Let them fail!

[Michael OLeary]

The Sobey's,  after ringing up $250+ in groceries inform me that I can't use my EF bags there.

And how would he have intended to stop you from using them?

 

[a_majoor]

Back to cars, or at least the theft of taxpayer dollars to car companies:

http://diogenesborealis.blogspot.com/2010/04/truth-about-gms-bailout-repayment.html

The truth about GM's bailout repayment

Shikha Dalmia, writing in Forbes Magazine, debunks GM's recent claim that they have repaid the US & Canadian governments "in full, with interest, years ahead of schedule" for their bailouts last summer:

    Uncle Sam gave GM $49.5 billion last summer in aid to finance its bankruptcy. (If it hadn't, the company, which couldn't raise this kind of money from private lenders, would have been forced into liquidation, its assets sold for scrap.) So when Mr. Whitacre publishes a column with the headline, "The GM Bailout: Paid Back in Full," most ordinary mortals unfamiliar with bailout minutia would assume that he is alluding to the entire $49.5 billion. That, however, is far from the case.

    Because a loan of such a huge amount would have been politically controversial, the Obama administration handed GM only $6.7 billion as a pure loan. (It asked for only a 7% interest rate--a very sweet deal considering that GM bonds at that time were trading below junk level.) The vast bulk of the bailout money was transferred to GM through the purchase of 60.8% equity stake in the company--arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return. (The Canadian government likewise gave GM $1.4 billion as a pure loan, and another $8.1 billion for an 11.7% equity stake. The U.S. and Canadian government together own 72.5% of the company.)

    But when Mr. Whitacre says GM has paid back the bailout money in full, he means not the entire $49.5 billion--the loan and the equity. In fact, he avoids all mention of that figure in his column. He means only the $6.7 billion loan amount.

    But wait! Even that's not the full story given that GM, which has not yet broken even, much less turned a profit, can't pay even this puny amount from its own earnings.

Actually the "repayment" was made using other government funds, so it is just an ENRON type accounting trick. We will never see our money back.

 

[a_majoor]

At least some politicians are willing to expose the GM fraud:

http://www.foxnews.com/politics/2010/04/26/lawmakers-accuse-gm-administration-misleading-public-loan-repayment/?test=latestnews

Lawmakers Accuse GM, Administration of Misleading Public Over Loan Repayment

FOXNews.com

A handful of lawmakers are accusing General Motors of misleading the public by continuing to claim as part of its advertising blitz that the auto giant has repaid its government loans "in full."
 
A handful of lawmakers are accusing General Motors of misleading the public by continuing to claim as part of its advertising blitz that the auto giant has repaid its government loans "in full."

General Motors has been running ads on all the major networks claiming the company repaid its $6.7 billion U.S. government loan "with interest five years ahead of the original schedule." General Motors Company CEO Ed Whitacre can be seen in the ad walking through an auto plant as he touts the company's progress.

But lawmakers, and even the inspector general for the bailout fund GM borrowed from, point out that General Motors only repaid the bailout money by dipping into a separate pot of bailout money. They say the company did not actually use its own earnings to make the early payment and are questioning why executives are making such a big deal out of it.

"The hype is not the reality," Sen. Charles Grassley, R-Iowa, wrote in a column on FoxNews.com over the weekend. "It is far from clear how GM and the Obama administration could honestly say, much less trumpet in prime time television ads, that GM repaid its TARP (Troubled Asset Relief Program) loans in any meaningful way."

Grassley wrote a letter last week to Treasury Secretary Timothy Geithner expressing his concerns and asking for more information about why the company was allowed to use bailout money to repay bailout money.

The $6.7 billion is also just a fraction of the $52 billion General Motors received in government aid. Grassley said lawmakers are being told government losses on GM are expected to exceed $30 billion.

The TARP inspector general, Neil Barofsky, bluntly told the Senate Finance Committee during a hearing last week that the repayment "is just other TARP money" and lawmakers should not "exaggerate" the feat.

"It sounds like they're kind of like taking money out of one pocket and putting it in the other to do that," Sen. Tom Carper, D-Del., said at the hearing.

Sen. Richard Shelby, R-Ala., expressed similar concerns Sunday on NBC's "Meet the Press," saying it's "misleading" for the administration to claim the company has paid back its loans.

The GM ad could potentially land the company in trouble with the Federal Trade Commission over its truth-in-advertising laws, which prohibit ads that are "likely to mislead consumers."

The FTC would not comment on the specific GM ad.

General Motors admits that the company is repaying the loan with other government money, but says a year ago "nobody thought we'd be able to pay this back."

 

[GAP]

Sweet.....for GM..

No wonder they're smiling at GM
By MICHAEL HARRIS Last Updated: April 30, 2010
Article Link

It’s time to admit that the taxers run the universe and the rest us of are just revenue serfs.

That doesn’t make it less crazy.

Take those self-congratulatory ads General Motors is now running — the avuncular, silver-haired president telling the world that the good ol’ car company has paid off all its good ol’ government loans early and is on its way to great things again.

The message conjures up a pretty nice picture.

Smiling assembly line workers full of pride in their work. Award-winning cars blowing the foreign imports away. Executives so canny that they have somehow managed to go through bankruptcy faster than undigested matter through a goose.

And then the loan repayment portrait taken with the prime minister to reinforce the impression that our money was not pissed away on a failed corporate elite but heroically invested in a good cause that turned out well.

I sincerely hope the future is as good as the commercials for GM. But just how did those government loans get repaid? Why with government money of course.

That’s right. During GM’s bankruptcy, the Obama administration created a special escrow account to assist the company. The balance was nothing to sneeze at — a cool $16.4 billion — part of the price Obama paid to get 61% of GM shares. Pretty good deal for GM; back in May of 2009 the company had an estimated worth of $500 million. With GM posting a $4.3-billion loss for 2009, Greek bonds were a better deal.

