By on November 21, 2021

2005 Pontiac Vibe in Colorado junkyard, LH front view - ©2021 Murilee Martin - The Truth About CarsSeveral hooptie-centric road rallies take place every warm season in Front Range Colorado, including the 24 Hours of Lemons Rally, the Rocky Mountain Rambler 500 Rally, and the Colorado Gambler 500 Rally. Teams will build crazy stuff— say, a Lincoln Continental Mark IV filled with three tons of engine-heated water or a gutted Volkswagen R32 converted to a doorless post-apocalyptic Astroturf nightmare— or just acquire some random cheap car, decorate it, and beat it half to death on Rocky Mountain fire roads. As you’d expect, many of these cars go right to the nearest boneyard when the rally is over, and I find quite a few of them during my junkyard travels in northeastern Colorado. Here’s the “Good Vibes” Pontiac Vibe, found in Denver over the summer. Read More >

By on May 23, 2014

Department of the Treasury

Back in 2004, perfectionist homemaker and well known TV personality Martha Stewart was charged with insider trading. As presented, the facts in the case were simple. Martha owned stock in a medical research company called ImClone and, like a lot of people who invest in tech firms, she was hoping for a big payout when their product, a promising new cancer treatment, went on the market. Unfortunately, the FDA chose not to approve the drug and the value of the stock looked set to take a beating once the decision was announced. According to the charges initially brought against her, Martha and many of the company’s top executives learned of the FDA’s decision though their inside connections the day before it was publicly announced and were able to sell their shares before they crashed. That’s against the law and many of the people caught up in the scandal, including Martha who was convicted on the charge of making false claims to a federal investigator, ended up going to jail. Read More >

By on March 22, 2013

Facing tough German competition, the people at General Motors come up with a large-displacement supercharged contender that outpowers but also out-weighs the BMW-and-Benz-powered entries. The look of their new model is controversial, but we’re told that it has to be that way due to existing platform constraints. And, of course, they’ll need a massive cash injection from the United States Government to make the whole thing happen, and they’ll get it, even though the aforementioned government wants them to build something completely different.

Wait a minute. Did you think I was talking about the CTS-V? Pas du tout! Set the wayback machine for the big band era, and let’s hear a story about how General Motors (allegedly) sabotaged the strategic plans of the United States in order to further their own economic interests.

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By on July 23, 2010

Now that GM’s acquisition of the subprime lender AmeriCredit has had 24 hours to sink in, howls of protest are starting to surface. The charge is being led by Senator Chuck Grassley, who has requested a review of the deal from the SIGTARP, saying

If GM has $3.5 billion in cash to buy a financial institution, it seems like it should have paid back taxpayers first.  After GM’s experience with GMAC, which left GM seeking a taxpayer bailout, you have to think the company and, in turn, the taxpayers would be better off if GM focused on making cars that people want to buy and stayed clear of repeating its effort to make high-risk car loans.

And though Grassley’s criticism could be read as mere partisan gamesmanship from a leader of “the party of no,” there are a number of very good reasons for opposing the deal.

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By on July 15, 2010

After ending the first quarter of this year with $35.7b in cash and equivalents, GM was in the best position it’s enjoyed in decades. And yet, with an IPO prospectus looming, The General is seeking a $5b line of credit and trotting out EBITDAPRO as its in-house measure of financial success. Both of these tactics are hallmarks of companies that are doing poorly, and GM has already learned how problematic loading up on debt and sliced-and-diced financials can be. So why is The General inviting criticism from outlets like Edmunds Autoobserver, which characterizes GM’s push towards an IPO as the rebirth of old bad habits? The simple answer: “business execution.” In other words, GM may have a lot of cash, but it’s got nearly as many demands on its resources as well… and these cash drains hardly add up to a coherent strategy.

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By on July 5, 2010

Despite having more cash than debt for the first time in decades, GM is going back to Wall Street in search of fresh debt. Over the weekend, The General has been in talks with several banks to secure a $5b revolving line of credit to shore up its liquidity position ahead of an IPO that’s rumored to take place in August. At $5b, GM’s desired line of credit would essentially replace the $5.8b the automaker has repaid to the Treasury, and will help it deal with a number of pressing cash needs to maintain its shaky global empire. But with so many pressing uses for the cash, and political pressure mounting for a rapid IPO, can GM deal with its issues and take on more debt and be worth what the government wants it to be worth? Troublingly, the answers to these questions are not to be found on GM’s balance sheet.

