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Archive for the ‘General Motors’ Category

Chevy Volt Sales Tank

Posted by Steve Markowitz on June 11, 2013

Chevy VoltChevy Volt is a plug-in electric car capable of only traveling 40 miles before requiring recharge.  This restriction doomed the vehicle to failure in a marketplace from the very beginning.  However, this reality did not stopped President Obama from promoting this green technology nor stopped at least one car magazine from naming the Volt “car the year”.  Politics has a strange way of distorting markets!

Volt sales have been disappointing from the start.  At times General Motors has stopped production due to excess inventory.  Today GM put an explanation mark on the Volt’s poor sales announcing $5,000 rebates on 2012 models and $4,000 rebates on 2013 models, according to CNNMoney.  This is on top of the $7,500 per Volt tax credis offered by the federal government.

President Obama has picked another loser in the Chevy Volt, adding to his growing trophy list of government boondoggles that includes Solyndra and others.

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General Motors is Rigging the Numbers

Posted by Steve Markowitz on July 22, 2012

The Daily Caller posted an article indicating that General Motors has been fixing the numbers in order to make itself and the government that bailed them out look good.  The numbers are being manipulated via two methods:

Overbuilding – GM has built more automobiles than the market requires.  In the short run this inflates profit margins as overhead costs are spread over a greater number of units resulting in a lower per unit cost in the short term.  While GM has admitted to overbuilding, it justifies the move based on some supposed future plant closings.

Channel Stuffing – GM has also over shipped automobiles to dealers.  Since sales are booked on shipments, this offers a short-term boost while the inventory grows.  A class-action lawsuit in New York has been initiated concerning this GM tactic.

Both overbuilding and channel stuffing have led to GM having robust second quarter financial results.  However, these tactics will hurt the Company’s quarter results, according to a Standard & Poor’s analysis.  It should come at no surprise that the third quarter figures will not be released until after November’s presidential election.

President Obama promotes his bailout of the auto industry a major success for his administration stating two weeks ago: “When the American auto industry was on the brink of collapse, more than one million jobs were on the line, Governor Romney said we should just let Detroit go bankrupt.  I refused to turn my back on communities like this one.”  A reality check tells a different story:

  • What about the ultimate cost to taxpayers?  GM stock currently sells for about $20 per share.  According to the Reason Foundation, the stock would have to sell for $55 per share in order for taxpayers to be repaid in full.
  • How about the disadvantage to GM’s competitors?  Why shouldn’t more successful companies like Ford, Toyota, Hyundai, Honda, etc. have replaced the failed General Motors?
  • GM’s bailout did not come from thin air.  Successful companies of all types that paid their taxes were penalized for their success in order to bail out the failed General Motors.

The bailout of General Motors was ill advised and cannot be justified by economics.  It once again showed Progressives propensity to reward failure and penalize success.  Just as grotesque, the bailout was payback by the Obama Administration to organize labor in return for future political “favors”.

Posted in Bailouts, General Motors | Tagged: , , , , , , | Leave a Comment »

Chevrolet Volt Sales in Low Gear

Posted by Steve Markowitz on September 29, 2011

The Chevy Volt has gained little traction since being introduced with much fanfare nearly a year ago.  While GM predicted it would sell 10,000 Volts in the U.S. by yearend, as of September 1 only 3,500 were sold.  This is minuscule number in a market where over 5 million cars are sold annually, especially given the hype by President Obama for it as part of his green agenda and the government’s $7,500 tax credit given each buyer.

t doesn’t take a Harvard MBA to determine why the Volt has so far flopped in the marketplace.  Here is a compact car that cost $32,500 after the $7,500 tax credit.  Its promoted strength is fuel economy, which is only marginally better than the Chevy Cruze that is almost 50% cheaper.

If not for the government’s intervention into GM’s business, the Volt would have never been released to the public.  The same government that pushed for the Volt also blew $500 million of taxpayer funds in Solyndra.  There is a pattern here.

