM believes that it is probable that it has incurred a contingent liability due to Delphi’s Chapter 11 filing. Based on currently available data and ongoing discussions with Delphi and other stakeholders, GM believes that the range of the contingent exposures is between $6 billion and $7.5 billion, with amounts near the low end of the range considered more possible than amounts near the high end of the range. GM established a liability of $5.5 billion ($3.6 billion after tax) for this contingent exposure in the fourth quarter of 2005, and recorded an additional charge of $0.5 billion ($0.3 billion after tax) in the third quarter of 2006 to reflect GM’s potential exposure for OPEB costs associated with previously divested Delphi business units and certain labor restructuring costs, including but not limited to expenditures related to the attrition plans discussed above. These views reflect GM’s current assessment that it is unlikely that a Chapter 11 process will result in both a termination of Delphi’s pension plan and to complete elimination of its OPEB plans. The amount of this charge may change, depending on the result of further discussions among GM, Delphi, and Delphi’s unions, and other factors. In addition to theses charges, GM may agree to reimburse Delphi for certain labor expenses to be incurred upon and after Delphi’s emergence from bankruptcy. GM’s current estimate of these expenses involves an initial payment in 2007, not expected to exceed approximately $400 million, and ongoing expenses of limited duration and estimated to average less than $100 million annually. GM will recognize these expenses as incurred in the future. As a result of ongoing negotiations, the actual impact of the Delphi matter will not be known until a consensual agreement has been reached and approved by the Bankruptcy Court.

21

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 9.   Comprehensive Income (Loss)

GM’s total comprehensive income (loss), net of tax, was as follows:

							Nine Months
	Three Months Ended						Ended
	September 30,						September 30,
	2006			2005			2006			2005
	(Dollars in millions)
Net loss	$	(91	)	$	(1,664	)	$	(3,025	)	$	(3,904	)
Other comprehensive income (loss)
Accumulated foreign currency translation	$	54		$	15		$	97		$	(436	)
Net gains (losses) on derivatives		(456	)		75			(40	)		(183	)
Net unrealized gains (losses) on securities		156			55			3			(9	)
Minimum pension liability adjustment		(28	)		(81	)		(82	)		(27	)
Total other comprehensive income (loss)		(274	)		64			(22	)		(655	)
Total comprehensive loss	$	(365	)	$	(1,600	)	$	(3,047	)	$	(4,559	)

Note 10.   Earnings (Loss) Per Share Attributable to Common Stock

Earnings per share (EPS) attributable to GM common stock was determined based on earnings for the period divided by the weighted-average number of common shares outstanding during the period. Diluted EPS attributable to GM common stock considers the effect of potential common shares, unless the inclusion of the potential common shares would have an antidilutive effect. Due to the net losses for all periods presented, loss per share, basic and diluted are the same since the effect of potential common shares would have an antidilutive effect.

Certain stock options and convertible securities were not included in the computation of diluted EPS for the periods presented since the instruments’ underlying exercise prices were greater than the average market prices of GM $12/3 par value common stock and inclusion would be antidilutive. Such shares not included in the computation of diluted EPS were 106 million and 112 million for the quarters ended September 30, 2006 and 2005, respectively. Such shares not included in the computation of diluted EPS were 107 million and 112 million for the nine months ended September 30, 2006 and 2005, respectively.

Note 11.   Depreciation and Amortization

Depreciation and amortization, including asset impairment charges, included in cost of sales and selling, general and administrative expenses were as follows:

					Nine Months
	Three Months Ended				Ended
	September 30,				September 30,
	2006		2005		2006		2005
	(Dollars in millions)
Depreciation	$	1,075	$	1,256	$	3,266	$	3,818
Amortization of special tools		837		1,907		2,682		3,526
Amortization of intangible assets		16		14		45		37
Total	$	1,928	$	3,177	$	5,993	$	7,381

22

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 12.   Pensions and Other Postretirement Benefits

	U.S. Plans						Non-U.S. Plans						U.S. Other						Non-U.S.
	Pension Benefits						Pension Benefits						Benefits						Other Benefits
	Three Months Ended						Three Months Ended						Three Months Ended						Three Months Ended
	September 30,						September 30,						September 30,						September 30,
	2006			2005			2006			2005			2006			2005			2006			2005
	(Dollars in millions)
Components of (income) expense
Service cost	$	150		$	279		$	140		$	69		$	113		$	175		$	13		$	13
Interest cost		1,257			1,221			295			234			891			1,027			48			55
Expected return on plan assets		(2,052	)		(1,974	)		(278	)		(184	)		(422	)		(421	)		—			—
Amortization of prior service cost		164			291			15			26			(487	)		(18	)		(21	)		2
Recognized net actuarial loss		220			517			113			70			432			563			34			22
Curtailments, settlements, and other		(21	)		—			78			8			23			—			—			—
Net (income) expense	$	(282	)	$	334		$	363		$	223		$	550		$	1,326		$	74		$	92

	U.S. Plans						Non-U.S. Plans						U.S. Other						Non-U.S.
	Pension Benefits						Pension Benefits						Benefits						Other Benefits
	Nine Months Ended						Nine Months Ended						Nine Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2006			2005			2006			2005			2006			2005			2006			2005
	(Dollars in millions)
Components of expense
Service cost	$	575		$	838		$	381		$	211		$	457		$	527		$	39		$	37
Interest cost		3,713			3,663			723			710			3,011			3,080			143			162
Expected return on plan assets		(6,110	)		(5,922	)		(629	)		(551	)		(1,172	)		(1,263	)		—			—
Amortization of prior service cost		621			873			65			80			(620	)		(53	)		(62	)		6
Recognized net actuarial loss		906			1,550			303			208			1,668			1,687			100			66
Curtailments, settlements, and other		4,369			112			109			91			23			—			—			2
Net expense	$	4,074		$	1,114		$	952		$	749		$	3,367		$	3,978		$	220		$	273

On February 7, 2006, GM announced it would increase the U.S. salaried workforce’s participation in the cost of health care, capping GM’s contributions to salaried retiree health care at the level of 2006 expenditures. On March 7, 2006, GM announced it would modify the terms of the U.S. salaried pension plan. The remeasurement of the U.S. salaried OPEB plans as of February 9, 2006 as a result of these benefit modifications generated a $0.2 billion and $0.3 billion reduction in OPEB expense for the three and nine months ended September 30, 2006, respectively. The remeasurement of GM’s U.S. salaried pension plan as of March 31, 2006 as a result of these benefit modifications generated a $0.1 billion and $0.3 billion reduction in pension expense for the three and nine months ended September 30, 2006. Both of these impacts are reflected in the table above.

Effective March 31, 2006, the U.S. District Court for the Eastern District of Michigan approved the tentative settlement agreement with the UAW (UAW Settlement Agreement) related to reductions in hourly retiree health care; this approval is now under appeal. Given the significance of these events, the plans were remeasured. The remeasurement of the U.S. hourly OPEB plans as of March 31, 2006 due to the previously announced UAW

23

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 12.   Pensions and Other Postretirement Benefits — (continued)

Settlement Agreement generated a $0.7 billion reduction in OPEB expense for the three and nine months ended September 30, 2006 and is reflected in the table above.

GM accounted for the reduced health care coverage provisions of the UAW Settlement Agreement as an amendment of GM’s Health Care Program for Hourly Employees (the Modified Plan). GM previously estimated that the reduced health care coverage provisions of the UAW Settlement Agreement would result in an approximately $15 billion reduction of GM’s OPEB obligations related to the Modified Plan. In conjunction with the measurement of the Modified Plan as of March 31, 2006, the estimated reduction of GM’s OPEB obligations increased from $15 billion to $17 billion attributable primarily to an increase in the discount rate utilized in the March 31, 2006 measurement. The reduction is being amortized on a straight-line basis over the remaining service lives of active UAW hourly employees (7.4 years) as a reduction of OPEB expense. This reduction of expense will be partially offset by the amortization over the same period of approximately $3 billion related to capped benefits expected to be paid from contributions to the Mitigation Plan as discussed below, and the expense related to previously negotiated wage increases for active employees now diverted to the Mitigation Plan. GM has no obligation to make contributions in excess of those described, and hence the Mitigation Plan is being accounted for as a capped defined benefit plan.

The UAW Settlement Agreement also provides that GM make contributions to a new independent Voluntary Employees’ Beneficiary Association (the Mitigation Plan). The assets of the Mitigation Plan will be used to mitigate the effect of reduced GM health care coverage on individual UAW retirees and, depending on the level of mitigation, are expected to be available for a number of years. The new independent Mitigation Plan is being partially funded by GM contributions of $1 billion in each of 2006, 2007 and 2011. The 2011 contribution may be accelerated under specified circumstances. GM will also make future contributions subject to provisions of the Settlement Agreement that relate to profit sharing payments, increases in the value of a notional number of shares of GM’s $12/3 par value common stock, as well as wage deferral payments and dividend payments. During the second quarter of 2006, as required in the UAW Settlement Agreement, GM made a $1 billion contribution to the Mitigation Plan.

As detailed in Note 7, GM, Delphi, and the UAW reached an agreement on March 22, 2006 intended to reduce the number of U.S. hourly employees through the Attrition Program. As a result of the Attrition Program, GM has recognized curtailment losses under SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits” and SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other than Pensions,” due to the significant reduction in the expected aggregate years of future service of the employees in the U.S. hourly pension and OPEB plans, respectively. The curtailment losses include recognition of the change in the projected benefit obligation (PBO) or accumulated postretirement benefit obligation (APBO) and a portion of the previously unrecognized prior service cost reflecting the reduction in expected future service. GM recognized a curtailment loss related to the U.S. hourly pension plan of approximately $4.4 billion in the second quarter of 2006. GM recognized a curtailment loss of $23 million in the third quarter of 2006 related to the U.S. hourly OPEB plans measured at May 31, 2006. Both of these impacts are reflected in the table above.

The remeasurement of GM’s U.S. hourly pension plan as of April 30, 2006 as a result of the Attrition Program generated a $0.3 billion and $0.4 billion reduction in pension expense for the three and nine months ended September 30, 2006, respectively. The remeasurement of the U.S. hourly OPEB plans as of May 31, 2006 as a result of the Attrition Program generated an approximate $30 million reduction in OPEB expense for the three and nine months ended September 30, 2006. Both of these impacts are reflected in the table above.

The remeasurements of the U.S. salaried and hourly pension plans reduced the U.S. pension PBO by $3.9 billion. The weighted average discount rate used to determine the benefit obligation was 6.15%. This represents a 45 basis point increase from the 5.70% weighted average discount rate used at year-end 2005. The

24

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 12.    Pensions and Other Postretirement Benefits — (concluded)

remeasurements of U.S. salaried and hourly OPEB plans for health care benefit modifications and the Attrition Program reduced the U.S. OPEB APBO by $19.9 billion. The weighted average discount rate used to determine the benefit obligation was 6.25%. This represents an 80 basis point increase from the 5.45% weighted average discount rate used at year-end 2005.

GM withdrew $2 billion and $4 billion from the VEBA trust for the three and nine months ended September 30, 2006. On a quarterly basis, GM evaluates the need for additional VEBA withdrawals.

Note 13.   Impairments, Restructuring and Other Initiatives

Impairments

In the third quarter of 2006, GMNA recorded impairment charges totaling $172 million ($112 million after tax) which includes $102 million ($66 million after tax) related to product specific assets and $70 million ($46 million after tax) related to the write-down of various plant assets due to decreased profitability and production associated with the planned cessation of production at the Doraville, Georgia assembly plant in 2008. Additionally, GME recorded an after tax impairment charge of $4 million related to the writedown of assets at the Azambuja plant. Asset impairment charges are recorded in Automotive Cost of Sales in the Condensed Consolidated Statement of Operations.

In the second quarter of 2006, GM recorded impairment charges totaling $363 million ($234 million after tax) related to product specific assets. Of this, $303 million ($197 million after tax) was at GMNA and $60 million ($37 million after tax) was at GME. In addition, GME recorded an asset impairment charge of $84 million ($57 million after tax), in connection with the announced closure of GM’s Portugal assembly plant, which is scheduled to close in December 2006. Asset impairment charges are recorded in Automotive Cost of Sales in the Condensed Consolidated Statements of Operations.

In the third quarter of 2005, the business planning cycle was accelerated as a result of the lack of improved performance in the second quarter of 2005. In connection with this process, GM reviewed the carrying value of certain long-lived assets held and used, other than goodwill and intangible assets with indefinite lives. In addition, restructuring initiatives were announced in the third quarter of 2005 in GMAP related to production in Australia, resulting in additional impairment charges. In GMLAAM, unusually strong South American currencies adversely affected the profitability of GMLAAM’s export business. Management’s decision to adjust GMLAAM’s export volumes resulted in lower expected future cash flows, resulting in an impairment charge in the region. These reviews and initiatives resulted in impairment charges in the third quarter of 2005 totaling $1.2 billion ($788 million after tax). Of this, $743 million ($468 million after tax) was at GMNA, $262 million ($176 million after tax) was at GME, $150 million ($99 million after tax) was at GMLAAM, and $64 million ($45 million after tax) was at GMAP. Impairments primarily related to product specific assets but also include amounts related to office and production facilities. These charges were recorded in Automotive Cost of Sales in the Condensed Consolidated Statements of Operations.

GMNA results in the first quarter of 2005 include a charge of $134 million ($84 million after tax), for the write-down to fair market value of various plant assets in connection with the first quarter 2005 announcement to discontinue production at the Lansing assembly plant during the second quarter of 2005. Total impairment charges were $872 million, after tax, for the nine months ended September 30, 2005.

GM assesses the carrying value of long-lived assets held and used, other than goodwill and intangible assets with indefinite lives, in connection with the annual business planning cycle or when events and circumstances indicate the need for such reviews. An impairment analysis is performed by comparing projected cash flows to the carrying value of specific product-related assets. As a result of the lack of improved performance on particular product related assets, these reviews resulted in certain assets not being recoverable.

25

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 13.   Impairments, Restructuring and Other Initiatives — (concluded)

Restructuring and Other Initiatives

GMNA results for the nine month period ended September 30, 2006 included a charge recognized in the first quarter of 2006 of $65 million after tax, related to costs expected to be incurred in 2006 under a new salaried severance program, which allows involuntarily terminated employees to receive continued salary and benefits for a period of time after termination.

Results for the nine month period ended September 30, 2005 include after tax charges recognized in the first quarter of $140 million in GMNA and $8 million in Other Operations related to voluntary early retirement and other separation programs with respect to certain salaried employees in the U.S.

GME results for the third quarter of 2006 included restructuring charges for separations totaling $83 million, after tax. The charge relates mainly to the reduction of one shift at the Ellesmere Port plant in the U.K. as well as the continuing separation activities related to the restructuring plan announced in the fourth quarter of 2004. GME results for the nine month period ended September 30, 2006 include after tax charges for separations and contract cancellations of $210 million. These charges are related to the restructuring plan announced in the fourth quarter of 2004, the closure of GM’s Portugal assembly plant, and the reduction of one shift at the Ellesmere Port plant in the U.K. The charge for the three and nine month periods ended September 30, 2006 for the restructuring plan announced in 2004 was $22 million and $91 million, after tax, respectively. GME’s restructuring plan targeted a total reduction of 12,000 employees over the period 2005 through 2007 through separation programs, early retirements, and selected outsourcing initiatives. As of September 30, 2006 approximately 10,800 employees have left GM under this restructuring program and the program is on target to achieve the total headcount reduction, as well as the targeted annual structural cost reduction of $600 million by 2006. Additional charges related to this program of about $55 million, after tax, are expected through the end of 2007. The charge for the nine month period for the closure of the Portugal plant was $23 million, after tax, and was related to separations and contract cancellations. The plant is scheduled to close in December 2006, resulting in a total separation of approximately 1,100 employees. Further charges are expected in the last quarter of 2006 as the restructuring activities develop. The charge for the three and nine month periods ended September 30, 2006 for the shift reduction in Ellesmere Port was $61 million and $87 million, after tax, respectively. The shift reduction is targeted to reduce the work force in the U.K. by approximately 1,200 employees by the end of 2006. Additional separation charges will be recorded in the last quarter of 2006 as further employees sign up for this separation program. The estimated total cost of the program is approximately $105 million, after tax.

GME results for the nine month period ended September 30, 2005, included restructuring charges of $604 million, after tax, for separations, mainly related to the restructuring plan announced in the fourth quarter of 2004, but included cost related to the dissolution of the Powertrain joint venture with Fiat in the second quarter of 2005, and a charge for product specific asset impairments of $176 million, after tax.

Results for the nine month period ended September 30, 2006 include restructuring charges at GMLAAM of $42 million after tax. These restructuring charges relate to the costs of voluntary employee separations at GM do Brasil.

Note 14.   Stock Incentive Plans

GM’s stock incentive plans consist of the General Motors 2002 Stock Incentive Plan, formerly the 1997 General Motors Amended Stock Incentive Plan (GMSIP), the General Motors 1998 Salaried Stock Option Plan (GMSSOP), the General Motors 2002 Long Term Incentive Plan (GMLTIP) and the General Motors 2006 Cash-Based Restricted Stock Unit Plan (GMCRSU), collectively the Plans. The GMSIP, the GMLTIP and the GMCRSU are administered by the Executive Compensation Committee of GM’s Board of Directors. The GMSSOP is administered by the Vice President of Global Human Resources.

26

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 14.   Stock Incentive Plans — (continued)

The compensation cost for the above plans was approximately $52.7 million and $26.7 million for the three months ended September 30, 2006 and 2005, respectively and $136.7 million and $77.6 million for the nine months ended September 30, 2006 and 2005, respectively. The total income tax benefit recognized for share-based compensation arrangements was approximately $19.8 million and $10.2 million for the three months ended September 30, 2006 and 2005, respectively and $46.5 million and $29.5 million for the nine months ended September 30, 2006 and 2005, respectively.

GMSIP and GMSSOP

Under the GMSIP, 27.4 million shares of GM $12/3 par value common stock may be granted from June 1, 2002, through May 31, 2007, of which approximately 4.6 million were available for grants at September 30, 2006. Any shares granted and undelivered under the GMSIP, due primarily to expiration or termination, become again available for grant. Options granted prior to 1997 under the GMSIP generally are exercisable one-half after one year and one-half after two years from the dates of grant. Stock option grants awarded since 1997 are generally exercisable one-third after one year, one-third after two years and fully after three years from the dates of grant. Option prices are 100% of fair market value on the dates of grant and the options generally expire 10 years from the dates of grant, subject to earlier termination under certain conditions.

Under the GMSSOP, which commenced January 1, 1998 and ends December 31, 2007, the number of shares of GM $12/3 par value common stock that may be granted each year is determined by management. Approximately 1.3 million shares of GM $12/3 par value common stock were available for grants at September 30, 2006. Stock options vest one year following the date of grant and are exercisable two years from the date of grant. Option prices are 100% of fair market value on the dates of grant and the options generally expire 10 years and two days from the dates of grant subject to earlier termination under certain conditions.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the weighted-average assumptions noted in the following table. Expected volatilities are based on both the implied and historical volatility of the Corporation’s stock. The Corporation uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options represents the period of time that options granted are expected to be outstanding. The interest rate for periods during the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

	Three Months Ended September 30,
	2006			2005
	GMSIP			GMSIP
Interest rate		5.19	%		4.14	%
Expected life (years)		6			6
Expected volatility		38.89	%		34.03	%
Dividend yield		3.37	%		5.49	%

27

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 14.   Stock Incentive Plans — (continued)

Changes in the status of outstanding options were as follows:

	GMSIP
	$12/3 Par Value Common
					Weighted
			Weighted-		Average
			Average		Remaining		Aggregate
	Shares Under		Exercise		Contractual		Intrinsic
	Option		Price		Term		Value
Options outstanding at January 1, 2006		84,130,586	$	53.11
Granted		2,836,996		21.32
Exercised		—		—
Terminated		5,032,773	$	46.56
Options outstanding at September 30, 2006		81,934,809	$	52.41		4.8	$	33,607,397
Options exercisable at September 30, 2006		71,777,168	$	54.67		4.3		—

	GMSSOP
	$12/3 Par Value Common
					Weighted
			Weighted-		Average
			Average		Remaining		Aggregate
	Shares Under		Exercise		Contractual		Intrinsic
	Option		Price		Term		Value
Options outstanding at January 1, 2006		27,213,635	$	55.19
Granted		—		—
Exercised		—		—
Terminated		558,159		53.69
Options outstanding at September 30, 2006		26,655,476	$	55.22		5.3		—
Options exercisable at September 30, 2006		26,655,476	$	55.22		5.3		—

The weighted-average grant-date fair value was $9.78 and $7.19 for the GMSIP options granted during the three and nine month periods ended September 30, 2006 and 2005, respectively. There were no options granted or exercised under the GMSSOP during the three and nine month periods ended September 30, 2006 and 2005.

GMLTIP

The GMLTIP consists of award opportunities granted to participants that are based on the achievement of specific corporate business criteria. The target number of shares of GM $12/3 par value common stock that may be granted each year is determined by management. These grants are subject to a three year performance period and the final award payout may vary based on the achievement of those criteria. The condition for all three plans is a minimum percentile ranking of GM’s TSR among the companies in the S&P 500.

At September 30, 2006, approximately 5.8 million target shares were outstanding under the GMLTIP. Of these outstanding shares, a total of 1.3 million were granted in 2004 at a grant-date fair value of $53.92. Management intends to settle these awards with GM $12/3 par value common stock. Of the remaining outstanding shares, approximately 2 million were granted in 2005 at a fair value of $36.37, and 2.5 million were granted for the nine month period ended September 30, 2006 at a fair value of $24.81. Management is required to settle these awards in cash. As a result, these cash-settled awards are recorded as a liability until the date of final award payout. In accordance with SFAS No. 123R, the fair value of each cash-settled award is recalculated at the end of each

28

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 14.   Stock Incentive Plans — (continued)

reporting period and the liability and expense adjusted based on the change in fair value. The preceding is the targeted number of shares that would be used in the final award calculation should the targeted performance condition be achieved. Final payout is subject to approval by the Executive Compensation Committee of the Board of Directors. The fair value at September 30, 2006 was $41.36 for the awards granted during the nine month period ended September 30, 2006 and $19.79 for the awards granted in 2005.

Prior to the adoption of SFAS No. 123R, the fair value of each award under the GMLTIP was equal to the fair market value of the underlying shares on the date of grant. Beginning January 1, 2006 in accordance with the adoption of SFAS No. 123R, the fair value of each cash-settled award under the GMLTIP is estimated on the date of grant, and for each subsequent reporting period, using a lattice-based option valuation model that uses the assumptions noted in the following table. Because lattice-based valuation models incorporate ranges of assumptions for inputs, those ranges are disclosed. Expected volatilities are based on the implied volatility from GM’s tradable options. The expected term of these target awards represent the remaining time in the performance period. The risk-free rate for periods during the contractual life of the performance shares is based on the U.S. Treasury yield curve in effect at the time of valuation. Because the payout depends on the Corporation’s performance ranked with the S&P 500, the valuation also depends on the performance of other stocks in the S&P 500 from the grant date to the exercise date as well as estimates of the correlations among their future performances.

	Three Months Ended
	September 30,
	2006
Expected volatility		48.8	%
Expected dividends		N/A
Expected term (years)		1.46
Risk-free interest rate		5.25	%

The weighted average remaining contractual term was 1.46 years for target awards outstanding at September 30, 2006. There were no shares delivered or cash paid during the three and nine month periods ended September 30, 2006 and 2005.

GMCRSU

In 2006, the Corporation established a cash-based restricted stock unit plan that provides restricted share units to certain global executives. Awards under the plan vest and are paid in one-third increments on each anniversary date of the award over a three year period. Compensation expense is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. Since the awards are settled in cash, these cash-settled awards are recorded as a liability until the date of exercise. In accordance with SFAS No. 123(R), the fair value of each cash-settled award is recalculated at the end of each reporting period and the liability and expense adjusted based on the new fair value.

The fair value of each RSU is based on the Corporation’s stock price on the date of grant and each subsequent reporting period until date of settlement. There were 4.2 million RSUs granted during the nine month period ended September 30, 2006 with a weighted average grant date fair value of $21.01 per share. The fair value at September 30, 2006 was $33.26 per share.

The weighted average remaining contractual term was 2.42 years for the RSUs outstanding September 30, 2006. There were no share units vested or delivered during the three and nine month period ended September 30, 2006.

29

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 14.    Stock Incentive Plans — (concluded)

Summary

A summary of the status of the Corporation’s options as of September 30, 2006 and the changes during the nine month period then ended, is presented below:

			Weighted-
			Average
			Grant-Date
	Shares		Fair Value
Nonvested at January 1, 2006		15,923,106	$	9.28
Granted		2,836,996		7.19
Vested		8,395,674		9.45
Forfeited		206,787		8.63
Nonvested at September 30, 2006		10,157,641	$	8.57

As of September 30, 2006, there was $22.9 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted-average period of 0.7 years.

Cash received from option exercise under all share-based payment arrangements for the nine months ended September 30, 2006 and 2005 was $0 and $2.1 million, respectively. The tax benefit from the exercise of the share-based payment arrangements totaled $0 and $.8 million, respectively, for the nine months ended September 30, 2006 and 2005.

Note 15.   Other Income and Other Expenses

Other income included the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2006		2005		2006		2005
	(Dollars in millions)
Gain on sale of Isuzu interest	$	—	$	—	$	311	$	—
Gain on sale of Suzuki interest (See Note 5)		—		—		630		—
Gain on sale of GMAC investment in a regional homebuilder (See Note 5)		—		—		415		—
Total Other Income	$	—	$	—	$	1,356	$	—

In April 2006, GM sold its 7.9% equity interest (90.09 million shares) in Isuzu Motors Ltd. (Isuzu). The sale of GM’s interest in Isuzu generated cash proceeds of $311 million and a gain on sale of $311 million ($212 million after tax), which is reflected in Other Income in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2006. GM’s basis in its investment was written down to zero in 2001.

30

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 15.    Other Income and Other Expenses — (concluded)

Other expenses included the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2006		2005		2006		2005
	(Dollars in millions)
Impairment loss on controlling interest of GMAC (See Note 2)	$	615	$	—	$	1,823	$	—
FHI impairment loss (See Note 5)		—		—		—		812
Impairment of goodwill (See Note 4)		828		—		828		—
Total other expenses	$	1,443	$	—	$	2,651	$	812

Note 16.   Segment Reporting

																		Total
							GM					Total						Auto &						Other			Total
	GMNA			GME			LAAM			GMAP		GMA			Other			Other			GMAC			Financing(d)			Financing			Total
	(Dollars in millions)
For the Three Months Ended September 30, 2006
Automotive sales
External customers	$	26,295		$	7,091		$	3,477		$	3,007	$	39,870		$	(346	)	$	39,524		$	—		$	—		$	—		$	39,524
Intersegment		(1,398	)		396			159			844		1			(1	)		—			—			—			—			—
Total automotive sales		24,897			7,487			3,636			3,851		39,871			(347	)		39,524			—			—			—			39,524
Financial services and insurance revenues		—			—			—			—		—			—			—			9,366			(2	)		9,364			9,364
Other income		—			—			—			—		—			—			—			—			—			—			—
Total net sales and revenues	$	24,897		$	7,487		$	3,636		$	3,851	$	39,871		$	(347	)	$	39,524		$	9,366		$	(2	)	$	9,364		$	48,888
Interest income(a)	$	418		$	151		$	22		$	31	$	622		$	(317	)	$	305		$	697		$	(187	)	$	510		$	815
Interest expense	$	794		$	174		$	13		$	57	$	1,038		$	(427	)	$	611		$	4,256		$	(17	)	$	4,239		$	4,850
Net income (loss)(c)	$	(374	)	$	(103	)	$	184		$	231	$	(62	)	$	(25	)	$	(87	)	$	(325	)	$	321		$	(4	)	$	(91	)
Segment assets	$	125,208		$	24,150		$	4,681		$	12,770	$	166,809		$	(978	)	$	165,831		$	309,838		$	(6,091	)	$	303,747		$	469,578
For the Three Months Ended September 30, 2005(b)
Automotive sales
External customers	$	26,091		$	6,890		$	2,805		$	2,893	$	38,679		$	(316	)	$	38,363		$	—		$	—		$	—		$	38,363
Intersegment		(1,406	)		362			186			859		1			(1	)		—			—			—			—			—
Total automotive sales		24,685			7,252			2,991			3,752		38,680			(317	)		38,363			—			—			—			38,363
Financial services and insurance revenues		—			—			—			—		—			—			—			8,710			109			8,819			8,819
Other income		—			—			—			—		—			—			—			—			—			—			—
Total net sales and revenues	$	24,685		$	7,252		$	2,991		$	3,752	$	38,680		$	(317	)	$	38,363		$	8,710		$	109		$	8,819		$	47,182
Interest income(a)	$	383		$	96		$	11		$	17	$	507		$	(269	)	$	238		$	601		$	(138	)	$	463		$	701
Interest expense	$	801		$	117		$	62		$	45	$	1,025		$	(279	)	$	746		$	3,320		$	(7	)	$	3,313		$	4,059
Net income (loss)	$	(2,175	)	$	(353	)	$	(68	)	$	126	$	(2,470	)	$	145		$	(2,325	)	$	654		$	7		$	661		$	(1,664	)
Segment assets	$	124,409		$	23,802		$	5,075		$	9,402	$	162,688		$	(3,295	)	$	159,393		$	314,194		$	(4,169	)	$	310,025		$	469,418

31

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

																			Total
							GM						Total						Auto &					Other			Total
	GMNA			GME			LAAM			GMAP			GMA			Other			Other			GMAC		Financing(d)			Financing		Total
	(Dollars in millions)
Note 16.  Segment Reporting — (concluded)
For the Nine Months Ended September 30, 2006
Automotive sales
External customers	$	86,343		$	22,929		$	10,126		$	8,470		$	127,868		$	(982	)	$	126,886		$	—	$	—		$	—	$	126,886
Intersegment		(4,325	)		1,392			470			2,464			1			(1	)		—			—		—			—		—
Total automotive sales		82,018			24,321			10,596			10,934			127,869			(983	)		126,886			—		—			—		126,886
Financial services and insurance revenues		—			—			—			—			—			—			—			27,215		71			27,286		27,286
Other income		—			—			—			941			941			—			941			415		—			415		1,356
Total net sales and revenues	$	82,018		$	24,321		$	10,596		$	11,875		$	128,810		$	(983	)	$	127,827		$	27,630	$	71		$	27,701	$	155,528
Interest income(a)	$	1,016		$	383		$	68		$	82		$	1,549		$	(873	)	$	676		$	2,003	$	(498	)	$	1,505	$	2,181
Interest expense	$	2,415		$	486		$	114		$	164		$	3,179		$	(1,161	)	$	2,018		$	11,637	$	(45	)	$	11,592	$	13,610
Net income (loss)(c)	$	(4,818	)	$	(113	)	$	353		$	1,063		$	(3,515	)	$	(353	)	$	(3,868	)	$	1,210	$	(367	)	$	843	$	(3,025	)
For the Nine Months Ended September 30, 2005(b)
Automotive sales
External customers	$	80,060		$	22,642		$	7,681		$	6,068		$	116,451		$	(607	)	$	115,844		$	—	$	—		$	—	$	115,844
Intersegment		(3,149	)		1,307			544			1,300			2			(2	)		—			—		—			—		—
Total automotive sales		76,911			23,949			8,225			7,368			116,453			(609	)		115,844			—		—			—		115,844
Financial services and insurance revenues		—			—			—			—			—			—			—			25,250		330			25,580		25,580
Other income		—			—			—			—			—			—			—			—		—			—		—
Total net sales and revenues	$	76,911		$	23,949		$	8,225		$	7,368		$	116,453		$	(609	)	$	115,844		$	25,250	$	330		$	25,580	$	141,424
Interest income(a)	$	997		$	299		$	40		$	22		$	1,358		$	(721	)	$	637		$	1,510	$	(301	)	$	1,209	$	1,846
Interest expense	$	2,308		$	366		$	124		$	61		$	2,859		$	(757	)	$	2,102		$	9,370	$	(22	)	$	9,348	$	11,450
Net income (loss)	$	(5,049	)	$	(963	)	$	(12	)	$	(409	)	$	(6,433	)	$	331		$	(6,102	)	$	2,198	$	—		$	2,198	$	(3,904	)

(a)	Interest income is included in net sales and revenues from external customers.
(b)	Effective January 1, 2006, four powertrain entities were transferred from GMNA to GME for management reporting. Accordingly, third quarter of 2005 amounts have been revised for comparability by reclassifying $103 million of revenue, $10 million of net income and $339 million of segment assets from GMNA. For the nine months ended September 30, 2005, amounts have been revised by reclassifying $380 million of revenue and $59 million of net income from GMNA to GME.
(c)	For the three and nine months ended September 30, 2006, GM recognized a non-cash impairment charge of $615 million and $1,823 million respectively, on the pending sale of a controlling interest in GMAC which is reflected in the column “Other Financing.” Refer to Note 2.
(d)	Other Financing includes the elimination from total assets of net receivables from Auto & Other. Receivables eliminated were $4.8 billion and $3.4 billion at September 30, 2006 and 2005, respectively.

Note 17.   Subsequent Events

In October 2006, GM announced its plan to cease production at two former component plants that are included in GM’s consolidated financial results. The permanent idling of approximately 2,000 employees will occur in several stages, with the majority of the workforce being laid off by December 31, 2006. GM expects to record a charge of approximately $200 million after tax in the fourth quarter of 2006 primarily for the idling and separation costs of the workforce. Currently, GM and the UAW are developing a mutually agreed upon severance program to offer to the hourly workforce. The actual severance program offered to employees could impact the amount of the estimated charge.

Also, in October 2006, the GM Board of Directors approved a reduction to the level of life insurance coverage for corporate-paid salaried retiree life insurance. For eligible salaried employees who retire on or after May 1, 2007, coverage will reduce 50% 10 years from the date of retirement. Salaried retirees before May 1, 2007 will have their coverage reduced 50% on January 1, 2017. GM estimates this change will reduce GM’s year-end OPEB obligation by approximately $600 million.

* * * * *

32

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

General Motors Corporation (together with its subsidiaries, the Corporation, General Motors, GM, we or us) is primarily engaged in automotive production and marketing and financing and insurance operations. With its largest operating presence located in North America, GM designs, manufactures, and markets vehicles worldwide. GM’s finance and insurance operations primarily relate to GMAC LLC, a wholly owned subsidiary of GM that is the successor to General Motors Acceptance Corporation (GMAC), which provides a broad range of financial services, including automotive finance and mortgage products and services. As discussed below, the sale of a 51% interest in GMAC to a consortium of investors is pending.

Financial Results

GM’s consolidated net sales and revenues increased to $48.9 billion in the third quarter of 2006 compared to $47.2 billion in the third quarter of 2005. The third quarter 2006 revenue levels set a GM record for third-quarter revenues, representing an increase of more than 3% from the third quarter of 2005. GM recorded a consolidated net loss of $91 million in the third quarter of 2006, compared to a net loss of $1.7 billion in the third quarter of 2005. GMAC’s net income in the third quarter of 2006 decreased by approximately $1 billion to a net loss of $325 million, compared to net income of $654 million in the third quarter of 2005.

For the first nine months of 2006, GM’s consolidated net sales and revenues were $155.5 billion, an increase of $14.1 billion, or approximately 10%, over the $141.4 billion in the first nine months of 2005. GM has experienced three consecutive quarters of record revenue for the first nine months of 2006. GM incurred a net loss of $3 billion for the first nine months of 2006 as compared to a net loss of $3.9 billion for the same period in 2005.

GM’s results of operations for the first nine months of 2006 were most significantly affected by the following trends and significant events:

Automotive Operations

Total Automotive revenues were $127.8 billion for the first nine months of 2006, which includes three consecutive quarters of growth in revenue over the same periods in 2005. GM experienced revenue improvements from all regions. Notably GMNA’s revenues increased 6.6% from the same period in 2005 due primarily to favorable product mix related to the recently launched full size utility vehicles such as the Chevrolet Tahoe, GMC Yukon and Cadillac Escalade, as well as favorable net price. GMAP’s revenues increased 61% from the previous period due to the consolidation of GM Daewoo Auto & Technology Company (GM Daewoo) beginning in June 2005 and continued strong performance in South Korea. GMLAAM’s revenues increased 28.8% due to favorable pricing and increases in volume generated by new product launches, including continued strong sales growth primarily in Brazil and the Middle East. During the first nine months of 2006, GM achieved certain cost cutting measures that were previously communicated as part of its turnaround plan. Specifically, GMNA achieved savings of $1.1 billion after tax related to hourly OPEB savings as a result of the UAW Settlement Agreement, the hourly pension and OPEB savings as a result of the Attrition Program, and the effects of the changes in salaried retiree benefits plans announced in the first quarter of 2006. In addition, we continued to experience better vehicle quality than our accrual rate for warranty claims per car which allowed us to decrease our warranty accruals by $0.3 billion after tax. See “MD&A — Turnaround Plan” for a detailed description of the cost savings measures.

GMNA has increased its target for reduction of structural costs from the amount previously stated in GM’s 2005 Annual Report on Form 10-K by $2 billion to $9 billion on a running rate basis by the end of 2006. Running rate basis refers to the average annualized cost savings into the foreseeable future anticipated to result from cost savings actions when fully implemented. GM expects $6 billion of the structural cost reduction to be realized during 2006, exceeding the $4 billion of structural cost reductions previously estimated for calendar year 2006 in GM’s 2005 Annual Report on Form 10-K. This improvement is due to the financial impact of the UAW Attrition Agreement, including the effect of the pension and OPEB remeasurements, and the impact of the previously

33

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

  Financial Results — (concluded)

disclosed change in accounting treatment for the contributions related to the independent VEBA established under the UAW Settlement Agreement. The expected total annual cash savings from structural cost reductions remains at $5 billion on an average running rate basis.

Significant Events

Delphi Bankruptcy

Delphi, GM’s largest supplier of automotive systems, components and parts, is pursuing a restructuring plan as part of its Chapter 11 process proceedings under the United States Bankruptcy Code and is continuing to work constructively in the court proceedings with GM and other participants in the process. GM’s goal is to achieve outcomes that are in the best interests of GM and its stockholders, and, to the extent consistent with those interests, that enable Delphi to continue to serve as an important supplier to GM. Hearings on Delphi’s motion to reject its U.S. labor agreements and modify retiree welfare benefits have been adjourned indefinitely to allow Delphi, its unions and GM additional time to focus on reaching comprehensive consensual agreements. Delphi has indicated to us that it expects no disruptions in its ability to continue supplying us with the systems, components and parts we need. If these negotiations fail, however, labor disruptions at Delphi could seriously disrupt our North American operations, prevent us from executing our GMNA turnaround initiatives, and materially adversely impact our business. Accordingly, resolution of the Delphi related issues remains a critical near term priority.

Hearings on Delphi’s motion to reject certain supply contracts with GM have been adjourned indefinitely to allow Delphi, its unions and GM additional time to focus on reaching comprehensive consensual agreements. Delphi has not rejected any GM contracts at this time and has assured GM that it does not intend to disrupt production at GM assembly facilities. There is a risk, however, that if negotiations fail Delphi or one or more of its affiliates may reject or threaten to reject individual contracts with GM, seeking either to exit unprofitable lines of business or to increase the price GM pays for certain parts or components. If that happens, the supply of automotive systems, components and parts to GM could be disrupted, possibly forcing the suspension of production at GM assembly facilities, which would have a material adverse effect on GM.

GM has filed an amended and consolidated Proof of Claim setting forth claims against Delphi and the other debtor entities. Although the Proof of Claim preserves GM’s right to pursue recovery of its claims from the Delphi estate, these claims may be subject to compromise in the bankruptcy proceedings or as part of a negotiated settlement, and as a result GM may recover only a portion, if any, of these claims.

Although the challenges faced by Delphi during its restructuring process could create operating and financial risks for GM, that process is also expected to present opportunities for GM. For example, GM hopes to reduce, over the long term, the significant cost penalty GM incurs in obtaining parts from Delphi. In addition, the restructuring process may result in a stronger Delphi that improves the quality of systems, components and parts it supplies to GM. However, there can be no assurance that GM will be able to realize any benefits. See “Key Factors Affecting Future and Current Results” for a more complete description.

GMAC — Pending Sale of 51% Controlling Interest

GM continues to work towards consummating the sale of a 51% controlling interest in GMAC to a consortium of investors in the fourth quarter of 2006. The transaction remains subject to a number of U.S. and international regulatory and other approvals and is expected to provide for a strong long term services agreement between GM and GMAC, improve GM’s liquidity position, enhance stockholder value through a stronger GMAC and provide GMAC with a solid foundation to improve its current credit rating by delinking the GMAC credit ratings from those of GM. GM will also receive an option, to last 10 years from the closing of the transaction, to purchase certain assets related to the automotive finance business of GMAC’s North American Operations and International Operations. See “Key Factors Affecting Future and Current Results” for a more complete description.

34

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

  Significant Events — (concluded)

Discussions with Renault and Nissan

From time to time, GM considers entering into relationships with other OEM automobile manufacturers. In this regard, from July 2006 to October 2006, GM evaluated a three way relationship proposed by Renault S.A. (Renault) and Nissan Motor Co. Ltd. (Nissan). A team from GM, participated with teams from Renault and Nissan in a comprehensive review of the potential benefits of such a relationship in order to fully inform GM’s Board of Directors of the potential synergies among the three companies. On October 4, 2006, GM, Renault, and Nissan announced that they had agreed to terminate discussions regarding the proposed alliance. The companies recognized that significant aggregate synergies might result from the alliance, and in seven out of eight areas agreed on the scope of potential synergies, while disagreeing only on the extent of the potential synergies in the area of purchasing. In all areas, the companies agreed, the benefit of those synergies would accrue predominantly to Renault and Nissan, which would improve Nissan’s position as a competitor of GM. Under the terms of the transaction proposed by Renault and Nissan, GM would not be compensated for its lesser share in the synergies resulting from the alliance. Moreover, Renault and Nissan proposed to acquire a substantial block of GM common stock at market price, without paying any premium for the block, and to obtain the right to restrict GM’s ability to enter into other strategic transactions. On review of the proposed transaction, and after receiving input from GM’s financial advisors on the proposed structure, the GM Board unanimously voted that the alliance would not be in the best interest of GM and its stockholders. GM may in the future consider entering into relationships with other OEM automobile manufacturers, but has no definitive plans to enter into any such relationships at this time.

Sale of Investments in Isuzu and Suzuki

During the first quarter of 2006, GM reduced its equity stake in Suzuki Motor Corporation (Suzuki) from 20.4% to 3.7%. The sale of the investment resulted in a gain of $372 million after tax recognized by GMAP and generated cash proceeds of approximately $2 billion. GM maintains a 3.7% equity ownership in Suzuki after the transaction, and will continue its strategic alliance with Suzuki. In the second quarter of 2006, GM sold its 7.9% equity interest (90.09 million shares) in Isuzu Motors Ltd (Isuzu) to Isuzu’s strategic business partners and major shareholders, Mitsubishi Corp., Itochu Corp. and Mizuho Corporate Bank. The sale of GM’s interest in Isuzu generated cash proceeds of $311 million and a gain on sale of $311 million ($212 million after tax). GM’s basis in its investment was written down to zero in 2001. The proceeds from both sales were used to support the GMNA turnaround plan, finance future growth initiatives, strengthen the balance sheet and fund other corporate priorities.

Sale of Regional Homebuilder

In the second quarter of 2006, GMAC recognized a gain of $415 million ($259 million after tax) on the sale of its equity interest in a regional home builder. Under the equity method of accounting, GMAC’s share of pretax income recorded from this investment was approximately $42.4 million and $35.2 million for the nine months ended September 30, 2006 and 2005, respectively.

Basis of Presentation

This management’s discussion and analysis of financial condition and results of operations (MD&A) should be read in conjunction with the December 31, 2005 consolidated financial statements and notes thereto (the 2005 Consolidated Financial Statements), along with the MD&A included in General Motors’ 2005 Annual Report on Form 10-K, filed separately with the U.S. Securities and Exchange Commission (SEC). All earnings per share amounts included in the MD&A are reported on a fully diluted basis. See related discussion in Item 2 of the GMAC Form 10-Q for the quarterly period ended September 30, 2006, which is herein incorporated by reference.

