By on May 17, 2013

General-Motors-headquarte-006

GM stockholders, especially the large stockholder in Washington, DC, have reason to rejoice: Today, GM shares “topped their 2010 initial public offering price, which will help the automaker’s largest shareholder, the U.S. Treasury, pare its losses,” Reuters says.

The price in the November 2010 IPO was $33.00. Today, the stock rose as high as $33.58 in morning trading.

According to Reuters, “the run-up in the stock price could help Treasury, which provided GM with a $49.5 billion bailout, trim losses that will likely still total billions of dollars. Treasury said earlier this month that it would begin another round of sales of its 241.7 million GM shares.”

Executives at GM told Reuters “that putting this issue behind them will improve the company’s image and boost sales, as they believe some consumers have held the bailout against the company.” For a current GM quote, click here.

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56 Comments on “GM Stock In Plus Territory...”


  • avatar

    Good for them. Plenty of tailwinds for GM in the next few years. New trucks and SUVs are soon hitting the market. Sales in China are still going strong. Treasury will be selling all the remaining stock in the next 10 months. Opel’s losses in the 1Q are half of 1Q 2012. EU zone sales are stabilizing. Opel/Vaxhaull sales have outperformed the EU market (though Chevy dragged GM down), and Bochum is getting shut down by 2015. The two major causes for downward pressure on the stock price have been the threat of treasury selling massive chunks in short period and EU Zone losses. Once treasury sells the remaining stock and Opel breaks even by 2015, the stock would soar. Akerson did the right thing buying 200 Million shares from the treasury for $5.5 billion. Those shares are now worth $1.2 billion more.

  • avatar
    doctor olds

    It is a shame the taxpayers will be left with unrecovered costs, though, on the bright side, GM will have invested nearly as much in capital improvements in the US by the time all US owned shares have been sold. Better, they will continue to invest in America.

  • avatar

    I got back in at 29. at 35 I’m out again. GM is like a cold shower. you have to get in and out quickly.

    the June 32 calls did nicely as well.

    Buickman

  • avatar
    CJinSD

    The market is up 39.5% over the same period that GM took to make it back to its IPO price.

  • avatar
    highdesertcat

    We, the people, will still be out billions upon billions of dollars lost on this resurrection of a company that should have been liquidated or pimped to China or India like Chrysler was pimped to Italy’s Fiat.

    Most Americans don’t even buy anything remotely GM so how is this increase in GM stock price going to make them rejoice in the slightest?

    This increase in GM stock price may play well in UAW-ville but the taxpayers who paid for the bailout bucks to keep the UAW living the high life won’t derive any benefits from this at all.

    • 0 avatar
      doctor olds

      @highdesertcat- Your share of the bill is $3.70 . The average American is out $9-$10. Spare us the theatrics. Saving GM was a very good thing for America and will pay off well over time.

      • 0 avatar
        highdesertcat

        Hey doctor olds, that’s where we differ. No theatrics. Perfect example: the former Chrysler Corporation, now a subdivision of Fiat. No longer our concern, and doing very well, keeping its parent alive.

        The only pay-off was to the UAW. It is a matter of contention whether saving GM was a good thing or a bad thing. The majority of Americans must think it is a bad thing because they’re not buying anything remotely resembling GM.

        If Americans thought it was a good thing they would forsake all other brands and buy exclusively GM. They don’t!

        • 0 avatar
          porschespeed

          As a guy who knew without a doubt that GM was gonna BK since around ’73, I agree with your meta point.

          I would suggest that keeping the money circulating was far better than planting it in the hands of the few.

        • 0 avatar
          doctor olds

          @HDC- theatrics= “…out billions upon billions of dollars…”, “not buying anything remotely resembling GM”.

          The shortfall appears likely to be $9.5B or so, equivalent to a couple weeks interest on our federal debt.

          The UAW was favored by the Obama administration in the handling of the bankruptcy, and I share your sentiments, in that regard. At the same time, GM is by far the largest American carmaker, an asset to our nation, and is doing well everywhere except EU, which will soon be fixed.

          Meanwhile, GM has invested over $9B in capital improvements in the United States since BK. GM continues to sell more vehicles than anyone else in America, empirical proof that your notions are incongruent with reality.

          • 0 avatar

            tell that to the 20,000 Delphi salaried retirees who lost their pensions. tell that to the hundreds and hundreds of dealers across America who got robbed of their franchises and now sell competing brands. explain that to second tier workers who now receive half the pay of those they work beside. rationalize it to the many bondholders who were trumped in court by a fictional wild card and left without legal recourse. and lastly…try if you will to convince conservative moms and pops across America that they should forget their principles and just go along for the ride.

            yes the stock is up and the profits are there but until GM can make it right in the hearts and minds of the people, there will be no such thing as a successful bailout.

          • 0 avatar
            highdesertcat

            doctor olds, I respect your point of view but I just can’t find a way in my own beliefs to share that same point of view.

            You know, there actually is a factual example in Chrysler. It, too, got bailed out, resurrected, and put on life support, but then the Obama administration couldn’t wait to dump Chrysler on the first chump that they could find, and even bribed them to the tune of $1.3B to take Chrysler’s dead carcass. Great deal, for Fiat.

            The UAW was marginalized by Sergio and the Chrysler subdivision took off, like never before, with a lot of help from the Daimler R&D team.

            I cannot help but draw the parallel that we could have pimped GM’s carcass to Mahindra or Tata, or Shanghai motors, or anyone of the government run and state sponsored Communist Chinese automakers, and we, the people, would have come out ahead. Just like we did with the former Chrysler.

