By on September 4, 2009

It’s been a while since I’ve written a General Motors Zombie Watch. Time keeps on slipping, slipping . . . into the future. Only when you’re dead, there is no future. You’re dead. Oh, I know: New GM’s got new plans for new cars with new advertising that will win new (old?) customers. And the new Board of Directors’ Chairman Ed Whitacre is busy threatening to fire New GM’s old (new?) execs if they don’t get their shit together. But they haven’t, as their farrago of product plans and the botched launch of the new Buick LaCrosse prove. In fact, the current crop of GM suits will be fired. And?

And nothing. As I’ve said before, Uncle Sam kept CEO Fritz Henderson and the GM Lifers on center stage for one reason: to throw them off when taxpayer tomatoes start hitting RenCen’s windows. Which will be soon after GM’s third quarter financials hit the press. When it becomes abundantly clear that GM will burn through ALL of its taxpayer loot within two years. Or less.

Politicians from both sides of the aisle (though one more than the other) will proclaim that something must be done! And something will: the management that should have been shit-canned when GM was nationalized—actually long before, but that’s another story—will be shit-canned. The feds will press an entirely theoretical reset button.

New suits will take over. The fact that the auto industry is on a three to five-year cycle, the fact that New GM’s new brooms face dust devils the size of Montana, the fact that any genuine GM turnaround would take a decade and over $100 billion in addition funds, will be lost in the shuffle.

Never mind. The corporate cull will achieve its intended goal: it will unleash the puppies of prognostication. The media will be abuzz with speculation about the new new new new new new new New GM, for another financial quarter. Maybe two. Possibly three. Meanwhile, the feds will continue readying the GM pig for its IPO, lipstick and all.

You want to talk about a perception gap? The Obama administration’s Presidential Task Force on Automobiles is trying to widen the gap between the perceived value of General Motors and the actual retail price of the government’s automotive showcase. Mark my words: the feds ain’t done propping-up the unproppable. They’ll shovel more and more money at GM, dressing-up the nationalized automaker for the Great Pre-Mid-Term Election Sale.

Lest we forget, GM is counting on—as in factoring into their current balance sheet—a $10.3 billion loan from the Department of Energy’s Advanced Technology Vehicles Manufacturing loan program. It’s the same money previously denied the American automaker. You may remember that GM was deemed non-viable by someone figured out that 1 minus 120 billion is something less than one. Guess what’s changed.

Nothing much. While GM has shed a mountain of debt, restructured its labor contracts, dumped dealers, paid lip service to cultural change, and found another sucker to foot the bills (thank you, America!), it’s still taking in less money than it spends. And we all know how that picture ends.

Before the closing credits, we’ve got to sit through a chase scene between Chevy’s plug-in electric/gas hybrid Volt and the Toyota Prius.

There’s no way GM can catch ToMoCo’s four-wheeled planet cooler. Even if GM can get the Volt to work, they can’t sell it for anything even close to the Prius’ $22,000 price tag. Unless . . . Unless . . . Government Motors does it anyway and takes the hit.

Of course, a “hit” is not a good thing for a company that wants to offer shares to the general public. So . . . how about we subsidize the shit out of the car so that it appears as if the car is somewhat profitable-ish? Or, at the very least, take the costs off GM’s books?

The federal government has already cash-injected the battery makers developing the Volt’s power supply, to the tune of $100 million plus. Your elected representatives are going to use your taxes to subsidize the plant making the car [see: DOE loans above]. And the car itself (via a $7,500 tax credit). Not to mention signing over $62 billion to a company that can’t even set a timeline for the Volt’s potential profitability.

Before a hundred or so hand-built Volts hit Chevy showrooms, the feds will re-up the battery research grants and find some other eco-friendly way of “helping” the halo car that the Presidential Task Force on Automobiles rejected as delusional, pre-nationalization.

