Discontinued Operations

On March 5, 2017 we entered into the Agreement to sell our European Business to PSA Group. On July 31, 2017 we closed the sale of our Opel/Vauxhall Business to PSA Group, and on October 31, 2017 we closed the sale of the Fincos to Banque PSA Finance S.A. and BNP Paribas Personal Finance S.A.

The net consideration paid at closing for the Opel/Vauxhall Business was $1.4 billion, consisting of (1) $1.1 billion in cash; and (2) $808 million in warrants in PSA Group; partially offset by (3) a $478 million de-risking premium payment made to PSA Group for assuming certain underfunded pension liabilities. During the three months ended September 30, 2017, our wholly owned subsidiary (the Seller) made payments to PSA Group, or one or more pension funding vehicles, of $3.4 billion with respect to net underfunded pension liabilities assumed by PSA Group, which included pension funding payments for active employees and the de-risking premium payment of $478 million. For a further description of the terms and conditions refer to Note 3 of our 2017 Form 10-K.

The total charge from the sale of the European Business was $6.2 billion, net of tax. During the three months ended September 30, 2017 we recognized a charge of $5.4 billion, of which $3.1 billion was recorded in Loss from discontinued operations, net of tax and $2.3 billion was recorded in Income tax expense, as a result of the sale of the Opel/Vauxhall Business. During the three months ended June 30, 2017 we recognized charges in Loss from discontinued operations, net of tax of $421 million for the cancellation of product programs resulting from the convergence of vehicle platforms between our European Business and PSA Group, a disposal loss of $324 million as a result of the Fincos being classified as held for sale and other insignificant charges.

The Seller agreed to indemnify PSA Group for certain losses resulting from any inaccuracy of the representations and warranties or breaches of our covenants included in the Agreement and for certain other liabilities including certain emissions and product liabilities. The Company entered into a guarantee for the benefit of PSA Group pursuant to which the Company agreed to guarantee the Seller's obligation to indemnify PSA Group. Certain of these indemnification obligations are subject to time limitations, thresholds and/or caps as to the amount of required payments. Although the sale reduced our vehicle presence in Europe, we may still be impacted by actions taken by regulators related to vehicles sold before the sale. In Germany, the Kraftfahrt-Bundesamt (KBA) recently issued an order converting Opel’s voluntary recall of certain vehicles with emission control systems into a mandatory recall for allegedly failing to comply with certain emissions regulations. In addition, at the KBA's request the German authorities recently re-opened a separate investigation that had previously been closed with no action. Opel is challenging the order of the KBA in court on the grounds that the emission control systems complied with the applicable regulations at the time the vehicles were manufactured, tested and sold.

Opel voluntarily recalled and serviced many of these vehicles between 2017 and 2018 at its own expense, and this expense should not be transferred to the Seller because it was accounted for at the time of the sale. However, the Seller may be obligated to indemnify PSA Group for certain additional expenses resulting from the mandatory recall and related investigation, including potential litigation costs, settlements, judgments and potential fines. We are unable to estimate any reasonably possible loss or range of loss that may result from this matter.

We continue to purchase from and supply to PSA Group certain vehicles for a period of time following closing. Total net sales and revenue of $339 million and $1.5 billion and purchases and expenses of $297 million and $1.1 billion related to transactions with the Opel/Vauxhall Business were included in continuing operations during the three and nine months ended September 30, 2018. Cash payments of $1.5 billion and cash receipts of $1.9 billion were recorded in Net cash provided by (used in) operating activities – continuing operations related to transactions with the Opel/Vauxhall Business during the nine months ended September 30, 2018.

The following table summarizes the results of the European Business operations:



	Three Months Ended				Nine Months Ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Automotive net sales and revenue	$	—	$	1,553	$	—	$	11,257
GM Financial net sales and revenue	—		147		—		414
Total net sales and revenue	—		1,700		—		11,671
Automotive and other cost of sales	—		1,583		—		11,049
GM Financial interest, operating and other expenses	—		99		—		301
Automotive and other selling, general, and administrative expense	—		134		—		813
Other expense items	—		74		—		72
Loss from discontinued operations before taxes	—		190		—		564
Loss on sale of discontinued operations before taxes(a)	—		1,150		70		1,986
Total loss from discontinued operations before taxes	—		1,340		70		2,550
Income tax expense(a)(b)	—		1,756		—		1,385
Loss from discontinued operations, net of tax	$	—	$	3,096	$	70	$	3,935

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(a)	Total loss on sale of discontinued operations, net of tax was $3.1 billion and $3.7 billion for the three and nine months ended September 30, 2017.


(b)	Includes $2.0 billion of deferred tax assets that transferred to PSA Group in the three and nine months ended September 30, 2017.