            Sure, we would also have lost money but not nearly as much as paying for the continued lavish lifestyle of the UAW and its members.

            So, we’ll never know about that but what we do know is that 94% of the taxpaying workforce paid to keep the other 6% alive and living large on the taxpayer dime. There’s no doubt about that. It’s a done deal! It’s money out of the bank.

            That scenario I cannot reconcile at any level. Bailing out an entity , like banks and investment houses, whose business it is to MAKE money is one thing.

            There is a semblance of a possibility, even a glimmer of hope, that the government venture capitalists will recoup SOME of their money, even all of their money with interest, as we have already seen.

            But bailing out dead automakers is quite another. There is NO CHANCE that we, the people, will ever get back ANY of the money wasted on them.

            Fiatsler has become just like Toyota, Honda, Nissan and any of the foreign transplants. They provide much needed jobs to Americans building cars for Americans in America.

            We could have done the same for GM.

            I realize that this is the new America where we nationalize the failings and debt of the cronies and friends of the party in power, both Republican and Democrat, so it is up to the actual buyers to choose if they support such intervention by either buying the product, or not.

            Overwhelmingly, we see that Americans have not returned to the GM fold after the Bush and Obama bailouts and nationalization, which leads me to conclude that MOST Americans do not support handouts, bailouts and nationalization and reject everything GM.

            Be that as it may, were GM to fail again and need a handout or bailout, you can rest assured that the US Treasury has GM’s back, no matter who’s in power on the hill.

          • 0 avatar
            golden2husky

            You know, other than a few outspoken people on this site, the vast majority of America has moved to the next thing a long time ago. Those folks open minded enough to cross shop multiple brands are not going to be put off by it. Those who would walk before driving GM felt that way before the bailout and after it and nothing is going to change that either. GMs old reputation is far more of a hindrance for them than the bailout will ever be from a national point of view. HDC is obviously one who is highly offended by such actions and that’s fair enough. But for most people, their memory has been purged for newer issues.

        • 0 avatar
          mike978

          You talk rubbish sometimes. No company has a 50% market share, so by your analysis if Americans thought Toyota or BMW were a “good thing” then they would have 50% market share.

          What is done is done and at least many thousands have benefited as opposed to a few rich bankers. I also note that they have out performed the auto market YTD and are nowhere near the 15% predicted by some.

          You keep citing Chrysler – yes they were given to FIAT. Did anybody else want them? Can you point me in the direction of news articles from the time showing which companies wanted GM. I don`t think you will find any. GM was a massive company and unless someone like VW or Toyota wanted them (which they didn`t) then nobody would take them on.

          • 0 avatar
            highdesertcat

            What’s rubbish to you could very well be someone else’s strongly held beliefs. Hey, you’re entitled to your beliefs as I am to mine. I’m not knocking that.

            Maybe you should expound on the virtues of the post-bailout GM. No else seems to, except maybe the folks at UAW. Maybe nobody wanted GM after they died because of what the UAW had done to them.

            You already know I’m not the lone ranger in this. And the anti-GM sentiment is not limited to any board either. It isn’t just one political faction that was against handouts, bailouts and nationalization. It was a multitude, including SOME Democrats.

            You are correct in saying that what is done is done but you also needed to add that if GM ever needs another bailout, it will be done. Precedence has already been set.

            Nobody wanted Chrysler either. That’s why our government had to bribe Fiat to take its carcass off our hands. And as the owner of a 2012 Grand Cherokee, I’m glad Sergio took dead Chrysler in and marginalized the UAW. Who can argue with the sales success of Chrysler products?

            We could have given GM to China and bribed them as well. GM would have been better liquidated. At least we could have recouped a tiny bit of the lost money selling off its parts. Parts is parts – just look at Volvo, Jaguar and Land Rover.

            Instead we, the people, paid so that the UAW could continue to party hardy. That rubs a lot of people the wrong way. People who lost their job. People who did not get a carte-blanche from Obama. People who saw their taxes go up. People who did not get a helping hand from the government because they were not a member of a minority, or a member of the UAW or any other union favored by the administration. The other 94%.

            Again, ultimately it’s up to the buyers in the real world. If they believe in handouts, bailouts and nationalization, they’ll choose to buy a GM product.

            If not, they can always buy Ford if they have to absolutely buy American, even if made in Mexico or Canada.

            I’ve owned GM for much of my life, including three new GM vehicles, a Custom Cruiser, a Toronado and a Silverado.

            That was then. This is now. Now I wouldn’t touch GM with a ten foot pole because there’s better out there without the stigma of the bailout and nationalization.

            It’s great that GM stock has risen in value but there’s nothing that can undo the damage of the bailout and nationalization.

            Of course the GM fan club sees the taxpayer infusion as a God-given right. But there aren’t enough fans in the world that will be buying GM products to make it a viable, self-sustaining, profitable company ever again.

            If buyers don’t like Toyota, Honda or Nissan, there’s always the venerable VW line of products. VW is infinitely better than anything from GM, in diesels and everything else that competes head-to-head.

            I believe that VW will overtake GM within the next five years and push GM to the #3 spot on the largest automaker list.

            GM died. It was resurrected by the American taxpayers. What is done is done.

          • 0 avatar
            mike978

            I understand your point and agree with some of it. But one thing – “VW products are infinitely better than GM products”. Really? That is an example of rubbish. Cruze vs Jetta, Equinox vs Tiguan.

          • 0 avatar
            highdesertcat

            mike978, if a person is predisposed to favor GM it may indeed be a stretch to accept that VW products are better engineered and better put together than GM products.