35

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Basis of Presentation — (concluded)

GM’s Auto & Other Reportable Operating Segment Consists of:

•  GM’s four automotive regions: GM North America (GMNA), GM Europe (GME), GM Latin America/Africa/Mid-East (GMLAAM), and GM Asia Pacific (GMAP), which constitute GM Automotive (GMA); and

•  Other, which includes the elimination of intersegment transactions, certain non-segment specific revenues and expenditures, including legacy costs related to postretirement benefits for certain Delphi Corporation (Delphi) and other retirees, and certain corporate activities.

GM’s FIO reportable operating segment consists of GMAC and Other Financing, which includes financing entities that are not consolidated by GMAC.

The disaggregated financial results for GMA have been prepared using a management approach, which is consistent with the basis and manner in which GM management internally disaggregates financial information for the purpose of assisting in making internal operating decisions. In this regard, certain common expenses were allocated among regions less precisely than would be required for stand-alone financial information prepared in accordance with accounting principles generally accepted in the U.S. (GAAP). The financial results represent the historical information used by management for internal decision-making purposes; therefore, other data prepared to represent the way in which the business will operate in the future, or data prepared in accordance with GAAP, may be materially different.

Consistent with industry practice, market share information employs estimates of sales in certain countries where public reporting is not legally required or otherwise available on a consistent basis.

Consolidated Results of Operations

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
	(Dollars in millions)
Consolidated
Total net of sales and revenues	$	48,888		$	47,182		$	155,528		$	141,424
Net loss	$	(91	)	$	(1,664	)	$	(3,025	)	$	(3,904	)
Net margin		(0.2	)%		(3.5	)%		(1.9	)%		(2.8	)%
Automotive and Other Operations
Total Automotive sales and other income	$	39,524		$	38,363		$	127,827		$	115,844
Net loss	$	(87	)	$	(2,325	)	$	(3,868	)	$	(6,102	)
Financing and Insurance Operations
Total Financial services and insurance revenues	$	9,364		$	8,819		$	27,286		$	25,580
GMAC net income (loss)	$	(325	)	$	654		$	1,210		$	2,198
Other financing net income (loss)	$	321		$	7		$	(367	)	$	—
Total FIO net income (loss)	$	(4	)	$	661		$	843		$	2,198

The increase in third quarter 2006 total net sales and revenues of 3.6%, compared with third quarter 2005, was due to higher GMA revenue of $1.2 billion, primarily driven by favorable pricing and sales of higher priced vehicles related to new product launches, increases in volume in GMLAAM, and continued strong sales performance in certain countries within GMLAAM and GMAP, and increased FIO revenue of $500 million, more than 6% over 2005. Similarly, year to date total net sales and revenues were $14.1 billion higher, an increase of 10% over 2005.

Consolidated results improved by about $1.6 billion to a net loss of $91 million in the third quarter of 2006, compared to a net loss of $1.7 billion million in the third quarter of 2005. The improvement was almost fully

36

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Consolidated Results of Operations — (concluded)

accounted for by significant improvement in GMA and benefits associated with certain tax matters, partially offset by lower GMAC results. For the first nine months of 2006, GM reported a consolidated net loss of $3 billion, $900 million less than the loss of $3.9 billion in 2005.

Third quarter 2006 results included:

•  Consolidated net loss of $91 million;

•  Increase in Delphi charge of $500 million ($325 million, after tax);

•  Strong revenue and improved performance at GMNA;

•  Continued strong sales growth and profitability at GMLAAM and GMAP;

•  Deterioration in profitability at GMAC;

•  Restructuring and impairment charges at GME of $87 million primarily related to the shift reduction at the Ellesmere Port plant;

•  Favorable adjustment at GMNA of $105 million related to the impact of the UAW Attrition Agreement on other postemployment and postretirement benefits;

•  Product related impairments at GMNA of $112 million, after tax, and goodwill impairment related to GMAC’s Commercial Finance Group of $695 million, after tax, and

•  Significant tax benefits of approximately $340 million realized in the Other reporting segment, as well as favorable tax items related to GMAP of $148 million.

More detailed discussions on the results of operations for the automotive regions, other operations, and GMAC can be found in the following sections.

GM Automotive and Other Operations Financial Review

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
	(Dollars in millions)
Auto & Other:
Total Automotive sales and other income	$	39,524		$	38,363		$	127,827		$	115,844
Net loss	$	(87	)	$	(2,325	)	$	(3,868	)	$	(6,102	)
GMA net income (loss) by region:
GMNA	$	(374	)	$	(2,175	)	$	(4,818	)	$	(5,049	)
GME		(103	)		(353	)		(113	)		(963	)
GMLAAM		184			(68	)		353			(12	)
GMAP		231			126			1,063			(409	)
Net loss	$	(62	)	$	(2,470	)	$	(3,515	)	$	(6,433	)
Net margin		(0.2	)%		(6.4	)%		(2.7	)%		(5.6	)%
GM global automotive market share		13.9	%		14.4	%		13.5	%		14.3	%
Other:
Net income (loss)	$	(25	)	$	145		$	(353	)	$	331

GM Auto & Other’s automotives sales and other income increased $1.2 billion, or nearly 3%, in the third quarter of 2006, compared to the same quarter of 2005. The improvement in revenue was driven by a $645 million or 21.6% increase at GMLAAM and an increase at GMNA and GME of more than $200 million each from 2005.

37

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GM Automotive and Other Operations Financial Review — (concluded)

GMAP’s revenue increased by $99 million. For the first nine months of 2006, automotive sales and other income at Auto & Other increased $12 billion over 2005, or 10.3%, led by GMNA and GMAP, with increases of $5.1 billion and $4.5 billion, respectively.

GM’s global market share was 13.9% and 14.4% for the third quarters of 2006 and 2005, respectively. GMNA’s market share decreased 1.1 percentage points, to 24.5% for the quarter, compared to 2005. Market share increased in GMLAAM and GMAP, while GME declined. In the first nine months of 2006, global market share declined 0.8 percentage point to 13.5%, from 14.3% at September 30, 2005. The decrease was driven by declines at GMNA and GME, partly offset by increases at GMLAAM and GMAP.

GMA reported a net loss of $62 million in the third quarter 2006, an improvement of $2.4 billion compared to a net loss of $2.5 billion in 2005, with all regions showing improved results. GMA’s net loss of $3.5 billion for the first nine months of 2006 was an improvement of $2.9 billion over 2005.

GM Automotive Regional Results

GM North America

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
	(Dollars in millions)
GMNA:
Total automotive sales and other income	$	24,897		$	24,685		$	82,018		$	76,911
Net loss	$	(374	)	$	(2,175	)	$	(4,818	)	$	(5,049	)
Net margin		(1.5	)%		(8.8	)%		(5.9	)%		(6.6	)%
Production volume	(Volume in thousands)
Cars		417			424			1,375			1,352
Trucks		633			722			2,167			2,224
Total GMNA		1,050			1,146			3,542			3,576
Vehicle unit sales
Industry — North America		5,250			5,522			15,412			15,844
GM as a percentage of industry		24.5	%		25.6	%		24.0	%		26.1	%
Industry — U.S.		4,458			4,740			13,084			13,543
GM as a percentage of industry		25.1	%		26.0	%		24.3	%		26.5	%
GM cars		21.8	%		22.5	%		20.8	%		23.1	%
GM trucks		27.9	%		28.8	%		27.4	%		29.2	%

North American industry vehicle unit sales decreased 5% to 5.3 million in the third quarter of 2006 compared to 2005, driven by lower U.S. industry volume of 4.5 million units, compared to 4.7 million units in the third quarter of 2005.

U.S. industry volume in the third quarter of 2006 represents a seasonally adjusted annual rate of 17.1 million, compared to 18.5 million in the third quarter of 2005. GM’s U.S. market share decreased by 0.9 percentage point, to 25.1%, compared to the third quarter of 2005, reflecting a decline in vehicle unit deliveries of approximately 117 thousand units, or 10.5%. GM’s U.S. car market share declined by 0.7 percentage point to 21.8%, while GM’s U.S. truck market share declined to 27.9%, down 0.9 percentage point. GM’s sales in the third quarter of 2005 were particularly strong, in part the result of marketing programs, including employee pricing offers and other incentives, that were not offered in 2006.

38

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GM Automotive Regional Results — (continued)

  GM North America — (continued)

GMNA production volumes were lower in 2006, by approximately 96 thousand units, at 1.050 million units for the quarter, compared to the third quarter of 2005. Dealer inventories in the U.S. increased year over year by approximately 185 thousand units, from 818 thousand units at September 30, 2005 to 1.003 million units at September 30, 2006, which is typical of inventories at the end of the third quarter. For example, dealer inventories at the end of the third quarter in 2002, 2003, and 2004 averaged 1.04 million units. The unusually small size of dealer inventories at the end of the third quarter 2005 resulted from strong sales driven by marketing programs as described above. Management anticipates that dealer inventories will be between 1 million and 1.1 million at the end of the year. The size of dealer inventories is affected by a variety of factors, including consumer demand and retail and dealer incentives provided by the Corporation. Year to date production decreased 34 thousand units, to 3.542 million in 2006.

North American industry vehicle unit sales decreased 2.7% to 15.4 million in the first nine months of 2006 from 15.8 million in the first nine months of 2005, while GMNA’s market share decreased by 2.1 percentage points to 24.0% in 2006 year-to-date, compared to 26.1% in 2005.

For the first nine months of 2006, industry vehicle unit sales in the United States decreased 3.4% to 13.1 million units from 13.5 million units in the first nine months of 2005. GM’s 2006 year-to-date U.S. market share declined 2.2 percentage points, to 24.3%. U.S. car market share declined by 2.3 percentage points to 20.8%, while U.S. truck market share decreased to 27.4%, down 1.8 percentage points from 2005.

In the third quarter of 2006, GMNA incurred a net loss of $374 million as compared to a net loss of $2.2 billion for the comparable period of 2005. The improvement in results was due primarily to the following factors:

•  Lower pension and OPEB costs of approximately $1 billion, primarily due to hourly OPEB savings as a result of the UAW Settlement Agreement, the hourly pension and OPEB savings as a result of the Attrition Program, and the effects of the changes in salaried retiree benefits plans announced in the first quarter of 2006.

•  Manufacturing cost savings of $0.4 billion due to results of the Attrition Program, and $0.4 billion in other structural cost savings.

•  Favorable adjustments of $175 million, related to reserves for postemployment benefits, primarily attributable to the transfer of employees from idled plants to other plant sites and a reduction in the population of employees on sickness and accident and extended disability leaves. This was slightly offset by the impact of the remeasurement of GM’s U.S. hourly OPEB plans, as of May 31, 2006 as a result of the previously discussed Attrition Program, which resulted in an after tax charge of $10 million in OPEB expense.

•  An unfavorable impact due to decreased volumes was only partially offset by favorable mix, primarily related to sales of full size utility vehicles. The net impact of these items is approximately $400 million unfavorable.

•  Other contribution margin decreased primarily due to an increase in the warranty accrual as a result of the extension of the powertrain warranty for all 2007 models sold in the United States and Canada, partially offset by increases in non-vehicle sales and improvements in other warranty costs. The net impact of these items is approximately $100 million unfavorable.

•  An impairment charge of $172 million (after tax charge of $112 million), for the impairment of product specific assets and write down of plant assets in connection with the decreased profitability and production associated with the planned cessation of production at the Doraville, Georgia assembly plant in 2008.

In addition, an impairment charge was recorded in the third quarter of 2005 of $743 million (after tax charge of $468 million) related to product specific assets and office and production facilities.

39

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GM Automotive Regional Results — (continued)

  GM North America — (continued)

For the first nine months of 2006, GMNA incurred a net loss of $4.8 billion, compared to a net loss of $5 billion in the 2005 period. 2006 year to date results were affected by the following:

•  A net charge of $3.7 billion, after tax, related to the UAW Attrition Agreement, which is more fully discussed in the section titled “GM-UAW-Delphi Special Attrition Program Agreement” below, was taken in the second quarter of 2006. This charge included the favorable impact of $0.6 billion after tax for the reduction in capacity action charges reflected in the fourth quarter of 2005 due to lower than anticipated expense related to the JOBS bank and $0.1 billion after tax related to the impact on other postemployment and postretirement benefits. In addition, estimated charges of $65 million after tax related to other separations of U.S. salaried employees was taken in the first quarter of 2006. Separately, 2005 results included after tax charges of $84 million related to the write-down of various plant assets in connection with the cessation of production at the Lansing assembly plant and $148 million related to voluntary early retirement and other separation programs with respect to certain U.S. salaried employees.

•  Other impairment charges of $303 million ($197 million after tax) in the second quarter of 2006 related to the write-down of product specific assets.

•  A favorable adjustment of approximately $300 million after tax in the second quarter of 2006 related to a decrease in the liability for policy, product warranty and recall campaigns due to lower spending as a result of better vehicle quality.

•  Lower pension and OPEB costs of approximately $1.3 billion in the first three quarters of the year, primarily due to the effects of the changes in salaried retiree benefits plans announced in the first quarter of 2006, and the hourly pension savings as a result of the Attrition Program.

•  Savings in other structural costs of approximately $1.6 billion, comprised of reductions in engineering, marketing and other costs and a reduction to the product liability reserve.

•  For the nine months of 2006, contribution margin was favorable by approximately $0.5 billion due to increase in production volumes, improved product mix and favorable pricing.

40

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GM Automotive Regional Results — (continued)

GM Europe

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
	(Dollars in millions)
Total automotive sales and other income	$	7,487		$	7,252		$	24,321		$	23,949
GME net loss	$	(103	)	$	(353	)	$	(113	)	$	(963	)
GME net margin		(1.4	)%		(4.9	)%		(0.5	)%		(4.0	)%
	(Volume in thousands)
Production volume		374			412			1,363			1,415
Vehicle unit sales
Industry		5,052			5,060			16,562			16,101
GM as a percentage of industry		9.0	%		9.1	%		9.2	%		9.5	%
GM market share — Germany		9.9	%		10.5	%		10.1	%		10.9	%
GM market share — United Kingdom		13.3	%		13.7	%		14.3	%		14.7	%

Industry vehicle unit sales decreased in Europe during the third quarter of 2006 by approximately 0.2% compared to the third quarter of 2005. GME vehicle unit deliveries decreased by approximately 7,000 units in the third quarter of 2006 versus the same period in 2005 leading to a decline in GME’s market share to 9.0%, representing a 0.1 percentage point reduction versus the same period in 2005. GME experienced market share losses for the two largest markets in Europe, Germany and the United Kingdom, in the third quarter of 2006 compared to the third quarter of 2005.

For the first nine months of 2006, European industry vehicle unit sales increased 2.9% over 2005, while GME sales decreased by 4,000 units over 2005. This resulted in a decline in GME’s market share for the nine months, to 9.2%, down 0.3 percentage point from 2005.

GME recorded a net loss of $103 million in the third quarter of 2006, compared to a net loss of $353 million in the third quarter of 2005. The improved results were affected in part by the following factors:

•  Results for the third quarter of 2006 included restructuring charges for separations totaling $83 million, after tax, and impairment charges of $4 million, after tax. The restructuring charge relates mainly to reduction of one shift at the Ellesmere Port plant in the U.K. as well as the continuing separation activities related to the restructuring plan announced in the fourth quarter of 2004. These items are further discussed in Note 13, Impairments, Restructuring and Other Initiatives, to the Condensed Consolidated Financial Statements.

•  Results for the third quarter of 2005 included a restructuring charge of $56 million, after tax, related to separations and a charge related to product specific asset impairments of $176 million, after tax.

•  Material cost reductions as well as favorable pricing of approximately $85 million improvement.

•  Savings in other structural costs of approximately $29 million due to impacts of the GME restructuring.

For the first nine months of 2006, GME incurred a net loss of $113 million, representing a significant improvement from the loss of $963 million for the first nine months of 2005. Factors affecting results included:

•  Total restructuring and impairment charges for the first nine months of 2006 of $309 million, after tax. The third quarter charge of $87 million, after tax, consists mainly of separation charges as discussed above. The second quarter charge of $182 million, after tax, consisted of a charge for separations and contract cancellations of $88 million, after tax, a product specific impairment charge of $37 million, after tax, and an asset impairment charge of $57 million, after tax, related to the closure of GM’s Portugal assembly plant. The first quarter of 2006 charge of $40 million, after tax, primarily related to the restructuring plan announced in the fourth quarter of 2004.

41

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GM Automotive Regional Results — (continued)

GM Europe — (concluded)

•  Total restructuring charges for the first nine months of 2005 were $780 million, after tax. This amount consisted of restructuring charges of $604 million, after tax, for separations, mainly related to the restructuring plan announced in the fourth quarter of 2004, but included costs related to the dissolution of the Powertrain joint venture with Fiat in the second quarter of 2005, and a charge for product specific asset impairments of $176 million, after tax.

•  Savings for the first nine months of 2006 related to material cost reductions of approximately $200 million, favorable savings in structural costs of approximately $100 million and favorable pricing performance of approximately $200 million.

Effective January 1, 2006, four Powertrain entities were transferred from GMNA to GME for management reporting. Accordingly, third quarter 2005 amounts have been revised for comparability by reclassifying $103 million of revenue and $10 million of net income from GMNA to GME. Year to date 2005 amounts have been revised by reclassifying $380 million of revenue and $59 million of net income from GMNA to GME.

GM Latin America/Africa/Mid-East

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
	(Dollars in millions)
Total automotive sales and other income	$	3,636		$	2,991		$	10,596		$	8,225
GMLAAM net income (loss)	$	184		$	(68	)	$	353		$	(12	)
GMLAAM net margin		5.1	%		(2.3	)%		3.3	%		0.1	%
	(Volume in thousands)
Production volume		216			207			616			587
Vehicle unit sales
Industry		1,565			1,344			4,441			3,856
GM as a percentage of industry		17.3	%		16.7	%		16.8	%		16.4	%
GM market share — Brazil		21.1	%		21.1	%		21.4	%		20.7	%

For the third quarter of 2006, industry vehicle unit sales in the GMLAAM region increased 16% to 1.565 million units compared to the third quarter of 2005. GMLAAM’s vehicle unit sales increased by 21% in the third quarter of 2006, outpacing the market and resulting in a 0.6 percentage point rise in GMLAAM market share to 17.3%. The overall market share gain was attributable to increases in several countries, including Brazil and Venezuela, with the highest gains in Colombia, South Africa, Egypt and the Dubai region.

The region’s industry grew by 15% in the first nine months of 2006, while GMLAAM’s vehicle unit sales increased by 18% over 2005. This growth led to a 0.4 percentage point increase in GMLAAM’s market share to 16.8% compared to the first nine months of 2005.

GMLAAM had net income of $184 million in the third quarter of 2006, compared to a net loss of $68 million in the third quarter of 2005. Favorable pricing contributed approximately $77 million of the improvement, higher production volumes and improved product mix contributed approximately $63 million, and other factors contributed $13 million, including a favorable tax benefit of approximately $30 million related to the recently adopted Brazil tax recovery program. In addition, GMLAAM’s third quarter of 2005 performance was affected by impairment charges of $99 million after tax related to product specific impairments.

For the first nine months of 2006, GMLAAM earned $353 million compared to a $12 million loss for the first nine months of 2005. Favorable pricing contributed approximately $300 million of the improvement and higher production volumes and improved product mix contributed approximately $200 million. GMLAAM’s 2006 results

42

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GM Automotive Regional Results — (continued)

GM Latin America/Africa/Mid-East — (concluded)

also include $42 million of restructuring charges in the first two quarters of 2006 relating to the costs of voluntary employee separations at GM do Brasil. In addition, GMLAAM’s 2005 results included the impairment charges as noted above.

GM Asia Pacific

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
	(Dollars in millions)
Total automotive sales and other income	$	3,851		$	3,752		$	11,875		$	7,368
GMAP net income (loss)	$	231		$	126		$	1,063		$	(409	)
GMAP net margin		6.0	%		3.4	%		9.0	%		(5.6	)%
	(Volume in thousands)
Production volume		430			409			1,384			1,142
Vehicle unit sales
Industry		4,634			4,458			14,479			13,642
GM as a percentage of industry		6.2	%		5.9	%		6.4	%		5.7	%
GM market share — Australia		14.8	%		17.5	%		15.3	%		18.0	%
GM market share — China		11.4	%		11.7	%		12.2	%		11.1	%

Industry vehicle unit sales in the Asia Pacific region increased nearly 4%, to 4.6 million units, in the third quarter of 2006 compared to the third quarter of 2005. GMAP increased its vehicle unit sales in the region by approximately 24 thousand units, or 9.1%, in the third quarter of 2006, primarily due to a 17% increase in China. GMAP sales volume includes Wuling sales in China. GMAP’s third quarter of 2006 market share increased to 6.2%, from 5.9% in the third quarter of 2005.

In the first nine months of 2006, industry vehicle unit sales in the region increased 837 thousand units, or more than 6%, to 14.5 million, from the same period of 2005. GMAP’s sales increased by approximately 149 thousand units, or 19.2%, to 923 thousand from the same period in 2005. GMAP’s sales growth was primarily due to the increase in China, where sales were up 37% and market share grew 1.1 percentage points to 12.2% for the first nine months of 2006. Overall, GMAP’s regional market share increased 0.7 percentage points from the same nine month period in 2005, to 6.4%.

Net income from GMAP was $231 million in the third quarter of 2006, compared to net income of $126 million in the third quarter of 2005. The increase in GMAP’s 2006 third quarter net income was primarily due to the following factors:

•  A gain of $110 million after tax, recognized in the third quarter of 2006, from the reversal of a deferred tax asset valuation allowance at GM Daewoo.

•  A gain of $38 million after tax, recognized in the third quarter of 2006, from a reduction in the estimate of tax expense related to the gain on sale of GM’s investment in Suzuki.

•  Favorable items noted above were partially offset by unfavorable results at GM Holden, Thailand, and India.

•  Results for the third quarter of 2006 also decreased by approximately $45 million due to the loss of equity income from the divested interest in Suzuki.

43

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GM Automotive Regional Results — (concluded)

GM Asia Pacific — (concluded)

For the first nine months of 2006, GMAP earned net income of $1.06 billion, compared to a net loss of $409 million for the first nine months of 2005. In addition to the third quarter items noted above, the following contributed to the improved performance in 2006:

•  A gain of $372 million after tax, recognized in the first quarter of 2006, from the sale of approximately 85% of GM’s investment in Suzuki.

•  A gain of $212 million after tax, recognized in the second quarter of 2006, from the sale of approximately 90 million shares of Isuzu stock.

•  A loss of $788 million, recognized in the second quarter of 2005, from the write-down to fair market value of GM’s investment in approximately 20% of the common stock of Fuji Heavy Industries.

•  Improved results at GM Daewoo and GM’s joint ventures in China partially offset by unfavorable results at Holden, Thailand, and India.

•  Results for the third quarter of 2005 included a charge related to product specific asset impairments of $45 million, after tax.

GMAP results reflect the consolidation of GM Daewoo beginning on June 30, 2005.

Other Operations

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
	(Dollars in millions)
Other:
Total net sales, revenues, and eliminations	$	(347	)	$	(317	)	$	(983	)	$	(609	)
Net income (loss)	$	(25	)	$	145		$	(353	)	$	331

Other Operations for the three months ended September 30, 2006 includes the incremental charge of $500 million ($325 million after tax), related to GM’s contingent liability for the Delphi matter. Refer to Note 8 for a further discussion of the factors surrounding the charge in the third quarter. Additionally, third quarter 2006 results include tax benefits totaling $342 million.

Third quarter of 2005 Other Operations includes tax benefits of $311 million. Other Operations also includes after tax legacy costs of $128 million for 2005, related to employee benefit costs of divested businesses, primarily Delphi, for which GM has retained responsibility.

In addition to the items mentioned above, for the nine months ended September 2006, Other Operations include an after tax charge of $3 million related to curtailment charges with respect to U.S. salaried pension plans, while 2005 results include an $8 million after tax charge related to early retirement and other separation programs for certain U.S. salaried employees. Other Operations also include after tax legacy costs of $266 million and $369 million for the nine months ended September 30, 2006 and 2005, respectively.

GMAC Financial Review

GMAC incurred a net loss of $325 million in the third quarter of 2006, a decrease of approximately $1 billion from third quarter of 2005 earnings of $654 million. Gross revenues increased to $9.4 billion in the third quarter of 2006 from $8.7 billion in the third quarter of 2005. The third quarter of 2006 net loss includes non-cash goodwill and other intangible asset impairment charges of $695 million after tax, related to GMAC’s Commercial Finance business. Excluding these charges, GMAC earned $370 million in the third quarter of 2006, or $284 million lower than the third

44

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GMAC Financial Review — (continued)

quarter of 2005. The decrease in operating earnings was primarily driven by decreases at Residential Capital Corporation (ResCap) as the result of softness in the U.S. residential mortgage market. GMAC also provided a significant source of cash flow to GM through the payment of a $500 million cash dividend in the third quarter of 2006. For the first nine months of 2006, net income was $1.2 billion, down $1 billion compared to the same period in the prior year.

						Nine Months
	Three Months Ended					Ended
	September 30,					September 30,
	2006			2005		2006			2005
	(Dollars in millions)
Automotive financing operations	$	168		$	139	$	680		$	707
ResCap		83			282		828			934
Insurance operations		183			89		392			278
Other /eliminations		(759	)		144		(690	)		279
Net income (loss)	$	(325	)	$	654	$	1,210		$	2,198

Results for Automotive Finance were $168 million in the third quarter of 2006, up $29 million from $139 million earned in the same period in the prior year. Results for Automotive Finance include the earnings impact of GMAC’s third quarter $1 billion debt tender offer to repurchase certain zero coupon bonds. Absent the impact of the tender offer, which resulted in an after tax unfavorable impact of $135 million, operating earnings were $164 million higher than the third quarter of 2005. Operating results benefited from an increase in net financing revenue as a result of strong retail penetration as well as lower provision for credit losses largely due to the negative impact in the third quarter of 2005 related to Hurricane Katrina.

ResCap earnings were $83 million in the third quarter of 2006, down $199 million from $282 million earned in the third quarter of 2005. The decrease in earnings was due to a number of factors impacting ResCap’s U.S. residential mortgage business. In particular, competitive pricing pressures negatively impacted margins, which led to lower gains despite year over year increases in production. Results were also impacted by higher credit loss provisions resulting from increases in delinquencies, lower net interest margins as the result of a flatter yield curve, and decrease in net servicing income due to the effect of lower long-term rates on expected prepayment of mortgages. Mortgage originations were $51.5 billion for the third quarter of 2006, representing a slight increase from $51.3 billion in the same period in the prior year.

GMAC’s Insurance operations earned $183 million in the third quarter of 2006, up $94 million from the third quarter of 2005 earnings of $89 million primarily due to a combination of favorable loss performance and higher capital gains. In addition, GMAC Insurance maintained a strong investment portfolio, with a market value of $8 billion at September 30, 2006, including unrealized capital gains of $604 million, net of tax.

In addition, GMAC’s other segment, which includes the Commercial Finance business unit and GMAC’s equity investment in Capmark (formerly GMAC Commercial Mortgage) incurred a net loss of $759 million, down $903 million from net income of $144 million earned in the same period of 2005. The decrease is primarily due to the non-cash goodwill impairment charges of $695 million (after tax) related to the Commercial Finance business. Absent the impact of the goodwill and other intangible asset charges, the other Segment incurred an operating loss of $64 million in the third quarter of 2006 as compared to $144 million earned in the same period last year. The Other segment results were negatively impacted by higher credit provisions at Commercial Finance in the third quarter of 2006. In addition, part of the third quarter decline relates to Capmark which was wholly-owned and fully consolidated in GMAC’s results in 2005, as compared to 2006 which reflects only the equity share of Capmark’s earnings. For the first nine months of 2006, other segment income declined $969 million, to a net loss of $690 million, from net income of $279 million earned in 2005. This decline is primarily related to the items noted above. In the first quarter of 2006, GMAC completed the sale of approximately 78% of Capmark. Cash proceeds from the sale were approximately $1.5 billion. At the closing, Capmark also repaid to GMAC approximately $7.3 billion in intercompany loans, bringing the total cash from the sale to $8.8 billion.

45

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

GMAC continues to maintain adequate liquidity with cash reserve balances at September 30, 2006 of $14.1 billion, comprised of $9.1 billion in cash and cash equivalents and $5 billion invested in marketable securities.

GM expects to close the sale of a 51% controlling interest in GMAC in the fourth quarter of 2006, subject to receiving necessary regulatory approvals. In addition to continuing to enable GMAC to support the sale of GM vehicles, the transaction is intended to support GMAC’s strategic goal of a stable investment grade credit rating and profitable growth.

Key Factors Affecting Future and Current Results

The following discussion identifies the key factors, known events, and trends that could affect our future results:

Turnaround Plan

Over the past year, one of our top priorities has been improving our business in North America, thus positioning GM for sustained profitability and growth in the long-term, to achieve competitiveness on a global basis in an increasingly global environment. GM has been systematically and aggressively implementing its turnaround plan for GMNA’s business to return the operations to profitability and positive cash flow as soon as possible. This plan is built on four elements:

•  Product Excellence

•  Revitalize Sales and Marketing Strategy

•  Accelerate Cost Reductions and Quality Improvements

•  Address Health Care Burden

The following update describes what we have done so far to achieve these elements:

Product Excellence

GM continues to focus significant attention on introducing new vehicles, such as the Saturn Aura, Chevy HHR, Saturn Sky, Pontiac G-6 convertible, GMC Yukon, Buick Lucerne, Saab 9-3 SportCombi, Hummer H3, and the Cadillac DTS, and in 2006 we anticipate that approximately 30% of GMNA’s retail sales volume will come from recently launched cars and trucks, increasing to approximately 40% in 2007. In support of new car and truck programs, GM anticipates total capital spending on product development in 2006 of $8.7 billion, of which $5.7 billion will be devoted to GMNA. GMNA is putting a high priority on maintaining consistent product freshness by reducing the average vehicle lifecycle. GMNA is also allocating capital and engineering to support more fuel-efficient vehicles, including hybrid vehicles in the United States, and is increasing production of active fuel management engines and six-speed transmissions. In addition, GM is undertaking a major initiative in alternate fuels through sustainable technologies such as ethanol/gasoline blended (E85) Flex Fuel vehicles. GM has sold 1.9 million E85 vehicles and plans to build over 2 million more in the next five years. GM is also adding five more E85-capable models to its lineup for 2007, raising GM’s total flex-fuel offerings to 14 vehicles.

In addition to the strong market demand for flex-fuel vehicles, GM expects to sell more than 1 million 2006 model year vehicles that achieve 30 mpg or better on the highway (as estimated by U.S. EPA). In the 2007 model year, GM will increase the number of fuel-efficient vehicle models in the “30 mpg or Over Club” to 23 models. The new models include the Chevrolet Aveo 5, Saturn Vue Hybrid, Saturn Sky, Saturn Aura, Pontiac G5, Pontiac Solstice, Saab 9-3 Convertible, Saab 9-5 Sedan and Saab 9-5 SportCombi.

The Saturn Vue Green Line will be added to GM’s hybrid line-up, and it is expected to get the highway fuel economy of any SUV and cost less than $23,000. Next year, we will introduce a two-mode hybrid system in large SUVs.

46

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Turnaround Plan — (continued)

Revitalize Sales and Marketing Strategy

GM is pursuing a revised sales and marketing strategy by focusing on clearly differentiating our brands, optimizing our distribution network, growing in key metropolitan markets, and re-focusing our marketing efforts on the strength and value of our products. GM continues to support a more orderly and consistent alignment of its dealers, particularly among Buick, Pontiac, and GMC dealers, which we believe will strengthen those brands.

On September 6, 2006, GM announced an expanded powertrain warranty policy, to five years or 100,000 miles, applicable to all 2007 models in the U.S. and Canada. GM believes that with its expanded warranty it now offers more extensive warranty coverage than any other full-line auto manufacturer. We anticipate that this expanded warranty will enhance consumer confidence in the quality and durability of our vehicles in the U.S. and Canada.

Residual values have increased on trucks through improved quality and product execution, a reduction in daily rental sales, strong used car sales and lower incentives. In addition, GM’s transaction prices on previous fleet vehicles have risen this year, slightly above the industry average.

In January 2006, GM significantly lowered manufacturer’s suggested retail prices on vehicles that account for about 80% of its 2006 model year automotive sales volume. GM’s promotion strategy now emphasizes its brands and vehicles, rather than price incentives. In addition, GM intends to increase advertising in support of new products and specific marketing initiatives to improve GM’s sales performance in certain metropolitan markets.

Accelerate Cost Reductions and Quality Improvements

Following our November 2005 announcement of our strategy to reduce structural costs in the manufacturing area, GM has introduced a variety of initiatives to accomplish that strategy.

In November 2005, GM announced the cessation of operations at 12 manufacturing facilities by 2008, and a reduction in manufacturing employment levels of approximately 30,000 employees by the end of 2008. GM now expects to reach the reduced employment levels by January 1, 2007. To support the structural cost initiatives further, on March 22, 2006 GM, the UAW and Delphi announced they had entered into the UAW Attrition Agreement designed to reduce the number of hourly employees at GM and at Delphi through a special attrition program in which approximately 34,400 employees will participate. See the “GM-UAW-Delphi Special Attrition Program Agreement” section for a further description of the UAW Attrition Agreement. GM believes these actions collectively will reduce our excess capacity by 1 million units, in addition to the 1 million unit capacity we eliminated between 2002 and 2005, and reduce structural costs to assist in closing the cost gap with other vehicle manufacturers. To achieve further cost reductions, GM’s management is putting a high priority on negotiating a more competitive collective bargaining agreement with the UAW in 2007.

In the first quarter of 2006, GM announced plans to substantially alter pension benefits for current U.S. salaried employees by freezing accrued benefits in the current plan and implementing a new benefit structure for future accruals, which will include a reduced defined benefit plan for some salaried employees and a new defined contribution plan for the other salaried employees. These pension plan changes will not affect retirees or surviving spouses who are currently drawing benefits from the Salaried Retirement Program.

On October 3, 2006, the GM Board of Directors approved a reduction to the level of coverage for corporate-paid salaried retiree life insurance. For eligible salaried employees who retire on or after May 1, 2007, coverage will reduce 50% 10 years from the date of retirement; salaried retirees before May 1, 2007 will have their coverage reduced 50% on January 1, 2017. This change is anticipated to reduce GM’s year-end OPEB obligation by approximately $0.6 billion.

In addition to the structural cost reductions, GMNA was also targeting a net reduction in material costs in 2006 of $1 billion, prior to factoring in the cost of government mandated product improvements. Reducing material costs remains a critical part of GMNA’s overall long-term cost reduction plans. Attainment of this target, however, has been challenged by higher commodity prices and troubled supplier situations. GM continues its aggressive pursuit of material cost reduction via improvements in its global processes for product development, which will enable

47

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Turnaround Plan — (concluded)

further commonization and reuse of parts among vehicle architectures, as well as through the continued use of the most competitive supply sources globally. By leveraging its global reach to take advantage of economies of scale in purchasing, engineering, advertising, salaried employment levels, and indirect material costs, GM seeks to continue to achieve cost reductions.

In addition to planned cost reductions resulting from the continued use of global architectures, GM seeks to improve overall vehicle quality by reducing the total number of architectures used across its geographic segments. By reducing the number of entries into the global market and consolidating architectures across geographic segments, GM’s objective is to improve quality by focusing more intently on a smaller number of products. Additionally, more efficient advertising in line with brand strategies will be designed to differentiate each of the GM brands more clearly, bringing selected brands into tighter focus.

Address Health-Care Burden

In October 2005, we announced an agreement with the UAW that will reduce GM’s hourly retiree health-care obligations. GM commenced recognition of the benefit from the UAW Settlement Agreement in the third quarter of 2006. Refer to Note 12 in the Condensed Consolidated Financial Statements for the financial impact of the UAW Settlement Agreement.

The UAW Settlement Agreement will remain in effect until at least September 2011, after which either GM or the UAW may cancel the agreement upon 90 days written notice. Similarly, GM’s contractual obligations to provide health care benefits to UAW hourly retirees extends to at least September 2011 and will continue thereafter until terminated by either GM or the UAW. As a result, the provisions of the UAW Settlement Agreement will continue in effect for the UAW retirees beyond the expiration in September 2007 of the current collective bargaining agreement between GM and the UAW.

On April 10, 2006, GM and the IUE-CWA also reached a tentative agreement to reduce health-care costs that is similar to the UAW Settlement Agreement. The agreement was ratified by the IUE-CWA membership on April 21, 2006 and received court approval on November 1, 2006. Because the effect is not material and will not require remeasurement, recognition of the savings will not occur until 2008.

GM is also increasing the U.S. salaried workforce’s participation in the cost of health care. On February 7, 2006, GM announced that beginning January 1, 2007, it will cap its contributions to salaried retiree health care at the level of its 2006 expenditures. This change affects employees and retirees who are eligible for the salaried postretirement health-care benefit, their surviving spouses, and their eligible dependents. Salaried employees who were hired after January 1, 1993 are not eligible for retiree health-care benefits, so they are not affected by these changes. After 2006, when average costs exceed established limits, additional plan changes that affect cost-sharing features of program coverage will occur, effective with the start of the next calendar year. Program changes may include, but are not limited to, higher monthly contributions, deductibles, coinsurance, out-of-pocket maximums, and prescription drug payments. Plan changes may be implemented in medical, dental, vision, and prescription drug plans.

General

Based on the cost savings initiatives described above, GMNA has increased its target for reduction of structural costs from the amount previously stated in GM’s 2005 Annual Report on Form 10-K by $2 billion to $9 billion on a running rate basis by the end of 2006. Running rate basis refers to the average annualized cost savings into the foreseeable future anticipated to result from cost savings actions when fully implemented. GM expects $6 billion in structural cost reduction to be realized during 2006, exceeding the $4 billion of structural cost reductions estimated for calendar year 2006 in GM’s 2005 Annual Report on Form 10-K. This improvement is due to the Attrition Program, including the effect of the pension remeasurement, as well as the impact of final accounting treatment for the UAW Hourly Retiree Health Care Agreement, which reduced previously expected charges in the first quarter related to a $1 billion contribution to the independent VEBA established under the agreement, and instead amortizes this and future contributions to the independent VEBA over the remaining service life of employees. The expected total annual cash savings from structural cost reductions is approximately $5 billion on an average running rate basis.

48

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Delphi Bankruptcy

On October 8, 2005, Delphi filed a petition for Chapter 11 proceedings under the United States Bankruptcy Code for itself and many of its U.S. subsidiaries. Delphi is GM’s largest supplier of automotive systems, components and parts, and GM is Delphi’s largest customer.

GM has worked and will continue to work constructively in the court proceedings with Delphi, Delphi’s unions, and other participants in Delphi’s restructuring process. GM’s goal is to pursue outcomes that are in the best interests of GM and its stockholders, and, to the extent conducive to those goals, that enable Delphi to continue as an important supplier to GM.

Delphi continues to assure GM that it expects no disruption in its ability to supply GM with the systems, components and parts it needs as Delphi pursues a restructuring plan under the Chapter 11 process. Although the challenges faced by Delphi during its restructuring process could create operating and financial risks for GM, that process is also expected to present opportunities for GM. These opportunities include reducing, over the long term, the significant cost penalty GM incurs in obtaining parts from Delphi, as well as improving the quality of systems, components and parts GM procures from Delphi as a result of the restructuring of Delphi through the Chapter 11 process. However, there can be no assurance that GM will be able to realize any benefits.

Delphi filed, on March 31, 2006, motions under the U.S. Bankruptcy Code seeking authority to reject its U.S. labor agreements and modify retiree welfare benefits. The unions and certain other parties have filed objections to these motions. Hearings on these motions were adjourned indefinitely, to allow Delphi, its unions, and GM additional time to focus on reaching comprehensive consensual agreements. While Delphi has indicated to us that it expects no disruptions in its ability to continue supplying us with the systems, components, and parts we need as Delphi pursues its bankruptcy restructuring plan, labor disruptions at Delphi resulting from Delphi’s pursuit of a restructuring plan could seriously disrupt our North American operations, prevent us from executing our GMNA turnaround initiatives, and materially adversely impact our business. Accordingly, resolution of the Delphi related issues remains a critical near term priority.

Delphi also filed a motion on March 31, 2006 under the U.S. Bankruptcy Code seeking authority to reject certain supply contracts with GM. A hearing on this motion was adjourned indefinitely by the court pending further developments related to Delphi’s U.S. labor agreements and retiree welfare benefits as discussed above. Although Delphi has not rejected any GM contracts as of this time and has assured GM that it does not intend to disrupt production at GM assembly facilities, there is a risk that Delphi or one or more of its affiliates may reject or threaten to reject individual contracts with GM, either for the purpose of exiting specific lines of business or in an attempt to increase the price GM pays for certain parts and components. As a result, GM could be materially adversely affected by disruption in the supply of automotive systems, components and parts that could force the suspension of production at GM assembly facilities.

GM is seeking to minimize this risk by protecting our right of setoff against the $1.15 billion we owed to Delphi as of the date of its Chapter 11 filing. A procedure for determining setoff claims has been put in place by the bankruptcy court. However, the extent to which these obligations are covered by our right to setoff may be subject to dispute by Delphi, the creditors committee, or Delphi’s other creditors, and limitation by the court. GM cannot provide any assurance that it will be able to fully or partially setoff such amounts. However, to date setoffs of approximately $53.6 million have been agreed to by Delphi and taken by GM. The financial impact of a substantial compromise of our right of setoff could have a material adverse impact on our financial position. In addition, the basis, amounts, and priority of any claims against Delphi that GM currently has or may have in the future may be challenged by other parties in interest in Delphi’s bankruptcy proceeding. The scope and results of such challenges cannot be predicted with certainty.

In connection with GM’s spin-off of Delphi in 1999, GM entered into separate agreements with the UAW, the International Union of Electronics Workers — Communication Workers of America (IUE-CWA) and the United Steel Workers. In each of these three agreements (Benefit Guarantee Agreement(s)), GM provided contingent

49

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Delphi Bankruptcy — (continued)

benefit guarantees to make payments for limited pension and postretirement health care expenses and life insurance (referred to as Other Postretirement Employee Benefits or OPEB) to certain former GM U.S. hourly employees who transferred to Delphi as part of the spin-off and meet the eligibility requirements for such payments (Covered Employees).

Each Benefit Guarantee Agreement contains separate benefit guarantees relating to pension and OPEB. These limited benefit guarantees each have separate triggering events that initiate potential GM liability if Delphi fails to provide the corresponding benefit at the required level. Therefore, it is possible that GM could incur liability under one of the guarantees (e.g., pension) without triggering the other guarantees (e.g., postretirement health care or life insurance). In addition, with respect to pension benefits, GM’s obligation under the pension benefit guarantees only arises to the extent that the combination of pension benefits provided by Delphi and the Pension Benefit Guaranty Corporation (PBGC) falls short of the amounts GM has guaranteed.

The Chapter 11 filing by Delphi does not by itself trigger any of the benefit guarantees. Moreover, Delphi’s filing of motions under the U.S. Bankruptcy Code to reject its U.S. labor agreements and modify retiree welfare benefits does not trigger any of the benefit guarantees. In addition, the benefit guarantees expire on October 18, 2007 if not previously triggered by Delphi’s failure to pay the specified benefits. If a benefit guarantee is triggered before its expiration date, GM’s obligation could extend for the lives of affected Covered Employees, subject to the applicable terms of the pertinent benefit plans or other relevant agreements.

The benefit guarantees do not obligate GM to guarantee any benefits for Delphi retirees in excess of the levels of corresponding benefits GM provides at any given time to GM’s own hourly retirees. Accordingly, if any of the benefits GM provides to its hourly retirees are reduced, there would be a similar reduction in GM’s obligations under the corresponding benefit guarantee.

A separate agreement between GM and Delphi requires Delphi to indemnify GM if and to the extent GM makes payments under the benefit guarantees to the UAW employees or retirees. GM received a notice from Delphi, dated October 8, 2005, that it was more likely than not that GM would become obligated to provide benefits pursuant to the benefit guarantees to the UAW employees or retirees. The notice stated that Delphi was unable at that time to estimate the timing and scope of any benefits GM might be required to provide under the benefit guarantees. Any recovery by GM under indemnity claims against Delphi might be subject to partial or complete discharge in the Delphi reorganization proceeding. As a result, GM’s claims for indemnity may not be paid in part or in full.

As part of GM’s health-care agreement negotiations with the UAW, GM provided former GM employees who became Delphi employees the potential to earn up to seven years of credited service for purposes of eligibility for certain health-care benefits under the GM/UAW benefit guarantee agreement.