Yes, there is that. It can’t be said enough: the feds own GM. The GM zombie has no will of its own; it’s controlled by its political taskmasters. When the truth about its [most recent] parlous finances are revealed, GM will become far more than a failed automaker turned undead manufacturer. It will become a political liability. If you think GM shareholders were slow to abandon ship, you’re right. If you think the Obama administration will be slow about jettisoning its GM-shaped political baggage, you’re wrong.

But first, GM CEO Fritz Henderson and his motley crew will be packed off in their golden lifeboat, so that the illusion of change can be re-energized. Like any good magic trick, the “GM will pay back it federal loans” routine depends on a suspension of disbelief. As Tufts University supporter P.T. Barnum said, you can’t fool all of the people all of the time.

When the IPO time rolls around, real investors (as opposed to taxpayers dragooned into paying for GM’s nationalization) will not want to own GM stock. Why would they? So the government will have to subsidize THAT boondoggle as well. In other words, papers will be shuffled once again, the taxpayer will still be on the hook, and GM will continue wandering through the wilderness.

One way or another, sooner or later, what’s left of GM will fall into the hands of its rivals. A few names will be all that’s left of what was once the world’s largest automaker, and the world’s most profitable company. But make no mistake: this is less of a transition than it seems. GM is already dead.

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18 Comments on “General Motors Zombie Watch 15: Volt Jolt for Dolts...”


  • avatar
    niky

    Just when you thought 2009 couldn’t get any uglier than 2008.

    GM has too much riding on too little right now… and with most of their eggs in a basket that anyone with half-a-brain can see isn’t big enough for even a small start-up to live off of… they haven’t got a prayer.

  • avatar
    Tosh

    ‘Warrantee’ means ‘person to whom a warranty is made’;it’s not a spelling variant of ‘warranty.’
    (from my dashboard dictionary)

    I just hate seeing this…

  • avatar
    wsn

    niky :
    September 4th, 2009 at 5:14 pm

    most of their eggs in a basket that anyone with half-a-brain can see isn’t big enough for even a small start-up to live off of…

    —————————————-

    GM did know what it is. But it was never their intention to produce a game-changing car. They only need a PPT to get some more bailouts.

    Obama did know what it is too. But it was never his intention to make GM viable. He only need to make sure his minions are paid 4 (hopefully 8) more years.

  • avatar
    OldandSlow

    So, internet pundits – what do you want to do with GM?

    Close it down? Sell it the Chinese or another foreign buyer? Can anything be done to make a viable concern?

  • avatar
    wsn

    OldandSlow, just sell it to the highest bidder and I will stop complaining even if it’s at a loss.

  • avatar
    NoSubstitute

    Bush and then Obama shoveled money in when the economy was on the brink. GM had the same kind of leverage then as a guy with a vest-bomb: if I go down you’re all going with me.

    Once the crisis passes, all becomes irrelevant. See e.g. Iraq. Just as that trillion plus dollar debacle didn’t have much of an electoral impact, there’s no way a fiscal rounding error like GM ever becomes a political liability.

    Bottom line: if the economy doesn’t come back by the next election cycle GM doesn’t matter. Likewise if it does.

    Anyone elected in 2008 would have had the same game-plan: keep the patient on life support until it doesn’t matter. All Obama can hope for is that GM goes out not with a bang but a whimper.

  • avatar
    50merc

    If managing a business firm is called Business Administration, and if managing a public agency is Public Administration, then should managing GM be called Public Business Administration?

    Whatever. It’s olla podrida.

  • avatar

    American Leyland is still a far more apropos moniker than “Government Motors”, as the sequel follows the plot of the original almost scene for scene.

    Just wait for the GM marketing boobs to anoint the Volt “The Shape of Things to Come.”

    –chuck

  • avatar
    mdensch

    Just how viable is GM going forward? Ultimately, it isn’t about how much money they have or how long it last, it’s about the product and selling that product to customers. So what bankable products does GM have to see them through the next 24 – 36 months?

