By on December 13, 2012

The bailout of a Volt-producing GM was sold as an investment into a green future, a liberation from the terrorist-supporting Arabs. We have been fooled. The decisive turnaround of the company could be delivered by a new generation of big, gas-guzzling trucks. If successful, the trucks could help recover at least some of the money the tax payer sunk into GM.

Forget the Volt.

GM “is counting on muscled up, more refined versions of its lucrative Chevrolet Silverado and GMC Sierra full-size pickup trucks to show investors and car buyers the No. 1 U.S. automaker is back on the right track,” says an in-depth Reuters article by its Detroit star reporter Ben Klayman.
Full-size trucks and related SUVs generate profits of $12,000 or more per vehicle and account for about 60 percent of GM’s global profit, analysts tell Reuters. The new models could bring more than $1 billion in additional operating earnings in 2013 and 2014.
GM needs to invigorate its trucks badly. Their last major redesign was in 2006. The 2009 bankruptcy made GM fall behind on development.
GM is estimated to have invested between $3 and $4 billion in developing the new trucks and revamping the plants where they are built. The market share of the Silverado/Sierra has been dropping for year, while the competition by Ford and Chrysler are gaining.
|“Obama’s bet on GM hangs on pickups boosting shares,” says Bloomberg. According to the wire, “the U.S. may sell its remaining 32 percent stake in GM, a holdover from the 2009 rescue of the automaker, if the shares rise. The Treasury wants to sell for at least the $33 a share price it got in the IPO. It needs to sell for more than $50 for the U.S. to break even.”

Currently, GM trades at $25.63, but a pick-up in earnings from the pick-ups is still a while away. Trucks are shown today, but will not hit dealers before the second quarter of next year.

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44 Comments on “Volt-Talking Obama Bets On Pick-Up Sales...”


  • avatar
    grzydj

    Everybody is posting pictures of the ’14, I’m sure you can too. They just did the live reveal a few minutes ago.

  • avatar
    KixStart

    GM put up a long and interesting press release on engine improvements here:

    http://www.gm.com/content/gmcom/home/article.content_pages_news_us_en_2012_dec_1213_ecotec3-engines.gm.html

  • avatar
    shelvis

    Since the election, Bertel has went from thinly veiled to full blast!
    How’s China this time of year Bertel? You still working there in the auto industry?

    • 0 avatar
      A Caving Ape

      I’m no fan of GM but the hatred on this site is just comical. I’m thinking particularly of calling out GM for not going headlong into Japan, and then lauding VW for picking up something like 1.5% market share and claiming that means Japan is an open market. With this article, the info isn’t really scandalous, and trying to word it so it seems that way is the same sort of disappointing.

      I can’t say I mind that much or will stop reading, it’s just Bertel bein’ Bertel.

    • 0 avatar
      Secret Hi5

      No where do I see anything that says President Obama is betting on pick-up sales, except in this article’s title.

      TFAC “The Fiction About Cars”

      Thank gods for Steven Lang and others.

      • 0 avatar
        A Caving Ape

        The idea is that the bailout was supposedly to encourage things like the Volt, but since the domestic OEMs live and die by pickup sales, that’s what the money was actually being wagered on. It’s factual, but forgive me if I can’t muster outrage.

      • 0 avatar
        28-Cars-Later

        @A Caving Ape

        Sir, your screen name is epic.

      • 0 avatar
        Xeranar

        ACA Beat me to it. This really isn’t news. In general North America is where the full and mid-size pickup lives. It’s also hugely profitable as fleet sales. For the record though, I don’t think Pres Obama ever declared the nationalization of GM was for volts to be made. It was a big point of advancing the technology because corporations were dragging their feet. So while I read the article what is with all this right-wing stroking lately? I know TTAC is obsessed with pretending they aren’t political when they are but this is just getting silly. Like bad kubuki theater.

  • avatar
    raph

    I don’t think anybody with a lick of sense and an interest in the auto industry had been fooled. Its no secret that trucks are the mainstay of the domestic auto industry , cars on the other hand are a necessary evil for the domestics.

    Are there actually people who think that in 4-8 years that domestic industry, let alone the auto industry and its products would go green? Heh, not without some WWII level government edicts.

