GM's IPO: High hopes and deep fears

FORTUNE -- When reporters run out of questions to ask executives in an interview, they often fall back on an old standby: "What keeps you up at night?"

General Motors' S-1 filing Wednesday for an initial public offering, in addition to touting the company's growth potential, contains a laundry list of worries in the "Risks" section -- enough to cause a month's worth of sleepless nights for the automaker's managers

Some of the risks cited are of the garden variety: economic cycles, foreign exchange rates, changes in government regulations. Others are more subtle and, in their own way, more nightmarish. Taken together, they form a kind of Rorschach test for GM's psyche in August 2010.

Among the more unexpected worries: inexperienced executives, voracious competitors, and the collapse of relationships in GM's prize market, China.

Here is a sampling:

GM is worried about its gas-guzzling image: "Our competitors have been very successful in persuading customers who previously purchased our products to purchase their vehicles instead. We believe this is due to a negative public perception of our products. Changing this perception, including with respect to fuel economy, will be critical to our long-term profitability."

Rival automakers may begin to squeeze GM from both sides: "Our competitors may respond to relatively high fixed costs by providing subsidized financing, offering option package discounts, or reducing vehicle prices. In addition, competitors in lower cost companies such as China and India have announced their intention of exporting to established markets as a bargain alternative to entry-level automobiles."

Fixing money-losing operations in Europe continues to be a sore point and could fail: "Our decision to restructure our European operations will require us to invest significant additional funds and require significant management attention. Creditors may force us to seek relief under applicable local bankruptcy, reorganization [or] insolvency, or similar laws."

GM really hates being known as "Government Motors," and it shows: "The [United States Treasury] is able to exercise significant influence over our business if it elects to do so. Its interests may differ from our other shareholders on matters including the selection, tenure, and compensation of our management, our business strategy and product offerings, [and] our relationship with our employees [and] unions."

Its joint ventures with other companies, especially Shanghai General Motors, could blow up in its face: "We share ownership and management of a company with one or more parties who may not have the same goals."

In fact, the whole China situation is beginning to look a little dicey: "We anticipate that additional competitors will seek to enter the Chinese market and that existing market participants will act aggressively to increase their market share. If vehicle sales in China decrease or do not continue to increase, our financial results could be materially adversely affected."

GM can't pay enough to keep or get good people: "As part of our business plan, we have reduced compensation for our most highly paid executives, and these actions may materially adversely affect our ability to hire and retain salaried employees. It is not competitive with that offered by other major corporations."

It doesn't help that GM is being run by a pair of rookies: "We have elected a new Chief Executive officer and a new Chief Financial Officer, both of whom have no outside automotive industry experience. We have also promoted from within GM many new senior officers. It is important that new members of the executive management team quickly understand the automotive industry and that our senior officers quickly adapt and excel."

As to why the new post-bankruptcy GM will succeed where the old GM failed, the document cites a strong balance sheet, a competitive cost structure, and a strong cash position. That, combined with the automaker's scale economies, presence in growing global markets, and improving quality of its cars and trucks, should allow GM to grow along with the expanding global appetite for cars.

One surprise is the degree to which GM has been able to move its manufacturing footprint out of the highest markets of North America and Europe. It says 43% of its vehicles are made in low-cost regions such as Mexico, Eastern Europe, India, and Russia with all-in labor costs of less than $15 per hour. As it moves more of its products on to global platforms, those low costs will enable it to become more efficient - and more competitive.

GM cites forecasts by IHS Global Insight that see worldwide vehicle sales increasing at a compound annual growth rate of 6% between 2009 and 2015. The company views its own chances of commanding a bigger slice of this expanding pie with enthusiasm.

In North America, it expects to maintain its number one ranking in a market growing 8.1% a year. Europe remains relatively stagnant, expanding only 1.3% annually, but GM hangs on in the number five position. And in the mostly developing markets in the rest of the world, where sales are expected to grow 6.9% a year, the automaker is forecasting a second-place finish for itself.

That is if not too many of those keep-you-awake-at-night risks assert themselves.

Investors will get their chance to vote on GM's hopes and fears later this year.