GM: "Scrapping ACDelco Parts Under Warranty Will Cease"

We’ve received this heads-up letter to GM dealers from one our sources on the front line. [Thanks to you-know-who-you-are.]

IMPORTANT BULLETIN: Parts Order Management Update

Paul Copses, Executive Director — GM SPO Sales and Marketing, and Charlie Hyndman, Executive Director– GM SPO Global Warehousing and Operations

05/06/2009

To: All ACDelco Customers, GM Dealers and Saturn Retailers (US, Canada, Mexico, Middle East, Other)

Please be advised that GM Service and Parts Operations have been working on supply plans for all of our suppliers over the past few months to ensure adequate inventories of service parts for our customers. However, in order to carefully manage inventories for our key supplier, Delphi, it is necessary to take some near-term actions.

GM has been in negotiations with Delphi and its lenders to arrive at solutions that would ensure a source of supply under fair and reasonable terms. To date, this issue has not been resolved. Given this, we will effectively manage supply and demand for Delphi sourced parts based on a number of criteria which include:

1. Parts that are still in vehicle warranty, inclusive of recalls and campaigns

2. Parts in current production

3. First year/last year of parts application and relative volume in the car parc, and

4. Number of days supply

This process will be effective immediately.

For ACDelco customers, and GM dealers and retailers, this means that some order control provisions will be applied immediately to better manage our Delphi-sourced inventories. In some cases, the controls will be more restrictive, especially when inventories are at critical levels on GM vehicle warranty parts.

These parts will also be taken off of RIM controls for markets serving dealers who use the RIM system. In other cases where we have adequate or plentiful supply, we expect limited or no restrictions. In all cases, we will closely monitor supply and demand on a daily basis, taking necessary actions as required.

Our intent is to balance the needs of our customers with our ability to maintain a steady flow of products which Delphi supplies.

Although Delphi is our largest supplier, more than 90 percent of GM part numbers are in a good short term inventory position. These controls will be managed on a daily basis to ensure that we are protecting the interests of GM vehicle owners and our GMSPO customers. At this critical time, we must collectively protect against any hoarding that sometimes occurs in these situations. Therefore, we ask for your support when it comes to managing supply and demand.

In addition to order writing controls, we will take the following measures to enhance supply of Delphi-sourced parts:

• Scrapping parts under warranty will cease and we will begin to evaluate re-working parts for reuse

• All Delphi parts will be made returnable (e.g. eliminating any in-field scrapping)

• Additional cores for reman products will be identified and a modified core return strategy will be implemented, where applicable

• Finally, when necessary, we will actively re-source products and identify acceptable substitutes as quickly and efficiently as possible

As you can imagine, this is a challenging situation that we are actively managing with our highest priority and with the best interests of our customers.

Paul Copses

Executive Director, Sales and Marketing

GM Service and Parts Operations

Charlie Hyndman

Executive Director, Global Warehousing and Operations

GM Service and Parts Operations