  • avatar
    mike978

    “If successful, the trucks could help recover at least some of the money the tax payer sunk into GM.” Some is already recovered/paid back and if the stock was sold now around 50% of the outstanding amount would be paid back so your concern is covered.

    The Volt was never going to be a huge money spinner for GM, and references that say otherwise? Just like the first gen Prius didn`t make money.

  • avatar
    28-Cars-Later

    Volt was always a pipe dream in the short term, which I think GM mgt was satisfied with… trouble with it was it was born at the wrong time in history. It went from a first attempt at radical new technology to becoming a political football.

    X-cars were some of the worst when they debuted but their DNA went on to influence almost every car in GM’s stable for twenty five years, Volt will be no different.

  • avatar
    el scotto

    No we weren’t fooled. F-150s and Silverados are consistently the number one and two selling vehicles in the US. Anyone who ignores this fundamental fact and is shocked that the Silverado is crucial to GM’s profits needs to be treated like a fool. Or sold a bridge in Manhattan.

    • 0 avatar
      ponchoman49

      It’s amazing how so many of this site seem to keep forgetting this fact.

      • 0 avatar
        DeadWeight

        I’m not a fan of automakers or unions, in particular, but given that the government DID step into the realm of private enterprise in a MASSIVE way back in 2008, given that GM and Chrysler received MAYBE 1/40th of the taxpayer monies that Wall Street firms and banking institutions did in the aggregrate, given that GM & Chrysler probably employ many more people than AIG, Citi, Bank of America, Goldman Sachs or their Wall Street brethren, and given that GM and Chrysler actually produce tangible products that are wealth accretive rather than wealth destroying (contrary to much of what AIG, Citi, Goldman Sachs, Bank of America, etc. produce), I am not going to complain at all that either GM or Chrysler were provided tax dollars.

        I am not a fan of the UAW, and I am dismayed at how General Motors has been run over the years (and even recently, to some degree), but if government IS going to meddle, as they seem intent on doing, I will side with the GMs and Chryslers of this country all day and every day versus the AIGs, Citis, Bank of Americas, Goldman Sachs Vampire Squids.

  • avatar
    gslippy

    I’m OK if GM succeeds by selling trucks instead of Volts. GM never said they’d be profitable selling Volts, anyway.

    I think a better industry-wide juxtaposition would be the the Perennial Truck Cash Cow (GM/Ford/Chrysler) vs. the 2025 CAFE requirement of 54.5 mpg.

    Every year that trucks sell in high quantities makes that lofty target harder to achieve. Not that I care.

  • avatar
    Beerboy12

    GM is making money from trucks and it’s Obama’s fault… I’m confused.

  • avatar
    etho1416

    Great title for this post! It totally implies that it was Obama’s personal decision to push new trucks at GM instead of the Volt as the companies (and therefore the government investors) salvation. But wait, that is total bunk!

    The Bloomberg article this is based on has a title that says almost the same thing, but without directly implying it was Obama’s call to push trucks. A subtle but important difference in terms of misleading the reader.

    I thought this website was finally done with misleading libertarian rants when the former editor left (and took those awful “The Newspaper” articles with him).

  • avatar
    marc

    So this is about Obama, how? You guys lost. Get over it.

  • avatar
    stryker1

    Shrill.

  • avatar
    APaGttH

    …the bailout of a Volt-producing GM was sold as an investment into a green future, a liberation from the terrorist-supporting Arabs…

    No, the bailout of GM by the Bush Administration was never sold as an investment in our green future. When GM flew in private to Washington D.C. with broke hat in hand (and yes that was meant to be ironic) they were blasted by Congress for not building products that people wanted, for relying to heavily on truck and SUV sales. There is nothing in that blasting, that isn’t untrue. What smaller cars GM made were steaming piles of crap, and their profits relied on gas guzzling models that got 13/17 using the pre-2008 EPA MPG rating, so in the real world it was more 11/15 (these numbers are important). George Bush (43), made it very clear in February of 2012 on what the bailout was about.

    http://www.bloomberg.com/news/2012-02-07/bush-tells-dealers-he-avoided-gamble-in-bailing-out-automakers.html

    “I didn’t want there to be 21 percent unemployment,” Bush said in a speech yesterday to cap the annual National Automobile Dealers Association convention, attended by more than 20,000 people. “I didn’t want to gamble. I didn’t want history to look back and say, ‘Bush could have done something but chose not to do it.’ And so I said, ‘no depression.’”