As discussed in Note 7 to the Condensed Consolidated Financial Statements, GM together with Delphi and the UAW announced on March 22, 2006 that they had entered into the UAW Attrition Agreement, which is intended to reduce the number of U.S. hourly employees at GM and Delphi through the Attrition Program. When originally executed, Delphi’s participation in the UAW Attrition Agreement was subject to approval by the U.S. Bankruptcy Court for the Southern District of New York (Bankruptcy Court), which has jurisdiction over Delphi’s Chapter 11 proceedings. On April 7, 2006, the Bankruptcy Court declared in a hearing that Delphi’s participation in the UAW Attrition Agreement was approved. The UAW Attrition Agreement provides for a combination of early retirement programs and other incentives designed to help reduce employment levels at both GM and Delphi.

In the UAW Attrition Agreement, GM has agreed to assume certain costs regarding UAW-represented Delphi employees. Specifically, GM agreed to: (1) pay lump sums of $35,000 to certain employees who participate in the Attrition Program; (2) allow Delphi employees who agree to retire under the Attrition Program to flowback to GM for purposes of retirement whereby GM will assume all OPEB obligations to such retiree; (3) subsidize, for an interim period of time, health care and life insurance coverage for Delphi employees participating in a special voluntary pre-retirement program if Delphi reduces or eliminates its health care and/or life insurance coverage provided to active UAW employees; and (4) accept 5,000 active flowback employees, and as a result after they flow

50

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Delphi Bankruptcy — (continued)

back, pay such employee’s wages and benefits and incur pension and OPEB obligations for such employees. The UAW Attrition Agreement provides that for such costs, other than the $35,000 lump sum payment, GM will have a prepetition, general unsecured claim assertable against the bankruptcy estate of Delphi under certain existing agreements. This claim is subject to the rights of parties in interest to object to allowance on any grounds other than the claim did not arise under the terms of the pre-existing contractual agreements between GM and Delphi. GM believes that the UAW Attrition Agreement will enhance the prospects for GM, the UAW and Delphi to reach a broad-based consensual resolution of issues relating to the Delphi restructuring, but significant obstacles remain. As of September 30, 2006 approximately 12,400 UAW-represented Delphi employees had elected one of the retirement options available under the UAW Attrition Agreement.

On June 29, 2006 the Bankruptcy Court approved a motion by Delphi to offer similar attrition packages and a buyout program to approximately 8,500 hourly employees represented by the IUE-CWA and a buyout program to hourly employees represented by the UAW, many of whom were not eligible for the earlier offer. As of September 30, 2006 approximately 6,300 IUE-CWA-represented Delphi employees and approximately 1,400 UAW-represented Delphi employees had elected to participate in these attrition and buyout programs. GM and Delphi will share the cost of these programs. GM will have an allowed prepetition, general unsecured claim against the estate of Delphi for payments that it makes under the buyout program and a prepetition, general unsecured claim for costs, other than the $35,000 lump-sum payment, incurred in the IUE-CWA attrition program assertable against the estate of Delphi under certain existing agreements. This claim is subject to the rights of parties in interest to object to allowance on any grounds other than that the claim did not arise under the terms of the pre-existing contractual agreements between GM and Delphi. In addition, the basis, amounts, and priority of any claims against Delphi that GM currently has or may have in the future may be challenged by other parties in interest in Delphi’s bankruptcy proceeding. The scope and results of such challenges cannot be predicted with certainty. The estimated cost to GM of these programs is comprehended in the pre-tax charge of $5.5 billion recorded by GM in the fourth quarter of 2005 related to GM’s contingent exposure related to Delphi’s bankruptcy filing.

GM believes that it is probable that it has incurred a contingent liability due to Delphi’s Chapter 11 filing. Based on currently available data and ongoing discussions with Delphi and other stakeholders, GM believes that the range of the contingent exposures is between $6 billion and $7.5 billion, with amounts near the low end of the range considered more possible than amounts near the high end of the range. GM established a liability of $5.5 billion ($3.6 billion after tax) for this contingent exposure in the fourth quarter of 2005, and recorded an additional charge of $0.5 billion ($0.3 billion after tax) in the third quarter of 2006 to reflect GM’s potential exposure for OPEB costs associated with previously divested Delphi business units and certain labor restructuring costs, including but not limited to expenditures related to the attrition plans discussed above. These views reflect GM’s current assessment that it is unlikely that a Chapter 11 process will result in both a termination of Delphi’s pension plan and complete elimination of its OPEB plans. The amount of this charge may change, depending on the result of further discussions among GM, Delphi, and Delphi’s unions, and other factors. In addition to theses charges, GM may agree to reimburse Delphi for certain labor expenses to be incurred upon and after Delphi’s emergence from bankruptcy. GM’s current estimate of these expenses involves an initial payment in 2007, not expected to exceed approximately $400 million, and ongoing expenses of limited duration and estimated to average less than $100 million annually. GM will recognize these expenses as incurred in the future. GM expects these payments to be far exceeded by anticipated reductions in the cost of systems, components and parts from Delphi. As a result of ongoing negotiations, the actual impact of the Delphi matter will not be known until a consensual agreement has been reached and approved by the Bankruptcy Court.

With respect to the possible cash flow effect on GM related to its ability to make either pension or OPEB payments to Delphi retirees, if any are required under the benefit guarantees, GM would expect to make such payments from ongoing operating cash flow and financings. Such payments, if any, are not expected to have a material effect on GM’s cash flows in the short-term. However, if payable, these payments would be likely to increase over time, and could have a material effect on GM’s liquidity in coming years. (For reference, Delphi’s 2005 Annual Report on Form 10-K reported that its benefits paid for 2005 were $231 million, which included

51

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Delphi Bankruptcy — (continued)

$182 million for both hourly and salaried retirees, the latter of whom are not covered under the Benefit Guarantee Agreements, plus $54 million in payments to GM for certain former Delphi hourly employees who flowed back to retire from GM, net of $5 million of payments from GM related to employees who flowed from GM to Delphi after the Delphi spin-off).

On July 31, 2006 GM filed a consolidated Proof of Claim and an amended consolidated Proof of Claim with the Bankruptcy Court setting forth GM claims (including the claims of various GM subsidiaries) against Delphi and the other debtor entities. The Proof of Claim, which was filed by the date established by the Bankruptcy Court for the filing of claims by all of Delphi’s creditors, preserves GM’s right to pursue recovery of its claims against the Delphi estate. Because of the contingent nature of many of the claims involved and the fact that the validity and amount of the claims may be subject to objections from Delphi and other stakeholders, the exact amount of GM’s claims cannot be established with any degree of certainty. Based on currently available data, the amount of GM’s claims could be as much as $13 billion. GM’s claims and the claims of other Delphi creditors will be resolved as part of the bankruptcy process. In order to achieve a consensual resolution of Delphi’s bankruptcy, GM may agree to settle some or all of these claims for a reduced amount.

     GM-UAW-Delphi Special Attrition Program Agreement

As part of the initiatives to accelerate cost reductions and bring our structural cost and employment levels in line with revenues and demand for our vehicles, GM together with Delphi Corporation (Delphi) and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) announced on March 22, 2006 that they had entered into the UAW-GM-Delphi Special Attrition Program Agreement (UAW Attrition Agreement), which was intended to reduce the number of U.S. hourly employees at GM and Delphi through the Attrition Program. When originally executed, Delphi’s participation in the UAW Attrition Agreement was subject to approval by the Bankruptcy Court, and such approval was granted on April 7, 2006. The UAW Attrition Agreement provides a combination of early retirement programs and other incentives designed to help reduce employment levels at both GM and Delphi, which will permit GM to reduce the number of employees who are and will be in the JOBS bank in a cost effective manner.

In the UAW Attrition Agreement, GM agreed to assume certain costs regarding UAW-represented Delphi employees. Specifically, GM agreed to (1) pay lump sums of $35,000 to certain employees who participate in the UAW Attrition Agreement; (2) allow Delphi employees who agree to retire under the UAW Attrition Agreement to flowback to GM for purposes of retirement whereby GM will assume all OPEB obligations to such retiree; (3) subsidize, for an interim period of time, health care and life insurance coverage for Delphi employees participating in a special voluntary pre-retirement program if Delphi reduces or eliminates its health care and/or life insurance coverage provided to active UAW employees; and (4) accept 5,000 active flowback employees, and as a result after their flow-back pay such employee’s wages and benefits and incur pension and OPEB obligations for such employees. The UAW Attrition Agreement provides that for such costs, other than the $35,000 lump sum payment, GM will have a prepetition, general unsecured claim assertable against the bankruptcy estate of Delphi under certain existing agreements. This claim is subject to the rights of parties in interest to object to allowance on any grounds other than the claim did not arise under the terms of the pre-existing contractual agreements between GM and Delphi. GM believes that the UAW Attrition Agreement will enhance the prospects for GM, the UAW and Delphi to reach a broad-based consensual resolution of issues relating to the Delphi restructuring, but significant obstacles remain. Refer to our discussion of issues related to the Delphi restructuring in the “Turnaround Plan” section.

Also under the UAW Attrition Agreement, GM provided certain UAW-represented employees at GM with (i) a lump sum payment of $35,000 for normal or early voluntary retirements retroactive to October 1, 2005; (ii) a mutually satisfactory retirement for employees 50 years of age or older with at least 10 years of credited service; (iii) payment of gross monthly wages ranging from $2,750 to $2,900 to those employees who participate in a special voluntary pre-retirement program depending on years of credited service and plant work location; and (iv) a buyout

52

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

     GM-UAW-Delphi Special Attrition Program Agreement — (continued)

of $140,000 for employees with ten or more years of seniority, or of $70,000 for employees with less than 10 years seniority, provided such employees sever all ties with GM and Delphi except for any vested pension benefits.

GM employees had until June 23, 2006 to accept and participate in the terms established under the UAW Attrition Agreement followed by a seven day rescission period from the date of acceptance. Approximately 34,400 GM hourly employees (33,100 UAW-represented and 1,300 represented by the International Union of Electronic Workers — Communication Workers of America (IUE-CWA) have agreed to participate in the program. Employees who chose to leave GM will retire or leave no later than January 1, 2007. GM will use temporary employees as necessary while permanent replacements are put in place.

In addition, as of September 30, 2006, approximately 12,400 Delphi employees represented by the UAW had chosen to participate in the Attrition Program. On June 29, 2006, the Bankruptcy Court approved a motion by Delphi to offer attrition packages and a buyout program to approximately 8,500 hourly employees represented by the IUE-CWA, and a buyout program to hourly employees represented by the UAW, many of whom were not eligible for the earlier offer. As of September 30, 2006, approximately 6,300 Delphi employees represented by the IUE-CWA and approximately 1,400 Delphi employees represented by the UAW had elected to participate in these attrition and buyout programs. GM and Delphi will share the cost of these programs. GM will have an allowed prepetition, general unsecured claim against the bankruptcy estate of Delphi for payment that it makes under the buyout programs and a prepetition, general unsecured claim for costs, other than the $35,000 lump sum payment, incurred in the IUE-CWA attrition program assertable against the bankruptcy estate of Delphi under certain existing agreements. In the third quarter of 2006 GM recognized a pre-tax charge of $500 million ($325 million after tax) for costs associated with these expanded programs which were not comprehended in the pre-tax charge of $5.5 billion recorded by GM in the fourth quarter of 2005 related to GM’s contingent exposure related to Delphi’s bankruptcy filing.

Also in the third quarter of 2006 GMNA recorded a net after tax benefit of approximately $105 million related to the impact of the UAW Attrition Agreement on other postemployment and postretirement benefits.

In the second quarter of 2006, GMNA recorded an after tax charge of $3.7 billion related to the UAW Attrition Agreement. This charge was comprised of the following: (1) an after tax charge of approximately $1.4 billion associated with the lump sum payments for normal or early voluntary retirements and buy-out agreements described above; (2) curtailment loss of $2.9 billion after tax with respect to its pension plan in conjunction with termination of a significant number of employees as part of the plan to reduce its workforce; and (3) a favorable offset of $0.6 billion after tax for reduction in capacity action charges taken in the fourth quarter 2005 due to lower than anticipated JOBS expense.

     GMAC — Pending Sale of 51% Controlling Interest

On April 2, 2006, GM and its wholly owned subsidiaries GMAC and GM Finance Co. Holdings Inc. entered into a definitive agreement pursuant to which GM will sell a 51% controlling interest in GMAC for a purchase price of $7.4 billion to FIM Holdings LLC (FIM Holdings). FIM Holdings is a consortium of investors including Cerberus FIM Investors LLC, the sole managing member, and Citigroup Inc., Aozora Bank Ltd. and a subsidiary of The PNC Financial Services Group, Inc. GM will retain a 49% equity interest in GMAC. In addition, GM and FIM Holdings together will invest $1.9 billion of cash in new GMAC preferred equity, with $1.4 billion to be invested by GM and $500 million to be invested by FIM Holdings. The transaction is subject to a number of U.S. regulatory and other approvals.

This agreement is an important element in GM’s current turnaround efforts, and is expected to provide the following:

•  Strong long term services agreement between GM and GMAC — As part of the transaction, GM and GMAC will enter into a number of agreements that will require that GMAC continue to allocate capital to

53

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

     GMAC — Pending Sale of 51% Controlling Interest — (continued)

automotive financing consistent with historical practices, thereby continuing to provide critical financing support to a significant share of GM’s global sales. While GMAC will retain the right to make individual credit decisions, GMAC will commit to fund a broad spectrum of customers and dealers consistent with historical practice in the relevant jurisdictions. Subject to GMAC’s fulfillment of certain conditions, GM will grant GMAC exclusivity for 10 years for U.S., Canadian and international GM-sponsored consumer and wholesale marketing incentives, with the exception of Saturn branded products.

•  Improved Liquidity — Significant upfront sales proceeds to bolster GM liquidity, strengthening GM’s balance sheet and funding the turnaround plan.

•  Enhanced stockholder value through a stronger GMAC — GM will retain a 49% equity interest in GMAC, and will be able to continue to participate in GMAC’s strong profitability levels.

•  Expected delinkage of GMAC’s credit rating from GM — GM expects the introduction of a new controlling investor for GMAC, new capital at GMAC, and significantly reduced intercompany exposures to GM will provide GMAC with a solid foundation to improve its current credit rating, and delink the GMAC credit ratings from GM.

As part of the agreement, GM will retain an option, for 10 years after the closing of the transaction, to repurchase from GMAC certain assets related to the automotive finance business of the North American Operations and International Operations of GMAC. GM’s exercise of the option is conditional on GM’s credit rating being investment grade or higher than GMAC’s credit rating. The call option price will be calculated as the higher of (i) fair market value or (ii) 9.5 times the consolidated net income of GMAC’s automotive finance business in either the calendar year the call option is exercised or the calendar year immediately following the year the call option is exercised.

GMAC expects to arrange two asset-backed funding facilities that total up to $25 billion that will support GMAC’s ongoing business and enhance GMAC’s liquidity position. In August 2006, GMAC closed a three-year, $10 billion facility with a subsidiary of Citigroup. At this time, GMAC is continuing to review its options for a second asset-backed facility, including the form of the facility, to enhance GMAC’s overall liquidity position. The funding facilities are in addition to Citigroup’s initial equity investment in GMAC.

Prior to consummation of the agreement, (i) certain assets with respect to automotive leases owned by GMAC and its affiliates having a net book value of approximately $4.1 billion, will be dividended to GM, (ii) GM will assume or retain certain of GMAC’s postemployment benefit obligations, (iii) GMAC will dividend to GM certain entities that hold a fee interest in certain real properties, (iv) GMAC will pay dividends to GM in an amount not to exceed GMAC’s 2006 net income prior to the consummation of the transaction, (v) GM will repay certain indebtedness owing to GMAC and specified U.S. intercompany unsecured obligations owing to GMAC which shall be no greater than $1.5 billion and (vi) GMAC will make a one-time distribution to GM of approximately $2.7 billion of cash to reflect the increase in GMAC’s equity value resulting from the transfer of a portion of GMAC’s net deferred tax liabilities arising from the conversion of GMAC and certain of its subsidiaries to limited liability company form. The total value of the cash proceeds and distributions to GM after repayment of certain intercompany obligations and before it purchases preferred limited liability company interests of GMAC will be approximately $14 billion over three years, comprised of the $7.4 billion purchase price and a $2.7 billion cash dividend at closing and other transaction related cash flows including monetization of certain retained assets over three years. From the proceeds GM will invest $1.4 billion of cash in new preferred limited liability company interests of GMAC.

For the first nine months of 2006, GMAC’s earnings and cash flows are fully consolidated with GM’s operating results. However, as a result of the agreement to sell a 51% controlling interest, certain assets and liabilities of GMAC have been presented as held for sale at September 30, 2006. GM recognized a non-cash impairment charge of approximately $600 million and $1.823 billion for the three months and nine months ended September 30, 2006, respectively, in conjunction with the pending sale of the 51% equity interest. After the sale of the 51% controlling

54

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

     GMAC — Pending Sale of 51% Controlling Interest — (continued)

interest, the remaining 49% interest in GMAC will be reflected in GM’s financial statements using the equity method of accounting.

Approximately $41 million of the $1.823 billion charge is attributable to differences between tangible book value to be paid by the consortium of investors and GMAC’s actual book value, partially offset by 51% of the effects of unrecognized net gains reflected in GMAC’s other comprehensive income. The remaining $1.782 billion of the charge is attributable to GMAC operating lease assets classified as held for sale. Pursuant to the requirements of Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS No. 144) GM is required to cease depreciation on long lived assets classified as held for sale in GM’s consolidated financial statements. Accordingly, pre-tax income in the nine months ended September 30, 2006 was higher by $1.782 billion as reported in the “Selling, general and administrative expenses” line item in the Condensed Consolidated Statements of Operations. However, because that higher income amount is not recoverable at close in the sales price or from a dividend prior to closing, a corresponding increase of $1.782 billion was recorded as part of the $1.823 billion charge, thereby impairing the carrying value of the operating lease assets held for sale as of September 30, 2006. As the transaction progresses towards closing, similar benefits from ceasing depreciation will not be recoverable in the sales price. Therefore, GM expects to increase the charge as necessary until closing related to further operating lease asset impairments. However these increases are expected to be offset by the favorable impacts of ceasing depreciation on GMAC assets held for sale and therefore will not have any impact on earnings. In addition, the charge will be adjusted until closing for any changes in fair value of the assets.

While GM expects to record tax benefits associated with the impairment charge of $1.823 billion, these benefits immediately will be offset by approximately $342 million of incremental tax costs created primarily by book to tax differences now recognized due to the pending sale. Both of these items are recorded in the “Income Tax Benefit” line item of the Condensed Consolidated Statements of Operations.

The agreement is subject to the satisfaction or waiver of customary and other closing conditions, including, among other things, (i) receipt of ratings for the senior unsecured long-term indebtedness of GMAC and ResCap, an indirect wholly owned subsidiary of GMAC, after giving effect to the transactions contemplated by the agreement, of at least BB and BBB− (or their respective equivalents), respectively, and an A.M. Best rating for GMAC’s significant insurance subsidiaries of at least B++; (ii) that no material adverse effect will have occurred with respect to the business, financial condition or results of operations of GMAC, which includes any actual downgrading by any of the major rating agencies of GM’s unsecured long-term indebtedness rating below CCC or its equivalent, and (iii) the receipt of required regulatory approvals and licenses. The agreement may be terminated upon the occurrence of certain events, including the failure to complete the transaction by March 31, 2007. There can be no assurance that the transaction will be completed or if it is completed, that the terms of the transaction will not be different from those set forth in the definitive agreement. Furthermore, even if the sale transaction is completed on the agreed-upon terms, there is no assurance that it will delink GMAC’s credit rating from GM’s credit rating or maintain ResCap’s credit rating at investment grade.

As previously reported, on July 28, 2006, the Federal Deposit Insurance Corporation (the “FDIC”) announced a six-month moratorium on the acceptance of, or final decisions on, notices filed under the Change in Bank Control Act with regard to industrial loan companies. In connection with the proposed sale of a controlling interest in GMAC, a notice was submitted to the FDIC. Since FDIC regulatory approval is a condition of the Agreement, GM, GMAC and representatives of FIM Holdings have been working with the FDIC to develop a means to enable the parties to stay on target for a closing of the GMAC transaction in the fourth quarter of 2006. GM currently expects to close the transaction in the fourth quarter of 2006, subject to receiving the necessary regulatory approvals.

The sale of a controlling interest in GMAC will reduce a significant portion of the GMAC U.S. pre-tax income available to GM. Given this anticipated decline in U.S. pre-tax income as a result of the transaction, we have reassessed the need for a valuation allowance against our U.S. net deferred tax assets balance of $25.2 billion as of September 30, 2006. At this time, we consider it more likely than not that we will have U.S. taxable income in the future that will allow us to realize these deferred tax assets. However, it is possible that some or all of these deferred

55

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

     GMAC — Pending Sale of 51% Controlling Interest — (concluded)

tax assets could ultimately expire unused, especially if our GMNA turnaround plan is not successful or if GMAC’s income declines.

Investigations

As previously reported, GM has been cooperating with the government in connection with a number of investigations.

The SEC has issued subpoenas to GM in connection with various matters including GM’s financial reporting concerning pension and OPEB, certain transactions between GM and Delphi, supplier price reductions or credits, and any obligation GM may have to fund pension and OPEB costs in connection with Delphi’s proceedings under Chapter 11 of the U.S. Bankruptcy Code. In addition, the SEC has issued a subpoena in connection with an investigation of our transactions in precious metal raw materials used in our automotive manufacturing operation, and a federal grand jury issued a subpoena in connection with supplier credits.

Separately, SEC and federal grand jury subpoenas have been served on GMAC entities in connection with industry wide investigations into practices in the insurance industry relating to loss mitigation insurance products such as finite risk insurance.

GM and GMAC have produced documents and provided testimony in response to the SEC and federal grand jury subpoenas. GM and GMAC will continue to cooperate with the SEC and federal grand jury with respect to these matters.

Liquidity and Capital Resources

Investors or potential investors in GM and GMAC securities consider cash flows of each reportable operating segment as a relevant measure in the analysis of GM’s and GMAC’s various securities that trade in public markets. Accordingly, GM provides supplemental condensed reportable operating segment statements of cash flows to aid users of GM’s condensed consolidated financial statements in the analysis of performance and liquidity and capital resources.

This information reconciles to the Condensed Consolidated Statements of Cash Flows after the elimination of “Net investing activity with Financing and Insurance Operations” and “Net financing activity with Automotive and

56

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Liquidity and Capital Resources — (concluded)

Other” line items shown in the table below. Following are such statements for the nine months ended September 30, 2006 and 2005:

	Automotive and Other						Financing and Insurance
	Nine Months Ended September 30,
	2006			2005			2006			2005
	(Dollars in millions)
Net cash provided by (used in) operating activities	$	4,350		$	(1,715	)	$	(9,640	)	$	(5,541	)
Cash flows from investing activities
Expenditures for property		(5,091	)		(4,878	)		(285	)		(170	)
Investments in marketable securities — acquisitions		(102	)		(289	)		(10,525	)		(14,184	)
Investments in marketable securities — liquidations		1,711			5,319			9,880			11,029
Net change in mortgage servicing rights		—			—			(65	)		(101	)
Increase (decrease) in finance receivables		—			—			(55,603	)		(6,781	)
Proceeds from sales of finance receivables		—			—			66,859			27,802
Proceeds from the sale of business units/equity investments		1,968			—			8,556			—
Operating leases — acquisitions		—			—			(13,772	)		(12,372	)
Operating leases — liquidations		—			—			5,266			5,029
Net investing activity with Financing and Insurance Operations		1,900			1,500			—			—
Investments in companies, net of cash acquired		(7	)		1,367			(324	)		—
Other		(683	)		(148	)		29			(870	)
Net cash provided by (used in) investing activities		(304	)		2,871			10,016			9,382
Cash flows from financing activities
Net increase (decrease) in loans payable		(244	)		8			1,511			(6,297	)
Long-term debt — borrowings		430			97			66,000			49,097
Long-term debt — repayments		(341	)		(21	)		(76,043	)		(50,813	)
Net financing activity with Automotive & Other		—			—			(1,900	)		(1,500	)
Cash dividends paid to stockholders		(424	)		(863	)		—			—
Other		—			—			2,931			5,020
Net cash used in financing activities		(579	)		(779	)		(7,501	)		(4,493	)
Effect of exchange rate changes on cash and cash equivalents		115			(36	)		61			(84	)
Net transactions with Automotive/Financing Operations		(967	)		206			967			(206	)
Net increase (decrease) in cash and cash equivalents		2,615			547			(6,147	)		(942	)
Cash and cash equivalents reclassified to Assets Held for Sale		—			—			(6,303	)		(509	)
Cash and cash equivalents at beginning of the period		15,187			13,148			15,539			22,845
Cash and cash equivalents at end of the period	$	17,802		$	13,695		$	3,089		$	21,394

57

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Automotive and Other Operations

Available Liquidity

GM believes it has sufficient liquidity and financial flexibility to meet its capital requirements over the short and medium-term under reasonably foreseeable circumstances. Over the long term, GM believes its ability to meet its capital requirements will primarily depend on the execution of its turnaround plan and the return of its North American operations to profitability and positive cash flow. GM Auto & Other’s available liquidity includes its cash balances, marketable securities and readily-available assets of its VEBA trusts. At September 30, 2006, GM Auto & Other’s available liquidity was $20.4 billion compared with $22.9 billion at June 30, 2006, $20.4 billion at December 31, 2005 and $19.2 billion at September 30, 2005. The amount of GM’s consolidated cash and marketable securities is subject to intra-month and seasonal fluctuations, with a significant portion of GM’s trade accounts payable due shortly after the beginning of each month, and such amounts include balances held by various GM business units and subsidiaries worldwide that are needed to fund their operations.

	September 30,		December 31,		September 30,
	2006		2005		2005
	(Dollars in billions)
Cash and cash equivalents	$	17.8	$	15.2	$	13.7
Other marketable securities		0.1		1.4		1.4
Readily-available assets of VEBA trusts		2.5		3.8		4.1
Available Liquidity	$	20.4	$	20.4	$	19.2

In addition to the $2.5 billion of readily-available GM VEBA trust assets included in available liquidity, GM expects to have access to additional VEBA trust assets over time to reimburse OPEB plan costs. These additional VEBA trust assets, which are not currently available, totaled approximately $14.4 billion as of September 30, 2006, making the total VEBA trust assets $16.9 billion as of September 30, 2006. At December 31, 2005, the total VEBA trust assets were $19.1 billion, $3.8 billion of which was readily-available and $15.3 billion of which was not readily-available. GM withdrew $2 billion of funds from its VEBA trusts during the third quarter of 2006. The decline in the VEBA balances since December 31, 2005 was primarily driven by withdrawals of $4 billion during the nine months ended September 30, 2006, partially offset by asset returns.

As an additional source of available liquidity, GM entered into a $4.6 billion amended and restated credit agreement with a syndicate of banks restating and amending the $5.6 billion unsecured line of credit on July 20, 2006. This agreement provides additional available liquidity that GM can draw on from time to time to fund working capital and other needs. The facility is comprised of a $4.48 billion secured line of credit that terminates in July 2011 and a $0.15 billion unsecured line of credit that terminates in June 2008. Under the $4.48 billion secured facility, borrowings are limited to an amount based on the value of the underlying collateral, which consists of certain North American accounts receivable and inventory of General Motors Corporation, Saturn Corporation, and General Motors of Canada, Limited, certain plants, property and equipment of General Motors of Canada, Limited, and a pledge of 65% of the stock of the holding company for GM’s indirect subsidiary GM de Mexico. In addition to the $4.48 billion secured line of credit, the collateral also secures certain lines of credit, automatic clearinghouse and overdraft arrangements and letters of credit provided by the same secured lenders totaling approximately $1.5 billion. In the event of certain work stoppages, the secured facility would be temporarily reduced to $3.5 billion. At September 30, 2006, a total of $4.6 billion was available under the credit agreement. This amended and restated credit agreement removed the uncertainty previously reported as to whether the bank syndicate would be required to honor a borrowing request.

GM has an additional $0.3 billion in undrawn committed facilities with various maturities and undrawn uncommitted lines of credit of $0.5 billion. In addition, GM’s consolidated affiliates with non-GM minority shareholders, primarily GM Daewoo, have a combined $1.6 billion in undrawn committed facilities.

GM previously reported its belief that issues may arise from its restatement of its prior financial statements under various financing agreements, which consist principally of obligations in connection with sale/leaseback transactions and other lease obligations (but not GM’s public debt indentures) to which GM is a party. In March

58

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Automotive and Other Operations — (continued)

Available Liquidity — (continued)

2006, GM evaluated the effect of its restatement under these agreements, including its legal rights (such as its ability to cure) with respect to any claims that could be asserted. While noting that the amounts that might be subject to possible claims of acceleration, termination or other remedies under some or all of these agreements were uncertain, GM stated in its 2005 Annual Report on Form 10-K that such amounts would likely not exceed approximately $3 billion. GM subsequently reduced that amount to $2 billion based on further analysis of the underlying portfolio in its Quarterly Report on Form 10-Q for the first quarter of 2006. Following these disclosures, GM received a small number of inquiries from parties to some of these agreements, but has not received any claims under these agreements resulting from the restatements, and is not aware of any indication that any party plans to make a claim. GM believes that it has sufficient liquidity over the short and medium term, regardless of the resolution of these matters.

On April 3, 2006, GM announced that it had entered into a definitive agreement to sell a controlling interest in GMAC to FIM Holdings. The transaction is subject to a number of U.S., international and other approvals. The total value of cash proceeds and distributions to GM before it purchases a new preferred equity interest in GMAC and repays any intercompany unsecured obligations will be approximately $14 billion in cash from this transaction over three years, comprised of the $7.4 billion purchase price and a $2.7 billion cash dividend at closing and other transaction related cash flows including monetization of certain retained assets over three years. From the proceeds, GM will invest $1.4 billion of cash in new preferred limited liability company interests of GMAC.

Cash Flow

Auto & Other’s available liquidity was $20.4 billion at September 30, 2006 and December 31, 2005 primarily as a result of positive operating cash flow and cash proceeds from asset sales offset by the significant capital expenditures required to support the business.

The charge of $3.7 billion, after tax, recognized in the second quarter as a result of the UAW Attrition Agreement includes $1.4 billion, after tax, for cash payments to employees, most expected to be paid in 2006, with the remainder spread over the next three years. These payments will be funded using cash flows from operations. The remaining $2.3 billion of the charge is “non-cash” and consequently will have no immediate cash flow impact.

For the nine months ended on September 30, 2006, Auto & Other’s operating cash flow was $4.4 billion compared with a negative $1.7 billion for the same period in the prior year.

Auto & Other’s investing cash flows for the nine months ended on September 30, 2006 consisted primarily of capital expenditures of $5.1 billion, compared with $4.9 billion in the same period in the prior year, liquidation of marketable securities of $1.7 billion, compared to $5.3 billion in the same period in the prior year, sale of interest in Suzuki common stock for approximately $2 billion, and dividends received from GMAC of $1.9 billion compared with $1.5 billion in the same period in the prior year. Capital expenditures were incurred primarily for real estate, plants, equipment, machinery and tooling to support new products and powertrain investments, as well as GM’s existing asset base.

Debt

GM Auto & Other’s total debt at September 30, 2006 was $32.8 billion, of which $1.4 billion was classified as short-term and $31.4 billion was classified as long-term. At December 31, 2005, total debt was $32.5 billion, of which $1.5 billion was short-term and $31 billion was long-term, and at September 30, 2005, total debt was $32.4 billion, of which $1.5 billion was short-term and $30.9 billion was long-term.

Separate from the $1.4 billion of short-term debt, near-term North American term debt maturities include up to approximately $1.2 billion in 2007, related to approximately $1.2 billion of convertible debentures that may be put to GM for cash settlement in March 2007, and approximately $1.3 billion of various term-debt maturities in 2008.

In order to provide financial flexibility to GM and its suppliers, GM maintains a trade payables program through GMAC Commercial Finance (GMACCF). Under the terms of the transaction to sell 51% of GMAC to FIM

59

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Automotive and Other Operations — (concluded)

Available Liquidity — (concluded)

Holdings, GM will be permitted to continue administering the program through GMACCF so long as GM provides the funding of advance payments to suppliers under the program. As of May 1, 2006, GM commenced funding of the advance payments, and as a result, at September 30, 2006 there was no outstanding balance owed by GM to GMACCF under the program.

Net Liquidity

Net liquidity, calculated as cash, marketable securities, and $2.5 billion ($3.8 billion at December 31, 2005) of readily-available assets of the VEBA trust less the total of loans payable and long-term debt, was a negative $12.4 billion at September 30, 2006, compared with a negative $9.6 billion at June 30, 2006 and a negative $12.1 billion at December 31, 2005.

Financing and Insurance Operations

At September 30, 2006, GMAC’s consolidated assets totaled $309.8 billion, compared with $320.5 billion at December 31, 2005 and $314.2 billion at September 30, 2005. The decrease from December 31, 2005 was primarily attributable to the sale of approximately 78% of GMAC’s equity in Capmark in the first quarter of 2006.

GMAC’s total debt is $247.6 billion at September 30, 2006, compared with $253.2 billion at December 31, 2005 and $245.7 billion at September 30, 2005. GMAC’s ratio of total debt to total stockholder’s equity at September 30, 2006 was 11.8:1, compared with 11.9:1 at December 31, 2005, and 10.7:1 at September 30, 2005. GMAC’s liquidity, as well as its ability to profit from ongoing activity, is in large part dependent upon its timely access to capital and the costs associated with raising funds in different segments of the capital markets. Part of GMAC’s strategy in managing liquidity risk has been to develop diversified funding sources across a global investor base. As an important part of its overall funding and liquidity strategy, GMAC maintains substantial bank lines of credit. These bank lines of credit, which totaled $45.1 billion at September 30, 2006, provide “back-up” liquidity and represent additional funding sources, if required.

GMAC currently has a $3.2 billion syndicated line of credit committed through June 2007, $4.4 billion committed through June 2008, and committed and uncommitted lines of credit of $3.5 billion and $9.2 billion, respectively. In addition, at September 30, 2006, New Center Asset Trust (NCAT) and Mortgage Interest Networking Trust (MINT) had $18.3 billion and $3 billion in committed liquidity facilities, respectively. NCAT is a special purpose entity administered by GMAC for the purpose of funding assets as part of GMAC’s securitization funding programs. This entity funds the purchase of assets through the issuance of asset-backed commercial paper and represents an important source of liquidity to GMAC. At September 30, 2006, NCAT had commercial paper outstanding of $8.4 billion, which is not consolidated in the Corporation’s Consolidated Balance Sheet. In addition, GMAC has been able to diversify its unsecured funding through the formation of ResCap. ResCap, which was formed as the holding company of GMAC’s residential mortgage businesses, has a $3.5 billion syndicated line of credit consisting of a $1.75 billion syndicated term loan, a $0.9 billion syndicated line of credit committed through July 2008, and a $0.9 billion syndicated line of credit committed through July 2007. Finally, GMAC has $111.8 billion in committed secured funding facilities with third-parties, including commitments with third-party asset-backed commercial paper conduits, forward flow sale agreements with third-parties, securities purchase commitments with third parties and repurchase facilities. This includes five year commitments that GMAC entered into in 2005 with remaining capacity to sell up to $48 billion of retail automotive receivables to third party purchasers through 2010. The unused portion of these committed and uncommitted facilities totaled $69.7 billion at September 30, 2006.

Status of Debt Ratings

Standard & Poor’s, Moody’s, and Fitch currently rate GM’s and GMAC’s credit at non-investment grade. Dominion Bond Rating Services (DBRS) rates GM’s credit at non-investment grade and maintains an investment

60

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Status of Debt Ratings — (continued)

grade rating for GMAC. All major rating agencies rate ResCap at investment grade. The following table summarizes GM’s, GMAC’s and ResCap’s credit ratings as of September 30, 2006:

	Senior Unsecured Debt			Commercial Paper
Rating Agency	GM	GMAC	ResCap	GM	GMAC	ResCap
DBRS	B	BBB(Low)	BBB	R-5	R-3	R-2(Mid)
Fitch	B	BB	BBB−	Withdrawn	B	F3
Moody’s	Caa1	Ba1	Baa3	Not Prime	Not Prime	P3
S&P	B−	BB	BBB−	B-3	B-1	A-3

	Outlook
Rating Agency	GM	GMAC	ResCap
DBRS	Negative Rating Watch	Developing	Developing
Fitch	Negative	Positive	Positive
Moody’s	Negative Credit Watch	Review for Possible Downgrade	Review for Possible Downgrade
S&P	Negative	Developing	Developing

While GM experienced limited access to the capital markets in the third quarter of 2006 as a result of deterioration in its credit ratings, GM was able to utilize available liquidity to meet its capital requirements. Similarly, due to the downgrade of GMAC’s unsecured debt to non-investment grade, GMAC’s access to the unsecured capital markets was limited. GMAC was able to meet its capital requirements by accessing alternative funding sources, with a focus on secured funding and automotive whole loan sales.

Since December 31, 2005, each of Moody’s, Fitch, Standard & Poor’s and DBRS downgraded GM’s unsecured debt.

On February 21, 2006, Moody’s downgraded GM’s senior unsecured debt to B2 with a negative outlook from B1 under review for a possible downgrade. On March 16, 2006, Moody’s placed the senior unsecured ratings of GM, GMAC and ResCap under review for a possible downgrade. At the same time, Moody’s changed the review status of ResCap’s short-term P-3 ratings to review for possible downgrade from direction uncertain. On March 29, 2006 Moody’s downgraded GM’s senior unsecured debt to B3 with a negative outlook leaving the ratings of GMAC and ResCap on review for possible downgrade. On May 5, 2006, Moody’s placed GM’s senior unsecured debt rating under review for a possible downgrade. GM’s corporate rating and the ratings of GMAC and ResCap were unaffected. On June 20, 2006, Moody’s assigned a B2 rating to GM’s secured credit facility, affirmed the company’s B3 corporate rating and lowered its unsecured credit rating to Caa1. The rating outlook is negative. Credit ratings of GMAC and ResCap were unaffected. On September 22, 2006, Moody’s revised the debt rating of the secured credit facility as a result of new Loss-Given-Default methodology to Ba3 from B2. Issuer credit rating and long-term unsecured debt rating of GM, GMAC and ResCap were unaffected.

On March 1, 2006, Fitch downgraded GM’s senior unsecured rating from B+ to B. Following GM’s April 2, 2006 entry into a definitive agreement to sell 51% of its stake in GMAC, Fitch changed GMAC’s and ResCap’s rating-watch outlook from evolving to positive. On June 20, 2006, Fitch assigned a BB rating to GM’s secured credit facility. GM’s issuer rating remained unchanged at B, on Rating Watch Negative. Credit ratings of GMAC and ResCap were unaffected.

On March 29, 2006, Standard and Poor’s placed both GM’s long term B and short term B-3 corporate credit ratings on CreditWatch with negative implications. The ratings for GMAC and ResCap were affirmed as BB and BBB minus, respectively. Both GMAC and ResCap’s ratings were left on CreditWatch with developing

61

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Status of Debt Ratings — (concluded)

implications. On June 20, 2006, Standard and Poor’s assigned a B+ credit rating on the proposed GM senior bank loan facility with a recovery rating of “1” signifying that lenders can expect full recovery of principal in the event of a payment default. At the same time, Standard & Poor’s affirmed the company’s B corporate credit rating and lowered the senior unsecured debt rating on GM to B− as a result of the secured bank transaction. All ratings remain on credit watch with negative implications. The credit ratings of GMAC and ResCap were unaffected by the ratings actions.

On July 24, 2006 DBRS downgraded GM’s senior unsecured rating to B from B (high) and commercial paper rating to R-3 (low) from R-3 (middle) following the completion of the aforementioned secured credit transaction. The trend remained negative. Credit ratings of GMAC, ResCap and their related subsidiaries were unaffected. On September 15, 2006, DBRS revised its short-term credit rating on GM to R-5 Negative from R-3 (low) Negative, and on GMAC to R-3 Under Review — Developing from R-2(low) Under Review — Developing as a result of its new ratings methodology.

While the aforementioned ratings actions have increased borrowing costs and limited access to unsecured debt markets, these outcomes have been mitigated by actions taken by GM and GMAC over the past few years to focus on an increased use of liquidity sources other than institutional unsecured markets that are not directly affected by ratings on unsecured debt, including secured funding sources beyond traditional asset classes and geographical markets, automotive whole loan sales, and use of bank and conduit facilities. Further reductions of GM’s and/or GMAC’s credit ratings could increase the possibility of additional terms and conditions contained in any new or replacement financing arrangements. As a result of specific funding actions taken over the past few years, management believes that GM and GMAC will continue to have access to sufficient capital to meet the Corporation’s ongoing funding needs over the short and medium-term. Notwithstanding the foregoing, management believes that the current ratings situation and outlook increase the level of risk for achieving the Corporation’s funding strategy and GMAC’s ability to sustain the current level of asset originations over the long-term. In addition, the ratings situation and outlook increase the importance of successfully executing the Corporation’s plans for improvement of operating results. One of the goals of GM’s pending transaction to sell 51% of the equity interest in GMAC is to delink GMAC’s credit rating from GM’s credit rating and renew its access to low-cost financing.

Line of Credit Between GM and GMAC

In September 2006, GM’s $4 billion revolving line of credit with GMAC expired and was not renewed. This credit line was used for general operating and seasonal working capital purposes and to reduce external liquidity requirements, given the differences in the timing of GM’s and GMAC’s peak funding requirements. The line was not utilized in the third quarter of 2006 and was not renewed after its expiration. In the third quarter of 2005, the maximum amount outstanding on the line was $1.4 billion.

Off-Balance Sheet Arrangements

GM and GMAC use off-balance sheet arrangements where economics and sound business principles warrant their use. GM’s principal use of off-balance sheet arrangements occurs in connection with the securitization and sale of financial assets generated or acquired in the ordinary course of business by GMAC and its subsidiaries and, to a lesser extent, by GM. The assets securitized and sold by GMAC and its subsidiaries consist principally of mortgages, and wholesale and retail loans secured by vehicles sold through GM’s dealer network. The assets sold by GM consist principally of trade receivables.

In addition, GM leases real estate and equipment from various off-balance sheet entities that have been established to facilitate the financing of those assets for GM by nationally prominent lessors that GM believes are creditworthy. These assets consist principally of office buildings, warehouses, and machinery and equipment. The use of such entities allows the parties providing the financing to isolate particular assets in a single entity and thereby syndicate the financing to multiple third parties. This is a conventional financing technique used to lower the cost of borrowing and, thus, the lease cost to a lessee such as GM.

62

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Off-Balance Sheet Arrangements — (concluded)

There is a well-established market in which institutions participate in the financing of such property through their purchase of ownership interests in these entities and each is owned by institutions that are independent of, and not affiliated with, GM. GM believes that no officers, directors or employees of GM, GMAC, or their affiliates hold any direct or indirect equity interests in such entities.

Assets in off-balance sheet entities were as follows:

	September 30,		December 31,		September 30,
	2006		2005		2005
	(Dollars in millions)
Assets leased under operating leases	$	2,286	$	2,430	$	2,431
Trade receivables sold(1)		760		708		980
Total	$	3,046	$	3,138	$	3,411
Financing and Insurance Operations
Receivables sold or securitized:
— Mortgage loans	$	80,272	$	99,084	$	97,887
— Retail finance receivables		6,119		6,014		6,523
— Wholesale finance receivables		18,499		21,421		16,688
Total	$	104,890	$	126,519	$	121,098

(1) In addition, trade receivables sold to GMAC were $497 million, $525 million and $476 million for the periods ended September 30, 2006, December 31, 2005, and September 30, 2005, respectively.

Book Value Per Share

Book value per share was determined based on the liquidation rights of the common stockholders. Book value per share of GM $12/3 par value common stock (Common Stock) was $19.70 at September 30, 2006, $25.81 at December 31, 2005, and $38.87 at September 30, 2005.

Book value per share is a meaningful financial measure for GM, as it provides investors an objective metric based on GAAP that can be compared to similar metrics for competitors and other industry participants. The book value per share can vary significantly from the trading price of common stock since the latter is driven by investor expectations about a variety of factors, including the present value of future cash flows, which may or may not warrant financial statement recognition under GAAP.

Dividends

Dividends may be paid on the Common Stock only when, as, and if declared by GM’s Board of Directors in its sole discretion out of amounts available for dividends under applicable law. Under Delaware law, our board may declare dividends only to the extent of our statutory “surplus” (which is defined as total assets minus total liabilities, in each case at fair market value, minus statutory capital), or if there is no such surplus, out of our net profits for the then current and/or immediately preceding fiscal year.

