By on March 16, 2009

The Financial Times carries the crazy news that General Motors is planning to celebrate its next bailout check by throwing more money–-your money—on the hood of its moribund metal. I repeat, GM wants to increase sales and reduce profits by using your taxes to reduce its prices to sell its cars that it wouldn’t be making–-couldn’t be making—if GM didn’t get some $30 billion of your tax money. This would [almost] explain GM’s otherwise inexplicable decision to increase production during the second quarter by 45 percent: they really do believe they’re going to sell a shit load of cars. Which they might if they slash, say, 50 percent off sticker. Hell, why not? It’s not their money. As TTAC, commenter lw points out, “the new owners are not interested in profits.” Wait! Don’t tell me! GM announces it’s “Thank You America” sale.

No, really. Advertising Age carries the also-not-entirely-unexpected news that GM dealers are tired of everyone saying GM’s going out of business. It’s . . . bad for business. They want The General to come out fighting.

“I would like them to make any kind of bold move,” said Bob Bakshi, a dealer in Valencia, Calif., who handles Buick-Pontiac-GMC and Cadillac. “I think a bold move is needed, like ‘Keep America Rolling,'” the marketer’s interest-free incentive following the attacks of Sept. 11, 2001.

Memo to Bob. Bold Moves is a Ford thing. Kinda. But don’t worry: Marketing maven Mark LaNeve is man after your own heart. With a razor.

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19 Comments on “Bailout Watch 441: GM Set to Spend New Bailout Bucks on Fresh Incentives...”


  • avatar
    PeteMoran

    …or perhaps GM have been directed to keep people employed, buy parts from suppliers and help the dealership’s stay open by ‘buying’ customers. That was the rationale of the bailout after-all.

    It won’t be a problem – there are still plenty of places to store unwanted new cars in the USofA.

  • avatar
    John Horner

    “Keep America Rolling” set the stage for the disaster GM faces right now. That promotion put all of the domestic intender customers on bargain hunter notice. Only chumps pay anything close to MSRP for a new GM vehicle … just wait, sometime soon it will be discounted $5k-$15k.

    Despite many promises to get off the cash-on-the-hood crack, the junkies literally can’t help themselves.

  • avatar
    romanjetfighter

    I’d rather my tax dollars help with my fellow Americans buy a new quality car than pay for healthcare for people who don’t even pay taxes.

    There. I SAID IT!!!!

    Besides, a new car purchase helps the economy.

  • avatar
    CarPerson

    RF says: …increase sales and reduce profits…

    Actually, throwing Bridge to Nowhere money on the hood instead of it’s own, GM is out to increase money to the drones that keep Red Ink Rick in power profits.

  • avatar
    ihatetrees

    How many more taxpayer billions until GM can sell nicely equipped 4×4 Silverados for $12K? That was my bankruptcy price point.

    romanjetfighter:
    Besides, a new car purchase helps the economy.

    Purchasing a lightly used domestic vehicle at a 40-50 percent discount helps the economy too.

  • avatar
    tankd0g

    Just mail the money to every man, woman and child in America and let this dinosaur die!

  • avatar
    meefer

    You put that on a Vette or CTS-V, then maybe.

  • avatar
    Dan Yeo

    Rob,

    I 100% agree with the idea that this giveaway is assinine as well as your thesis that GM should go bankrupt. I also subscribe to the school of thought that says “given a way to screw up, a bureaucrat will,” and even until a few days ago assumed that as unworthy as it is, GM was going to receive its bailout bucks.

    Now, I’m not so sure. There seems to be a lot of “positive” (i.e., in support) chatter regarding GM’s bankruptcy in MSM; combined with the NY Times non-article about the PTFOA finding the GM Restructuring Plan “optimistic,” I wonder if this marks a shift TOWARDS bankruptcy in the Administration, not away. The Obama campaign / administration has always been stellar at massaging the MSM, maybe this is related?
    Anyway, it’d be interesting to see a poll asking “do you support / not support bankruptcy” combined with “if you do / don’t, do you think it will / will not happen”

  • avatar
    97escort

    Which would you rather have tax money used for: $135 million in bonuses for AIG credit default swap traders out of a $170 billion bailout or a few thousand off the sticker on a GM vehicle?

    It’s an easy choice IMO.

    GM has large fixed costs in plant and employee compensation. Raising production just before the spring selling season may not be as stupid as it looks even with large inventories clogging dealer lots.