Posted in General Motors, Government Ineptness | Tagged: , , , , , | 1 Comment »

GM Loses CFO in Surprise Move

Posted by Steve Markowitz on March 10, 2011

Given that we the taxpayers own a majority interest in General Motors (GM), it is important that we the people follow up its progress to see how our investment is doing.  Today, GM made announcement that is troubling.

GM’s chief financial officer Chris Liddell will be departing on April 1.  In a hastily arranged news conference GM indicated that Lidell, who has no job yet lined up, will be replaced by Treasurer Dan Ammann, who has held that position for only 14 months.

GM has been an executive turn-style ever since the government bailed them out$50 billion.  They have had had four CEOs, as well as changed its top sales, marketing, product development and engineering executives in the past two years

It remains to be seen whether some bad financial news will follow CFO Liddell’s departure.  At the very least the constant executive changes at GM indicate a less than stable corporate environment.

 

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Consumer Reports Pans the Chevy Volt

Posted by Steve Markowitz on March 2, 2011

This Blog has posted several articles on the Chevrolet Volt produced by General Motors (GM), listed below:

August 12, 2009 – Chevy Volt- It Just Doesn’t Add Up

July 27, 2010 – Chevy Volt- The Numbers Don’t Add Up

October 22, 2010 – The Chevy Volt Con

December 8, 2010 – Chevy Volt: Car or Boondoggle of the Year?

February 10, 2011 – GM’s Chevy Volt PR (Propaganda) Push

Today well-respected Consumer Reports made official what this Blog has been proffering for over a year and a half: the Chevy Volt is a lemon!  In coming to this conclusion, CR offers the following comments:

  • When you are looking at purely dollars and cents, it doesn’t really make a lot of sense.  The Volt isn’t particularly efficient as an electric vehicle and it’s not particularly good as a gas vehicle either in terms of fuel economy.”
  • In CR’s testing the car traveled only 25 to 27 miles on a single charge when running on electric power alone and on winter roads.  GM says the car regularly achieves up to 33 miles.  Hmmmmm.
  • The Volt loses 30% of its electric efficiency when the heater is turned on.
  • CR called the fact the Volt takes five hours to charge “annoying“.
  • The Volt is “a tough sell to the average consumer” as it cost twice as much as Toyota’s hybrid, the Prius, which is more fuel efficient over long distances.

CR has confirmed what amateurs knew even before the car was introduced: the Volt was a bad idea that will fail in the market.  So who would be dumb enough to fund the development of this loser;  Only the federal government who took on a majority stake in GM in return for the bailout.

GM knew years ago that the Volt would be a failure.  Prior to the bankruptcy and bailout they perused its development only to attract government funds.  After the government became majority owner, GM pursued the completion of the Volt boondoggle because of the pressure placed on it by the Progressives in Washington that for all practical purposes control GM.

Had GM survived without the U.S. government’s bailout, the Chevy Volt would have be put out of it misery long ago.  The fact that it survived helps prove the inefficacy of governmental intervention into business ventures.  If private capital won’t risk a product’s development cost, it is not worth developing.

Posted in Bailouts, Chevy Volt, General Motors | Tagged: , , , , , , , , , , , | 3 Comments »

GM and its Workers Get Taxpayers’ Gifts Worth Billions

Posted by Steve Markowitz on February 23, 2011

Nowhere is the perversion of governmental bailouts more glaring than with its related actions towards General Motors (GM).  While the bailout itself had no justification economically, nor is it Constitutional, the repercussions since prove the corruptness of the process.

As reported by this Blog on November 2, 2010 in an article “General Motors, the Gift that Keeps on Taking”, the government bypassed standard bankruptcy procedures that have resulted in GM getting $14 billion in tax breaks.  Normally tax loss carry-forwards are lost to companies that go through bankruptcy since they are able to shed debt at that time.  GM shed some $30 billion in debt, which means they didn’t pay that amount to others that it had the obligations to.  However, for some unknown reason, GM got special treatment and will be able to make at least $14 billion in profits, but not pay income tax on that amount.  With typical perverted Progressive logic, GM ran its business poorly, received a $50 billion taxpayer funded bailout, and will now be rewarded by not having to pay income tax for years.  Outrageous!