GM’s policy is to distribute dividends on the Common Stock based on the outlook and indicated capital needs of the business. Cash dividends per share of the Common Stock were $2.00 in 2005, 2004, and 2003. At the February 6, 2006 meeting of the GM Board of Directors, the board approved the reduction of the quarterly dividend on the Common Stock from $0.50 per share to $0.25 per share, effective for the first quarter of 2006. Cash dividends per share of the Common Stock were $0.25 per quarter for the first three quarters of 2006.

63

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Employment and Payrolls

Worldwide Employment for GM and its Consolidated Subsidiaries at September 30, (in thousands)	2006		2005
GMNA		156		173
GME(1)		62		56
GMLAAM		32		32
GMAP		34		27
GMAC		31		34
Other		3		3
Total employees		318		325

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2006		2005		2006		2005
Worldwide payrolls — (in billions)	$	6.0	$	5.2	$	16.7	$	15.6

(1) Approximately 7,000 employees were added in the fourth quarter of 2005 from a former powertrain joint venture with Fiat.

Critical Accounting Estimates

The condensed consolidated financial statements of GM are prepared in conformity with GAAP, which requires the use of estimates, judgments, and assumptions that affect the reported assets and liabilities as of the financial statements dates and the reported revenues and expenses for the periods presented. GM’s accounting policies and critical accounting estimates are consistent with those described in Note 1 to the Consolidated Financial Statements and the MD&A section in our 2005 Annual Report on Form 10-K. Management believes that the accounting estimates employed are appropriate and resulting balances are reasonable; however, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. Management has discussed the development, selection and disclosures of its critical accounting estimates with the Audit Committee of GM’s Board of Directors, and the Audit Committee has reviewed the disclosures relating to these estimates.

Pension and Other Postretirement Employee Benefits (OPEB)

Pension and OPEB costs and liabilities are dependent on assumptions used in calculating such amounts. The primary assumptions include factors such as discount rates, health care cost trend rates, expected return on plan assets, mortality rates, retirement rates, and rate of compensation increase, discussed below:

•  Discount rates.  Our discount rates are based on creating a hypothetical portfolio of high quality bonds (rated AA or higher by a recognized rating agency) for which the timing and amount of cash inflows approximates the estimated cash outflows of the defined benefit plan.

•  Health care cost trend rate.  Our health-care cost trend rate is based on historical retiree cost data, near term health care outlook, including appropriate cost control measures implemented by GM, and industry benchmarks and surveys.

•  Expected return on plan assets.  Our expected return on plan assets is derived from detailed periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risk and correlations for each of the asset classes that comprise the fund’s asset mix, and recent and long-term historical performance.

64

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Critical Accounting Estimates — (continued)

•  Mortality rates.  Mortality rates are based on actual and projected plan experience.

•  Retirement rates.  Retirement rates are based on actual and projected plan experience.

•  Rate of compensation increase.  The rate of compensation increase for final pay plans reflects our long-term actual experience and our outlook, including contractually agreed upon wage rate increases for represented hourly employees.

In accordance with GAAP, actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense and the recorded obligation in future periods. While management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect GM’s pension and other postretirement obligations and future expense.

GM remeasured its U.S. hourly pension plan as of April 30, 2006 as a result of the UAW Attrition Program and its U.S. salaried pension plan as of March 31, 2006 as a result of previously announced benefit modifications resulting in a reduction in the U.S. pension projected benefit obligation (PBO) by $3.9 billion. The weighted average discount rate used to determine the benefit obligation was 6.15%. This represents a 45 basis point increase from the 5.70% weighted average discount rate used at year-end 2005. The U.S. hourly plan remeasurement also included a change in retirement assumptions for the remaining active employees which resulted in an increase in the average remaining service life for remaining active employees.

GM’s U.S. SFAS No. 87 pension expense is estimated to decrease by approximately $1.2 billion from approximately $0.6 billion previously projected for 2006.

GM remeasured the U.S. salaried OPEB plans as of February 9, 2006 as a result of previously announced benefit modifications, the U.S. hourly OPEB plans as of March 31, 2006 as a result of the previously announced settlement agreement with the UAW related to reductions in hourly retiree health care, and the U.S. hourly OPEB plans as of May 31, 2006 as a result of the UAW Attrition Program. The remeasurements resulting from U.S. salaried and hourly OPEB health care benefit modifications and the Attrition Program reduced the U.S. OPEB accumulated postretirement benefit obligation (APBO) by $19.9 billion. The aggregate weighted average discount rate used to determine the benefit obligation was 6.25%. This represents an 80 basis point increase from the 5.45% discount rate used at year-end 2005. The U.S. salaried plan remeasurement also included a change in retirement assumptions for the remaining active employees which resulted in an increase in the average remaining service life for remaining active employees.

The previously disclosed estimate for the third quarter UAW Attrition curtailment charge for Other Postretirement Employee Benefits (OPEB) was approximately $300 million pre-tax. The final measurement of this impact resulted in an actual pre-tax third quarter charge of $23 million reflecting the impact of final participant health care and service demographics not available at the time of the original estimate.

The following information illustrates the sensitivity to a change in certain assumptions for U.S. pension plans after the remeasurements (As of March 31, 2006 for the U.S. salaried plan, April 30, 2006 for the U.S. hourly plan, and December 31, 2005 for the other U.S. plans, the PBO for these pension plans was $85 billion and the minimum pension liability charged to equity with respect to these pension plans was $114 million, net of tax):

	Effect on 2006		Effect on
Change in Assumption	Pre-Tax Pension Expense		PBO
25 basis point decrease in discount rate	+$	120 million	+$	2.1 billion
25 basis point increase in discount rate	−$	120 million	−$	2.0 billion
25 basis point decrease in expected return on assets	+$	230 million		—
25 basis point increase in expected return on assets	−$	230 million		—

GM’s U.S. pension plans generally provide covered U.S. hourly employees with pension benefits of negotiated, flat dollar amounts for each year of credited service earned by an individual employee. Formulas

65

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Critical Accounting Estimates — (continued)

providing for such stated amounts are contained in the prevailing labor contract. Consistent with GAAP, pre-tax pension expense and PBO do not comprehend any future benefit increases or decreases from one contract to the next. The current cycle for negotiating new labor contracts is every four years. There is no past practice of maintaining a consistent level of benefit increases or decreases from one contract to the next. However, the following data illustrates the sensitivity of pension expense and PBO to hypothetical assumed changes in future basic benefits. An annual 1% increase in the benefit units for U.S. hourly employees would result in an $80 million increase in 2006 pre-tax pension expense and a $420 million increase in the April 30, 2006 U.S. hourly plan PBO. An annual 1% decrease in the same benefit units would result in an $80 million decrease in 2006 pre-tax pension expense and a $390 million decrease in the same PBO.

The following table illustrates the sensitivity to a change in the discount rate assumption related to GM’s U.S. OPEB plans after the remeasurement for the U.S. salaried OPEB plans as of February 9, 2006 and the remeasurements for the U.S. hourly plans as of March 31, 2006 and May 31, 2006:

	Effect on 2006		Effect on
Change in Assumption	Pre-Tax OPEB Expense		APBO
25 basis point decrease in discount rate	+$	110 million	+$	1.7 billion
25 basis point increase in discount rate	−$	100 million	−$	1.6 billion

GM assumes a 10% initial U.S. health-care cost trend rate for the 2006 calendar year and a 5.0% ultimate U.S. health-care cost trend rate projected for calendar year 2012 and beyond as of December 31, 2005. Considering the remeasurement for the U.S. salaried OPEB plans as of February 9, 2006 as well as the remeasurements for the U.S. hourly OPEB plans as of March 31, 2006 and May 31, 2006, then a one percentage point increase in the assumed U.S. health care trend rates for all periods would have increased the U.S. APBO by 5.3 billion, and the aggregate service and interest cost components of non-pension postretirement benefit expense on an annualized basis by $410 million. A one-percentage point decrease would have decreased the U.S. APBO by $5.1 billion and the aggregate service and interest cost components of non-pension postretirement benefit expense on an annualized basis by $390 million.

The above sensitivities reflect the effect of changing one assumption at a time. Note that economic factors and conditions often affect multiple assumptions simultaneously and the effects of changes in key assumptions are not necessarily linear.

New Accounting Standards

In December 2005, the Financial Accounting Standard Board (FASB) released FASB Staff Position (FSP) SFAS No. 123R-3, “Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards,” which provides a practical transition election related to accounting for the tax effects of share-based payment awards to employees. The Corporation is currently reviewing the transition alternatives and will elect the appropriate alternative no later than January 1, 2007.

In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments,” which amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS No. 133) and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” (SFAS No. 140). This statement amends SFAS No. 133 to permit fair value remeasurement for any hybrid instrument that contains an embedded derivative that otherwise would require bifurcation. This statement also eliminates the interim guidance in SFAS No. 133 Implementation Issue D-1, which provides that beneficial interests in securitized financial assets are not subject to the provisions of SFAS No. 133. Finally, this statement amends SFAS No. 140 to eliminate the restriction on the passive derivative instruments that a qualifying special-purpose entity (SPE) may hold. This statement is effective for all financial instruments acquired or issued in the first fiscal year beginning after September 15, 2006. Management is assessing the potential impact on GM’s financial condition and results of operations.

66

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Critical Accounting Estimates — (continued)

In April 2006, the FASB issued FSP FIN 46R-6, “Determining the Variability to Be Considered in Applying FASB Interpretation No. 46R,” which requires the variability of an entity to be analyzed based on the design of the entity. The nature and risks in the entity, as well as the purpose for the entity’s creation are examined to determine the variability in applying FIN 46R, “Consolidation of Variable Interest Entities.” The variability is used in applying FIN 46R to determine whether an entity is a VIE, which interests are variable interests in the entity, and who is the primary beneficiary of the VIE. This statement was effective for all reporting periods beginning after June 15, 2006. Management has adopted the provisions of FSP FIN 46R-6. This interpretation did not have a significant effect on GM’s consolidated financial position or results of operations.

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48), which supplements SFAS No. 109, “Accounting for Income Taxes,” by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only if it is “more-likely-than-not” to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized. Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any necessary adjustment would be recorded directly to retained earnings in the period of adoption and reported as a change in accounting principle. This Interpretation is effective as of the beginning of the first fiscal year beginning after December 15, 2006. Management is assessing the impact on GM’s financial condition and results of operations.

In July 2006, the FASB issued FSP No. 13-2 “Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction,” (FSP 13-2), which amends SFAS No. 13, “Accounting for Leases,” by requiring lessors to recalculate the rate of return and periodic income allocation for leveraged-lease transactions when there is a change or projected change in the timing of income tax cash flows related to the lease. FSP 13-2 requires lessors to use the model in FIN 48 to determine the timing and amount of expected tax cash flows in leveraged-lease calculations and recalculations. FSP 13-2 is effective in the same period as FIN 48. At the date of adoption, the lessor is required to reassess projected income tax cash flows related to leveraged leases using the FIN 48 model for recognition and measurement. Revisions to the net investment in a leveraged lease required when FSP 13-2 is adopted would be recorded as an adjustment to the beginning balance of retained earnings in the period of adoption and reported as a change in accounting principle. Management does not expect this guidance to have a material effect on GM’s financial condition and results of operations.

In September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108 “Quantifying Financial Misstatements” which expresses the Staff’s views regarding the process of quantifying financial statement misstatements. Registrants are required to quantify the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. The techniques most commonly used in practice to accumulate and quantify misstatements are generally referred to as the “rollover” (current year income statement perspective) and “iron curtain” (year-end balance sheet perspective) approaches. The financial statements would require adjustment when either approach results in quantifying a misstatement that is material, after considering all relevant quantitative and qualitative factors. This bulletin is effective for financial statements for the first fiscal year ending after November 15, 2006. Management does not expect this guidance to have a material effect on GM’s financial condition and results of operations.

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements,” which provides a definition of fair value, establishes a framework for measuring fair value and requires expanded disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The provisions of SFAS No. 157 should be applied prospectively. Management is assessing the potential impact on GM’s financial condition and results of operations.

67

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Critical Accounting Estimates — (concluded)

In September 2006, the FASB issued SFAS No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,” which amends SFAS No. 87 “Employers’ Accounting for Pensions” (SFAS No. 87), SFAS No. 88 “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits” (SFAS No. 88), SFAS No. 106 “Employers’ Accounting for Postretirement Benefits Other Than Pensions” (SFAS No. 106), and SFAS No. 132R “Employers’ Disclosures about Pensions and Other Postretirement Benefits (revised 2003)” (SFAS No. 132R). This Statement requires companies to recognize an asset or liability for the overfunded or underfunded status of their benefit plans in their financial statements. SFAS No. 158 also requires the measurement date for plan assets and liabilities to coincide with the sponsor’s year end. The standard provides two transition alternatives related to the change in measurement date provisions. The recognition of an asset and liability related to the funded status provision is effective for fiscal year ending after December 15, 2006 and the change in measurement date provisions is effective for fiscal years ending after December 15, 2008. Based on available information from the last measurement dates for the defined benefit pension and other postretirement benefit plans and reflecting potential variability in actuarial assumptions, such as discount rates and asset returns, and plan experience, GM estimates that the impact due to the recognition at December 31, 2006 of previously unrecognized amounts would reduce shareholders’ equity in the range of $18 billion to $25 billion, after tax, before assessing the realizability of deferred tax assets resulting from the adoption of SFAS No. 158 of approximately $4 billion to $5 billion as well as others recorded prior to the adoption of SFAS No. 158. Also, the adoption of SFAS No. 158 would result in a reduction of deferred tax liabilities of approximately $6 billion to $9 billion. The actual impact of the recognition provisions of SFAS No. 158 will not be known until year-end valuations are available and the deferred tax assets are assessed for realizability. We are currently evaluating the measurement-date provisions of SFAS No. 158 to determine if it will be possible for GM to early adopt the new measurement dates coinciding with GM’s fiscal year for all plans for 2007.

In October 2006, the FASB issued FSP No. 123R-5 “Amendment of FASB Staff Position FAS 123R-1”. This FSP amends FSP FAS 123R-1, “Classification and Measurement of Freestanding Financial Instruments Originally Issued in Exchange for Employee Services under SFAS No. 123R” to clarify that freestanding financial instruments that were originally issued as employee compensation subject to SFAS No. 123R and subsequently modified solely to reflect an equity restructuring that occurs when the holders are no longer employees, should continue to be subject to the recognition and measurement provisions of SFAS No. 123R if certain conditions are met. The provisions in this FSP are effective for the first reporting period beginning after October 10, 2006. Management does not expect this guidance to have a material effect on GM’s financial condition and results of operations.

Forward-Looking Statements

In this report, in reports previously and subsequently filed by GM with the SEC on Form 10-K and Form 10-Q and filed or furnished on Form 8-K, and in related comments by General Motors’ management, we use words like “expect,” “anticipate,” “estimate,” “forecast,” “initiative,” “objective,” “plan,” “goal,” “project,” “outlook,” “priorities,” “target,” “intend,” “evaluate,” “pursue,” “seek,” “may,” “would,” “could,” “should,” “believe,” “potential,” “continue,” “designed,” or “impact” to identify forward-looking statements that represent our current judgments about possible future events. We believe these judgments are reasonable, but GM’s actual results may differ materially due to a variety of important factors.

Among other items, such factors include:

•  Our ability to achieve reductions in costs as a result of the turnaround restructuring, health care cost reductions and the Attrition Program, to realize production efficiencies and to implement capital expenditures at levels and times planned by management;

•  The pace of product introductions and market acceptance of our new products;

68

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Forward-Looking Statements — (continued)

•  Changes in the competitive environment and the effect of competition in our markets, including our pricing policies;

•  Our ability to maintain adequate liquidity and financing sources and an appropriate level of debt;

•  Restrictions on GMAC’s and ResCap’s ability to pay dividends and prepay subordinated debt obligations to us;

•  The final results of investigations and inquiries by the SEC and other government agencies;

•  Changes in relations with unions and employees/retirees and the legal interpretations of the agreements with those unions with regard to employees/retirees;

•  Our ability to complete the timely sale of a 51-percent controlling interest in GMAC and the effect of that sale on the results of GM’s and GMAC’s operations, liquidity and respective credit ratings;

•  Labor strikes or work stoppages at GM or its key suppliers such as Delphi or financial difficulties at those key suppliers;

•  Negotiations and bankruptcy court actions with respect to our relationship with Delphi;

•  Our ability to attract customers as a result of our more extensive powertrain warranty coverage;

•  Potential increases in our product warranty costs and costs associated with product recalls or product liability;

•  Additional credit rating downgrades and their effects;

•  Costs and risks associated with litigation;

•  New laws, regulations or governmental policies or changes to existing laws, regulations or governmental policies (including changes in interpretation or enforcement);

•  Shortages of and price increases for fuel;

•  Changes in economic conditions, commodity prices, currency exchange rates or political stability in the markets in which we and our competitors operate; and

•  Other factors affecting financing and insurance operating segments’ results of operations and financial condition such as credit ratings, adequate access to the market, changes in the residual value of off-lease vehicles, changes in U.S. government-sponsored mortgage programs or disruptions in the markets in which its mortgage subsidiaries operate, and changes in its contractual servicing rights; and price increases or shortages of fuel.

In addition to these factors, GMAC’s actual results may differ materially due to a variety of other important factors that are described in GMAC’s most recent Annual Report on Form 10-K, Forms 10-Q and 8-K, which are incorporated herein by reference. Such factors include, among others, the following:

•  Changes in the competitive environment and the effect of competition in GMAC’s markets, including on GMAC’s pricing policies;

•  GMAC’s ability to maintain adequate financing sources and an appropriate level of debt;

•  The profitability and financial condition of GM, including changes in production or sales of GM vehicles and risks based on GM’s contingent benefit guarantees;

•  Changes in GMAC’s accounting assumptions that may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; and

•  The threat of natural calamities.

69

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Forward-Looking Statements — (concluded)

We caution investors not to place undue reliance on forward-looking statements, and do not undertake any obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or other such factors that affect the subject of these statements, except where expressly required by law.

* * * * * *

Item 3.   Quantitative And Qualitative Disclosures About Market Risk

There have been no significant changes in the Corporation’s exposure to market risk since December 31, 2005. See Item 7A in GM’s Annual Report on Form 10-K for the year ended December 31, 2005.

* * * * * *

Item 4.   Controls and Procedures

The Corporation maintains disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the specified time periods.

GM’s management, with the participation of its chief executive officer and its chief financial officer, evaluated the effectiveness of GM’s disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) as of September 30, 2006. Based on that evaluation, GM’s chief executive officer and chief financial officer concluded that, as of that date, GM’s disclosure controls and procedures required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15, were effective at the reasonable assurance level.

As discussed in GM’s Annual Report on Form 10-K for the year ended December 31, 2005, management’s assessment identified the following material weakness and significant deficiency:

(A) As previously disclosed in our Form 10-K for the year ended December 31, 2005, GM management had concluded that the disclosure controls and procedures related to certain mortgage loan operations of GMAC were not effective because of a material weakness in internal control over financial reporting with respect to the preparation, review, presentation and disclosure of the consolidated statement of cash flows.

Subsequently, during 2006, management implemented enhancements to GMAC’s internal controls over financial reporting with respect to the consolidated statement of cash flows. For example, GMAC management has created templates to be used in financial reporting to provide more detailed information about cash flows and to facilitate identifying and isolating non-cash amounts. Business units provide certifications on cash flow to GMAC management on a quarterly basis, and internal quarterly accounting reviews have been expanded to incorporate cash flow items. In addition, the disclosure process for testing for GAAP compliance has been revised to cover treatment of cash flows more thoroughly. GM management and GMAC management have assessed the operating effectiveness of these enhanced internal controls and believe the material weakness has been remediated.

(B) GM management also identified a significant deficiency in internal controls related to accounting for complex contracts. This deficiency was noted as a result of certain contracts being accounted for incorrectly and without appropriate consideration of the economic substance of the contracts. As part of its remediation efforts, GM management issued procedural guidance regarding the evaluation of and accounting for complex contracts. Further, GM management is implementing a delegation of authority for approval of the accounting for complex contracts that requires formal review and approval by experienced accounting personnel. GM management will continue to monitor the effectiveness of the remediation.

70

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Controls and Procedures — (concluded)

In June 2006 GM commenced the transition of some of its information technology support services between existing suppliers for its systems, including a portion of its financial systems. Management is continuing to closely monitor the transition to ensure there is no adverse effect to its financial reporting and related internal controls.

Other than indicated above, there were no changes in the Corporation’s internal control over financial reporting that occurred during the quarter ended September 30, 2006, that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

Limitations on the Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within General Motors have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

* * * * * *

PART II

Item 1.   Legal Proceedings

Health Care Litigation

In the previously reported class action UAW, et al. v. General Motors Corporation, the classwide settlement approved by the U.S. District Court for the Eastern District of Michigan has been appealed to the Sixth Circuit Court of Appeals by a small number of individual objectors. The appeal has been fully briefed and is awaiting decision.

On May 10, 2006, the IUE-CWA along with individual retirees filed a class action in the U.S. District Court for the Eastern District of Michigan on behalf of hourly retirees, spouses and dependants, seeking to enjoin GM from making unilateral changes to their hourly retiree health care benefits. On November 1, 2006, the District Court issued an order approving a classwide settlement regarding modifications to health care benefits for hourly retirees.

General Motors Securities Litigation

In the previously reported stockholder action In re General Motors Securities and Derivative Litigation plaintiffs filed amended complaints on August 15, 2006. The amended complaint in the GM securities litigation does not include claims against the underwriters previously named as defendants, alleges a proposed class period of

71

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Legal Proceedings — (continued)

April 13, 2000 through March 20, 2006, does not include the previously asserted claim for the rescission of incentive compensation against Mr. Wagoner and John Devine, and contains additional factual allegations regarding GM’s restatements of financial information filed with the SEC. On October 13, 2006, the GM defendants filed a motion to dismiss the complaint. The amended complaint in the stockholder derivative litigation filed on August 15, 2006 alleges that the Board breached its fiduciary obligations by failing to oversee GM’s operations properly and prevent alleged improprieties in connection with GM’s accounting with regard to cash flows, pension-related liabilities and supplier credits. On October 2, 2006, the defendants filed a motion to dismiss the amended complaint. On October 30, 2006, the plaintiffs in the stockholder derivative litigation filed a proposed stipulated order granting leave for plaintiffs to file a second consolidated and amended derivative complaint, which would add some allegations concerning recent changes to the GM bylaws and the resignation of Jerome B. York from the GM Board of Directors. The Court has not yet entered the stipulated order.

Bondholder Class Actions

In the previously reported bondholder class action J&R Marketing, et al. v. General Motors, et al., on July 28, 2006, plaintiffs filed a Consolidated Amended Complaint, which mainly differed from the initial complaint in that it asserted claims for GMAC debt securities purchased during a different time period (July 28, 2003 through November 9, 2005), and added additional underwriter defendants. On August 28, 2006 the underwriter defendants were dismissed without prejudice. On September 25, 2006, the GM and GMAC defendants filed a motion to dismiss the amended complaint. No determination has been made that the case may be maintained as a class action.

ERISA Class Actions

In the previously reported ERISA class action In re General Motors ERISA Litigation, on July 17, 2006, plaintiffs filed in the United States District Court for the Eastern District of Michigan a First Amended Consolidated Class Action Complaint, which principally adds allegations about GM’s restated earnings and reclassification of cash flows, but which does not name any additional defendants or assert any new claims. On August 24, 2006, the GM defendants filed a motion to dismiss the amended complaint. No determination has been made that the case may be maintained as a class action.

Canadian Export Antitrust Class Actions

In the previously reported antitrust class action In re New Market Vehicle Canadian Export Antitrust Litigation Cases, the United States District Court for the District of Maine ruled that it will certify a class action for damages for six exemplar states under federal rule 23(b) (3) after further discovery to determine the scope of the classes. GM intends to appeal the ruling certifying the damages classes to the United States Court of Appeals for the First Circuit and expects that appeal will be consolidated with its pending appeal from a prior order certifying a class for the six exemplar states for injunctive relief only.

John Evans and Evans Cooling Systems v. General Motors

In this previously reported matter, the plaintiffs have been permitted by the court to expand the claims for retrial to include an additional line of engines.

Environmental Matters

EPA Region V Administrative Complaint

With respect to the previously reported matter in which the EPA had issued an Administrative complaint on October 17, 2003 against General Motors in connection with the Corporation’s assembly facilities in Moraine, Ohio, Pontiac, Michigan, and Lake Orion, Michigan, the EPA Administrative Law Judge has issued a preliminary determination that GM is liable for multiple violations of the hazardous waste rules as applied to GM’s painting and purge operations. The Judge has ordered GM to pay $568,116 in penalties. GM believes that the case was wrongly

72

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Legal Proceedings — (concluded)

decided because the purge material in question is not a “waste”, but instead is being used as intended in enclosed systems to clean, suspend paint solids, and transport fluids. The purge material is thereafter captured, reclaimed, and reused by GM in its processes. GM has appealed this determination to the Environmental Appeals Board on the grounds that the purge material in question is not a “waste.” Oral argument took place on September 28, 2006, and a decision has not been received. In a separate administrative complaint against the Linden, New Jersey assembly plant in June 2005, the EPA alleged the same type of hazardous waste rule violations, for which it is seeking $171,795 in penalties. The New Jersey matter is expected to be scheduled for hearing in 2007.

Greenhouse Gas Lawsuit

On September 20, 2006, the California Attorney General filed California ex rel. Lockyer v. General Motors Corporation, et al., a lawsuit against GM, Ford Motor Company, and the U.S. subsidiaries of DaimlerChrysler AG, Toyota Motor Corporation, Honda Motor Co. Ltd. and Nissan Motor Co. Ltd. in the U.S. District Court for the Northern District of California. Relying principally on a common law nuisance theory, the complaint alleges that the products manufactured and sold by the defendant companies emit greenhouse gases causing millions of dollars of damage to the state of California. The alleged damage is the effects of these greenhouse gases on the environment, health, infrastructure and natural resources of the state. The complaint seeks to hold each defendant jointly and severally liable for the alleged public nuisance, monetary damages according to proof and a declaratory judgment for future expenses and damages, plus attorney fees and litigation expenses.

* * * * * * *

Item 1a.   Risk Factors

The risk factors described below, which were disclosed in our 2005 Annual Report on Form 10-K, have been modified to provide additional disclosure related to changes since we filed our 2005 Annual Report on Form 10-K. See our 2005 Annual Report on Form 10-K for an expanded description of other risks facing the Corporation listed below under “Other Risk Factors.”

Our ability to achieve structural and material cost reductions and to realize production efficiencies for our automotive operations is critical to our ability to achieve our turnaround plan and return to profitability.

We currently are in the process of implementing a number of structural and material cost reduction and productivity improvement initiatives in our automotive operations, including substantial restructuring initiatives for our GMNA operations as more fully discussed above in MD&A. Continued success in implementing these restructuring initiatives throughout our automotive operations, and in GMNA in particular, is critical to our future competitiveness. However, there can be no assurance that these initiatives will continue to be successful in this regard. In addition, while some of the elements of structural cost reduction are within our control, others such as interest rates or return on investments (which influence our pension and OPEB expense) are more dependent on outside factors, and there can be no assurance that such outside factors will not disrupt our plans for structural cost reductions.

Financial difficulties, labor stoppages or work slowdowns at key suppliers, including Delphi, could result in a disruption in our operations and have a material adverse affect on our business.

We rely on many suppliers to provide us with the systems, components and parts that we need to manufacture our automotive products and operate our business. In recent years, some of these suppliers have experienced severe financial difficulties and solvency problems. Financial difficulties or solvency problems at those suppliers could materially adversely affect their ability to supply us with the systems, components and parts that we need to operate our business, resulting in a disruption in our operations. Similarly, many of these suppliers utilize workforces with

73

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Risk Factors — (continued)

substantial union representation. Workforce disputes resulting in work stoppages or slowdowns at these suppliers could also have a material adverse affect on their ability to continue supplying us.

In particular, our largest supplier, Delphi, filed a Chapter 11 bankruptcy petition in October 2005. On March 31, 2006 Delphi filed motions under the U.S. Bankruptcy Code seeking authority to reject its U.S. labor agreements and modify retiree welfare benefits. Delphi’s unions and certain other parties have filed objections to these motions. Hearings on these motions have been adjourned indefinitely, to allow Delphi, its unions, and GM additional time to fully focus on reaching comprehensive consensual agreements. However, the Delphi employees represented by the UAW have given the UAW authorization to strike if Delphi voids its labor contracts pursuant to these motions. While Delphi has indicated to us that it expects no disruptions in its ability to continue supplying us with the systems, components and parts we need as Delphi pursues its bankruptcy restructuring plan, labor disruptions at Delphi resulting from Delphi’s pursuit of a restructuring plan could seriously disrupt our North American operations, prevent us from executing our GMNA turnaround initiatives, and materially adversely impact our business.

Delphi may seek to reject or compromise its obligations to us through its Chapter 11 bankruptcy proceedings.

In connection with its Chapter 11 bankruptcy restructuring, Delphi filed a motion under the U.S. Bankruptcy Code on March 31, 2006 seeking authority to reject certain supply contracts with GM. A hearing on this motion was adjourned indefinitely by the court pending further developments related to Delphi’s U.S. labor agreements and retiree welfare benefits as discussed in Note 8 to the Condensed Consolidated Financial Statements. Although Delphi has not rejected any GM contracts as of this time and has assured GM that it does not intend to disrupt production at GM assembly facilities, there is a risk that Delphi or one more of its affiliates may reject or threaten to reject individual contracts with GM, either for the purpose of exiting specific lines of business or in an attempt to increase the price GM pays for certain parts and components. As a result, we could experience a material disruption in our supply of automotive systems, components and parts that could force the suspension of production at GM assembly facilities, which could materially adversely affect our business, including implementation of our GMNA turnaround initiatives. It is also difficult for us to quickly switch to a different supplier for some of the systems, components and parts we purchase from Delphi as a result of the extended validation and production lead times for these items.

GM is seeking to minimize risk by protecting our right of setoff against the $1.15 billion we owed to Delphi as of the date of its Chapter 11 filing. A procedure for determining setoff claims has been put in place by the bankruptcy court. However, the extent to which these obligations are covered by our right to setoff may be subject to dispute by Delphi, the creditors’ committee, or Delphi’s other creditors, and limitation by the court. GM cannot provide any assurance that it will be able to fully or partially setoff such amounts. To date setoffs of approximately $53.6 million have been agreed to by Delphi and taken by GM. The financial impact of a substantial compromise of our right of setoff, could have a material adverse impact on our financial position. In addition, the basis, amounts and priority of any claims against Delphi that GM currently has or may have in the future may be challenged by other parties in interest in Delphi’s bankruptcy proceeding. The scope and results of such challenges cannot be predicted with certainty.

Continued failure to achieve profitability may cause some or all of our deferred tax assets to expire.

As of September 30, 2006, we had approximately $25.2 billion in U.S. net deferred tax assets. These deferred tax assets include net operating loss carryovers that can be used to offset taxable income in future periods and reduce our income taxes payable in those future periods and are likely to increase substantially as a result of changes to accounting for pension liabilities pursuant to a newly issued accounting standard SFAS No. 158. However, many of these deferred tax assets will expire if they are not utilized within certain time periods. At this time, we consider it more likely than not that we will have U.S. taxable income in the future that will allow us to realize these deferred

74

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Risk Factors — (continued)

tax assets. However, it is possible that some or all of these deferred tax assets could ultimately expire unused, especially if our GMNA restructuring initiatives are not successful or if GM’s share of GMAC’s income declines. While the closing of the sale of a controlling interest in GMAC will not directly affect GM’s ability to realize our deferred tax assets, a significant portion of GMAC’s U.S. pre-tax income will no longer be available to GM as a result of the transaction. Therefore, unless we are able to generate sufficient U.S. taxable income from our automotive operations, a substantial valuation allowance may be required, which would materially increase our expenses in the period taken and materially adversely affect our business.

Restrictions in our labor agreements, including the JOBS bank provisions in the UAW agreement, could limit our ability to pursue or achieve cost savings through restructuring initiatives, and labor strikes, work stoppages or similar difficulties could significantly disrupt our operations.

Substantially all of the hourly employees in our U.S., Canadian and European automotive operations are represented by labor unions and are covered by collective bargaining agreements, which usually have a multi-year duration. Many of these agreements include provisions that limit our ability to realize cost savings from restructuring initiatives such as plant closings and reductions in work force. Our current collective bargaining agreement with the UAW will expire in September 2007. Any UAW strikes, threats of strikes, or other resistance in connection with the negotiation of a new agreement could impair our ability to implement further measures to reduce structural costs and improve production efficiencies in furtherance of our GMNA initiatives and could materially adversely affect our business.

We have reached an agreement to sell a controlling interest in GMAC. There is a risk that this transaction may not be completed. In addition, this transaction, if completed, would reduce our interest in GMAC’s earnings going forward.

On April 2, 2006, GM entered into a definitive agreement to sell a 51% controlling interest in GMAC to FIM Holdings. There can be no assurance that the sale transaction will be completed or if it is completed, that the terms of the sale will not be different from those set forth in the definitive agreement.

Failure to complete the sale transaction will place further pressure on both GM’s and GMAC’s credit profiles, potentially resulting in further downgrades with GMAC’s credit ratings explicitly re-linked to those of GM. Moreover, any reduction in the automotive finance capacity of GMAC could materially adversely affect GM’s business to the extent that third party financing is not available to fund GM’s automotive sales. In the absence of a transaction:

•  GMAC’s access to capital may be seriously constrained, as most unsecured funding sources may decline, including bank funding;

•  The cost of funds related to borrowings that are secured by assets may increase, leading to a reduction in liquidity for certain asset classes;

•  It may be increasingly difficult to securitize assets, resulting in reduced capacity to support overall automotive loan originations;

•  Uncompetitive funding costs may result in a lower return on capital and significantly lower earnings and dividends; and

•  GMAC may need to consider divesting certain businesses in order to maintain adequate liquidity to fund new originations or otherwise preserve the value of its businesses.

In addition, the sale transaction, if completed, would reduce our interest in the earnings of GMAC and ResCap, although the financial effects would be reduced by the value of the consideration we would receive from the purchasers.

75

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Risk Factors — (concluded)

Our pension and OPEB expenses are affected by factors outside our control, including the performance of plan assets, interest rates, actuarial data and experience, and changes in laws and regulations.

Our future funding obligations for our IRS-qualified U.S. defined benefit pension plans and OPEB plans depend upon changes in the level of benefits provided for by the plans, the future performance of assets set aside in trusts for these plans, the level of interest rates used to determine minimum ERISA funding levels, actuarial data and experience, and any changes in government laws and regulations. In addition, our employee benefit plans hold a significant amount of equity securities. If the market values of these securities decline to a point where our pension obligations are not fully funded, our pension and OPEB expenses would increase and, as a result, could materially adversely affect our business. Any decreases in interest rates, if and to the extent not offset by contributions and asset returns, could also increase our obligations under such plans. We may be legally required to make contributions to the pension plans in the future, and those contributions could be material.

Industry consolidation or the entry of competitors into alliances could adversely affect our business, results of operations and financial condition.

We are focused on utilizing our global scope and scale to take advantage of our size and resources around the world so that we can leverage global design, engineering, manufacturing and purchasing to reduce costs and improve quality, productivity and reliability. If our competitors consolidate or enter into other strategic agreements such as alliances, they may be able to take advantage of similar resources and reduce any advantage we generate from our size and global scope. We believe that competitors may be able to benefit from the cost savings offered by consolidation or alliances, which could adversely affect our business, results of operations and financial condition. In addition, competitors could use consolidation or alliances as a means of enhancing their competitiveness or liquidity position, which could also materially adversely affect our business.

Other Risk Factors

The following risk factors, which were disclosed in our 2005 Annual Report on Form 10-K, have not materially changed since we filed our 2005 Annual Report on Form 10-K. See our 2005 Annual Report on Form 10-K for a complete discussion of these risk factors.

Risks related to GM and its automotive business

•  Our ability to maintain or grow structural and material cost savings and to realize production efficiencies for our automotive operations is critical to our ability to achieve our turnaround plan and return to profitability.

•  We have guaranteed a significant amount of Delphi’s financial obligations to its unionized workers. If Delphi fails to satisfy these obligations, we would be obligated to pay some of these obligations.

•  Our health-care cost burden is one of our biggest competitive challenges, and if we do not make progress on structurally fixing this issue, it will continue to be a long-term threat to GM.

•  Our extensive pension and OPEB obligations to retirees are a competitive disadvantage for us.

•  We have experienced a series of credit rating actions that have downgraded our credit ratings to historically low levels. Further reduction of our credit ratings, or failure to restore our credit ratings to higher levels, could have a material adverse effect on our business.

•  Our liquidity position could be negatively affected by a variety of factors, which in turn could have a material adverse effect on our business.

•  The government is currently investigating certain of our accounting practices. The final outcome of these investigations could require us to restate prior financial results.

•  We operate in a highly competitive industry that has excess manufacturing capacity.

76

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Risks related to GM and its automotive business — (concluded)

•  The bankruptcy or insolvency of a major competitor could result in further competitive disadvantages for us in relation to that competitor.

•  Shortages and increases in the price of fuel can result in diminished profitability due to shifts in consumer vehicle demand.

•  A decline in consumer demand for our higher margin vehicles could result in diminished profitability.

•  Our indebtedness and other obligations of our automotive operations are significant and could materially adversely affect our business.

•  The pace of introduction and market acceptance of new vehicles is important to our success.

•  We may be affected by new laws, regulations or governmental policies or changes to existing laws, regulations or governmental policies (including changes in interpretation or enforcement).

•  Potential increases in our product warranty costs and costs associated with product recalls or product liability could affect our profitability.

•  Economic and industry conditions constantly change and could have a material adverse effect on our business and results of operations.

•  Changes in existing, or the adoption of new, laws, regulations or policies of governmental organizations may have a significant negative impact on how we do business.

•  Our businesses outside the United States expose us to additional risks that may cause our revenues and profitability to decline.

•  A failure of or interruption in the communications and information systems on which we rely to conduct our operations could adversely affect our business.

•  We could be materially adversely affected by changes in currency exchange rates, commodity prices, equity prices and interest rates.

•  We are subject to significant risks of litigation.

Risks related to GM’s finance, mortgage and insurance businesses

•  Our finance, mortgage and insurance businesses require substantial capital, and if we are unable to maintain adequate financing sources, our business, results of operations and financial condition will suffer and jeopardize our ability to continue operations.

•  We are exposed to credit risk which could affect the business, results of operations and financial condition of our finance, mortgage and insurance operations.

•  Our earnings may decrease because of increases or decreases in interest rates.

•  Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates.

•  ResCap’s ability to pay dividends and to prepay subordinated debt obligations to GMAC is restricted by contractual arrangements.

•  We use estimates and assumptions in determining the fair value of certain of our assets, in determining our allowance for credit losses, in determining lease residual values and in determining our reserves for insurance losses and loss adjustment expenses. If our estimates or assumptions prove to be incorrect, the business, results of operations and financial condition of our finance, mortgage and insurance operations could be materially adversely affected.

77

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Risks related to GM’s finance, mortgage and insurance businesses — (concluded)

•  General business and economic conditions of the industries and geographic areas in which we operate affect the business, results of operations and financial condition of our finance, mortgage and insurance operations.

•  Our business, results of operations and financial condition may be materially adversely affected by decreases in the residual value of off-lease vehicles.

•  Fluctuations in valuation of investment securities or significant fluctuations in investment market prices could negatively affect revenues.

•  Changes in existing U.S. government-sponsored mortgage programs, or disruptions in the secondary markets in the United States or in other countries in which our mortgage subsidiaries operate, could materially adversely affect the business, results of operations and financial condition of our mortgage business.

•  GMAC may be required to repurchase contracts and provide indemnification if GMAC breaches representations and warranties from its securitization and whole loan transactions, which could harm our business, results of operations and financial condition.

•  Significant indemnification payments or contract, lease or loan repurchase activity of retail contracts or leases or mortgage loans could harm our business, results of operations and financial condition.

•  A loss of contractual servicing rights could have a material adverse effect on our operations.

•  The regulatory environment in which GMAC operates could have a material adverse effect on its business.

The worldwide financial services industry is highly competitive. If we are unable to compete successfully or if there is increased competition in the automotive financing, mortgage and/or insurance markets or generally in the markets for securitizations or asset sales, our margins could be materially adversely affected.

* * * * * * *

Item 2(c).  Purchases of Equity Securities

GM made no purchases of its common stock, $12/3 par value during the three months ended September 30, 2006.

Item 5.   Other Information

On October 18, 2006, the GM Board of Directors, by resolution, reduced the authorized number of directors by one, so that the current size of the Board is 11.

* * * * * * * *

78

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

Item 6.   Exhibits

Exhibit
Number			Exhibit Name
	4		Amended Bylaws of General Motors Corporation, dated October 3, 2006
	13		General Motors Acceptance Corporation Quarterly Report on Form 10-Q, File No. 000-03754, for the quarterly period ended September 30, 2006
	31	.1	Section 302 Certification of the Chief Executive Officer
	31	.2	Section 302 Certification of the Chief Financial Officer
	32	.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32	.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

79

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

GENERAL MOTORS CORPORATION
(Registrant)

By:  /s/  PAUL W. SCHMIDT

(Paul W. Schmidt, Controller)

Date: November 7, 2006

80

GENERAL MOTORS CORPORATION AND SUBSIDIARIES

EXHIBIT INDEX

Exhibit
Number			Exhibit Name
	4		Amended Bylaws of General Motors Corporation, dated October 3, 2006
	13		General Motors Acceptance Corporation Quarterly Report on Form 10-Q, File No. 000-03754, for the quarterly period ended September 30, 2006
	31	.1	Section 302 Certification of the Chief Executive Officer
	31	.2	Section 302 Certification of the Chief Financial Officer
	32	.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32	.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

81

EX-4

GENERAL MOTORS CORPORATION

BYLAWS

As of October 3, 2006

GENERAL MOTORS CORPORATION

BYLAWS

INDEX

	Page
ARTICLE I—MEETINGS OF STOCKHOLDERS
1.1. Annual Meetings		3
1.2. Special Meetings		3
1.3. Notice of Meetings		3
1.4. List of Stockholders Entitled to Vote		3
1.5. Quorum		3
1.6. Conduct of Meeting		4
1.7. Voting; Proxies		4
1.8. Fixing Date for Determination of Stockholders of Record		4
1.9. Adjournments		4
1.10. Judges		5
1.11. Notice of Stockholder Nomination and Stockholder Business		5
1.12. Stockholder Action by Written Consent		6
ARTICLE II — BOARD OF DIRECTORS
2.1. Responsibility and Number		9
2.2. Election; Resignation; Vacancies		9
2.3. Regular Meetings		11
2.4. Special Meetings		11
2.5. Quorum; Vote Required for Action		11
2.6. Conduct of Meeting		11
2.7. Transactions with Corporation		12
2.8. Ratification		12
2.9. Written Action by Directors		13
2.10. Telephonic Meetings Permitted		13
2.11. Independent Directors		13
2.12. Access to Books and Records		13
ARTICLE III — COMMITTEES
3.1. Committees of the Board of Directors		13
3.2. Election; Vacancies; Independence		14
3.3. Procedure; Quorum		14
3.4. Investment Funds Committee		14
3.5. Audit Committee		15
3.6. Executive Compensation Committee		15
3.7. Public Policy Committee		15
3.8. Directors and Corporate Governance Committee		15

1

	Page
ARTICLE IV — OFFICERS
4.1. Election of Officers		16
4.2. Chief Executive Officer		16
4.3. President		16
4.4. Vice Chairman of the Corporation		16
4.5. Chief Financial Officer		17
4.6. Treasurer		17
4.7. Secretary		17
4.8. Controller		17
4.9. General Counsel		17
4.10. General Auditor		17
4.11. Chief Tax Officer		17
4.12. Subordinate Officers		18
4.13. Resignation; Removal; Suspension; Vacancies		18
ARTICLE V — INDEMNIFICATION
5.1. Right to Indemnification of Directors and Officers		18
5.2. Advancement of Expenses of Directors and Officers		19
5.3. Claims by Officers or Directors		19
5.4. Indemnification of Employees		19
5.5. Advancement of Expenses of Employees		20
5.6. Non-Exclusivity of Rights		20
5.7. Other Indemnification		20
5.8. Insurance		20
5.9. Amendment or Repeal		20
ARTICLE VI — MISCELLANEOUS
6.1. Prohibition on Certain Stock Purchases		21
6.2. Seal		22
6.3. Fiscal Year		22
6.4. Notice		22
6.5. Waiver of Notice		22
6.6. Voting of Stock Owned by the Corporation		23
6.7. Form of Records		23
6.8. Offices		23
6.9. Amendment of Bylaws		23
6.10. Gender Pronouns		23
DEFINITION OF CERTAIN TERMS USED IN BYLAW 6.1		i

2

GENERAL MOTORS CORPORATION
BYLAWS

ARTICLE I
MEETINGS OF STOCKHOLDERS

1.1. Annual Meetings.

The annual meeting of stockholders for the election of directors, ratification or rejection of the selection of auditors, and the transaction of such other business as may properly be brought before the meeting shall be held on the first Tuesday in June in each year, or on such other date and such place and time as the chairman of the board or the board of directors shall designate.