But the auto executives couldn’t get their hot little hands on all that moolah without permission from the U.S. Treasury. After all, the new government owners didn’t want to see it disappear into corporate jets and more Hummers.

So GM drew on its piggybank of taxpayers dollars very prudently. It paid off the Delphi bankruptcy resolution and other loans. The company understood just how profitable it could be under the Treasury’s rules if it “paid off” its government loans by June 30. By doing that, the restrictions on what was left in the escrow account would be lifted.

And that was no small matter. It meant that any money remaining in that taxpayer funded account could be “added” to GM’s cash reserves. So here’s the deal: In return for paying off $8.1 billion in government loans in the U.S. and Canada, GM can claim $5.5 billion still in the escrow account and spend it as they wish. Public money has made that exotic journey to private money through the wonders of government intervention.

The last stage of the GM miracle will be the sale of the company’s stock still held by the U.S. and Canadian governments. No doubt there will be new commercials when that happens celebrating the fact that the governments actually made profits on their investment and Stephen Harper and Barack Obama will have another photo opportunity to attest to their shrewdness. By then, the public money scarfed away will be long forgotten.

And who knows? After Toyota was knee-capped by the Obama administration (the majority shareholder in General Motors), GM might spring back into competitiveness once again — by using one government credit card to pay off another. 

No wonder that nice-looking old gentleman in the TV ads is smiling.
More on link

 

[a_majoor]

Pushback:

http://cei.org/news-release/2010/05/04/general-motors-deceptive-advertising-challenged-watchdog-group-ftc-filing

General Motors Deceptive Advertising Challenged by Watchdog Group in FTC Filing
By Christine Hall
Created 05/04/2010 - 12:17
subhead:
GM Ad Falsely Claimed Taxpayer Bailout Loans Were Repaid

Washington, D.C., May 4, 2010 –The Competitive Enterprise Institute today filed a formal complaint with the Federal Trade Commission, arguing that General Motors misleadingly claimed in a national TV ad that the company has paid back taxpayer bailout loans.

In the complaint, CEI urges the FTC to investigate the GM ad campaign entitled "GM Repaid Government Loan Ahead of Schedule.”  The ad features GM’s Chairman and CEO, Ed Whitacre, who declares that “we have repaid our government loan in full, with interest, five years ahead of the original schedule."

That claim, CEI explains in the complaint, “gives the false impression that GM has used its own funds to pay back all the bailout money that it received from the federal government.  In fact, GM has only repaid a fraction of those funds—barely ten percent.  Moreover, GM apparently repaid its loan by using other federal funds.”

To add insult to injury, GM’s misleading ad could unfairly dupe consumers into a false, renewed confidence in the company, the complaint explains. “Consumer purchasing decisions can easily be affected by such considerations, as the FTC has long recognized in prohibiting false claims that products are ‘Made in the U.S.A.’”

Sam Kazman, CEI General Counsel, points out the real-world absurdity of GM’s claim.  "If I applied for a car loan using GM's financially misleading approach, I’d be tossed out of the dealership on my ear."

“GM might argue that its ad is literally accurate, but the fact is it’s completely misleading,” said Hans Bader, CEI counsel.

CEI urges the FTC to promptly investigate, to “serve the American public on this issue of major consumer and taxpayer importance [and] “discourage other beneficiaries of government bailouts from falsely misrepresenting their status.”


> View the CEI Complaint of Deceptive Advertising by General Motors Company [1]

> View the GM ad on YouTube [2]

> Read more on the $4.7 billion GM bailout and related issues at Openmarket.org [3]

Source URL: http://cei.org/news-release/2010/05/04/general-motors-deceptive-advertising-challenged-watchdog-group-ftc-filing

Links:
[1] http://cei.org/rcandtestimony/2010/05/04/ceis-ftc-complaint-against-general-motors-over-bailout-ad
[2] http://www.youtube.com/watch?v=SSNPFVLIWjI
[3] http://www.openmarket.org/?s=General Motors&x=0&y=0&=Go

 

[a_majoor]

Now that GM is planning an IPO, more inconvenient truths are coming out:

http://www.nypost.com/p/news/opinion/opedcolumnists/model_corruption_ttyHIpNuoQRwVTkBZuhHeM

Model corruption
By MARK MODICA & HAL JOHN
Last Updated: 10:31 AM, August 13, 2010
Posted: 11:48 PM, August 12, 2010

General Motors plans an initial public offering as soon as today -- a first step in the government's effort to sell its ownership stake to private investors. The IPO comes on the heels of a much publicized plant tour by President Obama, who'll certainly hail the stock sale as proof he made a smart decision by bailing out the automaker with billions of taxpayer dollars.

But, to us, the IPO will be proof of something else: a White House that purposefully trampled the legal rights of investors -- many of whom, like us, are small savers -- to benefit its political supporters. Rather than a model of success and foresight, the GM episode is a model of corruption and cronyism.

Let's review the sordid history. Last year, the federal government bought a majority stake in GM for about $50 billion -- a sum equal to GM's market capitalization in 2000, when it was making record profits.

It should hardly be a surprise that the new GM, with so much money to work with (plus a special $16 billion tax benefit) would start inching into the black again. After all, Ford, without government help, has posted after-tax earnings of about $4.7 billion for the first half of this year -- more than twice GM's, even with the $1.3 billion second-quarter profit that "Government Motors" announced yesterday.

The bailout's announced goals required a more limited intervention than what Washington concocted. For example, a deal could have been brokered with strategic investors, as in a normal distressed sale, with GM's assets -- including its valuable Cadillac and Chevrolet brands and an expanding foothold in China -- passing from weak hands to strong.