            So in the US there may indeed be a margin of doubt as to the veracity of that statement.

            However, if we talk global sales, which is really all that matters to the automakers’ bottom line since the US market is shrinking and both Ford and GM have to seek their fortunes elsewhere outside of the US, I believe that the concept of VW products being better and more accepted than GM products may not be too far fetched.

            What is not in doubt is that Toyota products are infinitely better and more widely accepted than any comparable GM products (on a global scale). I picked a Japan-built Highlander over anything from GM because it was clearly better in all aspects.

            VW does have some well-deserved stigma attached to their name in the US based on past products. Very similar to Fiat during the days of Fix It Again Tony. As does Audi based on their history of SUA and subsequent retreat from the US market, in the past.

            If I were a betting man with money to place on an automaker, my money would go to Toyota and VW in the current global automotive market.

            GM is not even a contender, except maybe in China. Which is why I advocated giving GM to China when GM went bankrupt, and have GM import their Chinese-made products to the US, or build them in the US like Fiatsler now does.

            That ain’t all bad, you know. All the transplants provide good paying jobs to Americans who make cars for Americans right here in America, most without interference from the UAW. And that is a good thing!

          • 0 avatar
            doctor olds

            @HDC- Dispassionate review of hard data shows GM second only to Toyota in quality, and well ahead of Honda, Ford, the also rans, and the rest. Your ideas are emotional, not factual.

            GM is likely to stay ahead of VW,imo, and are the only global carmaker enjoying 1st place in the two largest markets, China and the US. If not for Toyota’s 2million to approximately nothing advantage in their CLOSED home market GM would be far ahead of them. Time will tell if VW grows like they plan. Talk is cheap.

          • 0 avatar
            WRohrl

            @HDC – When exactly did Audi “retreat from the US market”? You can’t answer that as it did not occur. Many of your posts seem to have at least one piece of “information” that is patently false. Unfortunately for you it makes everything else you say equally suspect. Please check your facts before you post them…

          • 0 avatar
            highdesertcat

            WRohrl, During the 1980s the Audi 4000 and 5000 also had SUA problems. I thought that was common knowledge.

            I owned a used 4000 briefly and it became an orphan almost overnight, as did the 1982 Quantum we had bought new (which used a lot of Audi 4000 parts).

          • 0 avatar
            highdesertcat

            “If not for Toyota’s 2million to approximately nothing advantage in their CLOSED home market GM would be far ahead of them.”

            I remember several articles that reflected that their home market was not closed to GM or any other US automaker.

            I deduced from those articles that the people of their home market just chose not to buy GM products or those from other US manufacturers.

            Maybe Bertel should do another article on that specific aspect of the acceptance of GM products in that home market.

            BTW, I’ll be gone for awhile starting tomorrow so please don’t think I’m ignoring you by not replying to your criticisms of my comments.

            The only internet access I will have is on my cell phone and I’m not going to type any comments on that tiny keyboard.

          • 0 avatar
            sunridge place

            HDC

            I think the point is that you said that Audi ‘retreated from the market’

            Retreat means that a company withdraws from the market.

            Audi never left the US market…their sales went down…but they didn’t withdraw from selling vehicles in the US.

          • 0 avatar
            doctor olds

            @HDC- The Japanese market is essentially closed and the proof is that the largest selling import brand captures only a couple percent of the market. It is not just GM, but all import brands. They value their domestic industry and do a lot to protect it, unlike some of the idiots here.

            You first mistake is to put stock in Bertel’s spin on whether or not the Japanese market is closed. Few other markets in the world have such low import penetration. No foreign brand sells more than a few tens of thousands, compared to millions of Japanese cars. You can actually look these facts up, too, if you really want to understand.

          • 0 avatar
            jkross22

            Dr. Olds,

            Regardless of how you feel about your fellow countrymen, calling them idiots isn’t going to win you any support for the GM cause you’re intent on arguing in favor of.

            Just the opposite in fact.

          • 0 avatar
            WRohrl

            @HDC – As usual you did not appear to answer the question about your statement (that Audi withdrew from the US market.) Not surprising since it was false, Audi never withdrew.

            Your actual response did mention SUA on the Audi 4000 and 5000. 5000 had the (later disproven) issue, 4000 never had it.

            In regard to your actual answer to a question nobody asked, your 4000 could not have become an orphan since Audi did not pull out of the market. Obviously your Quantum neither as VW never pulled out either. An “orphan” is when a manufacturer ceases to operate either in this market or completely closes shop, i.e. Saturn, Olds, Peugeot, Alfa, etc. Parts for a Quantum should not be hard to come by as the two engines offered during its time on the market here were shared with the Golf/Jetta (4cylinder) and Audi (5cylinder).

            Your disinformation is astounding, especially for someone who continously touts their industry connections, i.e. your brothers that sold cars.

            I do hope you had a good vacation though.

          • 0 avatar
            CJinSD

            @doctor olds: “Dispassionate review of hard data shows GM second only to Toyota in quality, and well ahead of Honda, Ford, the also rans, and the rest. Your ideas are emotional, not factual.”

            Where might one find this data? I can believe that GM is well ahead of Ford at the moment, but Honda? What color is the sky?

            http://www.autooninfo.net/QualityRanksManufacturerAverages.aspx

            Looking at JD Power IQS for 2012, Cadillac was ahead of Honda and Acura. That does little for GM, which includes Chevrolet, Buick, and GMC in the US. Weighted for sales, GM is merely average. Looking at today’s snapshot of initial quality may be what one chooses to do, but GM was still selling subpar vehicles in 2010. We’d been hearing that they’d stopped doing that in 2008, but it wasn’t true then. All we have to go on now is that a new car probably won’t need to immediately return to the dealer. That’s a track record that makes me want to take out a five year loan!