    Cadillac pretty much has its act together and has decent, marketable cars that are competitive in its niche. And it’s a wide enough range to satisfy a lot of the customers within that niche.

    Buick has the LaCrosse and . . . ? By all accounts it’s a pretty good car but it can’t carry the torch for Buick all by itself. The Enclave is one of, what, FOUR badge-engineered cross overs on the same platform? Thought they were getting away from that. (I know, Saturn is going away so that will leave three.) They need a well-defined line up of at least three or four really good cars. Where will those cars come from? What will they be? How will they relate to their Chevy and Cadillac siblings?

    Chevy could have the makings of a winning line up, but it needs to develop a clearer picture of what it is and where it’s going. They need quality products in a broad range of sizes with some salsa thrown into the mix. OK, so they have the Corvette and the Camaro for salsa, though early indications suggest that the Camaro has some quality issues to contend with. That isn’t going to help polish the image. They have the Malibu which is a strong product in its category but then what? They still need a good small car and a full size car and really should have a sub-compact, as well.

    Then they have to figure out how the three car brands relate to one another. So far they just seem to be throwing stuff at the wall to see if anything sticks and not much is.

    These guys have spent their whole lives in this industry. Is really that hard for them to figure this out?

  • avatar
    texlovera

    @Nosubstitute: “there’s no way a fiscal rounding error like GM ever becomes a political liability.”

    I disagree on that. I think that albatross is already hanging around Obama’s neck. He’ll try his damnedest to pretty it up, but it will hurt the Dems. (Really, it will hurt ANYONE who supported it).

    As for GM: If you want to cut your losses and run, then sell it off in pieces – Chevy, Buick, Caddy. If you think it still has some long-term chance at survival (and I don’t), it must be downsized further.

    And for God’s sake, fire the idiots now. A day’s delay is too long. The fact that it hasn’t already happened tells me all I need to know.

  • avatar
    stars9texashockey

    This has become really tiresome. I don’t have the energy to care any more about how to save GM. Go away already.

  • avatar
    FreedMike

    Seems to me that ideologically driven bellyaching about “government motors” is besides the point. The deal’s done, right or wrong.

    Now, how do we get them off the taxpayer dole? I can think of one way NOT to do it: by re-fighting the “do we save GM or let it die” battle over and over. If anything, that will ensure that consumers thinking about a GM product will encounter a hail of negative PR, and that will cost them sales.

    The smarter move: cut them some slack and let them do what they need to do.

    Or is it more important to position ourselves rhetorically for failure so we can pat ourselves on the back and say “we told you so”?

  • avatar
    FreedMike

    wsn :
    September 4th, 2009 at 5:53 pm

    OldandSlow, just sell it to the highest bidder and I will stop complaining even if it’s at a loss.

    And that’s the thing…you know darned well nobody has the money to buy GM. If someone did, then the company wouldn’t have gone BK in the first place.

  • avatar
    FreedMike

    OldandSlow :
    September 4th, 2009 at 5:33 pm

    So, internet pundits – what do you want to do with GM?

    They wanted it to fail so that they could crow about the “primacy of the market,” or some such blather.

    I truly believe that for many of these guys, the constant carping about GM is their way of positioning themselves rhetorically so that if the company fails, they can say “we told you so.”

    Again, never mind that if the company fails, it’ll be a horrid blow to the economy…it’s a zero-sum ideological game. Someone wins, someone loses. Who cares if it’s the American people who lose?

  • avatar
    CamaroKid

    Cadillac pretty much has its act together and has decent, marketable cars that are competitive in its niche. And it’s a wide enough range to satisfy a lot of the customers within that niche.

    Thats a joke right?!

    Cadillac has, over the past 5 years LOST over half of their customers. The Division has or soon will cancel the XLR, the STS, the DTS… And the only new car we have in the immediate future is a V6 FWD impala re-badge.

    The new SRX is a shadow of its former self, it is selling OK but not near the numbers hoped… well at least it is cheap to build.