But the fact that the administration mainly solicited advice from bankruptcy experts, rather than those in industry, is evidence that alternative solutions weren't considered.

Instead, politicians ran the company their way -- raining taxpayer money on key electoral states like Michigan and rewarding their staunch financial backers in the United Auto Workers union.

The devil, in this case, was in the details of the bankruptcy plan that the government pushed through:

Bondholders -- investors ranging from large institutions to retirees just scraping by, who loaned GM a total of $27 billion -- received just 10 percent of the company. By contrast, the government's $50 billion gave it about 61 percent.

And the union -- in return for the $20 billion that GM owed its health trust -- got a remarkable 17.5 percent of the stock plus $2.5 billion in cash plus $6.5 billion in preferred stock carrying a dividend of about 9 percent.

In other words, the UAW got three to four times as much as the bondholders for a smaller claim on GM's assets. The union even boasted to its members in May 2009 that it had made no concessions on pay, health care or pensions in the restructuring.

In effect, the government divided up GM's creditors into favored and unfavored groups, then gave a fat stake in the reorganized business to the favored (a k a longtime Democratic Party donors). On top of that, Washington also ordered the shutdown of 1,650 GM dealers and another 1,000 Chrysler dealers as part of its takeover.

In last month's audit, TARP's inspector general criticized the Treasury Department for that very decision. Treasury didn't show why the cuts were "either necessary for the sake of the companies' economic survival or prudent for the sake of the nation's economic recovery." The move "substantially contributed to the accelerated shuttering of thousands of small businesses."

Remember this as the president brags about recent gains in auto-industry jobs: Even though some plants have added union jobs, many in the dealerships have been lost.

But our main concern is what happens going forward. A terrible precedent has been set.

Small bondholders are essential to funding US industry. How eager will they be to invest their savings after seeing how the administration misappropriated the federal government's vast power and ignored long-standing bankruptcy law to reward its supporters at the expense of the less powerful?

We're pleased that GM is making a profit and, with the IPO, taxpayers should get some of our money back. But the government takeover of GM absolutely should not be framed as a success or, worse, as a model for the future. It was political bullying at its worst -- an arbitrary action befitting a banana republic, and deeply unfair to small investors who expected their lawmakers to play by the rules.

Mark Modica was a business manager at a now-closed Saturn dealership in Chalfont, Pa.; Hal John is an executive-search consul tant in Chesterfield, Mo. Both were steering committee members of Main Street Bondholders, a coalition of small GM investors.

 

[a_majoor]

The once and future IPO? Love the Monty Python reference

http://www.newsweek.com/blogs/kausfiles/2010/10/02/will-gm-s-ipo-actually-happen.html

Will GM's Big IPO Actually Happen?

Is GM's IPO going DOA?: When General Motors was bailed out last year, its recovery plan was based on acheiving at least a 19 percent share of the U.S. market. Here is a report from late 2009:

Oct 15 (Reuters) - General Motors Co's [GM.UL] turnaround plan assumes it can maintain slightly more than 19 percent of the U.S. market, board member Stephen Girsky said on Thursday.

"The public plan is 19 percent and change. That is what everything is being based on," Girsky said during a panel discussion at a conference at Columbia Business School. [E.A.]

Well, the September sales figures are now out, and unless I'm missing something GM's sales of 173,031 out of 959,049 total sales works out to 18.04%--that's 18 percent and no change. That drags the year-to-date total to 18.97%--and falling--by my calculations.
Hmm. GM is currently planning an IPO designed to allow taxpayers to sell at least some of their 61 percent stake in the bailed-out giant. The IPO is one of the things that lets the Obama administration claim the bailout was an "unambiguous success," in the words of former auto mini-czar Steven Rattner.

But isn't it looking increasingly like the IPO is in trouble? I'm not a Wall Street expert, but I can read the papers. The IPO's already been scaled back, apparently, to the point where taxpayers may not unload enough shares to put them under the 50 percent mark. The global economy is iffy. GM has just abruptly switched CEOs . Its balance sheet is "loaded with fluff," according to Bloomberg. Its own IPO documents admit its "internal control over financial reporting are currently not effective." UAW locals are restive. And its market share is now seemingly below the target level. (A percentage point of share is a big deal in the auto industry.)

I smell Kabuki! Here's the increasingly plausible scenario: The IPO was conveniently scheduled for after the November elections because the White House knew there was a good chance it wouldn't fly. Now they know that with more certainty. But until November 3, the prospect of the big fall sale allows Obama to portray the bailout as on track, minimizing voter disapproval of one of his most unpopular actions.

After the election, GM will discover that, gee, conditions just aren't ideal, and postpone the whole thing until some later, more auspicious date (which may never come).

The Wall Street Journal is already on to this possibility.

Still, with daily news about the ill financial health of countries from Greece to Ireland to Ecuador, U.S. taxpayers may have to be content to hold onto Government Motors a little longer.

How much longer does everybody else have to act as if the fall IPO isn't nailed to the perch?...
[/quote[

 

[a_majoor]

While this is really of interest to techno-geeks, it seems the GM Volt isn't even the type of car it was hyped and advertized to be. Rather than a serial electric car, it is a hybrid like the Prius, where the IC engine actually drives the wheels and electric engine(s) suppliment the IC engine when needed. The Prius is already on it's third generation, and this technology was funded in the United States under the Clinton Administration in the early 1990's  under the Partnership for the Next Generation Vehicle (remember that next time they tell you how "advanced" the Volt is):

http://green.autoblog.com/2010/10/11/flashback-bob-lutz-says-the-batteries-always-drive-the-volt/

Flashback: Bob Lutz says the "batteries always drive" the Volt
by Sebastian Blanco (RSS feed) on Oct 11th 2010 at 7:50PM

The big green car news today was that General Motors revealed that the 2011 Chevrolet Volt actually does have a direct mechanical connection between the gas engine and the wheels. For most everyone out there who's thinking about dropping $41,000 on the car (minus $7,500 in federal tax rebates and any local incentives), this little distinction won't make a lick of difference, especially since GM says the car's all-electric performance has been improved because of the connection.

