By on October 10, 2010

As GM’s IPO draws closer, GM (and the government) is doing everything they can to make GM as attractive as possible to the market. The Freep reports that GM is promoting the Volt as much as they can to highlight how much GM has changed. Unfortunately, all it takes is one pesky credit rating agency to undo all that hard work.

AP (via ) reports that Fitch has bestowed a “Junk” rating on GM in the first assessment of GM’s creditworthiness since leaving bankruptcy. The reason behind this bitch-slap (let’s not mince words, here) is that Fitch believes that GM’s pensions are heavily underfunded (to the tune of $27 billion last December) and that car the market still has uncertainty in front of it. Fitch did give props to GM, saying that it had come a long way since its bankruptcy, having better financial flexibility. It also praised its strong cash position (when you’re hooked up to the US treasury, money is seldom an issue), better cost structure.

Naturally, GM refused to comment on Fitch’s rating. In (possibly) unrelated news, The Freep reports GM has increased the pool of shares which can be distributed amongst its executives. Originally, GM had allocated 10 million shares to this pool, but now that figure has grown to 25 million. Any single senior executive can receive up to 1 million options or 250,000 stock units. Is GM returning to their excessive executive compensation schemes or are they giving shares away because they’re a little fearful of the success of the IPO? Either way, this IPO is going to be interesting…

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11 Comments on “GM Has A Lot Of Junk In The Trunk...”

  • avatar

    If you were to start your own car company from scratch with the intent of going public, would you establish three separate distribution channels, one of which sells two brands that are mechanically similar to the biggest one?  Would you even bother competing in high-cost Europe?  I hope all works out with GM, but it still seems to me that the company is saddled with negative legacies.  I can’t believe they expect to mount a serious threat to Mercedes and BMW with the Cadillac dealers (old non-dedicated facilities) in my area.

  • avatar

    “Bitch slap”? Get real. It would be more surprising if a still-restructuring pre-IPO company less than 18 months out of bankruptcy WEREN’T given a sub-investment-grade rating. I know that part of TTAC’s schtick is making anti-GM hay out of anything that comes along, but this post borders on ridiculous.

    • 0 avatar

      GM deserves all the anti-GM flak it receives here, and more.  GM needed a bitch-slap 50 years ago

    • 0 avatar

      @zbnutcase: Insisting on a negative view of every news bit because of GM’s past will make it impossible to see real change if and when it does occur. It’s a bad way to follow a company. People like Dan Akerson or Chris Liddell didn’t have anything to do with the GM of 5 yrs ago, much less 50.

  • avatar

    What surprises me about all of this is that GM’s credit rating as issued by Standard & Poor is actually higher than Ford Motor Company’s, despite many automotive enthusiasts considering Ford to be a much better sorted company. Makes me wonder what skeletons are in Ford’s closet…

    • 0 avatar

      What’s in Ford’s closet? $20-something billion worth of debt. Ford is a much better-sorted company at this point, but GM got the hard part of its restructuring accelerated via the government and the bankruptcy court, and that left it with much less in the way of debt. Not all “automotive enthusiasts” can read a balance sheet.

  • avatar
    Da Coyote

    Hey UAW, since you’re now living on my dime, howz about slithering to the local junkyard and find and rebuild the pieces of s***, er, pieces of Obamastuff that you tricked me into buying in the years before I discovered that you had only one engineer working for the entire company -and that idiot had an MBA with a D- average.
    May you all be forced to get medical coverage of the quality of your cr*ppy cars.  Eat Obamastuff and die!

  • avatar

    First I have to comment on the photograph and I’m sure it was not done intentionally but were you aware that the trunk looks like a Fiat 124 Spider (if I’m not mistaken)? :-)
    Either way, a waste if you ask me carrying around all that crap, just because without some reason for it.
    I know a lot of people are ranking on GM these days, and for good reason, they have sold us a bill of goods with crappy cars for decades, piss poor management and all that and every time they say they are going to change, they end up not doing so and we are back to square one. And so with that and with recent stories abound since they became Gov’t Motors and all this “change” (to put it mildly) and then with a bunch of caveats put forth with the introduction of the IPO leaves me very skeptical of them, much more so than Ford or Chrysler at this point and time, in fact, I have more faith with the Fiat/Chrysler merger than I do with GM at this time and thus won’t change my mind until I see some REAL progress from GM.
    But it will require some time to see how all three fare in the next few years anyway and I would not be surprised if we lose another company (GM probably the most likely if they fail to really change).

  • avatar

    These “wonderful” little new cars, even if they sell well just don’t make profits.  The last time GM really did anything new in the small car department was the Corvair in 1960.  (Sorry, but I had to say that.)  First GM said Vega was a great car, than the Monza, than the Cavalier was going to be outstanding, and lets not forget the Cobalt.  We wish we could though! Why now are we susposed to believe GM can build great little cars?  I just don’t see GM around for the long term.  Bankruptcy didn’t fix their real problems.  I’ll never own another GM car again.

  • avatar

    What makes GM junk is all the cars in their line up that sell at a loss. When has GM ever put a priority on profitability? Is GM’s new ‘loss leader’ the Volt or will the Corvette still lead losing?

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