    The Sales of the CTS and ‘Slade have all but completely collapsed and the new CTS Wagon is the wrong car at the wrong time… It will compete directly with the SRX and the “cheap” SRX will win.

    Maybe the CTS coupe will save the day… But don’t bet on it.. The last luxury coupe for the General that sold in profitable numbers was the 1998 Eldorado… Of course they canceled that car in 2002.

  • avatar
    FreedMike

    CamaroKid :
    September 6th, 2009 at 5:43 pm

    Cadillac has, over the past 5 years LOST over half of their customers. The Division has or soon will cancel the XLR, the STS, the DTS… And the only new car we have in the immediate future is a V6 FWD impala re-badge.

    The new SRX is a shadow of its former self, it is selling OK but not near the numbers hoped… well at least it is cheap to build.

    The Sales of the CTS and ‘Slade have all but completely collapsed and the new CTS Wagon is the wrong car at the wrong time… It will compete directly with the SRX and the “cheap” SRX will win.

    Maybe the CTS coupe will save the day… But don’t bet on it.. The last luxury coupe for the General that sold in profitable numbers was the
    2002 Eldorado…

    Huh? There is NO FWD Impala clone coming to Cadillac. The STS is being redesigned on a stretched CTS chassis. I also doubt very highly that the CTS wagon will steal sales from the SRX – two very different markets there.

    Keep in mind that the current downturn in sales at Cadillac is part of a bigger story – the ENTIRE luxury segment is taking a beating right now. Even Lexus is way down.

    With some luck and new product, Caddy will be well positioned when the downturn ends.

  • avatar
    CamaroKid

    Huh? There is NO FWD Impala clone coming to Cadillac. The STS is being redesigned on a stretched CTS chassis. I also doubt very highly that the CTS wagon will steal sales from the SRX – two very different markets there.

    Keep in mind that the current downturn in sales at Cadillac is part of a bigger story – the ENTIRE luxury segment is taking a beating right now. Even Lexus is way down.

    With some luck and new product, Caddy will be well positioned when the downturn ends.

    Wrong o!… Google the new Cadillac XTS It will share its platform with the replacement for the Impala (Epsilon II/Super Epsilon) The Caddy is expected in late 2010, the Impala a year later. It has been CONFIRMED by Cadillac that it WILL be FWD (AWD as an option) and it will be a V6 ONLY car.

    You are also wrong on the STS… it will be canceled after 2011… No new work is planed for the CTS chassis. The STS-V is already dead. The current STS is selling in the less then 500 per month range… AKA major Dog!

    The Wagon Market in America is minuscule… Maybe the CTS Wagon will prove to be the “minivan” of luxury cars and create a market that no-one thought existed… but I wouldn’t hold my breath.

    And the downturn at Cadillac isn’t new news… The down turn started in 2004 during a BOOM economy… Cadillac has been loosing 15-20% of their customers per year compounded year over year. Yes things got really bad this year… but this isn’t a new trend.

    Cadillac is not positioned… It is in worst shape then Pontiac or Saturn were last year… and look where they ended up.

  • avatar
    achevroletman

    With Toyota announcing they will not compete in the electric car market, things are looking great for the Volt. Chevy is ahead of schedule on the Volt and at 230 MPG it has no competition. When the economy rebounds, fuel costs will steadily rise making the Volt more attractive. The feds should be subsidizing companies that are inventing breakthrough car technology. GM knows alot is riding on the Volt and they will get it right, and after a 7500$ tax credit the Volt will price out in the Mid30s and cost of ownership will be very low due to phenomenal MPG. It is really sad how many gloom and doomers there are that would rather talk of failure of an American company than its’ potential success.
    Simply check out the quality, fuel efficiency, and styling of the Malibu,2010 Equinox, and Silverado Hybrid and Tahoe Hybrid. GM will be back stronger than ever with Chevrolet leading the charge. If you do not at least shop American brands before buying, then you are the problem, not the American Manufacturer.Long live Bowtie Pride and God Bless America.


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