1.2. Special Meetings.

Special meetings of stockholders may be called by the board of directors or the chairman of the board at such place, date, and time and for such purpose or purposes as shall be set forth in the notice of such meeting.

1.3. Notice of Meetings.

Written notice of each meeting of stockholders shall be given by the chairman of the board and/or the secretary in compliance with the provisions of Delaware law.

1.4. List of Stockholders Entitled to Vote.

The secretary shall prepare or have prepared before every meeting of stockholders a complete list of the stockholders entitled to vote at the meeting in compliance with the provisions of Delaware law.

1.5. Quorum.

At each meeting of stockholders, except where otherwise provided by law or the certificate of incorporation or these bylaws, the holders of one-third of the voting power of the outstanding shares of stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum. In the absence of a quorum, the stockholders so present may, by majority vote, adjourn the meeting from time to time in the manner provided in Section 1.9 of these bylaws until a quorum shall attend. Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity.

3

1.6. Conduct of Meeting.

The chairman of the board or, if he so designates, a vice chairman of the Corporation, an executive vice president or vice president shall preside at each meeting of the stockholders; provided, however, that if the chairman of the board does not preside and has not designated an officer of the Corporation to preside, the board of directors may designate any person to preside over the meeting. The secretary of the Corporation shall record the proceedings of meetings of the stockholders, but in the absence of the secretary, the person presiding over the meeting shall designate any person to record the proceedings.

1.7. Voting; Proxies.

Each stockholder shall be entitled to vote in accordance with the number of shares and voting powers of the voting shares held of record by him. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him by proxy, but such proxy, whether revocable or irrevocable, shall comply with the requirements of Delaware law. Voting at meetings of stockholders, on other than the election of directors, need not be by written ballot unless the holders of a majority of the outstanding shares of all classes of stock entitled to vote thereon present in person or by proxy at such meeting shall so determine. All elections and questions shall, unless otherwise provided by law or by the certificate of incorporation or section 2.2 or any other provision of these bylaws, be decided by the vote of the holders of a majority of the voting power of the shares of stock entitled to vote thereon present in person or by proxy at the meeting.

1.8. Fixing Date for Determination of Stockholders of Record.

To determine the stockholders of record, the board of directors may fix a record date, provided that the record date shall not precede the date upon which the board adopts the resolution fixing the record date and provided further that the record date shall be: (a) in the case of determination of stockholders entitled to receive notice of or to vote at any meeting of stockholders or adjournment thereof, not more than 60 nor less than ten days before the date of such meeting; (b) in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, in accordance with section 1.12; and (c) in the case of any other action, not more than 60 days prior to such other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board may choose to fix a new record date for the adjourned meeting.

1.9. Adjournments.

Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place, if any, thereof, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the

4

adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

1.10. Judges.

All votes by ballot at any meeting of stockholders shall be conducted by two judges appointed for the purpose, either by the board of directors or by the chairman of the meeting. The judges shall decide upon the qualifications of voters, count the votes, and declare the result.

1.11. Notice of Stockholder Nomination and Stockholder Business.

At a meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. Nominations for the election of directors may be made by the board of directors or by any stockholder entitled to vote for the election of directors who complies with the notice requirements set forth in this section. Other matters to be properly brought before the meeting must be: (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board, including matters covered by rule 14a-8 of the Securities and Exchange Commission (the “SEC”); (b) otherwise properly brought before the meeting by or at the direction of the board; or (c) otherwise properly brought before the meeting by a stockholder pursuant to the notice requirements of this section.

A stockholder who intends to make a nomination or to bring any other matter before a meeting of stockholders must give notice of his intent in writing or by electronic transmission. Such notice must be received by the secretary, in the case of an annual meeting not more than 180 days and not less than 120 days before the date of the meeting, or in the case of a special meeting, not more than 15 days after the day on which notice of the special meeting is first mailed to stockholders.

Every such notice by a stockholder shall state:

(a) the name and address of the stockholder of the Corporation who intends to make a nomination or bring up any other matter;

(b) a representation that the stockholder is a holder of the Corporation’s voting stock and intends to appear in person or by proxy at the meeting to make the nomination or bring up the matter specified in the notice;

(c) if he intends to make a nomination, a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such

5

person or persons) pursuant to which the nomination or nominations are to be made by the stockholder;

(d) if he intends to make a nomination, such other information regarding each nominee proposed by such stockholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC if each nominee had been nominated by the board; and

(e) if he intends to bring up any other matter, a description of the matter and of any material interest of the stockholder in the matter.

Notice of intent to make a nomination shall be accompanied by the written consent of each nominee to serve as director of the Corporation if elected.

At the meeting of stockholders, the presiding officer may declare out of order and disregard any nomination or other matter not presented in accordance with this section.

1.12. Stockholder Action by Written Consent.

(a) Request for Record Date. The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting shall be as fixed by the board of directors or as otherwise established under this section. Any person seeking to have the stockholders authorize or take corporate action by written consent without a meeting shall, by written notice addressed to the secretary of the Corporation and delivered to the Corporation and signed by a stockholder of record, request that a record date be fixed for such purpose. The written notice must contain the information set forth in paragraph (b) of this section. Following receipt of the notice, the board shall have ten days to determine the validity of the request, and if appropriate, adopt a resolution fixing the record date for such purpose. The record date for such purpose shall be no more than ten days after the date upon which the resolution fixing the record date is adopted by the board and shall not precede the date such resolution is adopted. If the board fails within ten days after the Corporation receives such notice to fix a record date for such purpose, the record date shall be the day on which the first written consent is delivered to the Corporation in the manner described in paragraph (d) of this section; except that, if prior action by the board is required under the provisions of Delaware law, the record date shall be at the close of business on the day on which the board adopts the resolution taking such prior action.

(b) Notice Requirements. Any stockholder’s notice required by paragraph (a) of this section must describe the action that the stockholder proposes to take by consent. For each such proposal, every notice by a stockholder must state (i) the information required by section 1.11 as though such stockholder was intending to make a nomination or to bring any other matter before a meeting of stockholders, (ii) the text of the proposal (including the text of any resolutions to be effected by consent and the language of any proposed amendment to the bylaws of the Corporation), (iii) the reasons for soliciting

6

consents for the proposal, (iv) any material interest in the proposal held by the stockholder and the beneficial owner, if any, on whose behalf the action is to be taken, and (v) any other information relating to the stockholder, the beneficial owner, or the proposal that would be required to be disclosed in filings in connection with the solicitation of proxies or consents pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder (or any successor provision of the Exchange Act or the rules or regulations promulgated thereunder).

     In addition to the foregoing, the notice must state as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the notice is given (i) the class and number of shares of capital stock of the Corporation that are owned beneficially and of record by such stockholder and such beneficial owner, as to the stockholder giving the notice, (ii) a description of all arrangements or understandings between such stockholder and any other person or persons regarding the proposed action by consent, and (iii) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends to (A) deliver a proxy statement and/or consent solicitation statement to stockholders of at least the percentage of the Corporation’s outstanding capital stock required to effect the action by consent either to solicit consents or to solicit proxies to execute consents, and/or (B) otherwise solicit proxies or consents from stockholders in support of the action to be taken by consent, and (C) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies or consents relating to the proposed action by consent pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (or any successor provision of the Exchange Act or the rules or regulations promulgated thereunder). The Corporation may require the stockholder of record and/or beneficial owner requesting a record date for proposed stockholder action by consent to furnish such other information as it may reasonably require to determine the validity of the request for a record date.

(c) Date of Consent. Every written consent purporting to take or authorize the taking of corporate action (each such written consent is referred to in this paragraph and in paragraph (d) as a “Consent”) must bear the date of signature of each stockholder who signs the Consent, and no Consent shall be effective to take the corporate action referred to therein unless, within 60 days of the earliest dated Consent delivered in the manner required by this section, Consents signed by a sufficient number of stockholders to take such action are so delivered to the Corporation.

(d) Delivery of Consent. Consent must be delivered to the Corporation by delivery to its registered office in the State of Delaware or its principal place of business. Delivery must be made by hand or by certified or registered mail, return receipt requested.

     In the event of the delivery to the Corporation of Consents, the secretary of the Corporation, or such other officer of the Corporation as the board of directors may designate, shall provide for the safe-keeping of such Consents and any related

7

revocations and shall promptly conduct such ministerial review of the sufficiency of all Consents and any related revocations and of the validity of the action to be taken by stockholder consent as the secretary of the Corporation, or such other officer of the Corporation as the board may designate, as the case may be, deems necessary or appropriate, including, without limitation, whether the stockholders of a number of shares having the requisite voting power to authorize or take the action specified in Consents have given consent; provided, however, that if the corporate action to which the Consents relate is the removal or replacement of one or more members of the board, the secretary of the Corporation, or such other officer of the Corporation as the board may designate, as the case may be, shall promptly designate two persons, who shall not be members of the board, to serve as inspectors (“Inspectors”) with respect to such Consent and such Inspectors shall discharge the functions of the secretary of the Corporation, or such other officer of the Corporation as the board may designate, as the case may be, under this section. If after such investigation the secretary of the Corporation, such other officer of the Corporation as the board may designate, or the Inspectors, as the case may be, shall determine that the action purported to have been taken is duly authorized by the Consents, that fact shall forthwith be certified on the records of the Corporation kept for the purpose of recording the proceedings of meetings of stockholders, and the Consents shall be filed in such records.

     In conducting the investigation required by this section, the secretary of the Corporation, such other officer of the Corporation as the board may designate, or the Inspectors, as the case may be, may, at the expense of the Corporation, retain special legal counsel and any other necessary or appropriate professional advisors, and such other personnel as such person or persons may deem necessary or appropriate and shall be fully protected in relying in good faith upon the opinion of such counsel or advisors.

(e) Effectiveness of Consent. No action by written consent without a meeting shall be effective until such date as the secretary of the Corporation, such other officer of the Corporation as the board may designate, or the Inspectors, as applicable, certify to the Corporation that the consents delivered to the Corporation in accordance with paragraph (d) of this section, represent at least the minimum number of votes that would be necessary to take the corporate action.

(f) Challenge to Validity of Consent. Nothing contained in this section 1.12 shall in any way be construed to suggest or imply that the board of directors of the Corporation or any stockholder shall not be entitled to contest the validity of any Consent or related revocations, whether before or after such certification by the secretary of the Corporation, such other officer of the Corporation as the board may designate, or the Inspectors, as the case may be, or to take any other action (including, without limitation, the commencement, prosecution, or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).

8

ARTICLE II

BOARD OF DIRECTORS

2.1. Responsibility and Number.

The business and affairs of the Corporation shall be managed by or under the direction of a board of directors. The number of directors, which may be changed from time to time by resolution of the board, is 12.

2.2. Election; Resignation; Vacancies.

(a) Term. At each annual meeting of stockholders, each nominee elected by the stockholders to serve as a director shall hold office for a term commencing on the date of the annual meeting, or such later date as shall be determined by the board of directors, and ending on the next annual meeting of stockholders, or until his successor is elected and qualified or until such director’s earlier resignation or removal.

(b) Majority Voting. Except as provided in paragraph (c) below, each nominee shall be elected a director by the vote of the majority of the votes cast with respect to that director’s election at any meeting for the election of directors at which a quorum is present. For purposes of this bylaw, a majority of votes cast means that the number of votes “for” a director must exceed 50% of the votes cast with respect to that director. Votes “against” will count as a vote cast with respect to that director, but “abstentions” will not count as a vote cast with respect to that director.

(c) Contested Elections. If the number of nominees for any election of directors nominated (i) by the board of directors, or (ii) any stockholder, or (iii) a combination of nominees by the board of directors and any stockholder, exceeds the number of directors to be elected, the nominees receiving a plurality of the votes cast by holders of shares entitled to vote in the election at a meeting at which a quorum is present shall be elected.

(d) Resignation and Replacement of Unsuccessful Incumbents.

(i)	In order for any incumbent director to become a nominee of the board for further service on the board, such person must submit an irrevocable resignation, contingent (i) on that person not receiving more than 50% of the votes cast, and (ii) acceptance of that resignation by the board in accordance with policies and procedures adopted by the board for such purposes.
(ii)	A resignation that becomes effective if and when the director fails to receive a specified vote for re-election as a director shall provide that it is irrevocable.

9

(iii)	The board of directors, acting on the recommendation of the directors and corporate governance committee, shall within 90 days of receiving the certified vote pertaining to such election, determine whether to accept the resignation of the unsuccessful incumbent. Absent a determination by the board of directors that a compelling reason exists for concluding that it is in the best interests of the Corporation for an unsuccessful incumbent to remain as a director, no such person shall be elected by the board to serve as a director, and the board shall accept that person’s resignation.
(iv)	If the board determines to accept the resignation of an unsuccessful incumbent, the directors and corporate governance committee shall promptly recommend a candidate to the board of directors to fill the office formerly held by the unsuccessful incumbent.
(v)	The board of directors shall promptly consider and act upon the directors and corporate governance committee’s recommendation. The committee, in making this recommendation and the board, in acting on such recommendation, may consider any factors or other information that they determine appropriate and relevant.
(vi)	The directors and corporate governance committee and the board of directors shall take the actions required under this paragraph (d) without the participation of any unsuccessful incumbent except that:

a.	If every member of the directors and corporate governance committee is an unsuccessful incumbent, the Independent Directors (as defined in section 2.11) who are not unsuccessful incumbents shall name a committee comprised of some or all of the Independent Directors to make recommendations under this subsection to the board; and
b.	If the number of independent directors who are not unsuccessful incumbents is three or fewer, all directors may participate in the decisions under this paragraph (d).

(e) Acceptance of a Director’s Resignation. If the board of directors accepts the resignation of a director who is not an unsuccessful incumbent pursuant to this bylaw, or if a nominee for director who is not an incumbent director does not receive more than 50% of the votes cast, then the board of directors may fill the resulting vacancy pursuant to the provisions of paragraph (g) of this section, or may decrease the size of the board of directors pursuant to the provisions of section 2.1.

(f) Resignation. Any director may resign at any time upon notice given in writing or by electronic transmission to the chairman of the board or to the secretary. A resignation is effective when the resignation is delivered unless the resignation specifies (a) a later effective date or (b) an effective date determined upon the happening of an event or

10

events (including but not limited to a failure to receive more than 50% of the votes cast in an election and the board’s acceptance of the resignation).

(g) Filling a Vacancy. Any vacancy occurring in the board for any cause may be filled by a majority of the remaining members of the board, although such majority is less than a quorum. Each director so elected shall hold office until the expiration of the term of the other directors or until his successor is elected and qualified, or until the earlier of his resignation or removal.

2.3. Regular Meetings.

Unless otherwise determined by resolution of the board of directors, a meeting of the board for the election of officers and the transaction of such other business as may come before it shall be held as soon as practicable following the annual meeting of stockholders, and other regular meetings of the board shall be held either on the first Tuesday of each month designated by the chairman of the board, or if that is a legal holiday, then on the next Tuesday that is not a legal holiday, or such other days as may from time to time be designated by the chairman of the board.

2.4. Special Meetings.

Special meetings of the board of directors may be called by the chairman of the board, or the chairman of the board may by written designation appoint a vice chairman of the Corporation, an executive vice president, or a vice president to call such meeting. Special meetings may also be called by the chairman of the directors and corporate governance committee or by written request of one-third of the directors then in office. Notice of a special meeting of the board of directors shall be sent by the secretary of the Corporation either by first class United States mail at least four days before such meeting, or by overnight mail, courier service, electronic transmission, or hand delivery at least 24 hours before the special meeting.

2.5. Quorum; Vote Required for Action.

At all meetings of the board of directors, one-third of the whole board shall constitute a quorum for the transaction of business. Except in cases in which applicable law, the certificate of incorporation, or these bylaws otherwise provide, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the board.

2.6. Conduct of Meeting.

The board of directors shall annually elect one of its members to be chairman of the board and shall fill any vacancy in the position of chairman of the board at such time and in such

11

manner as the board shall determine. The chairman of the board may but need not be an officer of or employed in an executive or any other capacity by the Corporation.

The chairman of the board shall preside at meetings of the board and lead the board in fulfilling its responsibilities as defined in section 2.1.

In the absence of the chairman of the board, the chairman of the directors and corporate governance committee or, in his absence, a member of the board selected by the members present, shall preside at meetings of the board. The secretary of the Corporation shall act as secretary of the meetings of the board, but in his absence the presiding officer may appoint a secretary for the meeting.

2.7. Transactions with Corporation.

No contract or transaction between the Corporation and one or more of its directors, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board of directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose: (1) if the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the board or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or (2) if the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) if the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the board, a committee thereof, or the stockholders.

Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board or of a committee which authorizes the contract or transaction.

2.8. Ratification.

Any transaction questioned in any stockholders’ derivative suit on the grounds of lack of authority, defective or irregular execution, adverse interest of director, officer or stockholder, non-disclosure, miscomputation, or the application of improper principles or practices of accounting may be ratified before or after judgment, by the board of directors or by the stockholders in case less than a quorum of directors are qualified; and, if so ratified, shall have the same force and effect as if the questioned transaction had been originally duly authorized, and said ratification shall be binding upon the Corporation and its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned transaction.

12

2.9. Written Action by Directors.

Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board or such committee, as the case may be, consent thereto in writing or by electronic transmission, and written evidence of such consent is filed with the minutes of proceedings of the board or committee.

2.10. Telephonic Meetings Permitted.

Members of the board of directors, or any committee of the board, may participate in a meeting of such board or committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this bylaw shall constitute presence in person at such meeting.

2.11. Independent Directors.

(a) A majority of the individuals nominated by the board of directors as candidates for election to the board by the stockholders at the next annual meeting of stockholders shall qualify to be Independent Directors (as defined in this section).

(b) If the board elects directors between annual meetings of stockholders, the majority of all directors holding office immediately after such election shall be Independent Directors.

(c) For purposes of this bylaw, the term “Independent Director” shall mean a director who qualifies as independent under any definition or standard of “independence” adopted by the SEC or the New York Stock Exchange.

2.12 Access to Books and Records.

The records, books, and accounts of the Corporation maintained by or under the supervision of the chief financial officer, the secretary, or any other officer shall be open, during the usual hours for business of the Corporation, to the examination of any director for any purpose reasonably related to his role as a director.

ARTICLE III

COMMITTEES

3.1. Committees of the Board of Directors.

The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, consisting of one or more of the directors of the Corporation, to be committees of the board. To the extent provided in any resolution of the

13

board, these bylaws, or any charter adopted by such committee and approved by the board, and to the extent permissible under Delaware law and the certificate of incorporation, any such committee shall have and may exercise all the powers and authority of the board in the management of the business and affairs of the Corporation.

The standing committees of the board shall be the audit committee, the directors and corporate governance committee, the executive compensation committee, the investment funds committee, and the public policy committee. The board (but not a committee thereof) may designate additional committees of the board and may prescribe for each committee such powers and authority as may properly be granted to such committees in the management of the business and affairs of the Corporation.

3.2. Election; Vacancies; Independence.

The members and the chairman of each standing committee of the board of directors shall be designated annually by the board at its first meeting after each annual meeting of stockholders or at any other time the board shall determine. The members of other committees of the board may be designated at such time as the board may determine. Vacancies in any committee may be filled at such time and in such manner as the board shall determine. Only Independent Directors as defined in section 2.11 of these bylaws shall be members of any standing committee.

3.3. Procedure; Quorum.

Except to the extent otherwise provided in these bylaws or any resolution of the board of directors, each committee of the board may fix its own rules of procedure.

At all meetings of any committee of the board, one-third of the members thereof shall constitute a quorum for the transaction of business. The vote of a majority of the members present at a meeting of a committee of the board at which a quorum is present shall be the act of the committee unless the certificate of incorporation, these bylaws, or a resolution of the board requires the vote of a greater number.

3.4. Investment Funds Committee.

The investment funds committee shall be responsible for assisting the board of directors with its general oversight responsibility for the investment funds of the Corporation and its subsidiaries. The committee shall serve, where it is designated by the governing documents, as a named fiduciary of the defined benefit employee benefit plans of the Corporation and any subsidiary of the Corporation that are covered by the Employee Retirement Income Security Act of 1974 (ERISA) where and to the extent that it is designated by the plan’s governing documents. In addition, the committee shall report annually to the board regarding the performance of the named fiduciaries and administrators of such plans of their responsibilities under ERISA, and the investment activity of the defined benefit plans

14

among such plans. The board and management of the Corporation and its subsidiaries shall retain all authority to determine the amount and timing of any future funding of such plans.

3.5. Audit Committee.

The audit committee shall have and may exercise the powers, authority, and responsibilities that are normally appropriate for the functions of an audit committee. The committee shall also annually select the independent accountants for the following calendar year, and that selection shall be submitted to the board of directors for their concurrence and to the stockholders for their ratification or rejection at the annual meeting of stockholders.

3.6. Executive Compensation Committee.

The executive compensation committee shall be responsible for matters related to executive compensation and all other equity-based incentive compensation plans of the Corporation. The committee shall determine the compensation of: (a) employees of the Corporation who are directors of the Corporation; and (b) upon the recommendation of the chief executive officer, all senior officers of the Corporation and any other employee of the Corporation who occupies such other position as may be designated by the committee from time to time. The committee shall review the compensation of any director, officer or other employee of any direct or indirect subsidiary of the Corporation as may be designated by the committee from time to time to determine if it has any objection to such compensation. The committee shall have and may exercise the powers and authority granted to it by any incentive compensation plan for employees of the Corporation.

Where any employee benefit or incentive compensation plan affects employees of the Corporation or its subsidiaries and the compensation of such employees is determined or subject to review by the committee, such plan shall be submitted to the committee for its review before adoption by the Corporation or its subsidiary. Any such plan or amendment or modification shall be made effective with respect to employees of the Corporation only if and to the extent approved by the committee.

3.7. Public Policy Committee.

The public policy committee shall, upon its own initiative or otherwise, inquire into all phases of the Corporation’s business activities that relate to matters of public policy. The committee may make recommendations to the board of directors to assist it in formulating and adopting basic policies calculated to promote the best interests of the Corporation and the community.

3.8. Directors and Corporate Governance Committee.

The directors and corporate governance committee shall be responsible for matters related to service on the board of directors of the corporation, and associated issues of corporate governance. The committee from time to time shall conduct studies of the size and

15

composition of the board. Prior to each annual meeting of stockholders, the committee shall recommend to the board the individuals to constitute the nominees of the board, so that the board may solicit proxies for their election. The committee shall review the qualifications of individuals for consideration as director candidates and shall recommend to the board, for its consideration, the names of individuals for election by the board. In addition, the committee shall from time to time conduct studies and make recommendations to the board regarding compensation of directors.

ARTICLE IV
OFFICERS

4.1. Election of Officers.

The board of directors shall elect such officers of the Corporation with the titles and duties that it designates, provided that the Corporation shall have at least two officers at any time. There may be a chief executive officer, a president, one or more vice chairmen of the Corporation, one or more executive vice presidents, one or more vice presidents, a chief financial officer, a secretary, a treasurer, a controller, a general counsel, a general auditor, and a chief tax officer. The officers, other than the chief executive officer and the president, shall each have the powers, authority, and responsibilities of those officers provided by the bylaws or as the board or the chief executive officer may determine. One person may hold any number of offices. Elected officers shall hold their offices at the pleasure of the board or until their earlier resignation.

4.2. Chief Executive Officer.

The chief executive officer shall have the general executive responsibility for the conduct of the business and affairs of the Corporation. He shall exercise such other powers, authority, and responsibilities as the board of directors may determine.

In the absence of or during the physical disability of the chief executive officer, the board may designate an officer who shall have and exercise the powers, authority, and responsibilities of the chief executive officer.

4.3. President.

The president shall have and exercise such powers, authority and responsibilities as the board of directors may determine.

4.4. Vice Chairman of the Corporation.

The vice chairman shall have and exercise such powers, authority, and responsibilities as the board of directors may determine. The vice chairman may be, but is not required to be, a member of the board of directors.

16

4.5. Chief Financial Officer.

The chief financial officer shall be the principal financial officer of the Corporation. He shall render such accounts and reports as may be required by the board of directors or any committee of the board. The financial records, books and accounts of the Corporation shall be maintained subject to his direct or indirect supervision.

4.6. Treasurer.

The treasurer shall have direct or indirect custody of all funds and securities of the Corporation and shall perform all acts incident to the position of treasurer.

4.7. Secretary.

The secretary shall keep the minutes of all meetings of stockholders and directors and shall give all required notices and have charge of such books and papers as the board of directors may require. He shall submit such reports to the board or to any committee as the board or such committee may request. Any action or duty required to be performed by the secretary may be performed by an assistant secretary.

4.8. Controller.

The controller shall be in charge of the accounts of the Corporation and shall perform all acts incident to the position of controller.

4.9. General Counsel.

The general counsel shall be the chief legal officer of the Corporation and shall have general control of all matters of legal import concerning the Corporation.

4.10. General Auditor.

The general auditor shall have such powers, authority and responsibilities as are incident to the position of general auditor in the performance of an independent audit activity of the Corporation and shall have direct access to the audit committee.

4.11. Chief Tax Officer.

The chief tax officer shall have responsibility for all tax matters involving the Corporation, with authority to sign and to delegate to others authority to sign all returns, reports, agreements and documents involving the administration of the Corporation’s tax affairs.

17

4.12. Subordinate Officers.

The board of directors may from time to time appoint one or more assistant officers to the officers of the Corporation, and such other subordinate officers as the board of directors may deem advisable. Such subordinate officers shall have such powers, authority and responsibilities as the board or the chief executive officer may from time to time determine. The board may grant to any committee of the board or the chief executive officer the power and authority to appoint subordinate officers and to prescribe their respective terms of office, powers, authority, and responsibilities. Each subordinate officer shall hold his position at the pleasure of the board, the committee of the board appointing him, the chief executive officer, and any other officer to whom such subordinate officer reports.

4.13. Resignation; Removal; Suspension; Vacancies.

Any officer may resign at any time by giving written notice to the chief executive officer or the secretary. Unless stated in the notice of resignation, the acceptance thereof shall not be necessary to make it effective. It shall take effect at the time specified therein or, in the absence of such specification, it shall take effect upon the receipt thereof.

Any officer elected by the board of directors may be suspended or removed at any time by the affirmative vote of a majority of the board. Any subordinate officer of the Corporation appointed by the board, a committee of the board, or the chief executive officer may be suspended or removed at any time by a majority vote of a quorum of the board, the committee that appointed such subordinate officer, the chief executive officer, or any other officer to whom such subordinate officer reports.

Subject to any contractual limitations, the chief executive officer may suspend the powers, authority, responsibilities and compensation of any employee, including any elected officer or appointed subordinate officer, for a period of time sufficient to permit the board or the appropriate committee of the board a reasonable opportunity to consider and act upon a resolution relating to the reinstatement, further suspension, or removal of such person.

As appropriate, the board, a committee of the board, and/or the chief executive officer may fill any vacancy created by the resignation, death, retirement, or removal of an officer in the same manner as provided for the election or appointment of such person.

ARTICLE V

INDEMNIFICATION

5.1. Right to Indemnification of Directors and Officers.

Subject to the other provisions of this article, the Corporation shall indemnify and advance expenses to every director and officer (and to such person’s heirs, executors, administrators or other legal representatives) in the manner and to the full extent permitted by applicable

18

law as it presently exists, or may hereafter be amended, against any and all amounts (including judgments, fines, payments in settlement, attorneys’ fees and other expenses) reasonably incurred by or on behalf of such person in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (“a proceeding”), in which such director or officer was or is made or is threatened to be made a party or is otherwise involved by reason of the fact that such person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary or member of any other corporation, partnership, joint venture, trust, organization or other enterprise. The Corporation shall not be required to indemnify a person in connection with a proceeding initiated by such person if the proceeding was not authorized by the board of directors of the Corporation.

5.2. Advancement of Expenses of Directors and Officers.

The Corporation shall pay the expenses of directors and officers incurred in defending any proceeding in advance of its final disposition (“advancement of expenses”); provided, however, that the payment of expenses incurred by a director or officer in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the director or officer to repay all amounts advanced if it should be ultimately determined that the director or officer is not entitled to be indemnified under this article or otherwise.

5.3. Claims by Officers or Directors.

If a claim for indemnification or advancement of expenses by a director or officer under this article is not paid in full within 90 days after a written claim therefor has been received by the Corporation, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or advancement of expenses under applicable law.

5.4. Indemnification of Employees.

Subject to the other provisions of this article, the Corporation may indemnify and advance expenses to every employee who is not a director or officer (and to such person’s heirs, executors, administrators, or other legal representatives) in the manner and to the full extent permitted by applicable law as it presently exists, or may hereafter be amended against any and all amounts (including judgments, fines, payments in settlement, attorneys’ fees, and other expenses) reasonably incurred by or on behalf of such person in connection with any proceeding, in which such employee was or is made or is threatened to be made a party or is otherwise involved by reason of the fact that such person is or was an employee of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, fiduciary, or member of any other corporation, partnership, joint venture, trust, organization, or other enterprise. The ultimate determination of entitlement to indemnification of employees who are not officers and directors shall be made in such

19

manner as is provided by applicable law. The Corporation shall not be required to indemnify a person in connection with a proceeding initiated by such person if the proceeding was not authorized by the board of the Corporation.

5.5. Advancement of Expenses of Employees.

The advancement of expenses of an employee who is not a director or officer shall be made by or in the manner provided by resolution of the board of directors or by a committee of the board.

5.6. Non-Exclusivity of Rights.

The rights conferred on any person by this article shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, any provision of the certificate of incorporation or of these bylaws or of any agreement, any vote of stockholders or disinterested directors, or otherwise.

5.7. Other Indemnification.

The Corporation’s obligation, if any, to indemnify any person who was or is serving at its request as a director, officer or employee of another corporation, partnership, joint venture, trust, organization, or other enterprise shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, organization, or other enterprise.

5.8. Insurance.

The board of directors may, to the full extent permitted by applicable law as it presently exists, or may hereafter be amended from time to time, authorize an appropriate officer or officers to purchase and maintain at the Corporation’s expense insurance: (a) to reimburse the Corporation for any obligation which it incurs under the provisions of this article as a result of the indemnification of past, present or future directors, officers, employees, agents, and any persons who have served in the past, are now serving, or in the future will serve at the request of the Corporation as a director, officer, employee, or agent of another Corporation, partnership, joint venture, trust or other enterprise; and (b) to pay on behalf of or to indemnify such persons against liability in instances in which they may not otherwise be indemnified by the Corporation under the provisions of this article, whether or not the Corporation would have the power to indemnify such persons against such liability under this article.

5.9. Amendment or Repeal.

Any repeal or modification of the foregoing provisions of this article shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification.

20

ARTICLE VI
MISCELLANEOUS

6.1. Prohibition on Certain Stock Purchases.

(a) Except as set forth in subsection (b) hereof, in addition to any affirmative vote of stockholders required by any provision of law, the certificate of incorporation or bylaws of the Corporation, or any policy adopted by the board of directors, neither the Corporation nor any subsidiary shall knowingly effect any direct or indirect purchase or other acquisition of any GM Equity Security of any class or classes issued by the Corporation at a price which is in excess of the highest Market Price of such GM Equity Security on the largest principal national securities exchange in the United States on which such security is listed for trading on the date that the understanding to effect such transaction is entered into by the Corporation (whether or not such transaction is concluded or a written agreement relating to such transaction is executed on such date, such date to be conclusively established by determination of the board), from any Interested Person (i.e., any person who is the direct or indirect beneficial owner of more than three percent (3%) of the aggregate voting power of the Voting Shares of the Corporation) who has beneficially owned such GM Equity Securities for less than two years prior to such date, without the affirmative vote of the holders of the Voting Shares which represent at least a majority of the aggregate voting power of the Corporation, excluding Voting Shares beneficially owned by such Interested Person, voting together as a single class. Such affirmative vote shall be required notwithstanding the fact that no vote may be otherwise required, or that a lesser percentage may be specified, by law or any agreement with any national securities exchange, or otherwise.

(b) The provisions of Section (a) hereof shall not be applicable with respect to:

(i) any purchase, acquisition, redemption or exchange of GM Equity Securities, the purchase, acquisition, redemption or exchange of which, at the time any such transaction is entered into, is provided for in the certificate of incorporation (including any resolution or resolutions of the board providing for the issuance of Preferred Stock or Preference Stock by the Corporation);

(ii) any purchase or other acquisition of GM Equity Securities made as part of a tender or exchange offer by the Corporation to purchase securities of the same class made on the same terms to all holders of such securities and complying with the applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (or any successor provisions to such Act, rules or regulations);

21

(iii) any purchase or acquisition of GM Equity Securities made pursuant to an open market purchase program which has been approved by the board of directors; or

(iv) any purchase or acquisition of GM Equity Securities made from, or any purchase or acquisition of GM Equity Securities made pursuant to or on behalf of, an employee benefit plan maintained by the Corporation, or any subsidiary or any trustee of, or fiduciary with respect to any such plan when acting in such capacity.

(c) The board shall have the exclusive right and power to interpret the provisions of this bylaw, including, without limitation, the adoption of written definitions of terms used in this bylaw (any such definitions shall be filed with the secretary of the Corporation, and such definitions as may prevail shall be made available to any stockholder upon written request); any such interpretation made in good faith shall be binding and conclusive upon all holders of GM Equity Securities.

6.2. Seal.

The corporate seal shall have inscribed upon it the name of the Corporation, the year of its organization and the words “Corporate Seal,” and “Delaware.” The seal and any duplicate of the seal shall be in the charge of the secretary or an assistant secretary.

6.3. Fiscal Year.

The fiscal year of the Corporation shall begin on January 1 and terminate on December 31 of each year.

6.4. Notice.

Unless otherwise stated, any notice required to be given by these bylaws must be given in writing delivered in person, by first class United States mail, overnight mail or courier service, or by facsimile or other electronic transmission followed by a paper copy of such notice delivered by overnight mail or courier service.

6.5. Waiver of Notice.

Whenever any notice is required to be given, a waiver thereof in writing, signed by the person or persons entitled to the notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except if the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Such written notice of waiver need not specify the business to be transacted at or the purpose of any regular or special meeting of the stockholders, board of directors, or committee of the board.

22

6.6. Voting of Stock Owned by the Corporation.

The board of directors, the investment funds committee or the chairman of the board may authorize any person and delegate to one or more officers or subordinate officers the authority to authorize any person to vote or to grant proxies to vote in behalf of the Corporation at any meeting of stockholders or in any solicitation of consent of any corporation in which the Corporation may hold stock or other voting securities.

6.7. Form of Records.

Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device or method, provided that the records so kept can be converted into clearly legible paper form within a reasonable time. Upon the request of any person entitled to inspect records, the Corporation shall so convert such records.

6.8. Offices.

The Corporation shall maintain a registered office inside the State of Delaware and may also have other offices outside or inside the State of Delaware. The books of the Corporation may be kept outside or inside the State of Delaware.

6.9. Amendment of Bylaws.

The board of directors shall have power to adopt, amend, or repeal the bylaws at any regular or special meeting of the board. The stockholders shall also have power to adopt, amend, or repeal the bylaws at any annual or special meeting, subject to compliance with the notice provisions provided in section 1.11.

6.10. Gender Pronouns.

Whenever the masculine pronoun is used in these bylaws, it shall be deemed to refer to either the masculine or the feminine gender.

23

DEFINITION OF CERTAIN TERMS
USED IN BYLAW 6.1
OF
GENERAL MOTORS CORPORATION

For the purposes of section 6.1 (formerly section 6.12) of the bylaws of General Motors Corporation, the board of directors adopted the following definitions effective March 5, 1990:

(i) “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on January 1, 1990.

(ii) “Beneficial Owner” and “Beneficial Ownership” shall have the meanings ascribed to such terms in Rule 13d-3 and Rule 13d-5 of the General Rules and Regulations under the Exchange Act, as in effect on January 1, 1990.

(iii) “GM Equity Security” shall mean any security described in Section 3(a) (11) of the Exchange Act, as in effect on January 1, 1990, which is issued by GM and traded on a national securities exchange or the NASDAQ National Market System.

(iv) “Interested Person” shall mean any person (other than the Corporation or any Subsidiary) that is the direct or indirect Beneficial Owner of more than three percent (3%) of the aggregate voting power of the Voting Shares, and any affiliate or associate of any such person. For the purpose of determining whether a Person is an Interested Person, the outstanding Voting Shares shall include unissued shares of voting stock of the Corporation of which the Interested Person is the Beneficial Owner, but shall not include any other shares of voting stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise, to any Person who is not the Interested Person.

(v) “Market Price” of shares of a class of GM Equity Security on any day shall mean the highest sale price (regular way) of shares of such class of GM Equity Security on such day, or, if that day is not a trading day, on the trading day immediately preceding such day, on the largest principal national securities exchange on which such class of stock is then listed or admitted to trading, or if not listed or admitted to trading on any national securities exchange, then the highest reported sale price for such shares in the over-the-counter market as reported on the NASDAQ National Market System, or if such sale prices shall not be reported thereon, the highest bid price so reported, or, if such price shall not be reported thereon, as the same shall be reported by the National Quotation Bureau Incorporated; in the case of any GM Equity Security which is the Preferred Stock or Preference Stock of the Corporation (of any series), the Market Price thereof

i

shall be the Market Price, as hereinabove defined, of the Voting Shares which the holder of such Preferred Stock or Preference Stock may then acquire by reason of the redemption, exchange, conversion or exercise of other rights as may be provided for in the terms of such securities.

(vi) “Person” shall mean any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, as well as any syndicate or group deemed to be a person pursuant to Section 13(d)(3) of the Exchange Act, as in effect on January 1, 1990.

(vii) “Subsidiary” shall mean any company of which the Corporation owns, directly or indirectly, (A) a majority of the outstanding shares of equity securities, or (B) shares having a majority of the voting power represented by all of the outstanding voting stock of such company. For the purpose of determining whether a company is a Subsidiary, the outstanding voting stock and shares of equity securities thereof shall include unissued shares of which the Corporation is the Beneficial Owner but, except for the purpose of determining whether a company is a Subsidiary for purposes of the definition of Interested Person as used in Bylaw Section 6.12 [now section 6.1], shall not include any other shares which may be issuable pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, warrants or options, or otherwise, to any Person who is not the Corporation.

(viii) “Voting Shares” shall mean the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors.

 ii

EX-13

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549-1004

FORM 10-Q

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2006, or
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from                      to                     .

Commission file number: 1-3754

GMAC LLC

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 38-0572512
(I.R.S. Employer
Identification No.)

200 Renaissance Center

P.O. Box 200 Detroit, Michigan

48265-2000

(Address of principal executive offices)

(Zip Code)

(313) 556-5000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes [X]  No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer (as these terms are defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer [ ]  Accelerated filer [ ]  Non-accelerated filer [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ]  No [X]

Reduced Disclosure Format

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format.

(PAGE INTENTIONALLY LEFT BLANK)

Explanatory Note

GMAC LLC

GMAC LLC’s (GMAC) net loss for the third quarter of 2006, preliminarily indicated as $348 million as furnished in a Form 8-K dated October 25, 2006, has been reduced by $24 million to $324 million. The reduction in net loss is attributable primarily to process improvements that identified amounts related to loan sales that had not been recorded. These items have been recorded and are reflected in this Form 10-Q.

INDEX

GMAC LLC

		Page
Part I — Financial Information
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Statement of Income for the Third Quarter and Nine Months Ended September 30, 2006 and 2005		1
	Condensed Consolidated Balance Sheet as of September 30, 2006, and December 31, 2005		2
	Condensed Consolidated Statement of Changes in Equity for the Nine Months Ended September 30, 2006 and 2005		3
	Condensed Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2006 and 2005		4
	Notes to Condensed Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		*
Item 4.	Controls and Procedures		41
Part II — Other Information
Item 1.	Legal Proceedings		42
Item 1A.	Risk Factors		42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		*
Item 3.	Defaults Upon Senior Securities		*
Item 4.	Submission of Matters to a Vote of Security Holders		*
Item 5.	Other Information		43
Item 6.	Exhibits		43
Signatures			44
Index of Exhibits			45

*  Item is omitted pursuant to the Reduced Disclosure Format, as set forth on the cover page of this filing.

Condensed Consolidated Statement of Income (unaudited)

GMAC LLC

		Third Quarter						Nine Months
Period ended September 30, ($ in millions)		2006			2005			2006			2005
Revenue
Consumer			$2,647			$2,448			$7,760			$7,438
Commercial			802			638			2,311			2,009
Loans held for sale			419			451			1,270			1,179
Operating leases			2,080			1,787			6,034			5,202
	Total financing revenue		5,948			5,324			17,375			15,828
Interest expense			4,257			3,320			11,637			9,370
	Net financing revenue before provision for credit losses		1,691			2,004			5,738			6,458
Provision for credit losses			486			385			906			915
	Net financing revenue		1,205			1,619			4,832			5,543
Servicing fees			459			439			1,377			1,282
Amortization and impairment of servicing rights			—			(95	)		(23	)		(594	)
Servicing asset valuation and hedge activities, net			(331	)		(1	)		(688	)		92
	Net loan servicing income		128			343			666			780
Insurance premiums and service revenue earned			1,045			975			3,107			2,822
Gain on sale of mortgage and automotive loans, net			352			499			1,220			1,244
Investment income			525			264			1,079			918
Gain on sale of equity method investments, net			—			—			411			—
Other income			1,033			1,207			3,051			3,149
	Total net financing revenue and other income		4,288			4,907			14,366			14,456
Expense
Depreciation expense on operating lease assets			1,400			1,329			4,185			3,888
Compensation and benefits expense			613			845			1,996			2,428
Insurance losses and loss adjustment expenses			580			593			1,830			1,779
Other operating expenses			1,109			1,089			3,452			2,995
Impairment of goodwill and other intangible assets			840			—			840			—
	Total noninterest expense		4,542			3,856			12,303			11,090
(Loss) income before income tax expense			(254	)		1,051			2,063			3,366
Income tax expense			70			376			815			1,147
Net (loss) income			($324	)		$675			$1,248			$2,219

The Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.

1

Condensed Consolidated Balance Sheet (unaudited)

GMAC LLC

		September 30,			December 31,
($ in millions)		2006			2005
Assets
Cash and cash equivalents			$9,125			$15,424
Investment securities			19,262			18,207
Loans held for sale			24,996			21,865
Assets held for sale			—			19,030
Finance receivables and loans, net of unearned income
	Consumer		140,121			140,411
	Commercial		45,180			44,574
Allowance for credit losses			(2,986	)		(3,116	)
	Total finance receivables and loans, net		182,315			181,869
Investment in operating leases, net			35,755			31,211
Notes receivable from General Motors			5,698			4,565
Mortgage servicing rights			4,828			4,015
Premiums and other insurance receivables			2,052			1,873
Other assets			25,817			22,457
Total assets			$309,848			$320,516
Liabilities
Debt
	Unsecured		$118,081			$133,269
	Secured		131,429			121,138
	Total debt		249,510			254,407
Interest payable			3,012			3,057
Liabilities related to assets held for sale			—			10,941
Unearned insurance premiums and service revenue			5,149			5,054
Reserves for insurance losses and loss adjustment expenses			2,611			2,534
Accrued expenses and other liabilities			23,763			18,381
Deferred income taxes			4,647			4,364
Total liabilities			288,692			298,738
Equity
Common stock and paid-in capital			—			5,760
Member’s interest			5,760			—
Retained earnings			14,475			15,190
Accumulated other comprehensive income			921			828
Total equity			21,156			21,778
Total liabilities and equity			$309,848			$320,516

The Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.

