General Motors Death Watch 66: No No Nadir

At yesterday's New York International Automobile Show, Bob Lutz provided the hook for GM's PR counterattack. Of course, the Car Czar's rallying cry wasn't planned. As usual, the former Marine aviator simply greeted the press, opened his mouth and OoRah! came out. 'GM has the worst behind it.' Whatever else you can say about Maximum Bob Lutz, the man is an idiot. While GM's first quarter results will be a lot less bad than last year's annus horribilis, Lutz' statement flies in the face of the growing, looming, unresolved, irresolvable conflict over at bankrupt parts supplier Delphi; the fact that GM's gas-guzzling SUV's are heading straight into a $3 a gallon shit storm; and a shoal of dangers so extensive that GM CEO Rick Wagoner has taken to calling it "stuff." But wait; there's more!

"Soon all will be revealed,' Lutz said. 'I can't mention figures, because I'd get in big trouble." So, Mr. 'Don't Tell Mommy' wants the nattering nabobs of negativity vulturing GM to believe that his company's management team (whom MB has just placed in harm's way) has a secret plan to pump-out GM's umpteen flooded compartments and restore the company to preeminence. Well, profit. Never mind that GM watchers have been waiting for an aggressive restructuring plan since 1973, or that every time Rabid Rick Wagoner steps up to the dais these days and says "Ta Da!" he's closing, cutting and/or buying out something or someone. If we're looking for company-saving revelations, what could possibly top the still only potential sale of 51% of GMAC for $14.1b? The mind boggles.

Or maybe I misunderstood. Maybe Maximum Bob's saying that GM's financials are about to get better. That would be odd. In March, GM's market share tumbled from 26.5 to 23.3%. Car and truck sales fell 15%. As for new product, The General has shot its wad, placing its bets on gas-guzzling GMT900's. Although Bob and his Booster Brigade are cheered by the supposed surge in sales of these brand new-ish Tahoes, Yukons, etc., it's best to remember that GM books fleets sale on "allocated preference" (i.e. when they're scheduled for production) and/or as soon as an SUV ships to the dealer. Also, Rabid Rick's publicly admitted stockpiling parts in preparation for a Delphi strike; perhaps Bob's optimism is based on "phantom" figures…

In fact, GM might be teetering on the brink of financial collapse. No one outside the company knows how low GM's US cash hoard has gone between balance sheet dates. And while Maximum Bob was busy entertaining the press corps, GM's purchasing guy publicly stated that The General is stretching its account payables to 55 days, essentially financing itself on the back of its vendors. That's not good. Nor is the recent revelation that the GMAC sale will NOT improve GM's credit rating and WILL slaughter GM's cash cow, starving The General of ANY dividends for five years. As one correspondent put it, "This deal does nothing to facilitate a restructuring of North American operations, but rather lets them keep the lights on until the UAW calls the end game."

I reckon the light at the end of Bob's tunnel is the headlight of an oncoming General Motors FP59 diesel-electric locomotive. But hey, that's just me. And Bob thinks I'm full of shit. 'Most of the analysts living in New York don't even own cars, and have never even visited one of our dealerships,' Maximum Bob proclaimed. 'At some point, I start to question whether they're holding short positions on the stock.' (FYI: This writer owns a car but not GM stock. And thanks to GM blacklisting, I've visited several GM dealerships for test drives.) As Detroit News reporter Brett Clanton pointed out, Lutz' analytical anti-Christs are the same effete intellectual snobs who heard GM predict that the company would be solidly profitable in '05– the year it lost $10.6b.

But Bob's not done playing the dozens with us financial and media mavens, announcing that "The imminent bankruptcy at GM is a myth created by Wall Street and our beloved media." It's nice to be loved, however sarcastically, but this website has been begging to differ on the Chapter 11 front for over a year now. Bob's said nothing to change our perspective and plenty to reinforce it. Sure, Maximum Bob's blend of feistiness and anti-intellectual, anti-media paranoia played well with his dealers and GM's decimated, dispirited troops. Maximum Bob's force of will even gave GM's beleaguered (not-to-say overvalued) stock a temporary boost. Be that as it may, Lutz is, at best, guilty of premature recapitulation. At worst, he's completely divorced from reality. Bob says "the last skeptic in America will [soon] be convinced that we are well on the way to recovery. GM has its best days ahead of it.' We say, well, good luck with that.