          • 0 avatar
            doctor olds

            @CJ in SD- http://autos.jdpower.com/content/press-release/bTiXte5/2013-u-s-vehicle-dependability-study.htm

            In this most recent survey, GM has many more top three finishers (11, if memory serves) than Honda and Ford combined (2 each), second only to Toyota.
            Being a powertrain guy, I recall reading a criticism of Cobal having a lousy engine which prompted me to compare the 2006 engine/transmission Consumer reports rating between Cobalt and Civic, the latest model to have 3 year dependability data at the time. I was surprised to find the Cobalt engine was ranked substantially better than the Civic. As a matter of fact, with specific regard to powertrain quality, GM has often been doing very well since at least the ’06MY and has 5 year 100,000 mile warranty to back it up. My point is to refute the idea that GM is terrible in the quality arena, more than to know Honda, who build very high quality cars and definitely have a much better quality reputaation than GM. Todays cars are all pretty good.

          • 0 avatar
            CJinSD

            Looking at the JD Power VDS that you linked to, Buick is the only GM brand above Honda and Acura. Chevrolet, Cadillac, and GMC are all lower, although two of them achieved average scores. Not only is Honda still doing better, Ford’s corporate average is probably still better than GM’s, this being a look at three year old cars. I do think GM will be ranked much better than Ford three years from now, although most of my faith in this prediction comes from Ford’s swan dive into the toilet. The top three in categories thing is pretty meaningless. Some categories don’t even have three competitors, and some of them have no vehicles that are particularly dependable.

            Anyway, good for GM for creating distance between itself and the Chryslers an VWs of the world, but there is some irony in you describing your pronouncement of GM’s quality ranking to be a “dispassionate review of hard data.” There’s a table for that. Overall, it looks like Toyota, Mercedes-Benz, and Honda were the top three companies. Then the corpse of Suzuki, the bit player Mazda, Ford and GM in virtual parity, followed by Subaru, BMW, Nissan, Hyundai, Volvo, Chrysler, VW, Mitsubishi, and Jaguar-Rover.

            Porsche somehow finishes near the top, but they’re a part of VW, which is dragged down by Audi and VW. I have no idea how Porsche finishes so high in JD Power rankings. Most years they only have two models that sell in sufficient numbers for statistics to be kept, and the year I researched it they were both below average while the company miraculously was well above average. I’ve never seen a long term test that didn’t involve repairs, and I don’t know of any trouble free ownership experiences either. I used to really like their cars, but that doesn’t mean they were trouble free.

  • avatar
    thelaine

    Taxpayers lose $15 billion in loss carry forwards (sweetheart tax benefits they are not entitled to because they went bankrupt), $11.5 billion in the bailout of GMAC, and another $10 to $15 billion(?) in losses on GM stock. Not to mention tax credits to Volt buyers, corrupt sweetheart Volt purchases by GE, government mandates, and innumerable other taxpayer subsidies.

    The “jobs saved” statistics for the bailouts are as inflated as the bailout costs are understated. The “jobs saved” statistics pretend that the government does not destroy jobs by taking tens of billions out of the economy to bail out GM. The bailouts destroy jobs because money is taken from productive private sector businesses and transferred to cover losses at GM.

    The armed robbery of produce from productive private enterprise, consumed by government and then puked onto inefficient government-favored enterprise is a form of socialism sometimes referred to as “state capitalism.” It is just as stupid, corrupt, inefficient, unjust and self-destructive as any other form of socialism, and for all the same reasons.

    At the very least, if this drunken Roman orgy had to take place while we paid to watch, UAW workers could have made the same pension sacrifice as Delco workers. The bailout would have cost a hell of a lot less. Even now, GM could publicly commit to paying back every freaking dime, with interest.

    If they are doing so well, as they now claim, why not start kicking some cash back to the American people, at least for PTSD counseling from getting raped. I thought this was about the American interest, and not just about selfish GM execs and UAW workers and their bought and paid for b*tches in Washington DC. Prove it, GM. Pay the money back.

    • 0 avatar
      doctor olds

      @Buickman- Delphi was spun off in 1999! They went bankrupt on their own, though also thanks to the UAW. The dealers who are gone deserve to be gone. You sound like a good unionist/socialist with your notions about who is owed what. If you want to blame someone, blame you pals at the UAW. They nearly sunk the entire industry, and King seems to be going back to their old ways after Gettlefinger’s enlighted attitude.

      @HDC- you are entitled to your emotional beliefs, but not made up facts. We are entitled to point out the error in your understanding and perceptions which can not stand in the face of real facts and logic. The idea that the whole enterprise IS the UAW is particularly ignorant, with all due respect.

      @thelaine- Carryforward of tax losses is NOT unprecedented, and was provided in this case in exchange for New GM continuing to fund retirement programs to keep the PBGC from going bankrupt. That would have cost taxpayers far more than the tax on those credits, which are almost used up, and GM will be paying taxes for a long time to come.

      GMAC was not even part of GM when it was crashed by the financial crisis, itself the product of governmental meddling in home mortgages.

      The kernel of truth in your post is that sale of the stock is likely to return around $10B less than was provided to fund the bankruptcy.