For others, well, the Internet was ablaze today with claims that GM lied to us all (the Car Connection was a contrarian voice). There certainly is a case to be made either way, but we wanted to remind readers of Bob Lutz's appearance on the Late Show with Dave Letterman in May of 2009. Back then, Lutz said:

A typical hybrid is (where) the gas engine drives the vehicle most of the time. So, you're using less gasoline, but you're still basically driving a gasoline-powered car and the gasoline engine actually will drive the car through the transmisssion and then sometimes the electric motor will drive it. In the case of the Volt, the batteries always drive the car.
Emphasis obviously added and you can watch the video after the jump (the comment comes at about 1:50).

We don't know enough about patent law to know if what GM told us today – that it couldn't reveal all the details (like the mechanical link between the gas engine and the wheels) before today because it was waiting for a response from the U.S. patent office about the patent's status – hold legal water, but we don't know of any law that says you have to say what Lutz said on national television.

Whether today's "GM lied" meme turns out to be a big deal in the national media or not, the truth is that you can still use the Volt as a daily driver and use no – or very little – gasoline. How, exactly, that works doesn't matter to most people. Does it to you?

 

[a_majoor]

Stay far away from GM stock (you lost enough money already):

http://www.newsweek.com/blogs/kausfiles/2010/12/29/the-bull-in-gm-bullishness.html

The Bull in GM Bullishness

'Banks in GM's IPO Bullish on Outlook'! [Wall Street Journal] Last graf, best graf:
Money managers say it is common for analysts who work for an IPO's underwriters to issue upbeat reports, in spite of reforms adopted in 2003 that were meant to bolster analysts' objectivity. "I would be astounded if they were anything but bullish," said Jack Ablin, chief investment officer at the Harris Bank unit of BMO Financial Group, which didn't underwrite the IPO or buy shares in it.
Particularly unconvincing is the analysis of Credit Suisse, which predicts GM will catch up with Ford because in two years GM will "refresh" a lot of products. Surely it matters more if the refreshed products are any good.

To get a sense of what to expect, I bought the most recent Consumer Reports buying guide. GM is doing better than I thought—most of its products have "average" reliability, though CR's results have a certain Woebegonish quality this year. Nevertheless, seven GM products, including three Cadillacs, are worse than average for reliability, and only one (the Camaro!) is better than average. Ford, meanwhile, has at least seven cars better than average, including bread-and-butter volume cars like the Focus and Fusion (though there's no guarantee that Ford's new Euro-based Focus will continue this recent tradition). Only two Fords are worse than average ...

P.S.: Some "average" GM cars, like the Chevy Impala, tend to have lousy ratings in the models that are three or four years old. That could be because quality has been improving. Or it could be because Impalas don't hold up ...

P.P.S.: One additional risk for GM investors not mentioned by the WSJ: GM is very China-dependent. A third of its worldwide production is in China. If the Chinese market crashes, GM is in trouble ... On the other hand, GM is already starting to export Chinese-built cars. How soon before a China-built Buick comes to the U.S.? Don't tell Michael Moore ...

P.P.P.S.: GM stock is trading at about $36 a share. It has to hit $53 for the government to make back its bailout investment. I'm not saying that is the test of whether the bailout was worth it, given the jobs saved. But it's a test of something, and Obama has made a reasonably big deal of it ... 2:29 p.m.

 

[a_majoor]

Tyota may offer a Prius based pickup truck. The pictures look something like the old Honda Ridgeline, which I kind of liked as a semi practical SUV. Of course if I really need to haul great quantities of stuff or tow large loads, then a full sized truck is needed.

http://www.autoblog.com/2011/01/11/rumormill-toyota-considering-prius-pickup/

Rumormill: Toyota considering Prius pickup
by Noah Joseph (RSS feed) on Jan 11th 2011 at 9:27AM


2008 Toyota A-BAT concept – Click above for high-res image gallery

Think of the most aerodynamic passenger vehicle on the market. Now think of the least. In one corner you may have the Toyota Prius, with its wind-cheating, economy-boosting shape. In the other there's a pickup truck, with its boxy shape that looks about as aerodynamically efficient as the broadside of a warehouse. But if the latest reports are any indication, the two could come together before you know it.

Word has it that Toyota is considering reviving the A-BAT hybrid pickup concept that was unveiled three years ago at the Detroit Auto Show. The Advanced Breakthrough Aero Truck concept explored ways of making the pickup more efficient, and employed a hybrid drivetrain, unibody construction and a more compact shape.

If built, the A-BAT could join the Prius five-door and the new MPV variant – as well as a potential production version of the Prius C concept just unveiled at Cobo Hall – in the rapidly expanding Prius line-up.

 

[a_majoor]

More GM accounting trickery. Make sure your RRSP or mutual funds do not have (or have a very small weighting) of GM stock.

http://www.newsweek.com/blogs/kausfiles/2011/02/02/mikileaks-top-secret-content-generation-template-revealed.html

GM sales surge 23% in January": What's the catch? This is GM—there must be a catch ... Were they less desirable rental and fleet sales? No ... Did GM lard on the profit-sapping incentives? ... Bingo! ... Also: Like other manufacturers, GM counts as "sold" cars that have been shipped to dealers but not bought by actual customers. There were half a million GM cars sitting on dealers' lots last month that were part of the mighty sales "surge"—that's up from a mere 390,000 a year earlier. This increase in parked, unsold cars accounts for the entire January-to-January "sales" increase, no? ... Zero Hedge has a chart. ...

