The Truth About Cars » Taxpayers The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Sun, 27 Jul 2014 20:45:49 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Taxpayers Quote Of The Day: Ed Whitacre’s Big Lie Edition Mon, 11 Jan 2010 17:38:51 +0000 Yuk it up... (courtesy:DetNews)

It’s a bit early in the day to be crowning a QOTD, especially considering there are sure to be plenty of juicy quotes coming out of the NAIAS today. Still, this one deserves a special place at TTAC for the sheer bold-faced shamelessness of its untruth.

I think (the government bailout was) well placed, and I think they’ll make a lot of money. GM’s on its way back. We’ll be back. The government’s made a good investment. We appreciate their support. We’re glad they’re here.

So said GM Chairman and CEO Ed Whitacre to reporters from the Detroit News today. As I recently explained in an op-ed in the NY Times, unless GM’s market cap soars to its highest level in history (a pipe dream if ever there was one) the taxpayer losses on the GM “investment” will be in the billions. Even the government estimates losses on the GM and Chrysler bailouts to reach $30b. Whitacre surely meant that a GM IPO will generate some kind of money for the Treasury’s 60 percent stake in GM, but the way it came out makes it sound like the bailout will be a positive investment for the government. That’s an impression that GM desperately needs to foster in order to have a chance at emerging from government control. Too bad it’s just an old-fashioned fib.

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Will CAFE Cause A Small Car Glut? Thu, 10 Dec 2009 19:15:40 +0000 The movement to nowhere?CSM Worldwide seems to think so, telling Automotive News [sub] that new compacts from Ford and Chevrolet are being pushed into the market to comply with increasing fuel-efficiency and CO2 emission standards. If gas prices stay steady, CSM’s VP for Forecasting, Michael Robinet says “extreme pressure to channel smaller vehicles in the market due to CAFE and emissions standards will raise incentives and lower profitability.” “It is very possible that U.S. automakers will not achieve their objectives of selling small cars at a profit,” adds CSM CEO Craig Cather. The crux of the argument is that CAFE ramp-ups to 35.5 MPG by 2016 create incentives for automakers to produce small cars without corresponding consumer demand. Luckily there’s a planned gas tax hike for that.

CSM admits that either an oil shock or a gas tax hike would increase demand for small cars, effectively nullifying their argument. And given the DOT’s rhetoric recently, that seems like a very plausible scenario… after all, even the most virulent anti-tax types would sign up for an indexed gas tax given that the alternative could be a pay-per-mile GPS tracking scheme.

But there’s more to CSM’s analysis than politics. AN [sub] explains:

Increasing competition in the subcompact and compact segments, which have long been dominated by Asian automakers, may also hamper Detroit automakers’ goal of making money on selling small cars, CSM said.

In short, CSM isn’t actually worried about a small car glut, it’s simply collecting excuses for the seemingly inevitable failure of Detroit’s compact offensive. After all, CAFE standards apply to the “Asian automakers” just as much as they apply to Ford and GM. The real problem is that the Detroit has a hard enough time getting consumers to consider its traditionally strong products like large cars and SUV/CUVs, and will be even harder pressed to drum up interest in its new compact offensive. The steady growth in the small-car segments that even CSM admits are occurring will simply go to the manufacturers who have maintained a stronger presence in those segments.

Will Detroit face an uphill battle selling the compact cars that are filling its future-product pipelines? You betcha. Is it CAFE’s fault? Of course not. CSM’s analysis is, at best an argument for a gas tax hike. Given the government’s 61 percent “exposure” to GM (and its heavy investment in small cars like Cruze, Volt, Spark, and Aveo), such a hike seems all the more likely.

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Bailout Watch 574: Legal Bills To Pile Up Through 2010 Mon, 30 Nov 2009 19:54:02 +0000 A lose-lose situation... unless you're a lawyer. (courtesy:abc news)

Compared to the tens of billions of dollars in lost taxpayer investments in GM and Chrysler, the lawyer bills for the twin bankruptcies are relatively inexpensive. The Freep reports that legal and consulting fees have already exceeded $120m, with another $3m pending for September and October, and more to come. According to court records, Chrysler’s chief financial advisors during its bankruptcy, Capstone Advisory Group, has received $17m in taxpayer money, with some $10m going directly to the firm’s Executive Director Robert Manzo. Chrysler’s lead counsel, Day Jones, received $40m through last August, and estimates place the firm’s eventual tab to total somewhere around $115m. GM’s bankruptcy advisors AlixPartners and Evercore Partners received $26m and $13m respectively, while its head lawyers, Weil, Gotshal & Manges received nearly $72m. And with the liquidations of Old GM and Chrysler far from over, the legal bills will continue to mount, likely past 2010.

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