2

Condensed Consolidated Statement of Changes in

Equity (unaudited)

GMAC LLC

		Common											Accumulated
		Stock											Other
		and Paid-			Member’s		Retained			Comprehensive			Comprehensive
($ in millions)		in Capital			Interest		Earnings			Income			Income			Total
Balance at January 1, 2005			$5,760			$—		$15,491						$1,166			$22,417
Net income			—			—		2,219			$2,219			—			2,219
Dividends paid			—			—		(1,500	)					—			(1,500	)
Other comprehensive income (loss)			—			—		—			(309	)		(309	)		(309	)
Comprehensive income											$1,910
Balance at September 30, 2005			$5,760			$—		$16,210						$857			$22,827
Balance at January 1, 2006			$5,760			$—		$15,190						$828			$21,778
Conversion of common stock to member’s interest on July 20, 2006			(5,760	)		5,760		—						—			—
Net income			—			—		1,248			$1,248			—			1,248
Cumulative effect of a change in accounting principle, net of tax:
	Transfer of unrealized loss for certain available for sale securities to trading securities		—			—		(17	)					17			—
	Recognize mortgage servicing rights at fair value		—			—		4			4			—			4
Dividends paid			—			—		(1,950	)					—			(1,950	)
Other comprehensive income (loss)			—			—		—			76			76			76
Comprehensive income											$1,328
Balance at September 30, 2006			$—			$5,760		$14,475						$921			$21,156

The Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.

3

Condensed Consolidated Statement of Cash Flows (unaudited)

GMAC LLC

Nine months ended September 30, ($ in millions)	2006			2005
Operating activities
Net cash used in operating activities		($12,526	)		($10,895	)
Investing activities
Purchases of available for sale securities		(10,423	)		(14,100	)
Proceeds from sales of available for sale securities		3,242			3,899
Proceeds from maturities of available for sale securities		6,508			6,800
Net increase in finance receivables and loans		(75,345	)		(68,483	)
Proceeds from sales of finance receivables and loans		88,724			95,596
Purchases of operating lease assets		(13,538	)		(12,372	)
Disposals of operating lease assets		5,266			4,846
Change in notes receivable from General Motors		(322	)		(435	)
Purchases of mortgage servicing rights, net		(66	)		(100	)
Acquisitions of subsidiaries, net of cash acquired		(324	)		—
Proceeds from sale of business units, net (a)		8,556			—
Settlement of residual support and risk sharing obligations with GM (b)		1,074			—
Other, net (c)		4			(796	)
Net cash provided by investing activities		13,356			14,855
Financing activities
Net change in short-term debt		1,450			(6,572	)
Proceeds from issuance of long-term debt		66,000			49,097
Repayments of long-term debt		(76,043	)		(50,813	)
Other financing activities		2,931			5,020
Dividends paid		(1,900	)		(1,500	)
Net cash used in financing activities		(7,562	)		(4,768	)
Effect of exchange rate changes on cash and cash equivalents		61			(84	)
Net decrease in cash and cash equivalents		(6,671	)		(892	)
Cash and cash equivalents at beginning of year (d)		15,796			22,718
Cash and cash equivalents at September 30,		$9,125			$21,826

(a)	Includes proceeds from the March 23, 2006 sale of GMAC Commercial Mortgage of approximately $1.5 billion and proceeds from repayment of intercompany loans with GMAC Commercial Mortgage of approximately $7.3 billion, $250 of which was received in preferred equity and net of cash transferred to buyer of approximately $650.
(b)	Refer to Note 9 to the Condensed Consolidated Financial Statements for a more detailed description.
(c)	Includes $570 and $767 for the nine months ended September 30, 2006 and 2005, respectively, related to securities lending transactions where cash collateral is received and a corresponding liability is recorded, both of which are presented in investing activities.
(d)	Includes $372 of cash and cash equivalents in GMAC Commercial Mortgage classified as assets held for sale as of December 31, 2005.

The Notes to the Condensed Consolidated Financial Statements are an integral part of these statements.

4

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

1 Basis of Presentation

Effective July 20, 2006, General Motors Acceptance Corporation converted its form of organization from a Delaware corporation to a Delaware limited liability company and changed its name to “GMAC LLC” as contemplated by the previously announced April 2, 2006 Purchase and Sale Agreement between General Motors Corporation, GM Finance Co. Holdings, Inc., FIM Holdings LLC and General Motors Acceptance Corporation. GMAC LLC (referred to herein as GMAC, we, our or us) is a wholly owned subsidiary of General Motors Corporation (General Motors or GM). The Condensed Consolidated Financial Statements include our accounts and those of our majority-owned subsidiaries, as well as all variable interest entities in which we are the primary beneficiary, after eliminating intercompany balances and transactions.

The Condensed Consolidated Financial Statements as of September 30, 2006, and for the third quarter and nine months ended September 30, 2006 and 2005, are unaudited but, in management’s opinion, include all adjustments consisting of normal recurring adjustments necessary for a fair presentation of the results for the interim periods. Certain prior period amounts have been reclassified to conform to the current period presentation.

The interim period consolidated financial statements, including the related notes, are condensed and are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim reporting. These interim period Condensed Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements, which are included in our Annual Report on Form 10-K for the year ended December 31, 2005, filed with the United States Securities and Exchange Commission (SEC) on March 28, 2006, and revised through a Current Report on Form 8-K filing on June 2, 2006, to reflect changes to our reporting segments (collectively referred to herein as the 2005 Annual Report on 10-K).

On March 23, 2006, we sold approximately 78% of our equity in GMAC Commercial Mortgage for approximately $1.5 billion in cash. At the closing, GMAC Commercial Mortgage also repaid us approximately $7.3 billion of intercompany loans, bringing our total cash proceeds to $8.8 billion. Prior to March 23, 2006, GMAC Commercial Mortgage’s earnings and cash flows were fully consolidated in our Condensed Consolidated Statement of Income and Statement of Cash Flows. The assets and liabilities of GMAC’s Commercial Mortgage segment were classified as held for sale separately in our Condensed Consolidated Balance Sheet at September 30, 2005. Subsequent to the sale on March 23, 2006, our remaining interest in GMAC Commercial Mortgage is accounted for as an equity method investment. Effective with the date of the sale, GMAC Commercial Mortgage changed its name to Capmark Financial Group Inc. (Capmark).

As a result of the sale of Capmark, results of this entity are now included in Note 12 to the Condensed Consolidated Financial Statements (Segment Information) in Other. Prior to the sale, GMAC Commercial Mortgage was identified as a reportable operating segment under Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information (SFAS 131). In addition, beginning January 1, 2006, based on changes in the organizational structure and management for the mortgage operations, Residential Capital Corporation (ResCap) is presented as a reportable operating segment. As a result, prior year financial data has been changed to reflect the current period presentation.

Change in Accounting Principle

On January 1, 2006, we adopted Statement of Financial Accounting Standards No. 156, Accounting for Servicing of Financial Assets (SFAS 156) that: (1) provides revised guidance on when a servicing asset and servicing liability should be recognized; (2) requires all separately recognized servicing assets and liabilities to be initially measured at fair value, if practicable; (3) permits an entity to elect to measure servicing assets and liabilities at fair value each reporting date and report changes in fair value in earnings in the period in which the changes occur; (4) upon initial adoption, permits a one time reclassification of available-for-sale securities to trading securities for securities, which are identified as offsetting an entity’s exposure to changes in the fair value of servicing assets or liabilities that a servicer elects to subsequently measure at fair value and (5) requires separate presentation of servicing assets and liabilities subsequently measured at fair value in the balance sheet and additional disclosures. We elected to subsequently measure the majority of servicing assets and liabilities at fair value and report changes in fair value in earnings in the period in which the changes occur. In addition, we made a one-time reclassification of $927 million of available for sale securities to trading securities for those securities identified as offsetting our exposure to changes in the fair value of servicing assets or liabilities. The adoption of SFAS No. 156 resulted in a $13 million reduction in the beginning of the year retained earnings, net of tax, as a cumulative effect of change in accounting principle. However, the impact to total member’s equity was a $4 million increase, net of tax.

We define our classes of servicing rights based on both the availability of market inputs and the manner in which we manage the risks of our servicing assets and liabilities. We manage our servicing rights at the reportable operating segment level. For all servicing assets and

5

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

liabilities recorded on our balance sheet at January 1, 2006, the date of adoption, we identified three classes of servicing rights: those pertaining to residential mortgage in our ResCap reporting segment, auto finance in our North American Operations reporting segment and commercial mortgages. We have elected to measure our residential mortgage servicing rights at fair value for each reporting date and report changes in fair value in earnings during the period in which the changes occur. At September 30, 2006, these assets were valued at $4.8 billion and recorded separately on our Condensed Consolidated Balance Sheet. Refer to Note 6 to the Condensed Consolidated Financial Statements for further information.

For servicing assets and liabilities related to our auto finance and commercial mortgage classes of assets, we have elected to continue to use the amortization method of accounting. As a result of the sale of Capmark on March 23, 2006, the commercial mortgage servicing rights are no longer recorded on our balance sheet at September 30, 2006. Our auto finance servicing assets and liabilities at September 30, 2006, totaled $13 million and $19 million, respectively, and are recorded in other assets and other liabilities, respectively, on our Condensed Consolidated Balance Sheet.

Recently Issued Accounting Standards

Statement of Position 05-1 — In September 2005 the American Institute of Certified Public Accountants (AICPA) issued Statement of Position 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts (SOP 05-1). SOP 05-1 provides guidance on accounting for deferred acquisition costs on internal replacements of insurance contracts. SOP 05-1 defines an internal replacement and specifies the conditions that determine whether the replacement contract is substantially or unsubstantially changed from the replaced contract. An internal replacement determined to result in a substantially changed contract should be accounted for as an extinguishment of the replaced contract; unamortized deferred acquisition costs and unearned revenue liabilities of the replaced contract should no longer be deferred. An internal replacement determined to result in an unsubstantially changed contract should be accounted for as a continuation of the replaced asset. SOP 05-01 introduces the terms integrated and non-integrated contract features and specifies that non-integrated features do not change the base contract and are to be accounted for in a manner similar to a separately issued contract. Integrated features are evaluated in conjunction with the base contract. SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. Management is assessing the potential impact on our financial condition or results of operations.

Statement of Financial Accounting Standards No. 155 — In February 2006 the Financial Accounting Standards Board (FASB) issued Statement of Financial Standards No. 155 Accounting for Certain Hybrid Financial Instruments — an amendment of FASB Statements No. 133 and 140 (SFAS 155). This standard permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation. SFAS 155 allows an entity to make an irrevocable election to measure such a hybrid financial instrument at fair value on an instrument-by-instrument basis. The standard eliminates the prohibition on a QSPE from holding a derivative financial instrument that pertains to a beneficial instrument other than another derivative financial instrument. SFAS 155 also clarifies which interest-only and principal-only strips are not subject to the requirements of SFAS 133, as well as determines that concentrations of credit risk in the form of subordination are not embedded derivatives. SFAS 155 is effective for all financial instruments acquired or issued after the beginning of the fiscal year that begins after September 15, 2006. Adoption of SFAS 155 is not expected to have a material impact on our consolidated financial position or results of operations.

FASB Staff Position — FIN 46(R)-6 — In April 2006 the FASB issued FIN 46(R)-6, Determining the Variability to Be Considered in Applying FASB Interpretation No. 46(R), which requires the variability of an entity to be analyzed based on the design of the entity. The nature and risks in the entity, as well as the purpose for the entity’s creation, are examined to determine the variability in applying FIN 46(R). The variability is used in applying FIN 46(R) to determine whether an entity is a variable interest entity, which interests are variable interests in the entity and who is the primary beneficiary of the variable interest entity. This statement is applied prospectively and is effective for all reporting periods after June 15, 2006. The guidance did not have a material impact on our consolidated financial position or results of operations.

FASB Interpretation No. 48 — In June 2006 the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), which supplements Statement of Financial Accounting Standard No. 109 by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only if they are “more-likely-than-not” to be sustained based solely on their technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized. Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any necessary adjustment would be recorded directly to retained earnings in the period of adoption and

6

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

reported as a change in accounting principle. This Interpretation is effective as of the beginning of the first fiscal year beginning after December 15, 2006. Management is assessing the potential impact on our financial condition or results of operations.

FASB Staff Position (FSP) No. 13-2 — In July 2006 the FASB issued FSP No. 13-2 Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction, (FSP 13-2), which amends SFAS No. 13, Accounting for Leases, by requiring lessors to recalculate the rate of return and periodic income allocation for leveraged-lease transactions when there is a change or projected change in the timing of income tax cash flows related to the lease. FSP 13-2 requires lessors to use the model in FIN 48 to determine the timing and amount of expected tax cash flows in leveraged-lease calculations and recalculations. FSP 13-2 is effective in the same period as FIN 48. At the date of adoption, the lessor is required to reassess projected income tax cash flows related to leveraged leases using the FIN 48 model for recognition and measurement. Revisions to the net investment in a leverage lease required when FSP 13-2 is adopted would be recorded as an adjustment to the beginning balance of retained earnings in the period of adoption and reported as a change in accounting principle. Management is assessing the potential impact on our financial condition and results of operations.

SEC Staff Accounting Bulletin No. 108 — In September 2006 the SEC issued Staff Accounting Bulletin (SAB) No. 108 Quantifying Financial Misstatements, which expresses the Staff’s views regarding the process of quantifying financial statement misstatements. Registrants are required to quantify the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. The techniques most commonly used in practice to accumulate and quantify misstatements are generally referred to as the “rollover” (current year income statement perspective) and “iron curtain” (year-end balance perspective) approaches. The financial statements would require adjustment when either approach results in quantifying a misstatement that is material, after considering all relevant quantitative and qualitative factors. Management does not expect this guidance to have a material effect on our current process for assessing and quantifying financial statement misstatements.

SFAS No. 157 — In September 2006 the FASB issued SFAS No. 157 Fair Value Measurements, which provides a definition of fair value, establishes a framework for measuring fair value and requires expanded disclosures about fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 12, 2007, and interim periods within those years. The provisions of SFAS 157 should be applied prospectively. Management is assessing the potential impact on our financial condition and results of operations.

SFAS No. 158 — In September 2006 the FASB issued SFAS No. 158 Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, which amends SFAS No. 87 Employers’ Accounting for Pensions (SFAS No. 87), SFAS No. 88 Employer’s Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits (SFAS No. 88), SFAS No. 106 Employer’s Accounting for Postretirements Benefits Other Than Pensions (SFAS No. 106), and SFAS No. 132(R) Employers’ Disclosures about Pensions and Other Postretirement Benefits (revised 2003) (SFAS 132(R)). This Statement requires companies to recognize an asset or liability for the overfunded or underfunded status of their benefit plans in their financial statements. The asset or liability is the offset to other comprehensive income, consisting of previously unrecognized prior service costs and credits, actuarial gains or losses and transition obligations and assets. SFAS 158 also requires the measurement date for plan assets and liabilities to coincide with the sponsor’s year end. The standard provides two transition alternatives for companies to make the measurement-date provisions. The recognition of asset and liability related to funded status provision is effective for fiscal years ending after December 15, 2006, and the change in measurement is effective for fiscal years ending after December 15, 2008. Management is assessing the potential impact on our financial condition and results of operations.

2 Sale of a Controlling Interest in GMAC

On April 2, 2006, GM and its wholly owned subsidiaries, GMAC and GM Finance Co. Holdings Inc., entered into a definitive agreement pursuant to which GM will sell a 51% controlling interest in GMAC for a purchase price of approximately $7.4 billion to FIM Holdings LLC (FIM Holdings), a consortium of investors including Cerberus FIM Investors LLC, the sole managing member, Citigroup Inc., Aozora Bank Ltd. and a subsidiary of The PNC Financial Services Group, Inc. GM and the consortium will invest $1.9 billion of cash in new GMAC preferred limited liability company interest in us, with $1.4 billion to be invested by GM and $500 million to be invested by the consortium. The transaction is subject to a number of U.S. and international regulatory and other approvals. GM and GMAC expect to close the transaction in the fourth quarter of 2006.

Prior to consummation of the transaction, (i) certain assets with respect to automotive leases owned by us and our affiliates having a net book value of approximately $4.1 billion will be dividended to GM; (ii) GM will assume or retain certain of our post-employment benefit obligations; (iii) we will dividend to GM certain entities that hold a fee interest in certain real properties; (iv) we will pay dividends to GM in

7

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

an amount up to the amount of our net income prior to the acquisition; (v) GM will repay certain indebtedness owing to us, and specified intercompany unsecured obligations owing to us shall be no greater than $1.5 billion and (vi) we will make a one-time distribution to GM of approximately $2.7 billion of cash to reflect the increase in our equity value resulting from the transfer of a portion of our net deferred tax liabilities arising from the conversion by us and certain of our subsidiaries to limited liability company form. The total value of the cash proceeds and distributions to GM after repayment of certain intercompany obligations and before it purchases preferred limited liability company interests will be approximately $14 billion over three years, comprised of the $7.4 billion purchase price, $2.7 billion cash dividend, and other transaction related cash flows including monetization of certain retained assets over three years.

As part of the transaction, we will enter into a number of agreements with GM that will require us to continue to allocate capital to automotive financing consistent with historical practices, thereby continuing to provide critical financing support to a significant share of GM’s global sales. While we will retain the right to make individual credit decisions, we will commit to fund a broad spectrum of customers and dealers consistent with historical practice in the relevant jurisdiction. Subject to our fulfillment of certain conditions, GM will grant us exclusivity for 10 years for U.S., Canadian and international GM-sponsored retail and wholesale marketing incentives around the world, with the exception of Saturn branded products.

As part of the agreement, GM will retain an option, for 10 years after the closing of the transaction, to repurchase certain assets from us related to the Automotive Finance operations of our North American Operations and our International Operations. GM’s exercise of the option is conditional on GM’s credit rating being investment grade or higher than our credit rating. The call option price will be calculated as the higher of (i) fair market value or (ii) 9.5 times the consolidated net income of our automotive finance operations in either the calendar year the call option is exercised or the calendar year immediately following the year the call option is exercised.

The agreement is subject to the satisfaction or waiver of customary and other closing conditions, including, among other things: (i) receipt of ratings for our senior unsecured long-term indebtedness and the ratings of ResCap, our wholly owned subsidiary, after giving effect to the transactions contemplated by the agreement, of at least BB and BBB- (or their respective equivalents), respectively, and an A.M. Best rating for our significant insurance subsidiaries of at least B++; (ii) that no material adverse effect will have occurred with respect to our business, financial condition or results of operations, which includes any actual downgrading by any of the major rating agencies of GM’s unsecured long-term indebtedness rating below CCC or its equivalent; and (iii) the receipt of required regulatory approvals and licenses. The agreement may be terminated upon the occurrence of certain events, including the failure to complete the transaction by March 31, 2007.

As previously reported, on July 28, 2006, the Federal Deposit Insurance Corporation (the “FDIC”) announced a six-month moratorium on the acceptance of, or final decisions on, notices filed under the Change in Bank Control Act with regard to industrial loan companies (ILCs). In connection with the transaction, a notice was submitted to the FDIC. Since FDIC regulatory approval is a condition of the Agreement, GM, GMAC and representatives of FIM Holdings have been working with the FDIC to develop a means to enable the parties to stay on target for a closing of the transaction in the fourth quarter of 2006. GM and GMAC expect to close the transaction in the fourth quarter of 2006.

8

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

3 Other Income

The following table presents the components of other income:

	Third Quarter					Nine Months
Period ended September 30, ($ in millions)	2006		2005			2006			2005
Interest and service fees on transactions with GM (a)		$173		$118			$467			$350
Real estate services		162		202			493			527
Other interest revenue		158		119			406			314
Interest on cash equivalents		109		176			406			344
Full service leasing fees		70		44			205			131
Insurance service fees		45		9			103			85
Late charges and other administrative fees		40		42			122			123
Mortgage processing fees		28		143			135			340
Interest on restricted cash deposits		27		32			86			81
Fair value adjustment on certain derivatives (b)		17		(17	)		(4	)		(20	)
Factoring commissions		16		19			45			56
Specialty lending fees		12		17			42			46
Equity interest in Capmark		10		—			28			—
Other		166		303			517			772
Total other income		$1,033		$1,207			$3,051			$3,149

(a)	Refer to Note 9 to the Condensed Consolidated Financial Statements for a description of transactions with GM.
(b)	Refer to Note 8 to the Condensed Consolidated Financial Statements for a description of derivative instruments and hedging activities.

4 Other Operating Expenses

The following table presents the components of other operating expenses:

	Third Quarter					Nine Months
Period ended September 30, ($ in millions)	2006		2005			2006			2005
Insurance commissions		$238		$247			$692			$715
Technology and communications expense		144		155			408			437
Professional services		120		112			336			316
Advertising and marketing		84		71			260			282
Premises and equipment depreciation		64		70			191			210
Full service leasing vehicle maintenance costs		66		60			188			179
Auto remarketing and repossession		89		51			212			131
Rent and storage		59		66			180			198
Lease and loan administration		58		54			166			148
Operating lease disposal loss (gain)		27		(83	)		(1	)		(297	)
Other		160		286			820			676
Total other operating expenses	$	1,109	$	1,089		$	3,452		$	2,995

9

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

5 Finance Receivables and Loans

The composition of finance receivables and loans outstanding, which excludes Capmark activity, was as follows:

			September 30, 2006						December 31, 2005
($ in millions)			Domestic		Foreign		Total		Domestic		Foreign		Total
Consumer
	Retail automotive			$46,355		$19,607		$65,962		$53,789		$17,663		$71,452
	Residential mortgages			70,484		3,675		74,159		65,040		3,919		68,959
Total consumer				116,839		23,282		140,121		118,829		21,582		140,411
Commercial
	Automotive:
		Wholesale		12,962		7,866		20,828		13,202		7,372		20,574
		Leasing and lease financing		343		802		1,145		461		767		1,228
		Term loans to dealers and other		1,988		738		2,726		2,397		719		3,116
	Commercial and industrial			14,899		2,422		17,321		14,908		2,028		16,936
	Real estate construction and other (a)			2,982		178		3,160		2,601		119		2,720
Total commercial				33,174		12,006		45,180		33,569		11,005		44,574
Total finance receivables and loans (b)				$150,013		$35,288		$185,301		$152,398		$32,587		$184,985

(a)	At December 31, 2005, $3.0 billion ($2.1 billion domestic and $949 foreign) in Capmark finance receivables and loans were transferred to assets held for sale in our Consolidated Balance Sheet.
(b)	Net of unearned income of $6.3 billion and $5.9 billion as of September 30, 2006, and December 31, 2005, respectively.

The following tables present an analysis of the activity as of September 30 in the allowance for credit losses on finance receivables and loans.

			2006									2005
Third quarter ended September 30, ($ in millions)			Consumer			Commercial			Total			Consumer			Commercial			Total
Allowance at beginning of period (a)				$2,509			$374			$2,883			$2,752			$468			$3,220
	Provision for credit losses			388			97			485			375			10			385
	Charge-offs
		Domestic		(364	)		(30	)		(394	)		(351	)		(3	)		(354	)
		Foreign		(47	)		(4	)		(51	)		(50	)		(5	)		(55	)
	Total charge-offs			(411	)		(34	)		(445	)		(401	)		(8	)		(409	)
	Recoveries
		Domestic		44			—			44			47			—			47
		Foreign		10			2			12			11			2			13
	Total recoveries			54			2			56			58			2			60
	Net charge-offs			(357	)		(32	)		(389	)		(343	)		(6	)		(349	)
	Transfer to assets held for sale			—			—			—			—			(27	)		(27	)
	Impacts of foreign currency translation			4			3			7			6			(1	)		5
	Securitization activity			—			—			—			1			2			3
Allowance at September 30,				$2,544			$442			$2,986			$2,791			$446			$3,237

(a)  At September 30, 2005, $3.4 billion in Capmark finance receivables and loans and the related allowance of $27.0 million were transferred to assets held for sale on the Condensed Consolidated Balance Sheet.

10

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

			2006									2005
Nine months ended September 30,
($ in millions)			Consumer			Commercial			Total			Consumer			Commercial			Total
Allowance at beginning of period (a)				$2,683			$433			$3,116			$2,951			$471			$3,422
	Provision for credit losses			802			104			906			854			61			915
	Charge-offs
		Domestic		(1,005	)		(101	)		(1,106	)		(1,020	)		(27	)		(1,047	)
		Foreign		(131	)		(8	)		(139	)		(148	)		(18	)		(166	)
	Total charge-offs			(1,136	)		(109	)		(1,245	)		(1,168	)		(45	)		(1,213	)
	Recoveries
		Domestic		147			8			155			126			4			130
		Foreign		34			4			38			35			3			38
	Total recoveries			181			12			193			161			7			168
	Net charge-offs			(955	)		(97	)		(1,052	)		(1,007	)		(38	)		(1,045	)
	Transfer to assets held for sale			—			—			—			—			(27	)		(27	)
	Impacts of foreign currency translation			12			2			14			(6	)		(18	)		(24	)
	Securitization activity			2			—			2			(1	)		(3	)		(4	)
Allowance at September 30,				$2,544			$442			$2,986			$2,791			$446			$3,237

(a)  At September 30, 2005, $3.4 billion in Capmark finance receivables and loans and the related allowance of $27.0 million were transferred to assets held for sale on the Condensed Consolidated Balance Sheet.

11

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

6 Mortgage Servicing Rights

The following table summarizes 2006 activity related to mortgage servicing rights (MSRs) carried at fair value.

Period ended September 30, 2006 ($ in millions)		Total
Estimated fair value at January 1, 2006		$	4,021
Additions obtained from sales of financial assets			1,269
Additions from purchases of servicing rights			12
Changes in fair value:
	Due to changes in valuation inputs or assumptions used in the valuation model		79
	Other changes in fair value		(553	)
Estimated fair value at September 30, 2006		$	4,828

Changes in fair value, due to changes in valuation inputs or assumptions used in the valuation models, include all changes due to a revaluation by a model or by a benchmarking exercise. This line item also includes changes in fair value due to a change in valuation assumptions and/or model calculations. Other changes in fair value primarily include the accretion of the present value of the discount related to forecasted cash flows and the economic run-off of the portfolio. Other changes that affect the balance primarily include foreign currency adjustments and the extinguishment of mortgage servicing rights related to clean-up calls of securitization transactions.

The following are key assumptions used by us in valuing our MSRs:

September 30, 2006	Total
Range of prepayment speeds		5.2 - 43.2%
Range of discount rate		8.0 - 14.0%

Our servicing rights’ primary risk is interest rate risk and the resulting impact on prepayments. A significant decline in interest rates could lead to higher than expected prepayments, which could reduce the value of the mortgage servicing rights. We economically hedge the income statement impact of these risks with both derivative and non-derivative financial instruments. These instruments include interest rate swaps, caps and floors, options to purchase these items, futures and forward contracts and/or purchasing or selling U.S. Treasury and principal-only securities. At September 30, 2006, the fair value of derivative financial instruments and non-derivative financial instruments used to mitigate these risks amounted to $344 million and $2.0 billion, respectively. The change in the fair value of the derivative financial instruments amounted to a loss of $218 million for the nine months ended September 30, 2006, and is included in servicing asset valuation and hedge activities, net in the Condensed Consolidated Statement of Income.

The components of servicing fees were as follows for the nine months ended September 30, 2006:

($ in millions)	Total
Contractual servicing fees, net of guarantee fees and including subservicing		$972
Late fees		96
Ancillary fees		94
Total	$	1,162

At September 30, 2006, we pledged MSRs of $2.4 billion as collateral for borrowings.

12

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

The following table summarizes activity and related amortization of MSRs, which prior to January 1, 2006, were carried at lower of cost or fair value:

($ in millions)	2005
Balance at January 1, 2005		$4,819
Originations and purchases, net of sales		1,296
Amortization		(823	)
Sales		(208	)
SFAS 133 hedge valuation adjustments		(18	)
Transfers to assets held for sale (a)		(603	)
Other than temporary impairment		(37	)
Balance at September 30, 2005		4,426
Valuation allowance		(663	)
Carrying value at September 30, 2005		$3,763

(a)  At September 30, 2005, $603 in Capmark mortgage servicing rights, net were transferred to assets held for sale on our Condensed Consolidated Balance Sheet.

The following table summarizes the change in the valuation allowance for mortgage servicing rights.

($ in millions)	Total
Valuation allowance at January 1, 2005		$929
Deductions (a)		(229	)
Other than temporary impairment		(37	)
Valuation allowance at September 30, 2005		$663

(a)  Changes to the valuation allowance are reflected as a component of amortization and impairment of servicing rights on our Condensed Consolidated Statement of Income.

For a description of MSRs and the related hedging strategy, refer to Notes 1 and 10 to our 2005 Annual Report on Form 10-K.

7 Debt

The presentation of debt in the following table is classified between domestic and foreign based on the location of the office recording the transaction.

			September 30, 2006									December 31, 2005
($ in millions)			Domestic			Foreign			Total			Domestic		Foreign		Total
Short-term debt
	Commercial paper			$556			$772			$1,328			$227		$297		$524
	Demand notes			5,638			142			5,780			5,928		119		6,047
	Bank loans and overdrafts			957			4,728			5,685			1,165		5,487		6,652
	Repurchase agreements and other (a)			23,287			8,248			31,535			22,330		5,954		28,284
Total short-term debt				30,438			13,890			44,328			29,650		11,857		41,507
Long-term debt
	Senior indebtedness:
		Due within one year (b)		27,263			13,858			41,121			31,286		10,443		41,729
		Due after one year		141,099			23,302			164,401			147,307		23,862		171,169
Total long-term debt				168,362			37,160			205,522			178,593		34,305		212,898
Fair value adjustment (c)				(250	)		(90	)		(340	)		—		2		2
Total debt				$198,550			$50,960			$249,510			$208,243		$46,164		$254,407

(a)	Repurchase agreements consist of secured financing arrangements with third parties at our mortgage operations. Other primarily includes non-bank secured borrowings, as well as Notes payable to GM. Refer to Note 9 to the Condensed Consolidated Financial Statements for further details.
(b)	Includes $1 billion of deferred interest debentures repurchased in October 2006.
(c)	To adjust designated fixed rate debt to fair value in accordance with SFAS 133.

13

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

The following summarizes assets that are restricted as collateral for the payment of the related debt obligation primarily arising from securitization transactions accounted for as secured borrowings and repurchase agreements.

		September 30,				December 31,
		2006				2005
				Related				Related
				secured				secured
($ in millions)		Assets		debt (a)		Assets		debt (a)
Loans held for sale			$20,271		$18,156		$16,147		$12,647
Mortgage assets held for investment and lending receivables			84,524		71,967		78,820		71,083
Retail automotive finance receivables			17,861		16,465		20,427		18,888
Wholesale automotive finance receivables			436		302		—		—
Investment securities			3,599		4,712		3,631		4,205
Investment in operating leases, net			19,358		16,538		13,136		11,707
Real estate investments and other assets			6,150		3,290		4,771		2,608
	Total		$152,199		$131,430		$136,932		$121,138

(a)  Included as part of secured debt are repurchase agreements of $10.0 billion and $9.9 billion where we have pledged assets, reflected as investment securities, as collateral for approximately the same amount of debt at September 30, 2006, and December 31, 2005, respectively.

Liquidity Facilities

Liquidity facilities represent additional funding sources, if required. The financial institutions providing the uncommitted facilities are not legally obligated to fund such amounts. The following table summarizes the liquidity facilities maintained by us.

		Committed				Uncommitted				Total liquidity				Unused liquidity
		facilities				facilities				facilities				facilities
		Sep 30,		Dec 31,		Sep 30,		Dec 31,		Sep 30,		Dec 31,		Sep 30,		Dec 31,
($ in billions)		2006		2005		2006		2005		2006		2005		2006		2005
Automotive operations:
	Syndicated multi-currency global credit facility (a)		$7.6		$7.4		$—		$—		$7.6		$7.4		$7.6		$7.4
ResCap (b)			3.9		3.9		0.9		0.9		4.8		4.8		2.5		2.2
Other:
	U.S. asset-backed commercial paper liquidity and receivables facilities (c)		21.3		21.5		—		—		21.3		21.5		21.3		21.5
	Other foreign facilities (d)		3.1		2.9		8.3		7.5		11.4		10.4		2.7		1.7
Total bank liquidity facilities			35.9		35.7		9.2		8.4		45.1		44.1		34.1		32.8
Secured funding facilities
	Financing (e)		34.2		28.1		—		—		34.2		28.1		9.1		5.6
	ResCap		28.2		22.6		—		—		28.2		22.6		12.2		9.3
	Whole loan forward flow agreements		48.0		64.2		—		—		48.0		64.2		48.0		64.2
	Other (f)		1.4		0.6		—		—		1.4		0.6		0.4		0.1
Total secured funding facilities (g)			111.8		115.5		—		—		111.8		115.5		69.7		79.2
Total			$147.7		$151.2		$9.2		$8.4		$156.9		$159.6		$103.8		$112.0

(a)	The entire $7.6 is available for use in the U.S., $0.8 is available for use by GMAC (UK) plc and $0.8 is available for use by GMAC International Finance B.V. in Europe.
(b)	Relates mainly to $3.5 of syndicated bank facilities in the U.S., consisting of a $1.75 syndication term loan committed through July 2008, an $875 million syndication line of credit committed through July 2008 and an $875 million syndicated line of credit committed through July 2007.
(c)	Relates to New Center Asset Trust (NCAT) and Mortgage Interest Networking Trust (MINT), which are special purpose entities administered by us for the purpose of funding assets as part of our securitization and mortgage warehouse funding programs. These entities fund assets primarily through the issuance of asset-backed commercial paper and represent an important source of liquidity to us. At September 30, 2006, NCAT had commercial paper outstanding of $8.4, which is not consolidated in the Condensed Consolidated Balance Sheet. At September 30, 2006, MINT had commercial paper outstanding of $0.4, which is reflected as secured debt in the Condensed Consolidated Balance Sheet.
(d)	Consists primarily of credit facilities supporting operations in Canada, Europe, Latin America and Asia-Pacific.
(e)	In August 2006, we closed a three-year, $10 billion facility with a subsidiary of Citigroup.
(f)	Consists primarily of Commercial Finance committed conduits.
(g)	Consists of committed secured funding facilities with third parties, including commitments with third-party asset-backed commercial paper conduits, as well as forward flow sale agreements with third parties, securities purchase commitments with third parties and repurchase facilities. Amounts include five-year commitments that we entered into in 2005 with remaining capacity to sell up to $48 of retail automotive receivables to a third-party purchaser through June 2010.

14

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

The syndicated multi-currency global credit facility includes a $4.35 billion five-year facility (expires June 2008) and a $3.25 billion 364-day facility (expires June 2007). In the event that a public announcement is made by GMAC or GM that the acquisition as defined in the current report on Form 8-K filed by GMAC on April 3, 2006, will not be consummated or that such transaction has otherwise been terminated, $1.51 billion of the 364-day facility may be terminated by the lenders, and the remaining $1.74 billion will be transferred to the NCAT secured committed facility. Provided that such announcement has not been made, the facility also includes a term out option which, if exercised by us prior to expiration, carries a one-year term. Additionally, a leverage covenant in the liquidity facilities and certain other funding facilities restricts the ratio of consolidated borrowed funds (excluding certain obligations of bankruptcy remote special purpose entities) to consolidated net worth to no greater than 11.0:1 under certain conditions. More specifically, the covenant is only applicable on the last day of any fiscal quarter (other than the fiscal quarter during which a change in rating occurs) during such times that we have senior unsecured long-term debt outstanding, without third-party enhancement, which is rated BBB+ or less (by Standard & Poor’s), or Baa1 or less (by Moody’s). Our leverage ratio covenant was 7.4:1 at September 30, 2006, and we are, therefore, in compliance with this covenant.

8 Derivative Instruments and Hedging Activities

We enter into interest rate and foreign currency futures, forwards, options and swaps in connection with our market risk management activities. In accordance with SFAS 133, as amended, we record derivative financial instruments on the balance sheet as assets or liabilities at fair value. Changes in fair value are accounted for depending on the use of the derivative financial instrument and whether it qualifies for hedge accounting treatment. Refer to our 2005 Annual Report on Form 10-K for a more detailed description of our use of and accounting for derivative financial instruments.

The following table summarizes the pre-tax earnings effect for each type of accounting hedge classification, segregated by the asset or liability being hedged.

			Third Quarter						Nine Months
Period ended September 30,
($ in millions)			2006			2005			2006			2005			Income Statement Classification
Fair value hedge ineffectiveness gain (loss):
	Debt obligations			$27			($15	)		($17	)		$19		Interest expense
	Mortgage servicing rights			—			26			—			35		Servicing asset valuation and hedge activities, net
	Loans held for sale			(1	)		(13	)		—			(28	)	Gain on sale of mortgage and automotive loans, net
Cash flow hedge ineffectiveness gain (loss):
	Debt obligations			—			5			1			3		Interest expense
Economic hedge change in fair value:
	Off-balance sheet securitization activities:
		Financing operations		17			(17	)		(4	)		(20	)	Other income
		Mortgage operations		—			—			—			1		Other income
	Foreign currency debt (a)			(9	)		7			49			(156	)	Interest expense
	Loans held for sale or investment			(174	)		56			(16	)		16		Gain on sale of mortgage and automotive loans, net
	Mortgage servicing rights			437			(35	)		(219	)		4		Servicing asset valuation and hedge activities, net
	Mortgage related securities			30			1			—			(32	)	Investment income
	Other			(3	)		20			24			2		Other income
Total gain (loss)				$324			$35			($182	)		($156	)

(a)  Amount represents the difference between the changes in the fair values of the currency swap, net of the reevaluation of the related foreign denominated debt.

In addition, net gains on fair value hedges, excluded from assessment of effectiveness, totaled $0 and $8 million for the third quarter of 2006 and 2005, respectively, and $0 and $53 million for the nine months ended 2006 and 2005, respectively.

15

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

9 Transactions with Affiliates

As a wholly owned subsidiary, we enter into various operating and financing arrangements with our parent GM. A master intercompany operating agreement governs the nature of these transactions to ensure that they are done on an arm’s-length basis, in accordance with commercially reasonable standards and in our best interest as a diversified financial services company. In addition, GM and we agree that our total member’s equity, as reflected in our consolidated financial statements at the end of any quarter, will be maintained at a commercially reasonable level appropriate to support the amount, quality and mix of our assets.

Balance Sheet

A summary of the balance sheet effect of transactions with GM and affiliated companies is as follows:

($ in millions)		September 30, 2006			December 31, 2005
Assets:
Finance receivables and loans, net of unearned income (a)
	Wholesale auto financing		$892			$1,159
	Term loans to dealers		203			207
Investment in operating leases, net (b)			288			286
Notes receivable from GM (c)			5,698			4,565
Other assets
	Real estate synthetic lease (d)		1,038			1,005
	Receivable related to taxes due from GM (e)		1,137			690
Liabilities:
Unsecured debt
	Notes payable to GM		1,874			1,190
Accrued expenses and liabilities (f)
	Wholesale payable		527			802
	Subvention receivables (rate and residual support)		(438	)		(133	)
	Insurance premium and contract receivable, net		(59	)		(81	)
	Lease pull ahead receivable		(50	)		(189	)
	Other receivable		(48	)		(246	)
Equity:
	Dividends paid (g)		1,950			2,500

(a)	Represents wholesale financing and term loans to certain dealerships wholly owned by GM or in which GM has an interest. All of these amounts are included in finance receivables and loans.
(b)	Includes net balance of vehicles, buildings and other equipment classified as operating lease assets that are leased to GM affiliated entities.
(c)	Includes borrowing arrangements with GM, Opel and GM of Canada and arrangements related to our funding of GM company-owned vehicles, rental car vehicles awaiting sale at auction, our funding of the sale of GM vehicles through the use of overseas distributors and amounts related to a GM trade supplier finance program at December 31, 2005. In addition, we provide wholesale financing to GM for vehicles in which GM retains title while the vehicles are consigned to us or dealers in the UK. The financing to GM remains outstanding until the title is transferred to the dealers. The amount of financing provided to GM under this arrangement varies based on inventory levels. In May 2006 we recorded a note receivable from GM in the amount of $1.35 billion related to the settlement between GM and GMAC of residual support and risk sharing liabilities as of April 30, 2006, as well as to fund estimated residual support at lease inception pursuant to new up-front payment terms for residual support which began on May 1, 2006. This note is expected to be paid immediately prior to the closing of the GMAC majority sale transaction.
(d)	During 2000, we entered into a 16-year lease arrangement with GM, under which we agreed to fund and capitalize improvements to three Michigan properties leased by GM totaling $1.2 billion. In 2004, the lease arrangement was increased to $1.3 billion. The total construction advances as of September 30, 2006, and December 31, 2005, were $1,007 and $971, respectively. On October 31, 2006, we made a dividend to GM of these leased assets. Refer to Note 13 to the Condensed Consolidated Financial Statements for a description of the transaction with GM. Subsequently, the lease arrangement was terminated, and no further lease payments or advances will be made.
(e)	At September 30, 2006, we carried an intercompany tax receivable from GM of $1.1 billion. This receivable is expected to be paid immediately prior to the closing of the GMAC majority sale transaction. The receivable is comprised of federal net operating loss carryforwards of $981, charitable contributions carryforwards of $16 and foreign tax credit carryforwards of $140. We believe that the intercompany tax receivable is realizable as GM has determined that it is more likely than not that the tax attributes will be utilized in the remaining carryforward period.

(f)  Includes (receivables) payables from GM as follows: wholesale settlements payable to GM, subvention receivables due from GM and other (receivables) payables due to/from GM, which are included in accrued expenses, and other liabilities and debt, respectively.

(g)  The 2005 amount represents cash dividends of $500 million in each of the first three quarters and $1.0 billion in the fourth quarter. The 2006 amount represents cash dividends of $1.4 billion in the second quarter and $500 million in the third quarter. In addition, the 2006 amounts include non-cash dividends of $11 in the second quarter and $39 in the third quarter.

16

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

Retail and lease contracts acquired by us that included rate and residual subvention from GM, payable directly or indirectly to GM dealers as a percent of total new retail and lease contracts acquired, are noted in the table below.

Nine months ended September 30,		2006			2005
GM and affiliates subvented contracts acquired:
	North American operations (a)		91	%		77	%
	International operations		54	%		57	%

(a)  The increase in 2006 is primarily due to the 72-hour sale that occurred in July 2006. Contracts were sold at 0% financing for 72 months.

GM also provides payment guarantees on certain commercial assets we have outstanding with certain third-party customers. As of September 30, 2006, and December 31, 2005, commercial obligations guaranteed by GM were $263 million and $934 million, respectively. In addition, we have a consignment arrangement with GM for commercial inventories in Europe. As of September 30, 2006, and December 31, 2005, commercial inventories related to this arrangement were $298 million and $303 million, respectively, and are reflected in Other assets in the Condensed Consolidated Balance Sheet.

Income Statement

A summary of the income statement effect of transactions with GM and affiliated companies is as follows:

			Third Quarter						Nine Months
Period ended September 30, ($ in millions)			2006			2005			2006			2005
Net financing revenue:
	GM and affiliates lease residual value support (a)			$245			$136			$609			$390
	Wholesale subvention and service fees from GM			49			53			137			164
	Interest paid on loans from GM			(17	)		(11	)		(45	)		(30	)
	Consumer lease payments from GM (b)			4			37			65			149
	Insurance premiums earned from GM			72			97			229			300
Other income:
	Interest on notes receivable from GM and affiliates			97			51			233			163
	Interest on wholesale settlements (c)			44			36			137			100
	Revenues from GM leased properties, net (d)			28			20			82			57
Service fee income:
		GMAC of Canada operating lease administration (e)		—			5			—			17
		Rental car repurchases held for resale (f)		4			5			15			15
Expense:
	Employee retirement plan costs allocated by GM			21			36			84			124
	Off-lease vehicle selling expense reimbursement (g)			(8	)		(9	)		(22	)		(12	)
	Payments to GM for services, rent and marketing expenses			23			14			70			105

(a)	Represents total amount of residual support paid (or invoiced) for the third quarter 2006 and 2005 under the residual support and risk sharing programs. However, the table does not include a payment of $1.1 billion made during the second quarter in connection with settlement of residual support and risk sharing obligations for a portion of the lease portfolio, as described below.
(b)	GM sponsors lease pull-ahead programs whereby consumers are encouraged to terminate lease contracts early in conjunction with the acquisition of a new GM vehicle, with the customer’s remaining payment obligation waived. For certain programs, GM compensates us for the waived payments, adjusted based on the remarketing results associated with the underlying vehicle.
(c)	The settlement terms related to the wholesale financing of certain GM products are at shipment date. To the extent that wholesale settlements with GM are made prior to the expiration of transit, we receive interest from GM.
(d)	Includes net balance of vehicles, buildings and other equipment classified as operating lease assets that are leased to GM affiliated entities.
(e)	GMAC of Canada, Limited administered operating lease receivables on behalf of GM of Canada, Limited (GMCL) and received a servicing fee, which was included in other income. As of October 2005, GMAC of Canada, Limited no longer administers these operating lease receivables.

