Bailout Watch 230: WSJ LOLs at GM Rescue Plan
The Wall Street Journal’s Evan Newmark takes a look at GM’s Congressional bailout begging term paper. To paraphrase, “we are amused” (in a deeply cynical, bemused sort of way). More specifically, “The restructuring plan comes up short on the most fundamental question. Will this company actually make money? Just look at the details — or what details are lacking. GM says it plans to focus on only four brands. So why does the number of models only drop from 48 to 40? GM has 6,600 dealers, which it says it will cut to 4,700 by 2012. Honda has 1,300 dealers. Even Ford has only 4,100 — which it will cut further. And nowhere in the document does GM lay out, year by year, its own projected market share. This is perhaps the most critical part of any business plan. The kind of thing you learn in the first day of business school.” Yup, the WSJ gets it– in the same place the American taxpayer will… well you get my drift. More mill grist for left-brained nay-sayers after the jump.
“Turn to Exhibit B-1 — and you find something interesting. It is only in an appendix entry — and not stated explicitly. GM appears to have changed its market share assumption for 2009 GM U.S. volume from 20.6% a year ago to 22.5% today. In this environment, it seems strange that GM is actually increasing its market share assumptions. And car business is all about volumes. That points to the real flaw in the GM restructuring plan. The U.S. car industry has been a credit junkie that now has to go cold turkey.”
Ain’t that the truth. Once again. I’ll flag the fact that GM’s for-public-consumption rescue plan makes direct and specific reference of its strategy’s dependence on a federal bailout for GMAC. That’s GM’s once-captive soon-to-be-a-bank finance arm that wrote paper on just one to two percent of GM’s November new vehicle sales. And who owns the majority of GMAC these days? The same peope who own Chrysler. If you want to talk about enabling, here be dragons.
Newmark delivers the coupe de grace with characteristic clarity.
“Ask yourself how long it will take housing to hit a bottom and you’ll understand why the GM restructuring plan ain’t gonna cut it. Oh, it will work in Washington this week. But by next year, the U.S. taxpayer will be left holding the bag.”
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