      • 0 avatar
        highdesertcat

        “@HDC- you are entitled to your emotional beliefs, but not made up facts. We are entitled to point out the error in your understanding and perceptions which can not stand in the face of real facts and logic. The idea that the whole enterprise IS the UAW is particularly ignorant, with all due respect.”

        doctor olds, I understand that and anyone is free to disagree with my point of view. My beliefs are what they are based on my experiences and how I perceive the world to be and also based on how I interpret the common facts.

        I held blocks GM stock for decades. I was a believer! I’m sure glad my broker talked me into divesting in the 2007-2008 time frame. If I had been headstrong or willful about not selling GM shares, I would be hurting today.

        However, I take exception to your implication that the UAW and its actions did not affect the whole enterprise, and as such are only a part of the whole enterprise.

        My belief is that GM and Chrysler would have moseyed along in spite of their bad management and lousy badge engineering had not the UAW done their employers in with their outrageous demands for outlandish wages and benefits that were not sustainable for any company without government intervention.

        I understand your point. I just don’t agree with it.

        And that’s why I say that ultimately it is up to the buyers to bring GM back from the dead and make it a viable, self-sustaining profitable company.

        I don’t believe that is going to happen, but I don’t mind being proven wrong. Because if I’m wrong then GM will return back to the US Treasury and the taxpayers much more than it ever took out.

        And that simply does not seem likely at the current market share, worldwide.

        • 0 avatar
          doctor olds

          @HDC- I agree with you that the UAW costs were the 800 pound gorilla on top of all the other issues.

          My statement is that there is a lot more to GM than just one of its unions. I interpret your view to be that the company should have been allowed to die at the hands of the financial crisis because the UAW deserved it. Millions of people across middle America would also have been devastated and the depression that would have ensued would have effected everyone, including you.

          @Buickman- But you don’t understand the business of manufacturing cars either, as good a salesman as you claim to be. Whitacre proves to be a self-serving a** with his book and was an embarrassment in his public actions. His presumption is sickening. He was CEO for 9 whole months, knew and still knows virtually nothing about the car business, and never had to deal with the UAW. Hardly a basis for him to be an expert despite his lofty,and isolated perch.
          This is not to say management made no errors over time, but labor costs are certainly what financially depleted all three US companies.

          • 0 avatar
            highdesertcat

            “I interpret your view to be that the company should have been allowed to die at the hands of the financial crisis because the UAW deserved it.”

            GM died. There were no ifs, ands or buts about that. The UAW just sped up the process to financial collapse.

            Profit sharing is one thing, if the employer is profitable and there are profits to be shared. GM hadn’t profitable for a very long time, but that didn’t stop the UAW in their demands.

            What I objected to, like many other Americans, was that GM was selectively bailed out at the taxpayers’ expense when GM should have been allowed to go through bankruptcy procedures and liquidation, like any other failed company, and without a bailout.

            All businesses have a life span, or a life cycle. They startup, they function, they die. GM and Chrysler were no different. Neither were the investment banks, mortgage lenders, etc that were bailed out by Shrub. Bad precedence all around.

            In this instance the government, meaning Obama and his administration, decided who was going to be resurrected and live, and which failed businesses would not be.

            So, GM stock is up now. What exactly does that mean anyway? I sold my GM stock in the 2007/2008 time frame, and it was up then. But that didn’t mean nothing because by 2009 GM was dead by all accounts.

            “Millions of people across middle America would also have been devastated and the depression that would have ensued would have effected everyone, including you”

            I can’t imagine things being worse than they have been since 2009. If the economic and bailout policies of the current administration work for you, that’s great! They don’t work for me or millions of other Americans. I’m much worse off now than during Clinton or both Bush administrations, and whatever little money I do have is worth a lot less, to boot.

            The only faction not affected by the economic downturn was the UAW. In fact, because of the bailout the UAW thrived and no doubt, will soon want to share in the profits by demanding higher pay and increased benefits, while everyone in America is busy retrenching.

            There’s something wrong with that picture.

          • 0 avatar
            doctor olds

            @HDC, by die, I meant be liquidated, which was the only alternative to goverment financed bankruptcy at the time. It would have cost you personally and every American many times as much if that had been allowed to occur. Bush knew that, and I share your criticism of the UAW biased actions taken by the Obama administration. In the scheme of things, we are getting off ver, very cheap.

            From my vantage point, you, and most commenters really have no clue as to the magnitude and complexity of the auto sector and GM in particular. The company is the nation’s largest buyer of steel, aluminum, glass, tires and information tech, plus more that my memory fails me on. Most obscure to folks here is the fragility of the supply chain. There is no doubt but that allowing even Chrysler to liquidate would have brought ALL automaking in North America by any maker to a complete halt within 3 months. The disruption would have been beyond your comprehension.

          • 0 avatar
            highdesertcat

            “From my vantage point, you, and most commenters really have no clue as to the magnitude and complexity of the auto sector and GM in particular.”

            Well, I believe you are wrong in that assumption since I actually studied GM and the global auto sector during my pursuit of an MBA decades ago, specifically because my brothers were at that time, and for the next 30 years, involved with the auto industry as retailers.

            At that time GM was prominent and whatever was good for GM was good for America. Studying GM was supposed to be good for me and it paid off handsomely in 2008.

            “The disruption would have been beyond your comprehension.”

            The disruption would have been unpleasant, yes, but no less painful than what the US is going through at this time AFTER GM, the UAW, the US auto industry and financial institutions were bailed out.

            I believe we should have made a clean break of it; give away or liquidate GM, give away Chrysler, and press on. But what is done is done. Can’t undo it. Can’t recoup the money wasted on GM.