    Now I get it, for TTAC and some of the B&B this is hard to swallow. These aren’t my words. They are words from Bush himself, on what his advisors were telling him. If you don’t bailout Detroit, depression. Obama wasn’t even President elect when these discussions were going on.

    …We have been fooled. The decisive turnaround of the company could be delivered by a new generation of big, gas-guzzling trucks…

    Here you use an interesting choice of words. You start with, “we have been fooled.” Again, I think I’ve provided direct evidence we weren’t fooled about anything. The bailout of GM started by the Bush Administration and finished/further executed by the Obama administration was about preventing a Depression. Then with a wink and a grin you write, “COULD be delivered.” You start with a firm statement, but then you hedge your bet. Have we been fooled? If you felt that 100% than I don’t think you believe a decisive turnaround COULD be delivered on a new generation of trucks. Lets face it, GMs turn around isn’t in North America. It’s in China – and its foot print is only getting larger there along with its profits. At least TTAC has stopped the China bubble will pop this month stories.

    …If successful, the trucks could help recover at least some of the money the tax payer sunk into GM…

    Again, another wink and a grin here. If successful, could recover at least some of the money. Even among those disgusted by bailouts in general (including yours truly) there is a point where you have to move on. The bailout was over four years ago and a President ago. There is a point where you have to say time to move on. I believe we’re getting to this point. Did it work out for the taxpayers. In the tangible, no. In the intangible historians can debate that at a future date.

    …Forget the Volt…

    Interesting position here. Can one paint the Volt as a failure today? Well one can point to the 60K goal (IIRC) for 2012 and say, see the Volt will only sell about 40% of that, and has a run rate of half of – fail. But the Volt is also outselling all comers. And as the competitors fail one by one, the Volt, with all its flaws, which are many, continues to emerge as one of the best choices in its narrow niche. No one has attacked its MPG numbers, which appear to be conservative (Ford I’m looking at you). It doesn’t have batteries losing 1% of their range every 1,000 miles (Nissan, I’m looking at you). It doesn’t cost $100K each and have a very questionable history of immolation (Fisker I’m looking at you) and it is having some real impact in sales volume, not crowing about huge success with only 250 units delivered since July (Tesla, I’m looking at you) with hope, that 3,000 units can be delivered by the end of the year. As a matter of fact I have to pause and go, wait a minute, Tesla said they would deliver 5,000 units by the end of the year, they cut their number by 40% – where are the screams of failure??? So given the current state of series hybrids and electrics, its hard to scream the Volt will die tomorrow. With about 72 days of inventory, its hard to scream about channel stuffing and with about 2,000 units a month selling annualized for the year, and a current run rate closer to 3,000 units a month (November withstanding) it is hard to scream the Volt will not, “sell.” It’s in the middle of the pack of all cars sold, and one of the best selling niche vehicles. With gasoline at $3.30ish a gallon, it doesn’t help. But you keep missing the central point. The bailout by the Bush Administration was not about a green agenda. It was about jobs and saving them. Again, Bush himself said it.

    …GM “is counting on muscled up, more refined versions of its lucrative Chevrolet Silverado and GMC Sierra full-size pickup trucks to show investors and car buyers the No. 1 U.S. automaker is back on the right track,” says an in-depth Reuters article by its Detroit star reporter Ben Klayman

    Full-size trucks and related SUVs generate profits of $12,000 or more per vehicle and account for about 60 percent of GM’s global profit, analysts tell Reuters. The new models could bring more than $1 billion in additional operating earnings in 2013 and 2014…

    Now wait a minute. How is this a bad thing? Profits for a controversial company coming out of bankruptcy is, bad? Isn’t GM now profitable as they report quarter after quarter. Doesn’t the info graphic you used from the LA Times (but don’t mention the story or provide a link to the story it was used in) showing that since the bankruptcy, GMs dependency on fullsize trucks for profitability is in decline? Hasn’t GM shown with its Daewoo assets that it can build a small car? Hasn’t the Spark surprised – well everyone as it rockets to the top of the A segment? Isn’t the Sonic being largely praised, and hasnt’ even one TTAC editor called the Sonic LTZ a, “budget Mini Cooper S.” Isn’t the success of the Cruze kind of undeniable at this point. Isn’t the Verano selling in a sense too well, killing the sales off of the maligned (and rightly so) Buick Regal? Hasn’t GM car sales volume gone up starting back in 2008? So I’m left scratching my head. The number one selling vehicle in the United States is the F-150.