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By on May 29, 2010

As yesterday’s sales graph proves, this is not the greatest time to be re-launching an entry-luxury brand. With Kias and Fords offering the kind of tech gadgets once found only in the upper echelons of true luxury brands, and with well-regarded import luxury marques moving into the front-drive, mass-market, the so-called “premium” brands are finding themselves caught in the middle and losing sales. But in spite of these damning dynamics, GM is moving to overhaul its entry-luxe Buick brand at top speed. Why? Because it can…

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By on April 19, 2010

GM’s government-installed Chairman/CEO Ed Whitacre hasn’t been wildly popular with Detroit insiders, earning dismissive raspberries from more than a few corners of the industry’s peanut gallery. But now that his reign of executive terror is over, Detroit seems to be learning how to stop worrying and love the former AT&T man. As Whitacre prepares for his first visit to Washington DC as head of GM, the local media and other members of “Team Detroit” are making their peace with Whitacre. So what lies beneath the new united front?

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By on December 6, 2009

Panic in Detroit. And Shanghai. And Russelsheim. And Bupyeong...

News that GM is selling a control-shifting single share in GM Shanghai to its Chinese partner SAIC was the toads-from-heaven flourish at the end of an epic week for the RenCen. The day after the last of GM’s lifer CEOs left the building, Opel’s CFO followed suit. One management re-organization and a rough LA Auto Show later, came this symbolic surrender of GM’s largest market for a measly $85m. Accompanied by news that The General would buy out Suzuki’s stake in CAMI for an estimated $46.5m, no less. Oh yeah, and something about India. Freshly-minted CEO and notorious rattlesnake killer Ed Whitacre isn’t about be accused of not trying to shake things up. The only question is where will everything land?

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By on December 1, 2009

Recently, it’s become popular to believe that when a zombie loses its head, it dies. With today’s resignation of Fritz Henderson, the reanimated corpse of General Motors is testing that theory. Henderson was the latest in a line of GM lifers to hold the company’s reigns, hand-picked by ousted CEO Rick Wagoner and put in place by a presidential task force that couldn’t say no to another insider. In theory, Henderson’s resignation shouldn’t come as a surprise, let alone a disappointment. In practice though, the move leaves the zombie GM in a precarious position at a challenging moment. For the first time since (your guess here), GM is in the hands of an outsider.
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By on November 16, 2009

Time to head.. out... uh... somewhere! (

GM’s first post-bankruptcy financial data has arrived, underscoring in red ink the folly of the government “investment” in the shambling zombie once known as General Motors. Bankruptcy-driven improvements in cost structure have not prevented GM from turning a non-GAAP-certified loss since emerging from Chapter 11, and GM is already warning that 4th quarter results will be even less attractive. More importantly, beneath all of the interpretation of this latest batch of weak results, rests the biggest lie of all: GM will be paying back the taxpayers. GM has simply defined the terms of its debt as $6.7b, or about half the amount remaining in its $16b bankruptcy-present escrow account. The plan is to have the taxpayers pay off GM’s debt to the taxpayers, and collect the remaining $6b or so for operating cash.  When called on the ruse, GM CEO Fritz Henderson has only one defense: Taxpayers will receive their just reward only when GM’s IPO relieves them of their 60 percent equity stake. But even with the goalposts moving up in hopes of a PR win, there’s little evidence that GM will come close to paying off their full bailout bill.

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By on October 22, 2009

Not so delightful, really. (courtesy

OK, so, GM is a nationalized automaker. I know, I know: nationalization is for third world dictators. But there it is. Thanks to outgoing president George Bush, the feds used $50 billion from the Troubled Asset Relief Fund to bail out General Motors, in exchange for majority ownership. So no matter what W’s political successor says about his administration’s “hands off” non-management of Government Motors, he who owns the gold makes the rules. And when it comes to running a federal-funded organization, Uncle Sam plays by different rules than, say, any private enterprise extent. The bottom line is that there is no bottom line. Amtrak, the U.S. Postal Service, Medicaid—they’re all run at a tremendous, ongoing loss. Which means there’s zero sense of accountability. Which means they will never, ever be able to fully and fairly compete with privately held corporations. Why should GM by any different? Answer: it isn’t.

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By on October 18, 2009

Back in the day, GM really pissed me off. As the American automaker continued its inexorable slide into bankruptcy, executives, analysts, journalists, loyalists and camp followers scoffed at the prospect of disaster. Their scorn fueled my anger or, as Angus Mackenzie would have it, pompous indignation. When the feds bailed-out and then nationalized GM, the company’s refusal to overhaul (keelhaul?) its executive “talent” kept my ire alive. A few months and $50b-plus dollars later and I’m rapidly approaching the point where I couldn’t give a NSFW. How many times can you sing the chorus of “Where have all the flowers gone?” without saying FTS and cranking-up the MC5? Before I abandon this pursuit entirely, here’s a quick rant about GM’s inability to realize American’s favorite mantra: hope and change.

