Before the bailout, McArdle writes, quoting David Cole of the Center for Automotive Research, GM faced “a cost penalty of more than $1,000 per car between its production costs and the competition’s.” GM dealt with that, McArdle writes, by chipping away at its cars. The government-backed bankruptcy has changed all that, she writes. The closing of 13 plants, the shedding of 25,000 union jobs and 1,500 dealerships, the shifting of retiree health costs from GM’s balance sheet to the UAW’s and various other adjustments have reduced GM’s costs per car by $4,000 to $6,000, according to Cole. And in the Chevy Cruze, at least, “GM is already using that advantage to deliver higher quality, even in the small-car market,” she writes, paraphrasing Cole once again. And then she quotes Baruth: “It’s well-positioned against the Civic and Corolla. I believe that it beats both of those cars in significant, measurable ways.”
Nonetheless, the new CAFÉ standards, 39 MPG by mid-decade, could cost $2,600 per car, McArdle writes, citing National Research Council data, erasing most of the new cost advantage, and one set of legacy costs, pensions, still puts a drag on GM. All this could make dealing with new UAW wage demands “particularly sticky.”
As for the bailout, a libertarian economist “of my acquaintance” considers it to have been “surprisingly successful,” McArdle writes. She then quotes that economist that the bailout was “not necessarily a good idea, but far from the worst thing the administration has done.” We the people may not get most of our money back, but as McArdle says, a billion dollars represents less than the cost of a venti latte per American. Thus, if GM’s IPO fails to pull in the $70 billion needed to repay us, we’re out less than two C-notes, each. (Nonetheless, that’s potentially a lot for a working class family of four.)
McArdle concludes as she began, with a paean to the Buick Enclave. While it’s not my idea of anything special, according to Consumer Reports, satisfaction with the Enclave is “better than average.” Still, I’d have more confidence in GM’s future if I knew that they’d shaken up their sclerotic bureaucracy.