Today General Motors let the next shoe drop announcing that it will pay bonuses greater than $4,000 to each union worker, doubling the previous highest bonus paid.  GM will also pay white collar employees huge bonuses of up to 50% of their salaries

GM touted the bonuses as a great success stating: “This payout is a good example of how we are sharing in the success of the New GM.”  How ridiculous!  With GM still owing U.S. $27 billion from the bailout, any bonus money should go to the taxpayers.

It is remarkable that when the Wall Street bankers started taking bonuses after their bailouts, the press and Obama Administration rightfully showed their indignation.  However, when the greedy ones at GM do this identical raiding of the coffers, there is not even a peep out of these leftists.  Outrageous!

Once again the bailout of a failed industry has proven to be a boondoggle and a waste of taxpayers’ dollars.  When history writes its tale of this decade’s meltdown, bailouts will be viewed as an economic failure that prolonged the rescission.  They will also be recognized as little more than the government paying off its political allies.

 

Posted in Bailouts, General Motors | Tagged: , , , , , , | 1 Comment »

GM’s Chevy Volt PR (Propaganda) Push

Posted by Steve Markowitz on February 10, 2011

This Blog has posted articles previously about the Chevy Volt and its problem economics.  The most recent one, Chevy Volt: Car or Boondoggle of the Year, was posted on December 8 ,2010.  GM’s recent propaganda on the Volt helps show the flaws with this GM product.

Posted at gm-volt.com is a rather incredible article titled “As Volt Sales Outpace the LEAF, GM Works on Lowering Price.  The headline indicates tremendous sales success for
the Chevy Volt, GM’s part-time plug-in automobile.  However, the figures included in that same article tell a different story.

Only 321 Chevy Volts were sold in January out of a total of 178,897 cars sold by GM during the month.  Wow, about 0.2% of GM’s total vehicle sales for the month.  But, the Volt did at least outsell the Nissan LEAF’s 106 cars for January.  However, Nissan has taken deposits for 20,000 LEAFs.

GM calls the Volt’s sales “red hot” and said “right now we’re selling every one we can make.”  That’s little surprise given its low production rate.  In addition, some of the sales went to the U.S. government, who happens to own a majority stake in the Company.  And those that went to real consumers required a $7,500 taxpayer funded subsidy.

General Motors made a different announcement today, unveiling a 550 horsepower version of its Chevy Camaro.  This Camaro will include a supercharged 6.2-liter V8 engine , not exactly a green machine.  However, with GM selling about 9,000 Camaros a month, it is clear that the buying public thinks more highly of it than the Volt.

Only a Company control by the government would have the gall to call the Chevy Volt a success.  Only a company owned by the government would think that a car with a battery that cost $10,000 has a chance to succeed in the market.

Posted in Chevy Volt, General Motors, Governmental Intervention, Uncategorized | Tagged: , , , , , , , | 4 Comments »

Two GM Bailout Stories: GM Goes Public and Former Auto-Car Sued by NY Attorney General Cuomo

Posted by Steve Markowitz on November 18, 2010

Two General Motor (GM) stories made the headlines today.  The one that grabbed the most attention related to its IPO (Initial Public Offering).  17 months after filing bankruptcy and the $50 plus billion taxpayer bailout, GM sold stock valued at $20 billion to the public.  President Obama today claimed that this IPO was proof that the bailout of GM was successful and positive for America.  That declaration of victory is as premature as President Bush’s “mission accomplished” speech given shortly after the invasion of Iraq.

This Blog has posted various articles on the fallacy of the GM bailout including most recently The Chevy Volt Con and General Motors, the Gift that Keeps on Taking (Stealing?).  The realities of the currently known and future unintended consequences of the bailout do not change with GM’s IPO.  Here are some of the more mundane realties that GM and the taxpayers still face going forward:

  • U.S. taxpayers took a 60.8% stake in GM for the $50 billion bailout.  The government’s sale of 75% of the common shares returns about $12 billion to taxpayers.
  • With today’s stock sale and other funds already returned to the U.S. government, about $27 billion remains unpaid by GM.  For taxpayers to get that amount back for their remaining GM stake will require those shares to be sold in the future at a 65% premium over today’s price.  That’s a stretch at best.
  • About 10% of the GM shares sold today went to foreign buyers, including a Chinese auto company.  So, the U.S. taxpayers paid to “fix” a broken company that will have major foreign ownership.  Next, watch for the jobs to start moving off-shore.
  • The reason that the U.S. government bailed out GM was because no private investors would step up to the plate for this risky venture.  Now, only 18 months later Obama claims victory.  Something doesn’t add up.