(f)  We receive a transaction fee from GM related to the resale of rental car repurchases.

(g)  An agreement with GM provides for the reimbursement of certain selling expenses incurred by us on off-lease vehicles sold by GM at auction.

Operating Lease Residuals

As a marketing incentive GM may sponsor residual support programs as a way to lower customer monthly payments. Under residual support programs, the customer’s contractual residual value is adjusted above our standard residual rates. GM reimburses us if remarketing sales proceeds are less than the customer’s contract residual value limited to our standard residual value. In addition to residual support programs, GM also participates in a risk sharing arrangement whereby GM shares equally in residual losses to the extent that remarketing proceeds are below our standard residual rates (limited to a floor).

17

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

In connection with the agreement to sell a 51 percent ownership interest in GMAC, GM settled its estimated liabilities with respect to residual support and risk sharing on a portion of our operating lease portfolio (approximately 19% of the North American Automotive Finance operating lease portfolio) and on the entire U.S. balloon retail receivable portfolio in a lump-sum payment. As of April 30, 2006, the maximum amount that would have been paid under the residual support and risk sharing arrangements with GM on this portion of the portfolio totaled approximately $2.0 billion. A negotiated amount totaling approximately $1.1 billion was agreed to by GM under these leases and balloon contracts and was paid to us on May 15, 2006. The payment of $1.1 billion was recorded as a deferred amount in accrued expenses and other liabilities in our Condensed Consolidated Balance Sheet and will be treated as sales proceeds on the underlying assets, as the contracts terminate and the vehicles are sold at auction, in recognizing the gain or loss on sale.

For the remainder of the operating lease portfolio, not subject to this payout arrangement, based on September 30, 2006 outstandings, the current amount that we would expect to be paid by GM under residual support programs would be $1.7 billion. The maximum that could be paid under the residual support programs on this portion of the lease portfolio is approximately $2.8 billion and would be paid only in the unlikely event that the proceeds from this portion of the operating lease portfolio are at or below our standard residual rates. As disclosed in Note 2 to the Condensed Consolidated Financial Statements, certain assets with respect to automotive leases will be dividended to GM prior to consummation of the agreement.

In addition, as it relates to those lease originations and all U.S. balloon retail contract originations occurring after April 30, 2006, that will remain with GMAC after the majority sale transaction GM agreed to begin payment of the expected residual support owed to us at the time of contract origination as opposed to after contract termination at the time of sale of the related vehicle. After the sale of a 51 percent ownership interest in us is completed, all new operating lease originations will be subject to this revised residual support arrangement with GM. For the affected contracts originated in the second and third quarters of 2006, GM paid or agreed to pay us a total of $234 million. The remaining maximum exposure after consideration of these payments that could be paid under these contracts for residual support is approximately $140 million and would be paid only in the unlikely event that the proceeds from this portion of the operating lease portfolio are at or below our standard residual rates.

The maximum amount that could be paid under the risk sharing arrangement on all leases not subject to the payout arrangement is approximately $1.5 billion and would only be paid in the unlikely event that the proceeds from outstanding lease vehicles would be lower than our standard residual rates. The expected amount to be paid under the risk sharing arrangement is approximately $0.2 billion.

In addition to the financing arrangements summarized in the foregoing table, GM had a $4 billion revolving line of credit from us that expired September 15, 2006. Subsequently, this revolving line of credit was not renewed. This credit line had previously been used for general operating and seasonal working capital purposes and to reduce external liquidity requirements.

10 Pension and Other Postretirement Benefits

Pension

Certain of our employees are eligible to participate in various domestic and foreign pension plans of General Motors. On March 7, 2006, GM announced that, effective March 7, 2006, it would freeze accrued pension benefits for U.S. salaried employees and implement a new benefit structure for future accruals.

Other employees (primarily at ResCap, the Commercial Finance business, and certain subsidiaries of GMAC Insurance) participate in separate retirement plans that provide for pension payments to eligible employees upon retirement based on factors such as length of service and salary.

During the second quarter, we approved the freezing of the benefit accrual of a noncontributory defined benefit retirement plan as of December 31, 2006 covering primarily ResCap employees. No further participant benefits will accrue subsequent to that date and no new entrants will be permitted in the plan. A curtailment gain of $42.4 million was recorded in compensation and benefits expense during the three months ended September 30, 2006. After the curtailment gain, the plan’s fair value of assets exceeded the plan’s projected benefit obligation by $60.8 million.

In addition, our Commercial Finance business and Insurance operations have made modifications and are in the process of further modifying their pension arrangements, which are not anticipated to have a material impact on our financial condition or results of operations.

18

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

11 Goodwill and Other Intangible Assets

Following attrition of key personnel around the middle of the year, our Commercial Finance reporting unit initiated a goodwill impairment test, in accordance with Statement of Financial Accounting Standards No. 142 Goodwill and Other Intangible Assets (SFAS 142), outside the normal fourth quarter cycle. A necessary precedent to such test was a thorough review of the business by new leadership, with a particular focus on long-term strategy. As a result of the review the operating divisions were reorganized and the decision was made to implement a different exit strategy for the workout portfolio and to exit product lines with lower returns. These decisions had a significant impact on expected asset levels and growth rate assumptions used to estimate the fair value of the business. In particular, the analysis performed during the third quarter incorporates management’s decision to discontinue activity in the equipment finance business, which had a portfolio of over $1 billion, representing approximately 20 percent of Commercial Finance business’s average commercial loan portfolio during 2006.

Consistent with the prior analysis, the fair value of the Commercial Finance business was determined using an internally developed discounted cash flow analysis based on five-year projected net income and a market driven terminal value multiple. Based upon the results of the assessment, we concluded that the carrying value of goodwill exceeded its fair value, resulting in an impairment loss of $827 million during the third quarter of 2006.

In connection with this analysis, Commercial Finance impaired certain related intangible assets totaling approximately $13 million. This amount is included in Impairment of goodwill and other intangible assets on the Condensed Consolidated Statement of Income.

12 Segment Information

Financial results for our reporting segments are summarized below.

	Automotive Finance operations
	North
Third quarter ended September 30,	American			International						Insurance
($ in millions)	Operations (a)			Operations (a)			ResCap (b)			Operations		Other (c)			Consolidated
2006
Net financing revenue before provision for credit losses		$1,035			$338			$174			$—		$144			$1,691
Provision for credit losses		(124	)		(31	)		(239	)		—		(92	)		(486	)
Other revenue		848			219			858			1,258		(100	)		3,083
Total net financing revenue and other income		1,759			526			793			1,258		(48	)		4,288
Impairment of goodwill and other intangible assets		—			—			—			—		840			840
Noninterest expense		1,631			396			644			977		54			3,702
Income (loss) before income tax expense		128			130			149			281		(942	)		(254	)
Income tax expense (benefit)		42			47			66			98		(183	)		70
Net income (loss)		$86			$83			$83			$183		($759	)		($324	)
Total assets		$150,340			$30,491			$132,490			$13,919		($17,392	)		$309,848
2005
Net financing revenue before provision for credit losses		$1,036			$377			$293			$—		$298			$2,004
Provision for credit losses		(184	)		(27	)		(164	)		—		(10	)		(385	)
Other revenue		767			183			1,044			1,070		224			3,288
Total net financing revenue and other income		1,619			533			1,173			1,070		512			4,907
Noninterest expense		1,527			396			702			928		303			3,856
Income before income tax expense		92			137			471			142		209			1,051
Income tax expense		31			34			191			53		67			376
Net income		$61			$103			$280			$89		$142			$675
Total assets		$173,722			$30,226			$104,620			$12,489		($6,863	)		$314,194

(a)	North American Operations consist of automotive financing in the U.S. and Canada and certain corporate activities. International Operations consists of automotive financing and full service leasing in all other countries and Puerto Rico through March 31, 2006. Beginning April 1, 2006, Puerto Rico is included in North American Operations.
(b)	Refer to Note 1 to the Condensed Consolidated Financial Statements for a discussion on changes to the reportable operating segments.
(c)	Represents our Commercial Finance business, Capmark, certain corporate activities related to mortgage activities, and reclassifications and elimination between the reporting segments. The financial results for 2006 reflect our approximately 22% equity interest in Capmark commencing March 23, 2006, while the 2005 financial results represent Capmark as wholly owned.

19

Notes to Condensed Consolidated Financial Statements (unaudited)

GMAC LLC

	Automotive Finance operations
	North
Nine months ended September 30,	American			International						Insurance
($ in millions)	Operations (a)			Operations (a)			ResCap (b)			Operations		Other (c)			Consolidated
2006
Net financing revenue before provision for credit losses		$3,408			$1,024			$702			$—		$604			$5,738
Provision for credit losses		(267	)		(46	)		(484	)		—		(109	)		(906	)
Other revenue		2,417			637			3,090			3,556		(166	)		9,534
Total net financing revenue and other income		5,558			1,615			3,308			3,556		329			14,366
Impairment of goodwill and other intangible assets		—			—			—			—		840			840
Noninterest expense		4,946			1,197			1,941			2,972		407			11,463
Income (loss) before income tax expense		612			418			1,367			584		(918	)		2,063
Income tax expense (benefit)		176			129			534			192		(216	)		815
Net income (loss)		$436			$289			$833			$392		($702	)		$1,248
2005
Net financing revenue before provision for credit losses		$3,420			$1,137			$1,087			$—		$814			$6,458
Provision for credit losses		(350	)		(89	)		(440	)		—		(36	)		(915	)
Other revenue		2,017			577			2,752			3,162		405			8,913
Total net financing revenue and other income		5,087			1,625			3,399			3,162		1,183			14,456
Noninterest expense		4,428			1,194			1,940			2,732		796			11,090
Income before income tax expense		659			431			1,459			430		387			3,366
Income tax expense		206			120			557			146		118			1,147
Net income		$453			$311			$902			$284		$269			$2,219

(a)	North American Operations consist of automotive financing in the U.S. and Canada and certain corporate activities. International Operations consists of automotive financing and full service leasing in all other countries and Puerto Rico through March 31, 2006. Beginning April 1, 2006, Puerto Rico was included in North American Operations.
(b)	Refer to Note 1 to the Condensed Consolidated Financial Statements for a discussion on changes to the reportable operating segments.
(c)	Represents our Commercial Finance business, Capmark, certain mortgage activities maintained at corporate, and reclassifications and elimination between the reporting segments. The financial results for 2006 reflect our approximately 22% equity interest in Capmark commencing March 23, 2006, while the 2005 financial results represent Capmark as wholly owned.

13 Subsequent Events

On October 31, 2006, in connection with the expected closing of the sale by GM of a 51% controlling interest in us to FIM Holdings, we made a dividend of certain Michigan properties with a carrying value of approximately $1.2 billion to GM. Separately, on November 1, 2006, GM agreed to assume or retain approximately $800 million of other liabilities related to U.S. and Canadian based GM sponsored other postretirement programs, as well as approximately $300 million of related deferred tax assets.

20

Management’s Discussion and Analysis

GMAC LLC

Overview

We are a leading global financial services firm with approximately $310 billion of assets and operations in approximately 40 countries. Founded in 1919 as a wholly owned subsidiary of General Motors Corporation, GMAC was originally established to provide GM dealers with the automotive financing necessary to acquire and maintain vehicle inventories and to provide retail customers the means by which to finance vehicle purchases through GM dealers. Our products and services have expanded beyond automotive financing as we currently operate in the following lines of business — Automotive Finance, Mortgage (ResCap), and Insurance. Refer to our 2005 Annual Report on Form 10-K for a more complete description of our business activities, along with the products and services offered and the market competition.

Net income for our businesses is summarized as follows:

	Third Quarter						Nine Months
Period ended September 30, ($ in millions)	2006			2005			2006			2005
Automotive Finance (a)		$169			$164			$725			$764
ResCap		83			280			833			902
Insurance		183			89			392			284
Other (b)		(759	)		142			(702	)		269
Net (loss) income		($324	)		$675			$1,248			$2,219
Return on average equity		(5.9%	)		11.9	%		7.5	%		13.1	%

(a)	Includes our North America and International automotive finance reporting segments, separately identified in Note 12 to the Condensed Consolidated Financial Statements.
(b)	Includes our Commercial Finance business operating segment, equity interest in Capmark and mortgage activities.

We reported a net loss of $324 million in the third quarter of 2006, as compared to third quarter 2005 net income of $675 million. The third quarter net loss includes non-cash goodwill and other intangible asset impairment charges of $695 million after-tax related to our Commercial Finance business.

Excluding these charges, we earned $371 million. The decrease in operating earnings was primarily driven by lower income at our mortgage business, ResCap, resulting from softness in the U.S. residential mortgage market, the unfavorable effect on income from our recently concluded debt tender offers as well as weakness in the Commercial Finance business.

We continue to be a significant source of cash flow to GM through the payment of a $500 million cash dividend in the third quarter, resulting in 2006 year to date cash dividends of $1.9 billion. We continue to maintain adequate liquidity with cash reserves at September 30, 2006, of $14.1 billion, comprised of $9.1 billion in cash and cash equivalents and $5.0 billion invested in marketable securities. We have begun to prudently reduce high excess levels of cash to more moderate levels, reflecting increased access to liquidity.

Net income for Automotive Finance was $169 million, up $5 million from $164 million earned in the same period in the prior year. These results include an expense of $135 million related to our third-quarter offer to repurchase $1 billion of deferred interest debentures, which will be positive to future period earnings as this debt was among our most expensive. Automotive Finance results otherwise benefited from an increase in net financing revenue as a result of strong retail financing penetration as well as lower provisions for credit losses.

ResCap’s net income was $83 million in the third quarter of 2006, down from $280 million earned in the third quarter of 2005. The decrease in earnings was the result of a number of factors in ResCap’s U.S. residential mortgage business. In particular, competitive pricing pressures negatively impacted margins, which led to lower gains despite year-over-year increases in production. Results were also affected by higher credit loss provisions resulting from increases in delinquencies, lower net interest margins as a result of a flatter yield curve, and a decrease in net servicing income, due to the effect of lower long-term rates on expected prepayments of mortgages. Mortgage originations were $51.5 billion for the third quarter of 2006, representing a slight increase from $51.3 billion in the same period in the prior year.

Our Insurance operations experienced record quarterly net income of $183 million in the third quarter of 2006, up $94 million from earnings of $89 million in the third quarter of 2005, primarily attributable to a combination of favorable loss performance and higher capital gains. In addition, our Insurance operations maintained a strong investment portfolio, with a market value of $8.0 billion at September 30, 2006, including unrealized capital gains of $604 million, net of tax.

21

Management’s Discussion and Analysis

GMAC LLC

Excluding the goodwill and other intangible asset impairment charges, our Other segment, which includes the Commercial Finance business and our equity investment of approximately 22% in Capmark, incurred a net operating loss of $64 million as compared to $142 million earned in the same period last year. Part of the third quarter decline relates to the change in ownership of Capmark, following the first quarter sale of approximately 78% of our commercial mortgage business. As a result, the third quarter income includes the earnings on our equity share of Capmark compared to a year ago when Capmark was wholly owned and fully consolidated in our results. In addition, the Other segment results were negatively affected by higher credit provisions at Commercial Finance business, mostly related to the workout portfolio.

The goodwill impairment charge of $685 million (after-tax) at our Commercial Finance business was the result of our third quarter impairment test which was triggered outside the normal fourth quarter cycle as the business experienced attrition of key personnel around the middle of the year. The charge results from lower cash flow projections due to the decision by new management at Commercial Finance business to exit certain low return product lines and asset classes as well as a decline in expected factored sales volume growth.

The sale of 51 percent of our equity to FIM Holdings is expected to close in the fourth quarter of this year. In addition to continuing to enable us to support the sale of GM vehicles, the transaction is intended to support our strategic goal of a stable investment grade credit rating and profitable growth.

Automotive Finance Operations

Our Automotive Finance operations offer a wide range of financial services and products (directly and indirectly) to retail automotive consumers, automotive dealerships and other commercial businesses. Our Automotive Finance operations are comprised of two separate reporting segments — North American Automotive Finance Operations and International Automotive Finance Operations — and certain corporate activities. The products and services offered by our Automotive Finance operations include the purchase of retail installment sales contracts and leases, extension of term loans, dealer floor plan financing and other lines of credit to dealers, and fleet leasing. Refer to pages 21-31 of our 2005 Annual Report on Form 10-K for further discussion of the business profile of our Automotive Finance operations.

Results of Operations

The following table summarizes the operating results of our Automotive Finance operations for the periods indicated. The amounts presented are before the elimination of balances and transactions with our other reporting segments.

		Third Quarter												Nine Months
Period ended September 30,
($ in millions)		2006			2005			Change			%			2006			2005			Change			%
Revenue
Consumer			$1,481			$1,605			($124	)		(8	)		$4,267			$4,991			($724	)		(15	)
Commercial			399			322			77			24			1,187			1,122			65			6
Operating leases			2,079			1,777			302			17			6,028			5,194			834			16
	Total financing revenue		3,959			3,704			255			7			11,482			11,307			175			2
Interest expense			(2,518	)		(2,258	)		(260	)		(12	)		(6,865	)		(6,659	)		(206	)		(3	)
Provision for credit losses			(155	)		(211	)		56			27			(313	)		(439	)		126			29
	Net financing revenue		1,286			1,235			51			4			4,304			4,209			95			2
Servicing fees			58			37			21			57			176			81			95			117
Net gains on sales			115			139			(24	)		(17	)		298			354			(56	)		(16	)
Investment income			152			54			98			181			387			162			225			139
Other income			673			686			(13	)		(2	)		2,004			1,903			101			5
Depreciation expense on operating leases			(1,394	)		(1,326	)		(68	)		(5	)		(4,176	)		(3,880	)		(296	)		(8	)
Noninterest expense			(632	)		(596	)		(36	)		(6	)		(1,963	)		(1,739	)		(224	)		(13	)
Income tax expense			(89	)		(65	)		(24	)		37			(305	)		(326	)		21			6
Net income			$169			$164			5			3			$725			$764			($39	)		(5	)
Total assets			$174,748			$200,743			($25,995	)		(13	)

Automotive Finance operations net income increased 3% for the third quarter and decreased 5% for the first nine months of 2006, respectively. Results for Automotive Finance include the earnings impact of a third quarter 2006 $1 billion debt tender offer to repurchase

22

Management’s Discussion and Analysis

GMAC LLC

certain deferred interest debentures, which resulted in an after-tax unfavorable impact of $135 million. Absent the impact of the tender offer, Automotive Finance operating earnings were $140 million higher than the third quarter of 2005.

Total financing revenue increased 7% in the third quarter of 2006, as compared to the prior year, with declines in consumer revenue being more than offset by higher commercial and operating lease revenues in the North American operations. The decrease in consumer revenue is consistent with the reduction in consumer asset levels as a result of continued whole loan sale activity. Consumer finance receivables declined by $13 billion, or approximately 16%, since September 30, 2005. Operating lease revenue (along with the related depreciation expense) increased year over year consistent with the increase in the size of the operating lease portfolio (approximately 20% since September 2005). The increase in the portfolio is reflective of continued strong lease volumes in North American operations and higher average customer balances.

The increase in interest expense for the third quarter as compared to the third quarter of 2005 is primarily due to the aforementioned $1 billion debt tender offer, which resulted in a $220 million pre-tax unfavorable impact ($135 million after-tax). Absent the impact of the tender offer, despite lower overall debt levels, interest expense is relatively flat in comparison with 2005 due to an increased cost of funds, as a result of higher market interest rates.

The provision for credit losses decreased in comparison to the prior year largely due to the estimated provision, which was necessary in the third quarter of 2005 due to Hurricane Katrina losses. The provision decreases due to Hurricane Katrina were somewhat offset by the overall credit performance of the consumer portfolio. Refer to Credit Risk discussion within this Automotive Finance Operations section of the MD&A for further discussion.

Investment income increased for both the third quarter and first nine months of 2006, as compared to the same periods in 2005. The increases are largely a result of higher short-term interest rates and asset balances in 2006 versus 2005. Other income decreased in comparison to the third quarter of 2005 due to lower revenue on intercompany loans. In addition, non-interest expenses increased in comparison with 2005 levels due to an overall decline in operating lease remarketing results as a result of a softening in used vehicle prices and an overall decrease in lease termination volume.

Total income tax expense increased by $24 million in the third quarter and declined by $21 million for the first nine months of 2006, respectively, as compared to the same periods in 2005.

23

Management’s Discussion and Analysis

GMAC LLC

Automotive Financing Volume

The following table summarizes our new vehicle consumer financing volume, our share of GM retail sales and our wholesale financing of new vehicles and related share of GM sales to dealers in markets where we operate.

			Third Quarter				Nine Months
					Share of				Share of
			GMAC volume		GM sales		GMAC volume		GM sales
Period ended September 30,
(units in thousands)			2006	2005	2006	2005	2006	2005	2006	2005
New vehicle consumer financing
GM vehicles
	North America
		Retail contracts	418	249	45%	24%	825	838	32%	29%
		Leases	162	137	17%	14%	495	449	19%	15%
	Total North America		580	386	62%	38%	1,320	1,287	51%	44%
	International (retail contracts and leases)		127	129	24%	25%	390	398	24%	27%
Total GM units financed			707	515	48%	34%	1,710	1,685	41%	38%
Non-GM units financed			18	21			52	57
	Total consumer automotive financing volume		725	536			1,762	1,742
Wholesale financing of new vehicles
GM vehicles
	North America		785	899	76%	81%	2,626	2,790	76%	80%
	International		606	598	84%	83%	1,954	1,803	87%	85%
Total GM units financed			1,391	1,497	79%	82%	4,580	4,593	80%	82%
Non-GM units financed			34	48			107	139
	Total wholesale volume		1,425	1,545			4,687	4,732

Our consumer financing volume and penetration levels are significantly impacted by the nature, timing and extent of GM’s use of rate, residual and other financing incentives for marketing purposes on consumer retail contracts and leases. In the third quarter of 2006 our North American retail volume and penetration levels were positively impacted by certain consumer retail financing incentives. These incentives resulted in significant volume increases in comparison with the third quarter of 2005 and modest increases in comparison with the first nine months of 2005. In our International Automotive Finance Operations, financing volume has been comparable with 2005 levels. Our wholesale financing continues to be the primary funding source for GM dealer inventories, as total penetration levels in the third quarter of 2006 remained relatively consistent with levels in the third quarter of 2005 and continue to reflect traditionally strong levels.

Consumer Credit

The following tables summarize pertinent loss experience in the consumer managed and on-balance sheet automotive retail contract portfolio. The managed portfolio includes retail receivables held on-balance sheet for investment and off-balance sheet receivables securitized and sold that we continue to service and have a continued involvement in (i.e., in which we retain an interest or risk of loss in the underlying receivables) but excludes securitized and sold finance receivables that we continue to service but have no other continuing involvement (serviced-only portfolio). We believe that the disclosure of the credit experience of the managed portfolio presents a more complete presentation of our risk of loss in the underlying assets (typically in the form of a subordinated retained interest). Consistent with the presentation in the Condensed Consolidated Balance Sheet, retail contracts presented in the table represent the principal balance of the finance receivables discounted for any unearned rate support received from GM.

The off-balance sheet portion of the managed portfolio includes receivables securitized and sold that we continue to service and in which we retain an interest or risk of loss but excludes securitized and sold finance receivables that we continue to service but in which we retain no interest or risk of loss. The process of creating a pool of retail finance receivables for securitization or sale typically excludes accounts that are greater than 30 days delinquent at such time. In addition, the process involves selecting from a pool of receivables that are currently outstanding and, therefore, represent seasoned accounts. A seasoned portfolio that excludes delinquent accounts historically

24

Management’s Discussion and Analysis

GMAC LLC

results in better credit performance in the managed portfolio than in the on-balance sheet portfolio of retail finance receivables. In addition, the current off-balance sheet transactions are comprised mainly of subvented rate retail finance receivables, which generally attract higher quality customers (or otherwise cash purchasers) than customers typically associated with non-subvented receivables.

	Average		Charge-offs,
	retail		net of		Annualized net
	contracts		recoveries(a)		charge-off rate
Third quarter ended September 30,
($ in millions)	2006		2006	2005	2006	2005
Managed
North America		$55,329	$135	$199	0.98%	1.12%
International		15,354	33	34	0.86%	0.93%
Total managed		$70,683	$168	$233	0.95%	1.09%
On-balance sheet
North America		$50,595	$132	$195	1.04%	1.22%
International		15,354	33	34	0.86%	0.93%
Total on-balance sheet		$65,949	$165	$229	1.00%	1.16%

(a)  Net charge-offs exclude amounts related to the lump-sum payments on balloon finance contracts. The amount totaled $7 for the third quarter ended September 30, 2006.

	Average		Charge-offs,
	retail		net of		Annualized net
	contracts		recoveries		charge-off rate
Nine months ended September 30,
($ in millions)	2006		2006	2005	2006	2005
Managed
North America		$56,196	$416	$566	0.99%	0.99%
International		15,081	82	103	0.72%	0.93%
Total managed		$71,277	$498	$669	0.93%	0.98%
On-balance sheet
North America		$51,067	$409	$556	1.07%	1.05%
International		15,081	82	103	0.72%	0.93%
Total on-balance sheet		$66,148	$491	$659	0.99%	1.03%

(a)  Net charge-offs exclude amounts related to the lump-sum payments on balloon finance contracts. The amount totaled $15 for the nine months ended September 30, 2006.

The following table summarizes pertinent delinquency experience in the consumer automotive retail contract portfolio.

	Percent of retail contracts
	30 days or more past due (a)
	Managed		On-balance sheet
September 30,	2006	2005	2006	2005
North America	2.46%	2.14%	2.68%	2.29%
International	2.64%	2.68%	2.64%	2.68%
Total	2.51%	2.28%	2.67%	2.40%

(a)  Past due contracts are calculated on the basis of the average number of contracts delinquent during a month and exclude accounts in bankruptcy.

25

Management’s Discussion and Analysis

GMAC LLC

In addition to the preceding loss and delinquency data, the following table summarizes bankruptcies and repossession information for the United States consumer automotive retail contract portfolio (which represents approximately 58% of our on-balance sheet consumer automotive retail contract portfolio):

	Managed						On-balance sheet
Third quarter ended September 30,	2006			2005			2006			2005
Average retail contracts in bankruptcy (in units)		83,103			99,542			82,680			95,610
Bankruptcies as a percent of average number of contracts outstanding		2.49	%		2.27	%		2.63	%		2.37	%
Retail contract repossessions (in units)		21,904			26,256			21,536			25,628
Annualized repossessions as a percent of average number of contracts outstanding		2.61	%		2.35	%		2.71	%		2.50	%

	Managed						On-balance sheet
Nine months ended September 30,	2006			2005			2006			2005
Average retail contracts in bankruptcy (in units)		93,433			98,386			92,403			94,044
Bankruptcies as a percent of average number of contracts outstanding		2.70	%		2.12	%		2.83	%		2.19	%
Retail contract repossessions (in units)		68,469			76,640			67,500			74,330
Annualized repossessions as a percent of average number of contracts outstanding		2.62	%		2.19	%		2.74	%		2.30	%

The following table summarizes activity related to the consumer allowance for credit losses for our Automotive Finance operations.

		Third Quarter						Nine Months
Period ended September 30, ($ in millions)		2006			2005			2006			2005
Allowance at beginning of period			$1,467			$1,819			$1,618			$2,035
	Provision for credit losses		156			225			332			452
	Charge-offs
	Domestic		(172	)		(233	)		(529	)		(647	)
	Foreign		(45	)		(48	)		(124	)		(147	)
Total charge-offs			(217	)		(281	)		(653	)		(794	)
Recoveries
	Domestic		35			41			113			100
	Foreign		10			11			34			35
Total recoveries			45			52			147			135
Net charge-offs			(172	)		(229	)		(506	)		(659	)
Impacts of foreign currency translation			5			4			10			(9	)
Securitization activity			—			1			2			1
Allowance at September 30,			$1,456			$1,820			$1,456			$1,820
Allowance coverage (a)			2.21	%		2.32	%		2.21	%		2.32	%

(a)  Represents the related allowance for credit losses as a percentage of total on-balance sheet consumer automotive retail contracts.

The overall credit performance of the consumer portfolio has deteriorated from the prior year consistent with the decline in the level of overall managed and on balance sheet receivables as we continue to execute more whole loan sales. Similar to securitizations, the process of creating a pool of retail finance receivables for whole loan sales typically involves excluding retail contracts that are greater than 30 days delinquent at such time and selecting from a pool of receivables currently outstanding, which therefore, represents seasoned contracts. A seasoned portfolio that excludes delinquent contracts historically results in better credit performance and, as a result, the increase in whole loan activity over the past year has impacted the charge-offs as a percentage of the managed and on-balance sheet portfolio, when compared to the comparable period in the prior year. In addition to the impact of whole loan activity, delinquencies in the North American Operations managed and on-balance sheet portfolio has been negatively impacted by an aging of the overall portfolio as consumer serviced assets continue to decrease, as compared to prior year levels. International consumer credit portfolio performance remains strong as both delinquencies and charge-offs have declined as compared to prior year levels.

26

Management’s Discussion and Analysis

GMAC LLC

The allowance for credit losses as a percentage of the total on-balance sheet consumer portfolio has experienced a slight decrease in comparison with the third quarter of 2005. This decrease is primarily related to improved credit performance in our International operations consumer portfolio. The allowance for credit losses as a percentage of the total on-balance sheet consumer portfolio for our North American operations remained stable in comparison to 2005 levels.

Commercial Credit

Our credit risk on the commercial portfolio is markedly different from that of our consumer portfolio. Whereas the consumer portfolio represents a homogenous pool of retail contracts that exhibit fairly predictable and stable loss patterns, the commercial portfolio exposures are less predictable. In general, the credit risk of the commercial portfolio is tied to overall economic conditions in the countries in which we operate.

At September 30, 2006, the only commercial receivables that had been securitized and accounted for as off-balance sheet transactions represent wholesale lines of credit extended to automotive dealerships, which historically experience low charge-offs. As a result, the amount of charge-offs on our managed portfolio is the same as the on-balance sheet portfolio, and only the on-balance sheet commercial portfolio credit experience is presented in the following table:

	Total
	loans		Impaired loans (a)
	Sep 30,		Sep 30,			Dec 31,			Sep 30,
($ in millions)	2006		2006			2005			2005
Wholesale		20,828		$317			$299			$330
				1.52	%		1.45	%		2.65	%
Other commercial financing		3,878		46			142			162
				1.19	%		1.36	%		1.49	%
Total on-balance sheet		24,706		$363			$441			$492
				1.47	%		1.42	%		2.27	%

(a)  Includes loans where it is probable that we will be unable to collect all amounts due according to the terms of the loan.

The commercial allowance for credit losses was $66 million and $102 million as of September 30, 2006 and 2005, respectively. Charge-off activity in the commercial portfolio was a net charge-off of $6 million and $3 million for the nine months ended September 30, 2006 and 2005, respectively. Decreases in the level of allowance from 2005 levels are reflective of proportional decreases in the on-balance sheet commercial portfolio over the same period.

 ResCap Operations

The principal activities of our ResCap operations involve the origination, purchase, servicing, sale and securitization of consumer (i.e., residential) and commercial mortgage loans and mortgage-related products (e.g., real estate services). Typically, mortgage loans are originated and sold to investors in the secondary market, including securitization transactions in which the assets are legally sold but are accounted for as secured financings. For additional information, please refer to ResCap’s quarterly report on Form 10-Q for the period ended September 30, 2006, filed separately with the SEC, which report is not deemed incorporated into any of our filings under the Securities Act or the Exchange Act.

27

Management’s Discussion and Analysis

GMAC LLC

Results of Operations

The following table summarizes the operating results for ResCap for the periods indicated. The amounts presented are before the elimination of balances and transactions with our other reporting segments.

	Third Quarter												Nine Months
Period ended September 30,
($ in millions)	2006			2005			Change			%			2006			2005			Change			%
Revenue
Total financing revenue		$1,878			$1,330			$548			41			$5,399			$3,740			$1,659			44
Interest expense		(1,704	)		(1,037	)		(667	)		(64	)		(4,697	)		(2,653	)		(2,044	)		(77	)
Provision for credit losses		(239	)		(164	)		(75	)		(46	)		(484	)		(440	)		(44	)		(10	)
Net financing revenue		(65	)		129			(194	)		(150	)		218			647			(429	)		(66	)
Mortgage servicing fees		401			361			40			11			1,162			1,047			115			11
MSR amortization and impairment		—			(69	)		69			100			—			(516	)		516			100
Servicing asset valuation and hedge activities, net		(332	)		(1	)		(331	)					(688	)		92			(780	)		(848	)
Net loan servicing income		69			291			(222	)		(76	)		474			623			(149	)		(24	)
Gains on sale of loans		237			307			(70	)		(23	)		879			787			92			12
Other income		552			446			106			24			1,737			1,342			395			29
Noninterest expense		(644	)		(702	)		58			8			(1,941	)		(1,940	)		(1	)		—
Income tax expense		(66	)		(191	)		125			65			(534	)		(557	)		23			4
Net income		$83			$280			($197	)		(70	)		$833			$902			($69	)		(8	)
Total assets		$132,490			$104,620			$27,870			27

ResCap net income decreased 70% and 8% to $83 million and $833 million for the third quarter and first nine months of 2006. Net financing revenue was negatively impacted by higher interest expense driven by an increase in short-term market interest rates. In addition, the provision for credit losses increased due to higher delinquencies. The increase in interest expense and provision for credit losses was partially offset by an increase in total financing revenues from higher asset levels due to higher loan production.

Net loan servicing income decreased due to negative servicing asset valuations, which were partially offset by an increase in the size of the mortgage servicing rights portfolio. The negative servicing asset valuation was primarily due to a decline in interest rates in 2006. Gain on sales of loans decreased as a result of lower margins due to competitive pricing pressures. This decline was partially offset by an increase in mortgage loan sales attributable to higher mortgage loan originations.

Other income, for the third quarter of 2006, increased due to higher residential real estate income as a result of continued growth in residential real estate investments and gains on U.S. Treasury and principal-only securities.

Noninterest expense decreased in the third quarter due to a $42.6 million gain from the freezing of the benefit accrual of GMAC Mortgage, Inc.’s noncontributory defined benefit plan as of December 31, 2006.

Mortgage Loan Production, Sales and Servicing

Our mortgage loan production increased to $51.5 billion for the three months ended September 30, 2006, compared to $51.3 billion for the same period in 2005. During the first nine months of 2006, our loan production increased to $140.1 billion from $130.3 billion in 2005. These increases were due primarily to the continued expansion of our international operations. Our domestic loan production declined 6% during the three months ended September 30, 2006, and increased 1.7% for the first nine months of 2006, compared to the same periods in 2005.

28

Management’s Discussion and Analysis

GMAC LLC

The following summarizes mortgage loan production for the periods indicated.

			Third Quarter				Nine Months
Period ended September 30, ($ in millions)			2006		2005		2006		2005
Consumer:
	Principal amount by product type:
		Prime conforming		$12,002		$14,832		$32,536		$39,532
		Prime nonconforming		16,411		17,292		42,776		42,358
		Government		942		1,141		2,884		3,382
		Nonprime		8,467		9,884		23,623		23,821
		Prime second-lien		6,100		3,588		18,500		9,262
		Total U.S. production		43,922		46,737		120,319		118,355
		International		7,531		4,535		19,736		11,932
	Total			$51,453		$51,272		$140,055		$130,287
	Principal amount by origination channel:
		Retail and direct channels		$7,012		$10,500		$21,114		$28,677
		Correspondent and broker channels		36,910		36,237		99,205		89,678
		Total U.S. production		$43,922		$46,737		$120,319		$118,355
	Number of loans (in units):
		Retail and direct channels		60,693		80,727		186,592		223,697
		Correspondent and broker channels		222,196		196,222		621,795		499,856
		Total U.S. production		282,889		276,949		808,387		723,553

The following table summarizes the primary domestic mortgage loan servicing portfolio for which we hold the corresponding mortgage servicing rights:

	U.S. mortgage loan servicing portfolio
	September 30, 2006				December 31, 2005
	Number of		Dollar amount		Number of		Dollar amount
($ in millions)	loans		of loans		loans		of loans
Prime nonconforming		310,937		$96,851		257,550		$76,980
Prime conforming		1,449,123		200,632		1,393,379		186,405
Government		183,058		18,866		181,679		18,098
Nonprime		478,130		57,494		493,486		56,373
Prime second-lien		694,654		28,584		500,534		17,073
Total primary servicing portfolio (a)		3,115,902		$402,427		2,826,628		$354,929

(a)  Excludes loans for which we acted as a subservicer. This included 280,003 of loans with an unpaid principal balance of $47.5 billion at September 30, 2006, and 271,489 loans with an unpaid balance of $38.9 billion at December 31, 2005.

Our international servicing portfolio was comprised of $31.5 billion of mortgage loans as of September 30, 2006.

29

Management’s Discussion and Analysis

GMAC LLC

Allowance for Loan Losses

The following table summarizes the activity related to the allowance for loan losses:

	Third Quarter						Nine Months
Period ended September 30, ($ in millions)	2006			2005			2006			2005
Allowance at beginning of period		$1,230			$1,094			$1,253			$1,015
Provision for loan losses		239			164			484			462
Charge-offs		(194	)		(117	)		(488	)		(359	)
Recoveries		9			7			35			30
Allowance at September 30		$1,284			$1,148			$1,284			$1,148
Allowance as a percentage of total mortgage loans held for investment and lending receivables		1.45	%		1.62	%		1.45	%		1.62	%

The provision for loan losses was $484 million for the nine months ended September 30, 2006, compared to $462 million in the same period in 2005, representing an increase of $22 million. The increase in the provision was primarily due to the increase in the mortgage loans held for investment portfolio, which includes more delinquent loans than the same period last year. Delinquent mortgage loans held for investment totaled $12 million, or 16.4%, of total mortgage loans held for investment at September 30, 2006, compared to $9 million, or 16.2%, at September 30, 2005.

Nonperforming Assets

The following table summarizes the nonperforming assets. Nonperforming assets are nonaccrual loans, foreclosed assets and restructured loans. Mortgage loans and lending receivables are generally placed on nonaccrual status when they are 60 and 90 days past due, respectively, or when the timely collection of the principal of the loan, in whole or in part, is doubtful. Management’s classification of a loan as nonaccrual does not necessarily indicate that the principal of the loan is uncollectible in whole or in part.

			Sep 30,			Dec 31,			Sep 30,
($ in millions)			2006			2005			2005
Nonaccrual loans:
	Mortgage loans:
		Prime conforming		$10			$10			$20
		Prime nonconforming		371			361			239
		Government		—			—			39
		Prime second-lien		133			85			72
		Nonprime (a)		6,275			5,731			5,110
Lending receivables:
		Warehouse		9			42			1
		Construction		21			8			9
		Commercial real estate		—			17			—
Total nonaccrual loans				$6,819			$6,254			$5,490
Restructured loans				12			23			—
Foreclosed assets				922			506			557
Total nonperforming assets				$7,753			$6,783			$6,047
	Total nonaccrual loans as a percentage of total mortgage loans held for investment and lending receivables			7.7	%		7.6	%		7.8	%
Total nonperforming assets as a percentage of total ResCap assets				5.8	%		5.7	%		5.8	%

(a)  Includes $340 as of September 30, 2006, $374 as of December 31, 2005, and $462 as of September 30, 2005, of loans that were purchased distressed and already in nonaccrual status.

30

Management’s Discussion and Analysis

GMAC LLC

Our classification of a loan as nonperforming does not necessarily indicate that the principal amount of the loan is ultimately uncollectible in whole or in part. In certain cases, borrowers make payments to bring their loans contractually current and, in all cases, our mortgage loans are collateralized by residential real estate. As a result, our experience has been that any amount of ultimate loss is substantially less than the unpaid principal balance of a nonperforming loan.

Insurance Operations

Our Insurance operations insure automobile service contracts and underwrite personal automobile insurance coverages (ranging from preferred to non-standard risks) and selected commercial insurance and reinsurance coverages. Refer to pages 42-45 of our 2005 Annual Report on Form 10-K for further discussion of the business profile of our Insurance operations.

Results of Operations

The following table summarizes the operating results of GMAC Insurance for the periods indicated. The amounts presented are before the elimination of balances and transactions with our other operating segments.

	Third Quarter												Nine Months
Period ended September 30, ($ in millions)	2006			2005			Change			%			2006			2005			Change			%
Revenue
Insurance premiums and service revenue earned		$1,037			$967			$70			7			$3,082			$2,797			$285			10
Investment income		172			89			83			93			361			275			86			31
Other income		49			14			35			250			113			90			23			26
Total financing revenue and other income		1,258			1,070			188			18			3,556			3,162			394			12
Insurance losses and loss adjustment expenses		(580	)		(593	)		13			2			(1,830	)		(1,779	)		(51	)		(3	)
Acquisition and underwriting expense		(380	)		(313	)		(67	)		(21	)		(1,074	)		(888	)		(186	)		(21	)
Premium tax and other expense		(17	)		(22	)		5			23			(68	)		(65	)		(3	)		(5	)
Income before income taxes		281			142			139			98			584			430			154			36
Income tax expense		(98	)		(53	)		(45	)		(85	)		(192	)		(146	)		(46	)		(32	)
Net income		$183			$89			$94			106			$392			$284			$108			38
Total assets		$13,919			$12,489			$1,430			11
Insurance premiums and service revenue written		$1,037			$1,053			($16	)		(2	)		$3,168			$3,209			($41	)		(1	)
Combined ratio (a)		89.4	%		94.6	%								92.3	%		94.3	%

(a)  Management uses combined ratio as a primary measure of underwriting profitability, with its components measured using Generally Accepted Accounting Principles. Underwriting profitability is indicated by a combined ratio under 100% and is calculated as the sum of all reported losses and expenses (excluding interest and income tax expense) divided by the total of premiums and service revenues earned and other income.

Net income from Insurance operations totaled $183 million and $392 million for the third quarter and first nine months of 2006, respectively, as compared to $89 million and $284 million for the same periods in 2005. Net income increased quarter over quarter and year over year due to a higher level of realized capital gains and favorable underwriting results driven by a lower level of losses and loss adjustment expenses. The impact of the favorable underwriting results is exhibited in the lower combined ratio for both periods. In addition, quarter and year-to-date results benefited from the first quarter 2006 strategic acquisition of MEEMIC, a personal lines business that offers automobile and homeowners insurance in the Midwest.

Insurance premiums and service revenue written totaled $1.0 billion and $3.2 billion for the third quarter and first nine months of 2006, respectively, as compared to $1.1 billion and $3.2 billion for the same periods in 2005. The slight decrease in both periods is primarily attributable to a lower volume of policies in the extended service contract business due to lower penetration and GM retail vehicle sales. The decrease in insurance premiums and service revenue written was partially offset by the inclusion of MEEMIC and growth in the domestic and international reinsurance assumed business.

Additionally, our extended service contract product line was unfavorably impacted by $15 million of customer refunds due to the recent announcement by GM to extend its powertrain warranty. On September 6, 2006, GM extended its powertrain limited warranty coverage across its entire 2007 car and light-duty lineup in the United States and Canada. The warranty extension provides coverage for up to five years or 100,000 miles. In addition, GM expanded its roadside assistance and courtesy transportation programs to match the powertrain

31

Management’s Discussion and Analysis

GMAC LLC

warranty term. Going forward the GM warranty extension will have a financial impact on our operations and management is currently assessing the potential revenue impact.

Underwriting results increased in the third quarter 2006 due to lower weather losses in the auto dealer physical damage business combined with the hurricane losses incurred in 2005 (primarily Hurricane Katrina) and continued favorable loss trends experienced by the extended service contract product line.

The combination of investment and other income increased 115% and 30% in the third quarter and first nine months of 2006, respectively, as compared to the same 2005 periods. The increase is primarily attributable to higher capital gains realized. The market value of the investment portfolio was $8.0 billion, comprised of $5.5 billion fixed income and $2.5 billion equity investments at September 30, 2006, compared to $7.8 billion, comprised of $5.4 billion fixed income and $2.4 billion equity investments at September 30, 2005. The increase in market value was driven by a strong equity portfolio and the reinvestment of positive cash flow.