            Even without GM and Chrysler being American-owned we still have a viable auto sector in the US, albeit that Ford would be the only American auto maker left standing and everything else would be foreign-owned, providing much needed jobs to Americans, building cars for Americans and export, in America.

            GM would not have gone away had we given GM away. Chrysler didn’t go away after our government pimped it to Fiat. GM would have been broken up into pieces, sold off in chunks or given away but would have continued to function just like Volvo, Jaguar, Land Rover and…. Chrysler/Jeep/Dodge/RAM. All GM needed was foreign ownership.

            Hey, we bribed Fiat to take Chrysler, we could have bribed another manufacturer to take pieces of GM. It would have cost us a lot less than what actually went down.

            As it is now, GM is hanging on us like an ugly red-headed step child, knowing full well that it enjoys the full faith and credit of the United States backing it up.

            So their stock price is up now. I hope it goes higher. But that still doesn’t take away that we wasted billions of dollars on a perpetual loser with a decades-long track record of failures and losses.

            We can agree to disagree on GM and its disastrous past and questionable future.

          • 0 avatar
            doctor olds

            @HDC- Studying under a prof who himself is very unlikely to have any real world auto experience and reading about the sector does not change my assumption about your understanding, with all due respect.

            If you think a collapse of the entire auto sector would have just been “unpleasant” and anything like the Obama economy today, you really don’t understand at all. Odds are, it would have thrust us into a full blown depression. The PBGC would have collapsed and it is backstopped by the Feds.

            I have a lot of sympathy for your criticism of HOW Obama handled the bankruptcy, though the speed with which they accomplished it deserves applause and may be the primary reason GM didn’t go into a death spiral.

            On the other than, your notions about what is happening with GM today are just uninformed. GM’s bankruptcy was funded, period and since then they have not received another dime. The company has generated plenty of cash and already invested more in capital improvements in America, with funds generated by the business, than the net cost to taxpayers is likely to be.
            GM (along with Ford and Chrysler) was the victim of Government meddling, from FDR’s Wagner act which gave the UAW a monopoly, to CAFE, which uniquely hurt the Americans, GM the most because of their dominance in big cars.

            Philosophically, I am also a free-marketer, don’t want the government picking winners and losers. If I were not so painfully aware of government’s role in the systemic problems across the industry, I might agree with you.

          • 0 avatar
            highdesertcat

            Well, we can agree to disagree. My beliefs are hardly my own.

            The reason I made a comment on this thread is because I believe that GM’s stock price being up today, doesn’t do anything to undo the damage that the bailout did to the taxpayers, all things considered.

            We survived the Great Depression. Some would have us believe that this past Recession was actually worse than the Great Depression.

            I suppose it depends on what a person lost.

            My belief is that the handouts, bailouts and nationalization were just bad all around because I do not believe that selectively resurrecting dead entities makes sense in our economy.

            If there was money to be made, the normal sources would have taken care of it. The fact that nobody wanted to extend more money to GM sums it up. GM was not worth saving.

            Good night.

      • 0 avatar

        read Whitacre’s book. he blames bad management. me too.

        • 0 avatar
          highdesertcat

          I bought Ed’s book and after reading it I donated the book to the library at the military base. I understand from the librarian there that there is a perpetual waiting list to read that book.

          I can’t find the attraction, unless it is mandatory reading for some MBA program, and I have not been dissuaded from my belief that the UAW was instrumental in driving their employers to the financial grave.

          To wit: after the bankrupture, the UAW was forced to take pay CUTS and pay restructuring like Tier 1, 2, Dissolution of the Job Bank, etc.

          Those are factoids that are really hard to play down except for those with selective memory, and it all boils down to the GM fan club defending GM and the UAW even when it is indefensible. Revisionism won’t work this time either. What is done is done!

          It’s great the GM stock price is up, but it doesn’t undo anything that has transpired in the past, like the bankruptcy, the bailout and nationalization and the loss to the US taxpayers.

  • avatar

    labor costs were not and are not the problem in the auto industry. GM’s BK was caused by repeated management blunders over many decades. for example I remember Annette Smith, manager of Park Avenue, eliminating all lease incentives April 1st 2001. this single move cost me personally 200 sales. I could detail hundreds more foolish decisions such as discontinuing LeSabre when it was the highest quality and best selling full size car in America. even though Buick City was being demolished and a new car replacing it, the new model should still have been called LeSabre rather than Lucerne. I could go on for hours about how bad the management was/is but have other things to do with my Saturday evening.

    decades of decline in market share was the cause of the BK. the blame lies with Red Ink Rick, not Rosie the Riveter.

  • avatar
    ect

    Some years ago, during a previous stock market boom, Business Week ran a cover story with a headline something like “a boomimg stock market is not proof of management genius”.

    GM has deep-seated problems that start at the executive level. They cannot afford to treat a general stock market rise as a “get out of jail free” card.

  • avatar
    doctor olds

    @Buickman- There is absolutely no doubt that labor costs set the stage for the financial crisis induced market collapse that nearly destroyed the whole US industry. IF they had been able reduce costs in line with business realities, they would have been able to maintain profitability even at reduced volumes resulting from strong competitors, and yes, bad decisions.

    No company could survive ever increasing labor costs with declining sales volumes and all three US makers were financially depleted as a result. Ford was just lucky to be in trouble earlier, before commercial credit completely dryed up. They have a mountain of debt today which will handicap them in competition with Chrysler and GM, in particular.

    It isn’t that complex, really. From the standpoint of business efficiency, retiree health care and the Jobs Bank alone took $8Billion a year from GM’s bottom line as pure waste in comparison to foreign transplants and off shore competitors.