    Now back when I wrote a long rebuttal to Ed’s editorial in the New York Times, which the B&B well received:

    http://www.thetruthaboutcars.com/2010/12/ttac-in-the-new-york-times/

    A somewhat similar argument was made. If the number one selling vehicle in the United States is the F-150 since, forever. If Toyota invested billions upon billions to build a new Tundra. If Nissan continues to cling to the ancient Titan. If Honda sunk who knows how much into the question no one asked Ridgeline, and also continues to cling to it. If a post-bailout Chrysler has taken its truck division and made it its own brand for North America. Wouldn’t GM be moronic, idiotic, stupid, not to invest in its truck line up – which by the way hasn’t been updated since the first GMT900 vehicles hit the dealer floor in 2007.

    …GM needs to invigorate its trucks badly. Their last major redesign was in 2006. The 2009 bankruptcy made GM fall behind on development.
    GM is estimated to have invested between $3 and $4 billion in developing the new trucks and revamping the plants where they are built. The market share of the Silverado/Sierra has been dropping for year, while the competition by Ford and Chrysler are gaining…

    Well the competition at Ford is definitely widening the gap, given recent reviews of the Dodge Ram pickup, I’m not sure how much inroads Ram is really making. Toyota and Nissan continue to soldier on.

    “…Obama’s bet on GM hangs on pickups boosting shares,” says Bloomberg. According to the wire, “the U.S. may sell its remaining 32 percent stake in GM, a holdover from the 2009 rescue of the automaker, if the shares rise. The Treasury wants to sell for at least the $33 a share price it got in the IPO. It needs to sell for more than $50 for the U.S. to break even…”

    Continuing to label it Obama’s bailout doesn’t make it true. Repeat after me, Bush bailout Detroit. Obama executed the Bush plan. That isn’t rewriting history, it is history. I didn’t even vote for Obama but I can’t stand twisting facts or pointing to those who do, in a less than thin attempt to rewrite history. And one has to ask the question again. If the bailout was about jobs, not a green agenda, then why are profits, ehem, bad. Well I guess if you’ve had a four year agenda of waiting for the bailout to fail, growing profits would be a bad thing. As a shareholder by proxy, I really don’t care if GM builds Hummers again if A) it is what buyers want and B) it is profitable. And American buyers – well they want trucks. If they didn’t Ford would be circling the drain right now and 120,000 Volts would have been already sold.

    …Currently, GM trades at $25.63, but a pick-up in earnings from the pick-ups is still a while away. Trucks are shown today, but will not hit dealers before the second quarter of next year…

    So in the end its all pure speculation.

  • avatar
    redav

    Duh. I think there was an article here about how Chevy was losing $200k (exaggeration) on each Volt they sell. Only a fool would try to make money on that.

    /sarcasm

  • avatar
    Chocolatedeath

    After reading this article..and reading (twice) all of its responses. I suggest we all go to Washington State and sit down with each other and smoke about five pounds of good stuff. This is coming from someone who is 45 and never had weed nor other drugs in his life.

  • avatar

    I don’t see how anyone thought the loss-leader that is the Chevrolet Volt could have become the bread and butter of General Motors so soon. Everyone knows trucks are where the profit is at, at least for now…

  • avatar
    D in the D

    Ah, duh, “building vehicles that people actually want to buy”. This piece is pitiful. If people wanted to buy Volts, GM is prepared. Since they actually buy full-sized trucks en masse, this is smart thinking on their part. Should they actually follow the Greens lead and fail? I think not. It is an embarrassment to this site to come out anywhere else on this issue. They need to make money. Plain and simple. What part of that is hard to comprehend?


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