P.S.: I'm not irretrievably anti-GM—really. For one thing, GM's current cars tend to be better-looking than the competition simply because, thanks in part to ex-product czar Bob Lutz's old-school Europhilic tastes, they haven't caught up to the latest absurd fashions. For another, I've sat in a Chevy Volt and seen one on the street—and it at least looks very well made. Early reviews are favorable. We'll see how it holds up, especially after they "take $10,000" in cost out of it.

But hype is hype. I pledge not to go soft on GM until a) they make a Cadillac ("Standard of the World") with above-average reliability in Consumer Reports' ratings (right now the flagship CTS is actually "below average," an average that includes humble Kias and Mazdas); and b) the Lordstown, Ohio-built Chevy Cruze proves as bulletproof as a Honda or Toyota ... These are achievable goals! ... After that, of course, GM has to rapidly adjust to nonunion competition while it's saddled with cumbersome post-World War II Wagner Act decision-negotiating mechanisms. Good luck with that ...

I was pleasantly surprised by the quality of the Kia van I recently bought to replace the Caravan (which had literally fallen apart...). I now have between 5 and 7 years to contemplate what sort of vehicle to buy next...

 

[GAP]

GM hourly workers to get $4,000 bonuses
Tom Krisher Detroit— The Associated Press Monday, Feb. 14, 2011
Article Link

General Motors Co. (GM-N36.29-0.16-0.44%) will pay more than $189-million (U.S.) in profit-sharing to 48,000 U.S. hourly workers and millions more in performance bonuses to salaried employees, according to company documents obtained by The Associated Press.

GM will pay most hourly workers more than $4,000 each as compensation for its strong financial performance last year, said a person briefed on the bonuses. The payments come less than two years after the automaker emerged from bankruptcy protection with the help of a huge government bailout. They're more than double the previous record payment of $1,775 in 1999, at the height of the boom in sales of sport utility vehicles and pickup trucks.
More on link

 

[a_majoor]

Timing is off; the mid terms already happened and the 2012 Presidential election is too far in the future to influence yet...

 

[a_majoor]

For $50 billion we should have gotten somthing that would enthuse everyone:

http://detnews.com/article/20110228/AUTO01/102280401

Consumer Reports: GM's Volt 'doesn't really make a lot of sense'
David Shepardson / Detroit News Washington Bureau

Washington — Consumer Reports offered a harsh initial review of the Chevrolet Volt, questioning whether General Motors Co.'s flagship vehicle makes economic "sense."The extended-range plug-in electric vehicle is on the cover of the April issue — the influential magazine's annual survey of vehicles — but the GM vehicle comes in for criticism.

"When you are looking at purely dollars and cents, it doesn't really make a lot of sense. The Volt isn't particularly efficient as an electric vehicle and it's not particularly good as a gas vehicle either in terms of fuel economy," said David Champion, the senior director of Consumer Reports auto testing center at a meeting with reporters here. "This is going to be a tough sell to the average consumer."

The magazine said in its testing in Connecticut during a harsh winter, its Volt is getting 25 to 27 miles on electric power alone.
GM spokesman Greg Martin noted that it's been an extremely harsh winter — and as a Volt driver he said he's getting 29-33 miles on electric range. But he noted that in more moderate recent weather, the range jumped to 40 miles on electric range or higher.
Champion believes a hybrid, such as the Toyota Prius, may make more sense for some trips.

"If you drive about 70 miles, a Prius will actually get you more miles per gallon than the Volt does," Champion said.
But GM has noted that most Americans can avoid using gasoline for most regular commuting with the Volt, while its gasoline engine can allow the freedom to travel farther, if needed.

The magazine has put about 2,500 miles on its Volt. It paid $48,700, including a $5,000 markup by a Chevy dealer.
Champion noted the Volt is about twice as expensive as a Prius.

He was said the five hour time to recharge the Volt was "annoying" and was also critical of the power of the Volt heating system.
"You have seat heaters, which keep your body warm, but your feet get cold and your hands get cold," Champion said.
Consumer Reports will release a full road test of the Volt later this year and will update it.

Champion praised the heater on the all-electric Nissan Leaf - which Consumer Reports borrowed from the Japanese automaker -- but said it also got very short ranges in very cold weather.

On one commute, his range in a Leaf was at 43 miles when he turned onto an eight-mile stretch of highway, but it fell from 43 to 16 miles after eight miles at 70 mph.

"If it keeps on going down at this rate, will I get to work," Champion said.
Champion said in an interview he thinks the Volt "will sell the quantity that they want to sell to the people that really want it."
Despite his criticism of the Volt, Champion praised its acceleration and acknowledged that under certain driving cycles, consumers could mostly avoid using gasoline. The magazine noted the Volt is nicely equipped and has a "taut yet supple ride."
But he said there are a lot of trade-offs.

"They are going to live with the compromises the vehicle delivers," Champion said. "When you look at it from a purely logical point of view, it doesn't make an awful lot of sense."

Before Consumer Reports decides whether to recommend the Volt, it needs data from at least 100 subscribers who own one, and a year of reliability data.

dshepardson@detnews.com
(202) 662-8735

From The Detroit News: http://detnews.com/article/20110228/AUTO01/102280401/Consumer-Reports--GM’s-Volt-‘doesn’t-really-make-a-lot-of-sense’#ixzz1FK22ccjf

Just to set the record straight, the Volt is a hybrid like the Prius, not a serial electric car as had been implied (the gasoline engine provides direct torque to the wheels like the Prius; the primary difference seems to be the proportion of work between the gasoline and electric engines in each vehicle). Given this, a direct comparison between the vehicles is justified, and the Volt is distinctly inferior.