    I don’t blame “Rosie the riveter” but “her” elected UAW officials who sold the lie that the automakers could afford paying and providing health care to every worker they ever had for the rest of their lives!

    CAFE was another element that harmed US makers uniquely and helped deplete them financially with the requirement that they redesign their fleets to meet regulations rather than consumer damand, and build loss making small cars here, unlike every foreign competitor who merely import them from markets where they are in demand.

    • 0 avatar

      sorry Doc, you’re wrong. Ford has the same labor costs as do the Germans. it’s nothing but bad management that drove GM into the dirt. you’re in denial as are/were most salaried GM executives who could not accept the fact that they were/are incompetent and solely at fault. period, end of story.

      • 0 avatar
        highdesertcat

        Buickman, doc’s not wrong. He just has a different perspective on the matter. He’s looking at it from the top down. We’re looking at it from the bottom up. Doc can’t understand that we see a totally different picture of GM, because his view is different.

        Doc may be in denial, yes, but his beliefs are based on the facts as he understands them to be. The further removed a body is from GM, the more that body is inclined to see the wisdom of dumping failed automaker Chrysler.

        Obama could have done the same for GM. He did not. Obama chose to nationalize GM and make it and the UAW a part of the public trust. That’s what Americans voted for. That’s what Americans got, in spades.

        I have heard the same argument about GM’s importance (too big to fail) from other GM associates but we’ll never know how things would have turned out had we flushed GM down the toilet, like we did Chrysler.

        Now the GM stock is up. That’s great! Let Treasury sell it post haste. We’ll still have to take it in the shorts because GM will never be able to repay the billions the taxpayers took in losses.

        I say, let the buyers decide. If they support handouts, bailouts and nationalization, then GM is the brand to buy. The poster child for automotive sector bailout and nationalization! The cheering is from the UAW camp. They won that one, without a doubt!

        But if the buyers want to purchase American there’s always Ford. Whatever Ford is, or is not, Ford remains an American company with less baggage than GM.

        For all other buyers, there are plenty of choices at America’s new car dealerships, for every budget and taste.

        • 0 avatar
          doctor olds

          Buickman- You appear to be unaware of the term “Pattern Bargaining”. All three US makers have had nearly identical contracts for decades. That should not be a secret.

          HDC- Not sure what you think I am denying. I don’t claim GM management was always right, or never made mistakes. It is just a fact that the US vehicle market collapse caused by the credit freeze of ’08 is the direct cause of the bankruptcies. It is also a fact that all three US makers bore unsustainable labor costs due to a one union monopoly on the domestic industry.

          Buickman, The difference between our perspectives is that I have a basis to know and understand the inner workings of a car maker, particularly the financial issues involved in the business and the fragility of the supply chain. Your comments often prove to me you don’t really understand a good share of this.

          I also take the time to review real data. Pre-bankruptcy, GM’s piece of the Detroit 3 Pie was just about exactly what it had been in 1970. All three lost share pretty much evenly. That is a fact you can look up for yourself, if you wish to learn. That is hardly evidence that GM managment was uniquely incompetent. The truth is all three were under the same pressures. The problems were systemic and affected all the US makers about the same. Only one thing kept Ford from bankruptcy,too, needing to line up that huge $23B credit line while banks could still lend that kind of money. There is really no other difference in Ford’s case. GM is strong. Ford is the one to worry about, though Fiat-Chrysler may have an even tougher time.

          I remind you gentlemen that you have repeately said GM would be back to the trough for more US money, would continue downhill and fail again in short order. The world of reality tells us that GM is solidly profitable, quarter after quarter, second only to Toyota in quality, and remains, by far, the largest US carmaker. GM is also seeing increasing owner retention as reported by Automotive News recently.
          The stock market is rationally responding to GM’s performance.

          • 0 avatar
            highdesertcat

            “The stock market is rationally responding to GM’s performance.”

            I believe the stock market is responding to the Obama administration’s agenda having been put on the back burner in favor of defending various “scandals”.

            This alleviates much of the insecurity that has prevailed for the past four years. Several companies are doing stock buy-backs instead of expanding or hiring more people. That drives the market up as well.

            Well, until the mid-term elections at least. Who knows how those will turn out?

          • 0 avatar
            jkross22

            dr olds,

            You keep repeating the same mantra, but never define quality.

            I can assure you that in most consumer’s minds, GM is nowhere near #2 in quality to Toyota. They are behind most Japanese brands, Hyundai/Kia and Ford.

            GM is the poster child for bigger not equalling better. How is their profit margin vis a vis other manufacturers?

          • 0 avatar
            doctor olds

            @JKRoss- By “idiots”, I was referring to politicians and interest groups who have piled on the auto industry over decades and drove adversarial policies that have been very damaging to our industry. I apologize for poor communication that implied I was referring to folks here.

            You are right that GM’s quality reputation has been pretty bad. On the other hand, for several years, their products have risen as measured by JD Power Long Term Dependability rankings, for example: http://autos.jdpower.com/content/press-release/bTiXte5/2013-u-s-vehicle-dependability-study.htm

  • avatar
    jimbob457

    If you don’t know what a loan covenant or DIP financing is, you are clueless as a baby about what really happened in 2008-9. It was effectively not a bailout, but a double bankruptcy (GM and Chrysler) managed by US politicians because there was nobody else in the world at the time who could do it.