Irrespective of whether or not taxpayers get repaid, the GM bailout cannot be justified, either morally or economically.  The bailout funds came from taxpayers, individuals and businesses, most whom are suffering from problems caused by the economy, but who have not received a government bailout.  What gives the government the legal or moral authority to take funds from some Americans and give it to others based only on where they work?

The second story that came out today didn’t receive as much publicity as GM’s IPO.  New York’s attorney general Andrew Cuomo announced a lawsuit against former car-Czar, Steven Rattner.   It seems that this former Obama appointee had a role in kickbacks relating to New York State’s pension fund.  Cuomo is seeking at $26 million in damages from Rattner and a lifetime ban for him from the securities industry.

Rattner was the subject of an earlier Blog posting, Former Obama Auto-Czar Steven Rattner is Just another Crook. Previously the Securities and Exchange Commission (SEC) settled with Rattner who agreed to pay penalties of $6.2 million and limitations banning him from “associating with any investment adviser or broker dealer” for two years.  This same Rattner, as car-Czar, played a role in the GM reorganization.  That association should give pause as to the claims of GM’s success.  What are the chances that Rattner and the cronies he helped bring in to run GM after the bailout used some shenanigans in preparing the company for today’s IPO?

The taxpayers have already been taken by the government’s bailout of GM.  It remains to be seen whether those who purchased their stock today will come out any better.

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General Motors, the Gift that Keeps on Taking (Stealing?)

Posted by Steve Markowitz on November 2, 2010

The Wall Street Journal just reported a story that is nothing short of disgusting.  The $50 billion government bailout of General Motors was just the start of the handouts for this failed company and its union.

According to the Journal, GM has also received about $45 billion in tax breaks that it can use to offset profits over the next 20 years.  This is in the form of tax-loss carry-forwards and relating items.  While typically companies that have a significant change in ownership, like GM did after bankruptcy, have major restrictions on any tax benefits from its predecessor.  However, the U.S. government snuck through a rule change that companies who received U.S. bailouts under TARP get a reprieve from this rule.  This additional government bailout to GM came out in the Journal’s review of GM’s pre-IPO public disclosures.

Let’s put these shenanigans into perspective.  Old GM that no longer exists incurred huge losses that wiped out its bondholders, along with others.  After bankruptcy a New GM emerged after shedding tens of billions in debt and receiving taxpayer bailout of about $50 billion.  Now the New GM and its owners will receive billions in tax rebates for years to come.

This story is an outrage even during this time of crazy bailouts and multi-trillion dollar government deficits.  While many Americas and businesses are suffering through this lengthy recession, GM and its unions continue to get special benefits from those very taxpayers who are going through rough times.

This GM story is nothing short of criminal.  The new Congress’s first action should be to strip GM of all of these ill begotten tax credits.

 

Posted in Bailouts, General Motors, Government Handouts, Governmental Intervention | Tagged: , , , , , , | 1 Comment »

GM – Two Announcements Issued

Posted by Steve Markowitz on August 12, 2010

General Motors made two announcements today.  They reported a profit of $1.3 billion for the second quarter of 2010.  This is a positive sign, however, it is rearward looking and does reflect future earnings potential.

The second announcement was that GM’s Chairman, Edward Whitacre, is resigning and will be replaced by GM board member Daniel Akerson.  Akerson is the managing director and head of global buyout of The Carlyle Group.  This potentially forward-looking announcement is troubling since executives generally do not leave companies on the way up.  Also, Akerson will be GM’s fourth CEO in 18 months and is a financial guru, not an automobile expert.

The Whitacre announcement should be of concern to American taxpayers who own the majority of GM stock.

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