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By on September 11, 2009

General Motors is a nationalized automaker. But it can’t stay that way forever. Its federal taskmasters have decreed that GM must return to public ownership before the Congressional mid-term elections in 2010. Makes sense. If GM is still on welfare at election time, GM will be an enormous political liability. A symbol of Big Government gone bad. But GM can’t possibly achieve profitability within that time frame. Even if it had the brains, it doesn’t have the time or money to build what needs building, to fix what needs fixing. The new car market sucks and GM’s product planning, reputation and branding are in tatters. So New GM’s doing the only thing they can do: putting lipstick on the product pig and sending it off to market. This “May The Best Car Win” advertising strategy will backfire. Badly.

You can certainly understand the thought process involved. The campaign is, after all, Bob Lutz’s brainchild. For more than half a decade, the former Car Czar has been claiming there’s nothing wrong with GM’s products (especially the vehicles developed during his watch). Lutz has consistently blamed the so-called “perception gap” for GM’s epic fall from grace. Our products used to suck at some indeterminate point in the past, but they don’t anymore, starting . . . now! Wait . . . NOW! In other words, it’s not the product, stupid. It’s the perception of the product.

I have no idea how Lutz seized on the idea that perception and reality aren’t part of a feedback loop. For someone who never saw combat, he has an extremely cynical view of human nature. Less perplexing: why New GM is allowing Lutz to bet the entire company on Maximum Bob’s belief that carpet-bombing consumers with “enlightenment” will somehow save the day. Again, GM has no choice. They don’t have the time to create the incremental improvements they need to build, market and sell the genuinely competitive products which would generate a profit in the North American market.

Speaking of loops, Lutz would say that my assessment of GM’s competitiveness is just my [biased, GM-hating] opinion. But it’s also the opinion of millions of American consumers over the last three or four decades, who’ve been abandoning GM for other car companies. I mean, ipso facto, right?

In truth, GM’s comparison tests will offer little more than invidious distinctions. To wit: GM’s new ads will pit the Chevy Equinox against the Honda CR-V, and the Buick LaCrosse against the Lexus ES350. And so on. According to Automotive News, “Lutz said in the rare cases when both cars match each other feature for feature and warranty for warranty, the difference will be illustrated in sticker price.” So we’re talking about feature comparisons and price comparisons. What was that about the definition of insanity?

Lest we forget, GM’s been driving down this road for some time. Howie Long’s Chevy ads, focusing on relative mileage and manliness, have done exactly nothing to stem the Bow Tie brand’s sales slide. The ads were arrogant, condescending and, at the end of the proverbial English day, ineffective. So ineffective they always ended in a plug for “the deal.” What’s different this time?

Nothing. GM’s “May the Best Car Win” head-to-head ad campaign completely glosses over the fundamental question that a real bankruptcy forces a company to face: “Well, how did I get here?” With a few not-so-notable exceptions, the products that GM is about to present as class-leading are the same products that ushered the company into [its first] bankruptcy. Discount the idea that customers are to blame or the competitors suddenly got worse, and you’re left with an inescapable conclusion: same as it ever was.

The “May the Best Car Win” campaign also reveals Lutz’s ongoing and misplaced belief in symmetrical warfare. Ironically enough, the larger-than-life fly-by-the-seat-of-his-pants suit has convinced his bosses that rational comparisons will finally convince consumers of his paycheck provider’s product superiority. But, Bob, that’s not what sells cars. Brands sell cars.

This is no small point. GM’s fall from grace is not about its products, per se. It’s about the company’s ongoing and abject failure to create compelling brands that sell products (and services) that embody the brands’ promise. Never mind the LaCrosse vs. the ES350. Who would buy a Buick instead of a Lexus? Or a Chevrolet instead of a Honda? The people who would are, and the ones that don’t, won’t. No head-to-head model throwdown is going to change the overall dynamic, and/or the minds of people who vote with their wallet.

There’s only one way Lutz and Co. can win this “debate”: frame it in the context of a battle of the brands. But first they have to create four tightly-gathered, clearly expressed branding concepts (e.g., Cadillac as the “standard of the world”), then build products and services that realize that promise. Until and unless New GM grasps that nettle, potential customers will see “May the Best Car Win” as bilious bailout braggadocio, while existing customers will see it as an invitation to jump ship.

Never mind. Time’s up. While we await the inevitable, GM has placed the cart before the horse, and invited potential customers to tell them they’ve gone about it the wrong way. Only this time, when they make their choice, when the best car company wins, everyone loses.

