Will GM's IPO Help Sales?

Because success in the auto industry depends upon both the buildup of industrial might and deft maneuvering on the winds of fashion, analysts often struggle to determine how business decisions impact consumer choice. For example, GM and Chrysler long resisted the pressing need to file for Chapter 11 bankruptcy protection because their leaders believed that Americans would not buy a car from a bankrupt firm, and that sales would go into an irrecoverable tailspin if they filed. Needless to say, that assumption proved to be deeply flawed, and sales during the GM and Chrysler bankruptcies barely dipped (if only compared to the miserable months preceding bankruptcy). In any case, the rating agency Moody’s is taking on the challenge of translating good business news into sales by arguing [via Bloomberg]

U.S. consumers who don’t know anything about over- allocation options or the need for strong liquidity in a cyclical industry knew that something exceptionally good happened to GM last week. That knowledge makes it more likely that they will consider buying a GM vehicle and possibly buy one. That’s good for the company’s credit quality.

But does the general air of positivity surrounding the IPO actually make a difference with consumers?

If bankruptcy barely affected sales, why would an IPO have a significant impact? Yes, the IPO helped return some tax money to the Treasury, but GM is still a long way from full payback of its $50b bailout. And with the government still holding about a third of GM’s equity, the “Government Motors” stigma isn’t gone by a long shot. Nor did the IPO create a massive amount of optimism, as GM’s stock is trading just a dollar and change above its IPO price. And at the end of the day, Moody’s still rates GM’s credit several notches below investment grade. But hey, maybe there’s a point here… can we muster any anecdotal evidence of consumers considering GM because of the IPO?