During the fourth quarter, as part of our investment and capital strategy, our Insurance operations is completing a securities portfolio review and is in the process of rebalancing the mix of equity and fixed income securities. The proceeds from these sales will either be invested in fixed income securities or remitted as dividends. It is expected that significant net capital gains will be realized on these sales during the fourth quarter.

Total expenses increased 5% in the third quarter of 2006, as compared to the same period in 2005, and 9% for the first nine months of 2006 over the same period in 2005. The increases were commensurate with higher insurance premiums and service revenue earned and an increase in amortization of deferred acquisition costs, partially offset by favorable loss experience.

Other Operations

Other operations is comprised of our Commercial Finance business, equity interest in Capmark, certain corporate activities related to the Mortgage Group, and reclassifications and elimination between the reporting segments.

Results of Operations

Net income for our Other operations is summarized as follows:

	Third Quarter											Nine Months
Period ended September 30, ($ in millions)	2006			2005		Change			%			2006			2005		Change			%
Commercial Finance		($768	)		$14		($782	)		(5,586	)		($756	)		$40		($796	)		(1,990	)
Capmark		9			128		(119	)		(93	)		54			229		(175	)		(76	)
Net (loss) income		($759	)		$142		($901	)		(635	)		($702	)		$269		($971	)		(361	)
Total assets (a)		$6,244			$26,688		($20,444	)		(77	)

(a)  Represents assets of Commercial Finance business.

Commercial Finance

The Commercial Finance business incurred a loss of $768 million and $756 million for the third quarter and first nine months of 2006, respectively, as compared to earnings of $14 million and $40 million in the same periods of the prior year. Excluding the non-cash goodwill impairment charge of $685 million (after-tax) discussed below, the decrease in earnings was driven primarily by increases in the provision for credit losses. The additional losses are primarily the result of a decline in the present value of expected future cash flows or collateral value, for collateral dependent loans, resulting from Commercial Finance management’s decision to liquidate versus hold approach to many troubled legacy accounts. The change in approach was driven by higher funding and maintenance costs on these primarily non-earning loans.

During the quarter, we recognized a non-cash goodwill impairment charge in accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142). The initiation of a goodwill impairment test, outside the normal fourth quarter cycle, was triggered during the middle of the year as the Commercial Finance business experienced attrition of key personnel, including their President and CEO. The charge is primarily due to the impact of the decision by new management to exit certain low return product lines and assets classes which impacted future growth assumptions used to measure the fair value of the company plus a decline in forecasted factored sales volume.

32

Management’s Discussion and Analysis

GMAC LLC

Equity Interest in Capmark

On March 23, 2006, we closed on the sale of approximately 78 percent of our equity in Capmark for approximately $1.5 billion in cash. At the closing, Capmark also repaid us approximately $7.3 billion in intercompany loans, bringing the total cash proceeds from the sale to $8.8 billion.

We retained an equity voting interest in Capmark and have representation on its Board of Directors. We no longer have a majority ownership or a majority controlling interest in Capmark but do have the ability to exercise significant influence and have accounted for our remaining interest under the equity method of accounting. In addition to our equity investment, we have an investment of $250 million of subordinated indenture notes issued by Capmark. Both investments are reflected in Other assets in the Condensed Consolidated Balance Sheet.

Our net after-tax earnings in Capmark decreased 93% and 76% to $9 and $54 million for the third quarter and first nine months of 2006. The results for the third quarter were partially offset as Capmark recognized a number of losses associated with properties owned by a Capmark subsidiary. For the nine months ended September 30, 2006, earnings declined due to a loss recognized on the sale and a decline in the share of Capmark income recognized as we no longer fully consolidate the results of Capmark but instead reflect our approximate 22% equity interest.

Critical Accounting Estimates

We have identified critical accounting estimates that, as a result of judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operations involved, could result in material changes to our financial condition, results of operations or cash flows under different conditions or using different assumptions.

Our most critical accounting estimates are:

•  Determination of the allowance for credit losses

•  Valuation of automotive lease residuals

•  Valuation of mortgage servicing rights

•  Valuation of interests in securitized assets

•  Determination of reserves for insurance losses and loss adjustment expenses

The adoption of SFAS 156 as of January 1, 2006, requires us to present our servicing rights at fair value for those classes of servicing rights for which we have elected the fair value method.

There have been no other significant changes in the methodologies and processes used in developing these estimates from what is described in our 2005 Annual Report on Form 10-K. Refer to Note 1 for further discussion of the impact of adopting this standard.

Funding and Liquidity

Our liquidity and our ongoing profitability is, in large part, dependent upon our timely access to capital and the costs associated with raising funds in different segments of the capital markets. Over the past several years, our funding strategy has focused on the development of diversified funding sources across a global investor base, both public and private and, as appropriate, the extension of debt maturities. In addition, we maintain a large cash reserve ($14.1 billion at September 30, 2006), including certain marketable securities that can be utilized to meet our obligations in the event of any market disruption. During the quarter, we reduced our cash reserves from $22.7 billion at June 30, 2006, to $14.1 billion at September 30, 2006, reflecting our increased access to liquidity. From time to time, we repurchase previously issued debt as part of our cash and liquidity management strategy. In October 2006 we successfully completed a debt tender offer to retire $1 billion of deferred interest debentures, which will generate significant interest savings going forward. This multi-faceted strategy, combined with a continuous prefunding of requirements, is designed to enhance our ability to meet our obligations.

The diversity of our funding sources enhances funding flexibility, limits dependence on any one source of funds and results in a more cost effective strategy over the longer term. In developing this approach, management considers market conditions, prevailing interest rates, liquidity needs and the desired maturity profile of our liabilities. This strategy has helped us maintain liquidity during periods of weakness in the capital markets, changes in our business or changes in our credit ratings. Despite our diverse funding sources and strategies, our ability to maintain liquidity may be affected by certain risk factors. Refer to Risk Factors for further discussion on risk factors.

33

Management’s Discussion and Analysis

GMAC LLC

The following table summarizes our outstanding debt by funding source, excluding Capmark balances, for the periods indicated:

		Outstanding
		September 30,			December 31,
($ in millions)		2006			2005
Commercial paper			$1,328			$524
Institutional term debt			71,650			82,557
Retail debt programs			31,333			34,482
Secured financings			131,429			121,138
Bank loans, and other			14,110			15,704
	Total debt (a)		249,850			254,405
Customer deposits (b)			10,119			6,855
Off-balance sheet securitizations (c)
	Retail finance receivables		5,567			3,165
	Wholesale loans		17,798			20,724
	Mortgage loans		101,884			77,573
	Total funding		385,218			362,722
Less: cash reserves (d)			(14,100	)		(19,605	)
	Net funding		$371,118			$343,117
Leverage ratio covenant (e)			7.4:1			7.5:1
Funding Commitments ($ in billions)
	Bank liquidity facilities (f)		$45.1			$44.1
	Secured funding facilities (g)		$111.8			$115.5

(a)  Excludes fair value adjustment as described in Note 7 to the Condensed Consolidated Financial Statements.

(b)	Includes consumer and commercial bank deposits and dealer wholesale deposits.
(c)	Represents net funding from securitizations of retail and wholesale automotive receivables and mortgage loans accounted for as sales, further described in Note 8 to the Consolidated Financial Statements in our 2005 Annual Report on Form 10-K.
(d)	Includes $9.1 billion in cash and cash equivalents and $5.0 billion invested in marketable securities at September 30, 2006, and $15.4 billion and $4.2 billion at December 31, 2005, respectively.
(e)	As described in Note 7 to the Condensed Consolidated Financial Statements, our liquidity facilities and certain other funding facilities contain a leverage ratio covenant of 11.0:1, which excludes from debt certain securitization transactions that are accounted for on-balance sheet as secured financings (totaling $93,476 and $94,346 at September 30, 2006, and December 31, 2005, respectively). Our debt to equity ratio was 11.8:1 and 11.9:1, at September 30, 2006, and December 31, 2005, respectively, as determined by accounting principles generally accepted in the United States of America, which was the former basis for the leverage ratio covenant.

(f)  Represents both committed and uncommitted bank liquidity facilities. Refer to Note 7 to the Condensed Consolidated Financial Statements for details.

(g)  Represents committed secured funding facilities with third parties. Includes commitments with third-party asset-backed commercial paper conduits, as well as forward flow sale agreements with third parties securities, purchase commitments with third parties and repurchase facilities. Refer to Note 7 to the Condensed Consolidated Financial Statements for details.

In the second and third quarters of 2005, our unsecured debt ratings (excluding ResCap) were lowered to a non-investment grade rating by three of the four nationally recognized rating agencies that rate us (refer to the Credit Ratings section of this MD&A for further information). These downgrades were a continuation of a series of credit rating actions over the past few years caused by concerns as to the financial outlook of GM, including its overall market position in the automotive industry and its burdensome health care obligations, as well as the uncertainty surrounding the auto parts supplier Delphi Corporation and its impact on GM’s financial condition. As a result of these rating actions, our unsecured credit spreads widened to unprecedented levels in 2005. In anticipation of, and as a result of, these credit rating actions, we modified our diversified funding strategy to focus on secured funding and automotive whole loan sales. These funding sources are generally not directly affected by ratings on unsecured debt and therefore offer both stability in spread and access to the market. For the first nine months of 2006, approximately 94% of our U.S. Automotive volume was funded through a secured funding arrangement or automotive whole loan sale. The increased use of automotive whole loan sales is part of our migration to an “originate and sell” model for our U.S. automotive finance business. In the third quarter of 2006, we executed $1.8 billion in automotive whole loan sales.

In addition, through our banking activities in our mortgage and automotive operations, bank deposits (certificates of deposits and brokered deposits) have become an important funding source for us. We have also been able to diversify our unsecured funding through the

34

Management’s Discussion and Analysis

GMAC LLC

formation of ResCap. ResCap, an indirect wholly owned subsidiary, was formed as the holding company of our residential mortgage businesses and in the second quarter of 2005 successfully achieved an investment grade rating (separate from us). To date, ResCap has issued $12.2 billion in public and private unsecured debt and closed a $3.5 billion syndication of its bank facilities. The syndication, which closed in July 2005, consisted of a $1.75 billion syndicated term loan; an $875 million syndicated line of credit committed through July 2008 and an $875 million syndicated line of credit committed through July 2007. In the fourth quarter of 2005, ResCap filed a $12 billion shelf registration statement in order to offer senior and/or subordinated debt securities and has issued $7.2 billion in unsecured debt to date from this shelf. In May 2006 $1.7 billion was issued from this shelf which was comprised of two tranches, GBP 400 million and EUR 750 million. The proceeds from bond transactions were used to repay the intercompany subordinated note to us, thus providing additional liquidity.

As previously disclosed, on March 23, 2006, we completed the sale of 78% of our equity in GMAC Commercial Mortgage. Under the terms of the transaction, we received $8.8 billion at closing, which is comprised of sale proceeds and repayment of intercompany debt, thereby increasing our liquidity position and reducing the amount of funding required. Please refer to Note 1 to the Condensed Consolidated Financial Statements for further details.

The change in focus in the funding strategy has allowed us to maintain adequate access to capital and a sufficient liquidity position despite reductions in and limited access to traditional unsecured funding sources (i.e., commercial paper, term debt, bank loans and lines of credit) due to the deterioration in our unsecured credit rating. Unsecured sources most impacted by the reduction in our credit rating have been our commercial paper programs, the term debt markets, certain bank loan arrangements primarily at ResCap and our International Automotive operations, as well as Fannie Mae custodial borrowing arrangements at ResCap.

A further reduction of our credit rating could increase borrowing costs and further constrain our access to unsecured debt markets, including capital markets for retail debt. In addition, a further reduction of our credit ratings could increase the possibility of additional terms and conditions in any new or replacement financing arrangements and impact elements of certain existing secured borrowing arrangements. However, our funding strategy has increased our focus on expanding and developing diversified secured funding sources and increased use of automotive whole loan sales that are not directly impacted by ratings on our unsecured debt.

With limited access to traditional unsecured funding sources, management will continue to diversify and expand our use of asset-backed funding, and we believe that our funding strategy will provide sufficient access to the capital markets to meet our short- and medium-term funding needs. Notwithstanding the foregoing, management believes that the current ratings situation and outlook increases the level of risk to our long-term ability to sustain the current level of asset originations. In an effort to mitigate this risk, on April 3, 2006, GM announced that it agreed to sell a 51 percent controlling interest in us to a consortium led by Cerberus Capital Management, which is expected to close in the fourth quarter of this year. In addition to continuing to enable us to support the sale of GM vehicles, the transaction is intended to support our strategic goal of a stable investment grade rating and profitable growth. In April 2006, in conjunction with the announcement of the sale of 51% of GMAC, we announced that we expected to arrange two asset-backed funding facilities totaling up to $25 billion which would support our ongoing business and enhance our liquidity position. Citigroup has committed $12.5 billion in aggregate to these two facilities. In August 2006, we closed on the first of the two asset backed funding facilities, a three year, $10 billion facility with a subsidiary of Citigroup. At this time, GMAC is continuing to review its options for a second asset-based facility, including the form of the facility, to enhance our overall liquidity position. The funding facilities are in addition to Citigroup’s initial equity investment in us. There can be no assurance that the sale transaction will be successful in achieving a stable investment grade rating and therefore we plan to maintain the current conservative funding strategy until risks to closing the transaction are reduced.

Credit Ratings

The cost and availability of unsecured financing is influenced by credit ratings, which are intended to be an indicator of the creditworthiness of a particular company, security, or obligation. Lower ratings generally result in higher borrowing costs as well as reduced access to capital markets. This is particularly true for certain term debt institutional investors whose investment guidelines require investment grade term ratings and for short-term institutional investors (money markets in particular) whose investment guidelines require the two highest rating categories for short-term debt. Substantially all of our debt has been rated by nationally recognized statistical rating organizations. Concerns over the competitive and financial strength of GM, including how it will fund its health care liabilities and uncertainties at Delphi Corporation, have resulted in a series of credit rating actions, which commenced late in 2001. In the second and third quarters of 2005, Standard & Poor’s, Fitch and Moody’s downgraded our (excluding ResCap) senior debt to a non-investment grade rating with DBRS continuing to maintain an investment grade rating on our senior debt. As a result of GM’s announcement on October 17, 2005, that it was exploring the possible sale of a controlling interest in us to a strategic partner, the four rating agencies changed our review status to either evolving or developing. On March 16, 2006, Moody’s placed our senior unsecured ratings under review for a possible downgrade following GM’s announcement that it would delay filing its annual report on Form 10-K with the SEC. Following

35

Management’s Discussion and Analysis

GMAC LLC

the April 3, 2006 announcement by GM that it agreed to sell a 51 percent controlling interest in us, Fitch revised our rating watch status to Positive from Evolving, indicating that the ratings may be upgraded or maintained at current levels.

The following summarizes our current ratings, outlook and the date of last rating action by the respective nationally recognized rating agencies.

Rating	Commercial	Senior
Agency	Paper	Debt	Outlook	Date of Last Action
Fitch	B	BB	Positive		September 26, 2005  (a)
Moody’s	Not-Prime	Ba1	Possible downgrade		August 24, 2005 (b)
S&P	B-1	BB	Developing		May 5, 2005 (c)
DBRS	R-3	BBB (low)	Developing		August 2, 2005 (d)

(a)	Fitch downgraded our senior debt to BB from BB+, affirmed the commercial paper rating of B and on October 17, 2005, placed the ratings on Rating Watch Evolving and on April 3, 2006, changed the rating watch status to Positive.
(b)	Moody’s lowered our senior debt to Ba1 from Baa2, downgraded the commercial paper rating to Not-Prime from Prime-2 and on October 17, 2005, changed the review status of the long-term debt ratings to direction uncertain and on March 16, 2006, changed the review status of the senior debt ratings to possible downgrade.
(c)	Standard & Poor’s downgraded our senior debt to BB from BBB–, downgraded the commercial paper rating to B-1 from A-3 and on October 10, 2005, changed the outlook to CreditWatch with developing implications.
(d)	DBRS downgraded our senior debt to BBB (low) from BBB, downgraded the commercial paper rating to R-2 (low) from R-2 (middle), on October 11, 2005, placed the ratings under review with developing implications and affirmed the review status on October 17, 2005. On September 15, 2006, DBRS modified their short-term rating scale by changing the lowest investment-grade rating from R-2 (low) to R-3. As a result of this technical change, our rating was reclassified from R-2 (low) to R-3.

In addition, ResCap, our indirect wholly owned subsidiary, has investment grade ratings (separate from us) from the nationally recognized rating agencies. The following table summarizes ResCap’s current ratings, outlook and the date of the last rating or outlook change by the respective agency.

Rating	Commercial	Senior
Agency	Paper	Debt	Outlook	Date of Last Action
Fitch	F3	BBB–	Positive		September 26, 2005  (a)
Moody’s	P-3	Baa3	Possible downgrade		August 24, 2005 (b)
S&P	A-3	BBB–	Developing		June 9, 2005 (c)
DBRS	R-2 (middle)	BBB	Developing		June 9, 2005 (d)

(a)	Fitch downgraded the senior debt of ResCap to BBB– from BBB, downgraded the commercial paper rating to F3 from F2, and on October 17, 2005, placed the ratings on Rating Watch Evolving and on April 3, 2006, changed the rating watch status to Positive.
(b)	Moody’s downgraded the senior debt of ResCap to Baa3 from Baa2, downgraded the commercial paper rating to P3 from P2, on October 17, 2005, changed the review status of the long-term debt ratings to direction uncertain and on March 16, 2006, changed the review status of the senior debt ratings to possible downgrade.
(c)	Standard & Poor’s initial ratings for ResCap were assigned, and on October 10, 2005, S&P changed the outlook to CreditWatch with developing implications.
(d)	DBRS initial ratings for ResCap were assigned and on October 11, 2005, DBRS placed the ratings under review with developing implications and affirmed the review status on October 17, 2005.

36

Management’s Discussion and Analysis

GMAC LLC

Off-balance Sheet Arrangements

We use off-balance sheet entities as an integral part of our operating and funding activities. For further discussion of our use of off-balance sheet entities, refer to the Off-balance Sheet Arrangements section in our 2005 Annual Report on Form 10-K.

The following table, which excludes Capmark balances, summarizes assets carried off-balance sheet in these entities.

		September 30,		December 31,
($ in billions)		2006		2005
Securitization (a)
	Retail finance receivables		$6.1		$6.0
	Wholesale loans		18.5		21.4
	Mortgage loans		105.3		79.4
Total securitization			129.9		106.8
Other off-balance sheet activities
	Mortgage warehouse		0.6		0.6
	Other mortgage		0.1		0.2
Total off-balance sheet activities			$130.6		$107.6

(a)  Includes only securitizations accounted for as sales under SFAS 140, as further described in Note 8 to the Consolidated Financial Statements in our 2005 Annual Report on Form 10-K.

Accounting and Reporting Developments

Statement of Position 05-1 — In September 2005 the AICPA issued Statement of Position 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts (SOP 05-1). SOP 05-1 provides guidance on accounting for deferred acquisition costs on internal replacements of insurance contracts. SOP 05-1 defines an internal replacement and specifies the conditions that determine whether the replacement contract is substantially or unsubstantially changed from the replaced contract. An internal replacement determined to result in a substantially changed contract should be accounted for as an extinguishment of the replaced contract; unamortized deferred acquisition costs and unearned revenue liabilities of the replaced contract should no longer be deferred. An internal replacement determined to result in an unsubstantially changed contract should be accounted for as a continuation of the replaced asset. SOP 05-01 introduces the terms integrated and non-integrated contract features and specifies that non-integrated features do not change the base contract and are to be accounted for in a manner similar to a separately issued contract. Integrated features are evaluated in conjunction with the base contract. SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. Management is assessing the potential impact on our financial condition or results of operations.

Statement of Financial Accounting Standards No. 155 — In February 2006 the Financial Accounting Standards Board (FASB) issued Statement of Financial Standards No. 155 Accounting for Certain Hybrid Financial Instruments — an amendment of FASB Statements No. 133 and 140 (SFAS 155). This standard permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation. SFAS 155 allows an entity to make an irrevocable election to measure such a hybrid financial instrument at fair value on an instrument-by-instrument basis. The standard eliminates the prohibition on a QSPE from holding a derivative financial instrument that pertains to a beneficial instrument other than another derivative financial instrument. SFAS 155 also clarifies which interest-only and principal-only strips are not subject to the requirements of SFAS 133, as well as determines that concentrations of credit risk in the form of subordination are not embedded derivatives. SFAS 155 is effective for all financial instruments acquired or issued after the beginning of the fiscal year that begins after September 15, 2006. Adoption of SFAS 155 is not expected to have a material impact on our financial position or results of operation.

FASB Staff Position — FIN 46(R)-6 — In April 2006 the FASB issued FIN 46(R)-6, Determining the Variability to Be Considered in Applying FASB Interpretation No. 46(R), which requires the variability of an entity to be analyzed based on the design of the entity. The nature and risks in the entity, as well as the purpose for the entity’s creation, are examined to determine the variability in applying FIN 46(R). The variability is used in applying FIN 46(R) to determine whether an entity is a variable interest entity, which interests are variable interests in the entity and who is the primary beneficiary of the variable interest entity. This statement is applied prospectively and is effective for all reporting periods after June 15, 2006. The guidance did not have a material impact on our consolidated financial position or results of operations.

FASB Interpretation No. 48 — In June 2006 the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), which supplements Statement of Financial Accounting Standard No. 109 by defining the confidence level that a tax position must meet in order to be recognized in the financial statements. The Interpretation requires that the tax effects of a position be recognized only if they are “more-likely-than-not” to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold

37

Management’s Discussion and Analysis

GMAC LLC

represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the position are to be recognized. Moreover, the more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. At adoption, companies must adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained as of the adoption date. Any necessary adjustment would be recorded directly to retained earnings in the period of adoption and reported as a change in accounting principle. This Interpretation is effective as of the beginning of the first fiscal year beginning after December 15, 2006. Management is assessing the potential impact on our financial condition or results of operations.

FASB Staff Position (FSP) No. 13-2 — In July 2006 the FASB issued FSP No. 13-2 Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease Transaction, (FSP 13-2), which amends SFAS No. 13, Accounting for Leases, by requiring lessors to recalculate the rate of return and periodic income allocation for leveraged-lease transactions when there is a change or projected change in the timing of income tax cash flows related to the lease. FSP 13-2 requires lessors to use the model in FIN 48 to determine the timing and amount of expected tax cash flows in leveraged-lease calculations and recalculations. FSP 13-2 is effective in the same period as FIN 48. At the date of adoption, the lessor is required to reassess projected income tax cash flows related to leveraged leases using the FIN 48 model for recognition and measurement. Revisions to the net investment in a leverage lease required when FSP 13-2 is adopted would be recorded as an adjustment to the beginning balance of retained earnings in the period of adoption and reported as a change in accounting principle. Management is assessing the potential impact on our financial condition or results of operations.

SEC Staff Accounting Bulletin No. 108 — In September 2006 the SEC issued Staff Accounting Bulletin (SAB) No. 108 Quantifying Financial Misstatements, which expresses the Staff’s views regarding the process of quantifying financial statement misstatements. Registrants are required to quantify the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. The techniques most commonly used in practice to accumulate and quantify misstatements are generally referred to as the “rollover” (current year income statement perspective) and “iron curtain” (year-end balance perspective) approaches. The financial statements would require adjustment when either approach results in quantifying a misstatement that is material, after considering all relevant quantitative and qualitative factors. Management does not expect this guidance to have a material effect on our current process for assessing and quantifying financial statement misstatements.

SFAS No. 157 — In September 2006 the FASB issued SFAS No. 157 Fair Value Measurements, which provides a definition of fair value, establishes a framework for measuring fair value and requires expanded disclosures about fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 12, 2007, and interim periods within those years. The provisions of SFAS 157 should be applied prospectively. Management is assessing the potential impact on our financial condition and results of operations.

SFAS No. 158 — In September 2006 the FASB issued SFAS No. 158 Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, which amends SFAS No. 87 Employers’ Accounting for Pensions (SFAS No. 87), SFAS No. 88 Employer’s Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits (SFAS No. 88), SFAS No. 106 Employer’s Accounting for Postretirements Benefits Other Than Pensions (SFAS No. 106), and SFAS No. 132(R) Employers’ Disclosures about Pensions and Other Postretirement Benefits (revised 2003) (SFAS 132(R)). This Statement requires companies to recognize an asset or liability for the overfunded or underfunded status of their benefit plans in their financial statements. The asset or liability is the offset to other comprehensive income, consisting of previously unrecognized prior service costs and credits, actuarial gains or losses and transition obligations and assets. SFAS 158 also requires the measurement date for plan assets and liabilities to coincide with the sponsor’s year end. The standard provides two transition alternatives for companies to make the measurement-date provisions. The recognition of asset and liability related to funded status provision is effective for fiscal years ending after December 15, 2006, and the change in measurement is effective for fiscal years ending after December 15, 2008. Management is assessing the potential impact on our financial condition and results of operations.

Consolidated Operating Results

The following section provides a discussion of our consolidated results of operations as displayed in the Condensed Consolidated Statement of Income. The individual business segment sections of this MD&A provide a further discussion of the operating results.

Revenues

Total financing revenue increased by $624 million and $1,547 million, respectively, in the third quarter and first nine months of 2006, compared to the same period of 2005, due to increases in auto financing revenue, operating lease income, and mortgage consumer

38

Management’s Discussion and Analysis

GMAC LLC

interest income. Auto financing revenue benefited from strong retail financing penetration and operating lease income benefited due to the growth in the operating lease portfolio. Mortgage consumer interest income benefited from mortgage originations which increased slightly to $51.5 billion in the third quarter from $51.3 billion in the prior period. These increases were partially offset by a decline in mortgage loans held for sale which declined due to the sale of Capmark. Subsequent to the sale of Capmark on March 23, 2006, we only recognize our approximately 22% equity interest versus a year ago when Capmark was wholly-owned and fully consolidated in our results.

Interest expense increased by $937 million and $2,267 million in the third quarter and first nine months of 2006, as compared with the same period in 2005. The increase is primarily a result of the negative impact of higher funding costs due to an increase in overall market interest rates. In addition, a portion of the increase is due to an unfavorable impact of $220 million related to our third-quarter debt tender offer to repurchase $1 billion of zero coupon bonds. The provision for credit losses increased for the third quarter of 2006 by $101 million primarily due to increases in provisions at both the Commercial Finance business and ResCap. This increase was partially offset by lower provisions in the auto finance business.

Insurance premiums and service revenue earned increased by 7% and 10% in the third quarter and first nine months of 2006, as compared with the same period in 2005. However, insurance premiums and service revenue written declined slightly for the third quarter and first nine months due to a lower volume of policies written in the extended service contract business due to lower penetration and GM retail vehicle sales.

Gains on sales of mortgage and automotive loans, net decreased due to lower margins resulting from competitive pricing pressures. Net loan servicing income decreased due to unfavorable mortgage servicing asset valuations resulting from lower long-term rates. The decline in net loan servicing was partially offset by an increase in servicing fees resulting from a higher volume of originations.

Investment income increased by $261 million and $161 million in the third quarter and first nine months of 2006, as compared to the same period of the prior year. The increase is primarily attributable to higher capital gains recognized during the period at our Insurance operations. The market value of the investment portfolio at our Insurance operations was $8.0 billion at September 30, 2006, compared to $7.8 billion at September 30, 2005. Gain on sale of equity investments increased by $411 million in the first nine months of 2006, as compared to the same period in the prior year. The increase is primarily due to the sale of our equity interest in a regional homebuilder during the second quarter of 2006.

Expenses

Noninterest expense increased by 18% and 11%, in the third quarter and first nine months of 2006, as compared to the same period in the prior year. Depreciation expense on operating lease assets increased during the third quarter and first nine months of 2006, as a result of higher average operating lease asset levels, as compared to the same period of 2005. In addition, noninterest expense was negatively impacted in the third quarter by non-cash goodwill and other intangible asset impairment charges of $840 million related to the Commercial Finance business. Part of the increase was offset by lower compensation and benefits expenses at Capmark which was fully consolidated in 2005 versus accounted for under the equity method starting in March 2006.

Forward Looking Statements

The foregoing Management’s Discussion and Analysis of Financial Condition and Results of Operations and other portions of this Form 10-Q contains various forward-looking statements within the meaning of applicable federal securities laws, including the Private Securities Litigation Reform Act of 1995, that are based upon our current expectations and assumptions concerning future events, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated.

The words “anticipate,” “estimate,” “believe,” “expect,” “intend,” “may,” “plan,” “project,” “future” and “should” and any similar expressions are intended to identify forward-looking statements. Forward-looking statements involve a number of risks, uncertainties and other factors, including (but not limited to) the Risk Factors described in Item 1A of our 2005 Form 10-K, as updated in this Form 10-Q, and which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. Such factors include, among others, the following:

•  the ability of GM to complete the previously announced transaction with a strategic investor of a controlling interest in us while maintaining a significant stake in us, securing separate credit ratings and low cost funding to sustain growth for us and ResCap and maintaining the mutually beneficial relationship between us and GM;

•  changes in economic conditions, currency exchange rates, significant terrorist attacks or political instability in the major markets where we operate;

39

Management’s Discussion and Analysis

GMAC LLC

•  changes in the laws, regulations, policies or other activities of governments, agencies and similar organizations where such actions may affect the production, licensing, distribution or sale of our products, the cost thereof or applicable tax rates; and

•  the threat of terrorism, the outbreak or escalation of hostilities between the United States and any foreign power or territory and changes in international political conditions may continue to affect both the United States and the global economy and may increase other risks.

40

Controls and Procedures

GMAC LLC

Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), designed to ensure that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the specified time periods. As of the end of the period covered by this report, our Principal Executive Officer and our Principal Financial Officer evaluated, with the participation of our management, the effectiveness of our disclosure controls and procedures. Based on management’s evaluation, GMAC’s Principal Executive and Principal Financial Officer each concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

As previously disclosed in our Form 10-K for the year ended December 31, 2005, management had concluded that the disclosure controls and procedures related to certain mortgage loan operations of GMAC were not effective because of a material weakness in internal control over financial reporting with respect to the preparation, review, presentation and disclosure of the consolidated statement of cash flows.

Subsequently, during 2006, management implemented enhancements to our internal controls over financial reporting with respect to the consolidated statement of cash flows. For example, management is utilizing enhanced templates in the financial reporting process which provide more detailed information about cash flows and which facilitate identifying and isolating non-cash amounts. GMAC reporting units certify to the accuracy of cash flow data on a quarterly basis, and internal quarterly accounting reviews have been expanded to incorporate cash flow items. In addition, the disclosure process for testing for GAAP compliance has been revised to cover treatment of cash flows more thoroughly. Management has assessed the operating effectiveness of these enhanced internal controls and believe the material weakness has been remediated.

There were no other changes in GMAC’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

41

Other Information

GMAC LLC

Legal Proceedings

We are subject to potential liability under laws and government regulations and various claims and legal actions that are pending or may be asserted against us. The following update supplements our Legal Proceedings section in our 2005 Annual Report on Form 10-K. Please refer to the Legal Proceedings section in our 2005 Annual Report on Form 10-K, as supplemented by our March 31 and June 30, 2006 Forms 10-Q, for additional information regarding the items noted below and other pending governmental proceedings, claims and legal actions.

In the previously reported bondholder class action, J&R Marketing et al. v. General Motors Corporation, et al., July 28, 2006, plaintiffs filed a Consolidated Amended Complaint. The amended complaint mainly differs from the initial complaint in that it asserts claims for GMAC debt securities purchased during a different time period (July 28, 2003 through November 9, 2005) and adds additional underwriter defendants. No determination has been made that the case may be maintained as a class action. The GM and GMAC defendants intend to vigorously defend this action.

Risk Factors

There have been no material changes to the Risk Factors section of our 2005 Annual Report on Form 10-K as supplemented by our March 31 and June 30, 2006 Forms 10-Q.

The following risk factors, which were disclosed in our 2005 Annual Report on Form 10-K and supplemented by our March 31 and June 30, 2006 Forms 10-Q have not materially changed since we filed these reports. Please refer to these reports for a complete discussion of these risk factors.

Risks Related to Our Controlling Member

•  GM has agreed to sell a controlling interest in us. There is a risk that the sale may not occur or, if it does occur, may not restore our investment grade rating or maintain ResCap’s investment grade rating.

Risks Related to Our Business

•  We have recently experienced a series of credit rating actions, resulting in the downgrade of our credit ratings to historically low levels. Any further reduction of our credit ratings or failure to restore our credit ratings to higher levels could have a material adverse effect on our business.

•  Our business requires substantial capital and, if we are unable to maintain adequate financing sources, our profitability and financial condition will suffer and jeopardize our ability to continue operations.

•  Our indebtedness and other obligations are significant and could materially adversely affect our business.

•  The profitability and financial condition of our operations are dependent upon the operations of our parent, General Motors.

•  We have substantial credit exposure to General Motors.

•  As a wholly owned subsidiary of GM, we are jointly and severally responsible with GM and its other subsidiaries for funding obligations under GM’s and its subsidiaries’ qualified U.S. defined benefit pension plans. Our financial condition and our ability to repay unsecured debt could be impaired if we were required to pay significant funding obligations for the GM plans.

•  We are exposed to credit risk which could affect our profitability and financial condition.

•  Our earnings may decrease because of increases or decreases in interest rates.

•  Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates and could affect our profitability and financial condition.

•  Our residential mortgage subsidiary’s ability to pay dividends and to prepay subordinated debt obligations to us is restricted by contractual arrangements.

•  A failure of or interruption in the communications and information systems on which we rely to conduct our business could adversely affect our revenues and profitability.

42

Other Information

GMAC LLC

•  We use estimates and assumptions in determining the fair value of certain of our assets, in determining our allowance for credit losses, in determining lease residual values and in determining our reserves for insurance losses and loss adjustment expenses. If our estimates or assumptions prove to be incorrect, our cash flow, profitability, financial condition and business prospects could be materially adversely affected.

•  Our business outside the United States exposes us to additional risks that may cause our revenues and profitability to decline.

•  Our business could be adversely affected by changes in currency exchange rates.

•  General business and economic conditions of the industries and geographic areas in which we operate affect our revenues, profitability and financial condition.

•  Our profitability and financial condition may be materially adversely affected by decreases in the residual value of off-lease vehicles.

•  Fluctuations in valuation of investment securities or significant fluctuations in investment market prices could negatively affect revenues.

•  Changes in existing U.S. government-sponsored mortgage programs, or disruptions in the secondary markets in the United States or in other countries in which our mortgage subsidiaries operate, could adversely affect the profitability and financial condition of our mortgage business.

•  We may be required to repurchase contracts and provide indemnification if we breach representations and warranties from our securitization and whole loan transactions, which could harm our profitability and financial condition.

•  Significant indemnification payments or contract, lease or loan repurchase activity of retail contracts or leases or mortgage loans could harm our profitability and financial condition.

•  A loss of contractual servicing rights could have a material adverse effect on our financial condition, liquidity and results of operations.

•  The regulatory environment in which we operate could have a material adverse effect on our business and earnings.

•  The worldwide financial services industry is highly competitive. If we are unable to compete successfully or if there is increased competition in the automotive financing, mortgage and/or insurance markets or generally in the markets for securitizations or asset sales, our margins could be materially adversely affected.

Other Information

None.

Exhibits

The exhibits listed on the accompanying Index of Exhibits are filed as a part of this report. Such Index is incorporated herein by reference.

43

Signatures

GMAC LLC

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized, this 7th day of November, 2006.

GMAC LLC

(Registrant)

/s/ Sanjiv Khattri

Sanjiv Khattri

Executive Vice President and

Chief Financial Officer

/s/ Linda K. Zukauckas

Linda K. Zukauckas

Vice President and Corporate Controller

44

Index of Exhibits

GMAC LLC

Exhibit	Description	Method of Filing
2.1	Purchase and Sale Agreement by and among General Motors Corporation, General Motors Acceptance Corporation, GM Finance Co. Holdings Inc. and FIM Holdings LLC dated as of April 2, 2006	Filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated as of April 2, 2006 (File No. 1-3754); incorporated herein by reference.
3.1	Certificate of Formation of GMAC LLC dated July 20, 2006	Filed as Exhibit 3.1 to the Company’s Quarterly Report for the Period Ended June 30, 2006, on Form 10-Q (File No. 1-3754); incorporated herein by reference.
3.2	Certificate of Conversion to Limited Liability Company of General Motors Acceptance Corporation to GMAC LLC dated July 20, 2006	Filed as Exhibit 3.2 to the Company’s Quarterly Report for the Period Ended June 30, 2006, on Form 10-Q (File No. 1-3754); incorporated herein by reference.
3.3	Limited Liability Company Agreement of GMAC LLC dated July 21, 2006	Filed as Exhibit 3.3 to the Company’s Quarterly Report for the Period Ended June 30, 2006, on Form 10-Q (File No. 1-3754); incorporated herein by reference.
4.1	Form of Indenture dated as of July 1, 1982, between the Company and Bank of New York (Successor Trustee to Morgan Guaranty Trust Company of New York), relating to Debt Securities	Filed as Exhibit 4(a) to the Company’s Registration Statement No. 2-75115; incorporated herein by reference.
4.1.1	Form of First Supplemental Indenture dated as of April 1, 1986, supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(g) to the Company’s Registration Statement No. 33-4653; incorporated herein by reference.
4.1.2	Form of Second Supplemental Indenture dated as of June 15, 1987, supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(h) to the Company’s Registration Statement No. 33-15236; incorporated herein by reference.
4.1.3	Form of Third Supplemental Indenture dated as of September 30, 1996, supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(i) to the Company’s Registration Statement No. 333-33183; incorporated herein by reference.
4.1.4	Form of Fourth Supplemental Indenture dated as of January 1, 1998, supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(j) to the Company’s Registration Statement No. 333-48705; incorporated herein by reference.
4.1.5	Form of Fifth Supplemental Indenture dated as of September 30, 1998, supplementing the Indenture designated as Exhibit 4.1	Filed as Exhibit 4(k) to the Company’s Registration Statement No. 333-75463; incorporated herein by reference.
4.2	Form of Indenture dated as of September 24, 1996, between the Company and The Chase Manhattan Bank, Trustee, relating to SmartNotes	Filed as Exhibit 4 to the Company’s Registration Statement No. 333-12023; incorporated herein by reference.
4.2.1	Form of First Supplemental Indenture dated as of January 1, 1998, supplementing the Indenture designated as Exhibit 4.2	Filed as Exhibit 4(a)(1) to the Company’s Registration Statement No. 333-48207; incorporated herein by reference.
4.2.2	Form of Second Supplemental Indenture dated as of June 20, 2006, supplementing the Indenture designated as Exhibit 4.2	Filed as Exhibit 4(a)(2) to the Company’s Registration Statement No. 333-136021; incorporated herein by reference.
4.3	Form of Indenture dated as of October 15, 1985, between the Company and U.S. Bank Trust (Successor Trustee to Comerica Bank), relating to Demand Notes	Filed as Exhibit 4 to the Company’s Registration Statement No. 2-99057; incorporated herein by reference.
4.3.1	Form of First Supplemental Indenture dated as of April 1, 1986, supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(a) to the Company’s Registration Statement No. 33-4661; incorporated herein by reference.

45

Index of Exhibits

GMAC LLC

Exhibit	Description	Method of Filing
4.3.2	Form of Second Supplemental Indenture dated as of June 24, 1986, supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(b) to the Company’s Registration Statement No. 33-6717; incorporated herein by reference.
4.3.3	Form of Third Supplemental Indenture dated as of February 15, 1987, supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(c) to the Company’s Registration Statement No. 33-12059; incorporated herein by reference.
4.3.4	Form of Fourth Supplemental Indenture dated as of December 1, 1988, supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(d) to the Company’s Registration Statement No. 33-26057; incorporated herein by reference.
4.3.5	Form of Fifth Supplemental Indenture dated as of October 2, 1989, supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(e) to the Company’s Registration Statement No. 33-31596; incorporated herein by reference.
4.3.6	Form of Sixth Supplemental Indenture dated as of January 1, 1998, supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(f) to the Company’s Registration Statement No. 333-56431; incorporated herein by reference.
4.3.7	Form of Seventh Supplemental Indenture dated as of June 15, 1998, supplementing the Indenture designated as Exhibit 4.3	Filed as Exhibit 4(g) to the Company’s Registration Statement No. 333-56431; incorporated herein by reference.
4.4	Form of Indenture dated as of December 1, 1993, between the Company and Citibank, N.A., Trustee, relating to Medium-Term Notes	Filed as Exhibit 4 to the Company’s Registration Statement No. 33-51381; incorporated herein by reference.
4.4.1	Form of First Supplemental Indenture dated as of January 1, 1998, supplementing the Indenture designated as Exhibit 4.4	Filed as Exhibit 4(a)(1) to the Company’s Registration Statement No. 333-59551; incorporated herein by reference.
10	Copy of agreement dated as of October 22, 2001, between General Motors Corporation and General Motors Acceptance Corporation.	Filed as Exhibit 10 to the Company’s current report on Form 8-K dated as of October 23, 2001 (File No. 1-3754); incorporated herein by reference.
12	Computation of ratio of earnings to fixed charges	Filed herewith.
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)	Filed herewith.
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)	Filed herewith.
The following exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that Section. In addition Exhibit No. 32 shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350	Filed herewith.

46

Exhibit 12

GMAC LLC

Ratio of Earnings to Fixed Charges

Nine months ended September 30, ($ in millions)	2006			2005
Earnings
Consolidated net income		$1,248			$2,219
Provision for income taxes		815			1,147
Minority interest in consolidated subsidiaries and (income)/loss from equity investees		(29	)		5
Consolidated income before income taxes, minority interest and (income)/loss from equity investees		2,034			3,371
Fixed charges		11,752			9,313
Earnings available for fixed charges		13,786			12,684
Fixed charges
Interest, discount, and issuance expense on debt		11,686			9,239
Portion of rentals representative of the interest factor		66			74
Total fixed charges		$11,752			$9,313
Ratio of earnings to fixed charges		1.17			1.36

Exhibit 31.1

GMAC LLC

I, Eric A. Feldstein, certify that:

1.	I have reviewed this report on Form 10-Q of GMAC LLC;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2006

/s/ Eric A. Feldstein

Eric A. Feldstein

Chairman

Exhibit 31.2

GMAC LLC

I, Sanjiv Khattri, certify that:

1.	I have reviewed this report on Form 10-Q of GMAC LLC;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-5(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2006

/s/ Sanjiv Khattri

Sanjiv Khattri

Executive Vice President and

Chief Financial Officer

Exhibit 32

GMAC LLC

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350

In connection with the Quarterly Report of GMAC LLC (the Company) on Form 10-Q for the period ending September 30, 2006, as filed with the Securities and Exchange Commission on the date hereof (the Report), each of the undersigned officers of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of their knowledge:

1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Eric A. Feldstein

Eric A. Feldstein

Chairman

November 7, 2006

/s/ Sanjiv Khattri

Sanjiv Khattri

Executive Vice President and

Chief Financial Officer

November 7, 2006

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to GMAC LLC and will be furnished to the Securities and Exchange Commission or its staff upon request.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, G. Richard Wagoner, Jr., certify that:

1. I have reviewed this quarterly report for the period ended September 30, 2006 on Form 10-Q of General Motors Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  G. RICHARD WAGONER, JR.

G. Richard Wagoner, Jr.

Chairman and Chief Executive Officer

Date: November 7, 2006

1

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Frederick A. Henderson, certify that:

1. I have reviewed this quarterly report for the period ended September 30, 2006 on Form 10-Q of General Motors Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of the directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  FREDERICK A. HENDERSON

FREDERICK A. HENDERSON

Vice Chairman and Chief Financial Officer

Date: November 7, 2006

1

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of General Motors Corporation (the “Corporation”) on Form 10-Q for the period ended September 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, G. Richard Wagoner, Jr., Chairman and Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/  G. RICHARD WAGONER, JR.

G. Richard Wagoner, Jr.

Chairman and Chief Executive Officer

November 7, 2006

1

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of General Motors Corporation (the “Corporation”) on Form 10-Q for the period ended September 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frederick A. Henderson, Vice Chairman and Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/  FREDERICK A. HENDERSON

Frederick A. Henderson

Vice Chairman and Chief Financial Officer

November 7, 2006

1