By on September 8, 2009

Ron Bloom is a Harvard MBA grad, investment banker and former advisor to the U.S. Steel workers. He’s also the head of the Presidential Task Force on Automobiles, now that Steve Rattner is busy defending his investment firm against bribery charges. Over the weekend, the Obama administration added Manufacturing Czar to Car Czar in Ron Bloom’s portfolio of power. “Bloom is to work with government departments including Commerce, Treasury, Energy and Labor to develop new initiatives affecting the manufacturing sector. The White House said Obama is committed to partnering with the private sector to spur innovation, invest in the skills of American workers, and help manufacturers prosper in global markets by promoting exports.” In other words, after nationalizing GM, Obama’s mob are now looking to screw up all the other parts of America’s manufacturing base. A quick joke . . .

As GM headed for oblivion, the executives shielded themselves from responsibility by blaming everyone else. The contention that the American automaker was on the cusp of recovery (again, still)—only to be waylaid by the entirely-out-of-its-control global economic meltdown—was only the final excuse for their epic mismanagement. Before that, GM had an entire litany of alibis for their slide into Chapter 11. Number one on the “it wazzunt me” hit list: Washington.

The carmaker bitched and moaned that it was being strangled by Washington’s safety regulations, fuel economy mandates, health care policy (take our legacy costs, please!) and foreign policy (plagued as it wasn’t by Japanese currency manipulation and import restrictions). But when it was time to face the music, GM’s suits leaped into Uncle Sam’s loving embrace, glad to become America’s first nationalized automaker.

See, now that’s funny.

Only not really. In truth, companies like GM—and there are more than a few of them—love federal regulations. They happily pass the cost of meeting governmental diktat directly to the consumer. Or, better yet, they get the government to pay for the cost of meeting government regulations. Case in point: Section 136 of the Energy Independence and Security Act of 2007. This greenwashed piece of pork directs the Department of Energy (DOE) to hand out $25 billion worth of no- to low-interest 25-year loans to automakers to retool factories to build cars that satisfy new federal corporate average fuel economy (CAFE) regulations.

Note the hidden dynamic: the federal regs provide an enormous barrier of entry to smaller car companies, who can’t afford to pay for meeting the regs, pass on the costs to their customers or lobby Congress for their share of the pie.

What smaller car companies, you ask? Well, exactly. Electric sports car maker Tesla Motors is the exception that proves the rule: a Silicon Valley start-up that managed to secure itself a $465 million mega-suckle on Uncle Sam’s teat. Otherwise, brash automotive independents are a thing of the past. They’re consigned to the industry’s early history, when federal regulations (and related subsidies and tax credits) were notable by their absence.

The counter to the “Uncle Sam killed the creative cluster” contention: if the feds hadn’t stepped in, automobiles would still be gas-guzzling, toxin-belching, rickety baby killers. The government HAD to sort out the chaos of competition for the public good.

But is that true? If so, why did it take Tesla to finally spur GM’s [previous] Car Czar Bob Lutz into action on the EV front? More to the point, do we really believe that car makers would have failed to provide seat belts, crumple zones, air bags, clean-running engines, etc. if Uncle Sam hadn’t spent huge amounts of time and money twisting their arms?

I know the idea that the carmakers would have done the right thing anyway—simply to remain competitive—runs against the commonly held belief that big companies are fundamentally amoral (i.e. “Capitalism: A Love Story”). As a former GM Death Watcher, I’ll admit that there’s more than a little truth to that assertion. But how did these big companies get to have such a stranglehold on the marketplace in the first place?

Again, you have to look at the role of government regulation and oversight in creating the monolithic manufacturers—before Uncle Sam decided they had to be dragooned into saving lives and protecting the planet and other social goals.

Whether you’re talking about making things or providing health care, President Obama’s “public private partnership” is not new, nor will it do anything to help the American economy get back on its feet. American history is littered with examples of the negative effects of excessive government control of/interference with the private sector. In this I refer you to Jonas Goldberg’s rambling rant, Liberal Fascism. And point my finger at GM.

By promoting Bloom to “fix” America’s manufacturing base, the Obama administration would have us believe that his main man has already “fixed” GM. At best, you could say the jury is still out. At worst, you could mention the fact that GM is a headless, nationalized chicken, running around in a vain, mindless attempt to avoid an inexorable fate brought on by its taxpayer-provided protection from accountability. Or, if you will, it’s a zombie.

To let Ron Bloom loose on other parts of our industrial sector, to encourage him to impose the government’s will upon large companies, is madness; regardless of how willing these large companies are to accept government assistance. The intervention ignores Ronald Reagan’s warning that the most dangerous words in the English language are “We’re from the government and we’re here to help.” Or the message behind that message: that America’s true economic strength lies in its free markets, engendered, fostered and protected by a lack of government interference.

Meanwhile, the Germans are pressuring the Americans to convince GM to let the Russians (fronted by the Canadians) buy GM’s German-financed Opel division. Maybe Big Ron should go sort that shit out. Or not.

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