 

[a_majoor]

Keep an eye on your mutual fund portfolio, and get rid of aything with GM stock:

http://dailycaller.com/2011/03/02/behind-gms-sales-surge/

Q. GM’s recent sales surge–what’s their secret? Great new models? Superior quality? A:  Heavy price-cutting to goose sales (at an inevitable cost in profits). … Maybe that’s why GM stock is  plunging  priced so realistically. … P.S.: GM has now begun selling Chinese-made GM cars outside of China. Right now these are small Chevies aimed at developing markets.  How long before they are Buicks and Cadillacs marketed in this country? You think Americans won’t buy a Chinese-made Cadillac? Those must be the same Americans who would never buy a Japanese luxury car. … True, the Chinese Caddies won’t be as well made. They will almost certainly be better made.  (In the latest Consumer Reports survey, Cadillac still had “below-average reliability“). …

Read more: http://dailycaller.com/2011/03/02/behind-gms-sales-surge/#ixzz1FZ87RDvO

 

[a_majoor]

"Atlas Shrugged Motors" (heh)

http://www.pjtv.com/?cmd=mpg&mpid=86&load=5199

One key point is GE (who's CEO is on the Administration's economic policy board) will be able to pocket over $7 million of taxpayer dollars for the privilage of "purchasing" half of the production run. Sales of under 300 cars in the month of February does not bode well either....

 

[a_majoor]

More on the GM IPO:

http://dailycaller.com/2011/04/18/gm-suckers-update/

They sneered when kausfiles said GM was looking for “suckers” to buy its stock. They were not sneering all the way to the bank!  The stock has plummeted relative to the Dow and just dipped below $30. (The IPO price was $33.)  No way the taxpayers get their money back at this rate–for that to happen shares need to climb to around $50. And that’s under a conservative estimate of the government’s investment, one that ignores the tax … “spending.”  Sorry, Steve! … Underlying the decline: GM’s market share is not looking good. … P.S.: I’m thinking of leasing a Chevy Malibu myself: nice-looking car, supposedly handles well, OK reliability. And it’s not selling. Soon the dealers might be desperate. …

Update: GM stock dilution on the way? …

Read more: http://dailycaller.com/2011/04/18/gm-suckers-update/#ixzz1JwQCCKiT

 

[a_majoor]

The Volt seems to attract all the wrong type of attention:

http://www.msnbc.msn.com/id/43243050/ns/business-autos/

Some Volt dealers take tax credit for themselves
Limited supply of electric cars creates opportunity to 'game the system'

An enlarged label shows fuel economy information for a 2011 Chevrolet Volt. GM sold fewer than 500 Volts in May as it slowly ramps up production.

Image: Paul A. Eisenstein, msnbc.com contributor
By Paul A. Eisenstein
msnbc.com contributor
updated 6/2/2011 9:28:54 AM ET

If you’re desperate to get yourself into a Chevrolet Volt you might make a visit to the Kia dealer in Glendale, Calif. Though most Chevy dealers in the seven initial launch markets for the plug-in hybrid claim to be on back order, three “used” Volts are sitting on the Kia dealer’s lot.

But don’t expect much of a bargain. True, the asking price of $39,995 is a modest discount off the $41,000 sticker price. But a salesman at the suburban Los Angeles showroom said he did not believe the three Volts would qualify for the $7,500 federal tax credit allocated for buyers of new battery vehicles.

The salesman's comment suggests there is truth to reports that some dealers are gaming the system to claim battery car tax credits for themselves, as first reported by a conservative think tank called the National Legal and Policy Center.

“Many Volts with practically no miles on them are being sold as ‘used’ vehicles, enabling the dealerships to benefit from the $7,500 credit supplied by the American taxpayers on each car,” NLPC’s Mark Modica said in a blog post on the practice. “The process of titling the Volts technically makes the dealerships the first owners of the vehicles, which gives them the ability to claim the subsidies. The cars are then offered to retail customers as ‘used’ vehicles."

Modica, a former Saturn dealership manager, said in an interview he was reluctant to call the process a “scam,” preferring to describe it as “gaming the system.” Though it may technically be legal, “it is not right,” he said.

It is hard to say how many dealers have taken the tax credit rather than passing it on to consumers. Modica suggests the number could be in the dozens. A spokesman for General Motors acknowledged that it is happening but said the maker has only been able to track 10 instances.

“The notion that this is rampant is a misnomer,” said Robb Peterson, who handles public relations for the Volt.

Peterson stressed that in at least half of the cases the company is aware of, Chevy dealers in one of the launch markets — which include California, Texas and Michigan — sold a Volt to a dealer in a state where the vehicle will not be offered until later this year.

In one case an Atlanta dealer purchased a Volt from a Chevy store in New York and has been using the plug-in hybrid to demonstrate the technology to his customers, hoping to build demand once GM starts distributing Volts in Georgia. In that case the dealer who sold the Volt would clearly qualify for the tax credit, according to several sources.

But in the case of the Glendale dealer, the rules are a bit murkier.

A spokesman for the Internal Revenue Service declined to comment beyond pointing to the language of the tax code passed by Congress to help promote the sale of battery vehicles. According to Title 26 Section 30D, a vehicle qualifies for the credit when:

(a) The original use (of the vehicle) "commences with the taxpayer," or
(b) The vehicle "is acquired for use or lease by the taxpayer and not for resale."

That would suggest the Glendale dealer would have to lease out the vehicles rather than sell them to qualify for the tax credit.

Peterson said GM “strongly discourages"  dealers from the pocketing the tax credit on battery cars but added, “There’s nothing we can do. They’re independent franchisees.”

Is there something anyone can do? Consumers, of course, could simply looking elsewhere for a Volt that qualifies for a tax credit, especially if they’re willing to wait, though some early adopters are clearly desperate to get their hands on the plug-in hybrid.