    Not that there was anything NOT wrong with that. Who can trust a politician? Even so I thought they did a decent job, the main shame, imo., was with the two bankrupt companies and their managements. There is a reasonable probability that either GM and/or Chrysler (or conceivably even Ford) might go bankrupt during the next US recession (comin’ right up, folks). So then what, we sell Chrysler to Fiat and GM to the Bank of China, a wholly owned subsidiary of the Communist Party of the Peoples’ Republic of China. Not many viable options would be left in case of such an unhappy event.

    • 0 avatar
      highdesertcat

      Thanks for bringing up the loan covenant and DIP financing. I didn’t want to get that explicit since someone would have taken exception to my comment and severely chastised me.

      The next recession! I have brought that up before but have run into arguments from the “Obama The Great” faction. I, too, think it is a distinct possibility that the US will experience another recession within 1-3 years, probably triggered by the effects of events initiated elsewhere. I’m living my life accordingly, conserving my assets.

      But I don’t see anything wrong with a Silverado, Buick or Caddy that says Made In China on it. For decades we have been buying all sorts of stuff made elsewhere and lapping it up like they were going out of style, from computers, appliances to cars and trucks and clothing. Even the “domestic” car makers make them in Canada and Mexico, South Korea and Australia.

      There was a reason why America’s industrial base has shrunk. Others could do it better and cheaper. The bottom line is that we in America enjoy fuller lifestyles because of it.

      • 0 avatar
        sunridge place

        ‘Thanks for bringing up the loan covenant and DIP financing. I didn’t want to get that explicit since someone would have taken exception to my comment and severely chastised me’

        Huh? Who here would have ‘chastised’ you for a factual statement? That’s hardly explicit…its a well-known fact to anyone who realized what happened and why it happened.

        I don’t think you realize what JimBob was saying there. His point was that the govt didn’t just barge in to offer GM bailout $$ because they wanted to. There was no private $$ at the time to provide the typical DIP financing during a reorganizational bankruptcy due to other factors…as in the entire financial system crashing at the same time.

        • 0 avatar
          highdesertcat

          I’m quite familiar with the events since GM took the Cadillac franchise away from them and dropped their floor plan financing.

          I was against the bailouts, but I think that the current administration should have done the same for GM that they did for Chrysler.

          Just because GM stock is up today doesn’t mean that we, the people, won’t lose money on this calamity.

          • 0 avatar
            sunridge place

            What the heck are you talking about HDC?

            ‘took the Cadillac franchise away from them and dropped their floor plan financing’

            Who is ‘them’ and ‘their’ in this discussion?

            We were talking about Debtor In Possession (DIP) financing which was NOT available to GM and thus the govt stepped in….what are you talking about?

          • 0 avatar
            highdesertcat

            I lost part of my text — beyond my control.

            Nobody wanted to take GM as a whole entity and that’s why the government stepped in and bailed them out. We’re on the same page about the bailout “loans” that will never be repaid and result in billions of taxpayer dollars lost, in spite of GM’s stock price being up today.

            GM also took away the Cadillac franchise from several dealerships and floor plan financing from even more dealerships during that fray, all as part of becoming more attractive to potential partners.

            All this was happening at the time when GM tried to align itself with various potential partners in order to keep operations going, wile keeping communications with the dealer network sparse. Imagine the insecurity at the dealer level at that time.

            GM could not create a partnership with any other automaker, nor sell itself as a whole entity so in order to keep GM operating and repaying the debt Obama had to the UAW for getting him elected, Obama chose to double down on the initial funding that Bush had extended to GM to keep them going through March 31, 2009, and nationalize GM and its debts.

            GM’s stock being up today is better than it being down but it still will not repay the billions the taxpayers have lost bailing out this failed entity.

            Them and their referred to my brothers’ dealerships.

            FYI, I will be gone for awhile starting tomorrow so don’t think that I am ignoring you if I don’t reply to your criticisms of my comments.

            And I’m going to hit the rack now since it is very late at the gas&sip where I live and I have to be on the road by 6am.

        • 0 avatar
          jimbob457

          I think I might have gotten a little carried away with the potential dire possibilities facing GM and Chrysler.

          Ford survived the 2008-9 crisis largely because they had purchased $23 billion in back up credit lines. These are like insurance policies against getting frozen out of the commercial paper market. The two grasshoppers, GM and Chrysler, failed to buy enough ‘insurance’ to prevent a liquidity crisis and bankruptcy. Dat’s piss poor management, imo.

          Nowadays, GM has recovered somewhat, although my largely uninformed opinion thinks they are on a long-term downslide to oblivion. Chrysler is in not so good shape, imo. (largely uninformed as well). If 23% of their new car sales are financed in the subprime market (just how subprime, I don’t know) there is a real potential for a serious double whammy in the next recession.

          As far as product goes, both companies have some good and some not so good according to most informed sources. GM is doing well in the burgeoning China market. I would, however, advise GM management to get almost any book by John King Fairbank, and look in the index under ‘squeeze artists’.

  • avatar
    doctor olds

    @CJ in SD- The headline of the JD Power link= “Toyota Motor Corporation Models Receive Seven Awards; General Motors Models Receive Four”- looking further into the data, Toyota and GM dominated the top 3 model places.

    I will give you that having top models in each segment doesn’t refute the overall ratings in which Honda does look better than GM. The movement in these rankings, Audi falling a dozen places in Long Term Dependability a year or so ago for example, shows how volatile the rankings can be. Didn’t Ford suffer because of infotainment glitches in recent times?

    The point, which I suppose I exaggerated with the Honda comment, is that GM is not a backmarker in today’s quality sweepstakes, but has solid results. In GM Powertrain, we focused on powertrain rankings, the things within our control. Drilling down into the details, we had been doing quite well for a number of years before the collapse of ’08.


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