    Say’s Law is that supply creates its own demand.
    And as vehicles gradually move off dealer lots this spring and summer GM will be able to stuff them full again. And recognize sales in doing so.

    If they didn’t increase production their survival chances would look worse since the dealer to public sales are not on GM’s books unless I’m mistaken.

    Sooner or later some of the money being conjured into existence at the Fed is bound to trickle down to real people who buy things even to GM customers. Some are very loyal and will buy GM no matter what out of tradition.

    This is especially true in the Midwest where there are few foreign dealerships in smaller towns. And the rural agriculture based economy has not been hit as hard by the housing bubble and related Wall Street shenanigans.

    A lot of local yokels would love nothing better than a new Siverado.

  • avatar
    jerry weber

    Since the 1990’s gm has become addicted to incentives to move iron. Early on, it looked succesful as GM was able to boost market share and have every third car in America be one of theirs. However, the company lost forever the idea of selling cars at a profit. They dragged Ford and chrysler into this death spiral and by 2000, none of the domestics could sell anything for close to retail. Huge new rebates and gimmicks will temporarily empty some storage lots and save some dealers. But it is repeating the 90’s and here is what we will get: Dealers will remain unprofitable, resale values will stay in the toilet, buyers will wait until the deal get’s better and better, and finally, the entire auto industry will have it’s enema postponed for a year or two. If you can even dream that a car or truck discounted several thousand will ever sell for close to retail (and make a profit)you need to see a shrink.

  • avatar

    dpeppers

    I sent your comment back to you via email. The proper place to post it is in the Camaro thread.

    Thanks.

  • avatar
    kaleun

    With every car they sell and subsidize, one of the transplant cars doesn’t get sold and destroys a workplace. Americans only buy X number of cars. Helping one (bad) company, damages other (good) companies.
    There is no free lunch (except for GM & Chrysler management, of course)

  • avatar
    Bill Wade

    With every car they sell and subsidize, one of the transplant cars doesn’t get sold and destroys a workplace. Americans only buy X number of cars. Helping one (bad) company, damages other (good) companies.
    There is no free lunch (except for GM & Chrysler management, of course)

    A command and control economy run by Democrats only care about buying union votes and producing products that further their agenda.

    It will be quite interesting to see how this plays out. If it’s anything like military procurement, the demise of Detroit will be even faster than if the manufacturers had been forced to sink or swim on their own. I really don’t want a battery operated, safety bubble car incapable of speeds in excess of 35 mph. This is ultimately what our new masters desire. (Only because they can’t force everybody into public transportation)

  • avatar
    dpeppers

    Ok high inventory= higher incentives

    See article..

    https://www.thetruthaboutcars.com/cs-firstboston-chrysler-dealers-overstocked-by-40-gm-31/

  • avatar
    RetardedSparks

    This is just the third prong of the “We’re viable” PR campaign.

    #1 was: We don’t need your $2B
    #2 was: We’re boosting production 45% this month. See, we’re viable.
    #3 is: Lets see if more cash and advertising can but us a tiny little boost in sales for the next 2 weekends. Weather is getting warmer, everyone is announcing the economic crisis is over after 6 days of positive stock market results. I bet GM releases their March sales numbers at midnight on March 31st…

    I guarantee there will be #4, 5 etc up to the minute they get their next cash fix.

  • avatar
    gslippy

    NO NO NO NO NO NO NO NO NO NO NO NO NO NO!

    Exactly right RF!

    But hey, isn’t the check on this behavior the ‘business viability’ plan GM is supposed to conjure before March 31?

    Then again, that’s the only way the Volt will get sold….

  • avatar

    A helping government hand for one company is a blow in the face of its competitor. I’m sure this will give Ford and the American workers at transplants a warm and fuzzy feeling.

  • avatar
    TheFredMan

    ….all the more reason part of BO’s “Stimulus Plan” should have included some type of instant rebate for a new vehicle purchase (any vehicle – any manufacturer).

  • avatar
    MM

    romanjetfighter :
    I’d rather my tax dollars help with my fellow Americans buy a new quality car than pay for healthcare for people who don’t even pay taxes.

    Good point. But I’d prefer still my tax dollars pay for essential, inherently governmental tasks (Defense, Prisons, and a few other things), NOT subsidizing (anyone’s) car or propping up zombie banks and manufacturers.

    In five years, when Treasury is shoveling the second $100B into Rabid Rick’s pie hole, we’ll look back and rue the day we taxpayers climbed into bed and rolled over for GM…

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