Dealers are already making out well. Auto data tracking site TrueCar.com shows that the average buyer is shelling out $42,070 for a Volt, a solid grand over sticker.

Dealers are required by law to disclose whether a vehicle already has been titled or whether  the tax credit already was applied for.

Still, consumers could inadvertently apply for a second tax credit on the same vehicle. Complicating matters, the federal form used to request the credit does not require a vehicle’s VIN, or vehicle identification number, something that would seemingly make such duplications difficult.

In fact, the Treasury's inspector general for tax administration revealed earlier this year that as much as $33 million in improper battery car tax credits had so far been claimed, as much as $7 million of that figure considered unrecoverable.
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That is clearly worrisome, though it is debatable whether the “gaming” of credits for the Volt, as NLPC’s Modica puts it, should also be cause for concern. The center has taken an activist position in opposition to the 2009 federal bailouts of General Motors and Chrysler. And Modica lost his job when his Saturn dealership closed.

Those facts do not necessarily mean his report was unfairly biased. But he clearly has a thumbs-down attitude towards the Volt, insisting that “retail sales are dismal.”

It’s true that Chevy has been selling less than 500 Volts a month, fewer than half the number of Leaf battery-electric vehicles sold by rival Nissan. But GM has insisted all along that there would be a slow “ramp-up,” reflecting the complexity of the vehicle and the need to ensure both line workers and dealers can handle the new technology.

Paul Harriman, an Ann Arbor, Mich., artist and designer, had been told he wouldn’t be able to take delivery of a Volt until late 2012 or even 2013. But he is hoping that might be accelerated now that GM has announced plans to boost production after the factory in Detroit returns from its summer break.

The current production rate will triple to around 16,000 Volts annually, something that would seem unjustified if the pent-up demand wasn’t there, said several analysts.

At least initially, though the question is whether buyers will continue to wait in line longer-term — especially if dealers were to keep the tax credit for themselves.

 

[a_majoor]

How well did those bailouts work anyway?

http://www.financialpost.com/news/Another+Chrysler+billion+lost+Canada/4915944/story.html

Another Chrysler billion lost in Canada

In this story:TM US$81.29  $0.47F US$13.24  -$0.23
Data delayed at least 15 min

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Mark Milke, Financial Post · Jun. 9, 2011 | Last Updated: Jun. 9, 2011 2:04 AM ET

Milton Friedman once said his greatest fear about the 1979 U.S. government bailout of Chrysler was not that it would fail, but that it would succeed. Chrysler's rescue, he said, might lead some to draw the wrong conclusion -that such actions save jobs.

That's one wrong conclusion. Here's another, courtesy of Industry Minister Christian Paradis on Wednesday: that Chrysler paid back its entire loan from taxpayers. In a department news release, Paradis claimed that Chrysler repaid its loan "in full and ahead of schedule."

Actually, Paradis is widely off the mark. Chrysler repaid just $1.7-billion of the $2.9billion loan from 2009, or just 59%. The remaining $1.2-billion will never come back. That's something his colleague, Finance Minister Jim Flaherty, publicly admitted last week. "That part of the loan, initially, was made to the old Chrysler that is no longer with us," said Flaherty. It was in reference to Chrysler before bankruptcy reorganization absolved the "new" Chrysler of past debts.

Flaherty's comments came in a news conference where he, the Canadian Autoworkers Union (CAW) and the company argued the latest Chrysler bailout was a "success." But let's examine the notion that Chrysler's repayment of 59¢ on the dollar is somehow proof positive that government intervention worked.

Ponder how no sober Canadian bank -recall, the much-praised ones that survived the recession's meltdown -would have thrown $1.2-billion at a company about to go under. Only a politician would -and for purely political reasons.

To make this loss even more real, consider that coincidentally in 2009, the net federal income tax take from Newfoundland and Labrador was almost the same (just under $1.2-billion). I doubt Newfoundland's taxpayers relish how the equivalent of all their federal tax went to Chrysler that year, never to return.

Moreover, take any person or company in financial trouble, relieve them of their debt via bankruptcy and of course their position will improve. It doesn't mean they were somehow brilliantly successful. By that measure, anyone who defaults on their mortgage is a whiz at real estate investing.

The Finance Minister defended the Chrysler-GM bailout on the grounds that 52,000 auto-sector jobs were "protected." But to use an example from the other side of the country, 92,000 full-time jobs evaporated in British Columbia between June 2008 and June 2009, the latter month being the Chrysler-GM bailout month.

Thus, B.C.'s actual employment losses were far higher than those predicted automotive job losses Flaherty thinks he prevented. But Ottawa could not have, and nor should it have, tried to save every business and job in B.C., or anywhere else. After all, Canada-wide in 2009, 5,420 companies went bankrupt; only two were bailed out. Instead, a defensible role for government is to provide a bridge for individuals. But that bridge already existed, courtesy of the Employment Insurance program.

The "government-saved-jobs argument" from Flaherty misses another obvious point: The tax dollars for such bailouts come from somewhere. Either from present or future taxes (debt), which thus harms job creation elsewhere in the economy.

More specifically, on jobs in the auto industry, sales of vehicles in North America plummeted in 2009 to 12.8 million units annually. That was down 21% from 2008 sales and a whopping 36% decline from 2005.

In other words, given the decline in new vehicle sales, it was inevitable some companies somewhere were going to cut staff. The only question was in which companies. Had Chrysler and GM not been given taxpayer cash and/or never exited bankruptcy court, other healthier automakers in Canada, such as Ford, Toyota and Honda, could have captured more market share. They also would hired more workers as their sales picked up in the absence of GM, Chrysler or both.

Instead, such bailouts have become a habit, at least for Chrysler. It was first bailed out in 1979-80, only to survive and repeat history three decades later. Both bailouts happened because politicians ignore the substitution effect. That's where taxes and jobs are politically transferred from the best-run businesses to the poorly managed ones.

Ignoring that reality doesn't justify the multi-billion-dollar bailouts and permanent losses, no matter how often ministers Flaherty and Paradis pretend otherwise.

mark.milke@fraserinstitute.org

- Mark Milke is the director of the Fraser Institute's Alberta office and author of the institute's studies on corporate welfare.

 

[a_majoor]

So what was gained for the expenditure of $50 billion US tax dollars and the overturning of the rule of law?

http://www.realclearpolitics.com/articles/2011/07/13/the_truth_about_the_auto_bailouts_110558.html

The Truth About the Auto Bailouts

By Todd Zywicki
Last month, President Obama barnstormed through Ohio, unveiling his surprising decision to claim credit for the success of the multi-billion dollar government bailouts of General Motors and Chrysler.

Why surprising?

Because despite the efforts of the administration and its willing accomplices in the media, the belief that the auto bailouts were a success is simply a myth. Leave aside the obvious point that the government still stands to lose billions of dollars on its investment as well as many billions more from the preferential tax treatment of the reorganizations. Not only was the bailout unnecessary to save the American automotive industry but the politicized bankruptcy process left both General Motors and Chrysler in a weaker competitive position than if they had simply reorganized in a standard chapter 11 process.

First, the belief that the bailouts were a success rests on a central misunderstanding: the belief that GM and Chrysler would have collapsed had the government not intervened. Yet large corporations reorganize in bankruptcy routinely in the United States and GM in particular is the prototype of the type of firm for which chapter 11 was designed: a firm with strong going-concern value, specialized labor and capital investments, but plagued with decades of bad management decisions and a need to fix crushing labor agreements, eliminate underperforming lines, and streamline an overgrown dealership network. Given the obvious viability of a leaner, more-efficient GM there is little doubt that it would have successfully reorganized. Moreover, to the extent that GM would have been unable to obtain post-bankruptcy operating loans, that would have been solely because of the credit crunch that began in 2008. And if so, then this would have made a possible case for use of TARP funds or the equivalent in order to finance or guarantee a narrowly-tailored bridge loan to overcome the temporary credit freeze-after all, to the extent that the TARP had any rationale at all it was to deal with the short-term liquidity problems in the banking industry that interfered with the ability to make even high-value loans, like a loan to GM would be.

As for Chrysler-which didn't even really reorganize but instead was sold as a going concern to Italian carmaker Fiat-there is no reason to believe that the Italians would not have bought Chrysler without the intervention of the U.S. government. Nor is it obvious why American taxpayers should care so much more about promoting the fate of Fiat's American-based workers than, say, Honda, Toyota, or BMW's.

In both cases then to say the bailouts were a success is akin to rolling a rock from the top of a hill and calling it a success when it reaches the bottom: the results in both cases would have almost certainly been the same without the intervention of the U.S. government except that American taxpayers wouldn't have lost billions of dollars in the process.

But even if one still believes that the bailouts were necessary to save the American auto industry (or to promote the Italian auto industry, as the case may be) that still doesn't excuse the egregious lawlessness and corruption of the bankruptcy process that took place in these cases. Even if was necessary for the government to intervene to prop-up Chrysler, does that justify plundering Chrysler's secured bondholders (including, among others, the Indiana Firefighters and Teachers Retirement Plans) simply to line the pockets of the United Autoworkers? In fact, finance scholars Deniz Anginer and Joseph Warburton have found that the government's intervention in the GM and Chrysler cases destabilized bond markets as investors adjusted to the new reality of the potential for government bailouts of unionized and politically-connected firms.

But perhaps most misleading about the myth of the auto bailout success is that by restructuring through a politicized bailout process both companies were left in a weaker competitive position than they would have been had they simply gone through a traditional chapter 11 process. Rather than a restructuring process focused on maximizing the economic value and viability of the firms, they were saddled with 535 new members of their boards of directors driving decision making through the lens of politics rather than economics. Efforts to streamline an overgrown dealership network has been thwarted by the intervention of politicians across the country designed to keep open local dealers and special legislation that permits dealers to seek arbitration of any decision to close their dealerships. From Barney Frank's intervention to keep open an outmoded manufacturing plant in his district to the efforts of Montana's delegation to insist on GM's continued use of home state palladium mines, politics has corrupted decision-making throughout the process.

But perhaps the greatest danger lies in President Obama's decision to trumpet the auto bailouts as a successful experiment in government industrial policy rather than a reluctant intervention to avert a perceived larger harm (the motivation for the initial intervention by President Bush). Celebrating the auto bailouts as an affirmative success can really have only one rationale: to lay the foundation for similar interventions in the future. For if the auto bailouts were truly a triumph of industrial policy why shouldn't the government intervene in the future to save major firms in other industries from the rigors of bankruptcy?

In turn, trumpeting the success of the auto bailouts is an open invitation to moral hazard by similar firms in the future, especially those with politically-favored constituencies. Nor is the moral hazard problem limited to the private sector-public employee unions in cash-strapped states such as California and Illinois must be rejoicing at the blessing of future bailouts implicit in President Obama's endorsement of the auto bailouts as a positive good rather than a necessary evil. If a bailout was good for GM and its workers why wouldn't it also be good for California and its employees?

Bailouts and novel governmental interventions into the economy during the heat of the financial crisis were justified as short-term and unfortunate necessities to stabilize a teetering economy. Not only is it misleading to claim the bailouts as a success, but by endorsing them in the cool light of ordinary economic conditions President Obama is proposing a radical alteration in the future relationship between business and the government. Understanding the real truth about the auto bailouts will help to avert similar disasters in the future.

The author is GMU Foundation Professor of Law at George Mason University School of Law and a Senior Scholar of the Mercatus Center.