Uh oh: GM backlog looking a lot like 2008

posted at 12:55 pm on July 5, 2011 by Ed Morrissey

“Is GM falling into old, bad habits?” asked one industry analyst when the backlog data for General Motors was made public yesterday.  The bailed-out automaker now has a growing inventory in its truck lines of 122 days worth of sales, nearly twice that of its non-bailout domestic competitor Ford Motors for similar lines.  With sales flattening in the auto market, GM has now returned to the high inventory of its pre-bailout condition:

The Detroit-based automaker, 33 percent owned by the U.S. after its 2009 bankruptcy, has 280,000 Silverado and GMC Sierra pickups on dealers’ lots around the country. If sales continue at June’s rate, that would be enough to last until November.

After GM’s truck inventory swelled to 122 days worth of average sales, the company said 100 to 110 will be normal going forward for such a large and complex line of vehicles, compared with 60 to 70 days for most models. Peter Nesvold, a Jefferies & Co. analyst, isn’t convinced.Ford Motor Co. (F), which makes similar trucks, is running at 79 days, and Nesvold says GM averaged 78 days on hand at year end from 2002 to 2010.

“It’s unbelievable that after this huge taxpayer bailout and the bankruptcy that we’re right back to where we were,” Nesvold, who has a “hold” rating on the stock, said in a telephone interview. “There’s no credibility.” In a research note he asked: “Is GM falling into old, bad habits?”

GM says that the answer to the question is “no,” but there are other similarities noted by Bloomberg in this analysis.  A former chief sales analyst calls GM’s line “dated,” and now predicts that GM will have to heavily discount in the fall to move the moribund inventory.  The pickup line hasn’t changed since 2006.  Ford, in contrast, began offering a V-6 engine on its trucks as an option and has been rewarded with significant movement in inventory.

The federal bailout of GM only made sense if the automaker’s difficulties entirely sprang from the financial collapse (caused mainly by government intervention in housing and financial markets through Fannie and Freddie junk bonds), and had been both competitive and profitable without it.  That was obviously not the case; GM had struggled for years against foreign and domestic competition.  The bailout forced GM to make some long-needed changes, such as consolidation of its product lines, as well as allowed the company to benefit from a politically-engineered bankruptcy that left the legacy benefit issues largely on the backs of taxpayers.

However, the basic management issues remained and apparently still do.  Even with the bailout, the company has trouble operating in a profitable and efficient manner.  That points to the bailout being a very bad investment for taxpayers, and with billions of dollars already lost on loans to GM and Chrysler, is a rather easy conclusion to reach.  As Doug Ross puts it, more succinctly:

You mean that abrogating bankruptcy law, screwing over secured creditors and rewarding Democrats’ union supporters with billions in equity, tax breaks and subsidies didn’t really fix GM?

Gee, that was hard to predict.

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Comment pages: 1 2

Mandate everyone buy GM – QED.

Chip on July 5, 2011 at 12:58 PM

Better hurry up and get another expensive program going to destroy perfectly good used cars.

Or just mandate that people buy GMs.

forest on July 5, 2011 at 12:59 PM

Get in their faces. – Barack Obama

Good Lt on July 5, 2011 at 1:00 PM

epic fail

cmsinaz on July 5, 2011 at 1:01 PM

Thadeus McCotter hardest hit.

Knucklehead on July 5, 2011 at 1:01 PM

Guess American citizens are going their job not buying gov. motors cars and trucks! Good, Ford only in our home! Wonder when gm will have their union thugs come to the wh to demand more taxpayers money?
L

letget on July 5, 2011 at 1:02 PM

Time for another government no-bid contract, buying exclusively from GM.

PackerBronco on July 5, 2011 at 1:02 PM

GM Executive Order—Buy Electric/National Security risk if we don’t blah blah blah….in 5….4…3…

PappyD61 on July 5, 2011 at 1:02 PM

The unions will need another bailout.

faraway on July 5, 2011 at 1:03 PM

This is what dems were bragging about?

rob verdi on July 5, 2011 at 1:03 PM

If sales are slow or slowing, wouldn’t GM have to combat that with slowing production? And if so, could that mean furloughs or layoffs?

I don’t know, 40 days of extra inventory. The line would probably just get longer breaks and more of them, not layoffs. But given that the government runs GM, layoffs -or the lack thereof- might be dictated from on high. Certainly laying off UAW workers at GM won’t sell well on the stump…

BKeyser on July 5, 2011 at 1:04 PM

Has Jeffrey Immelt been consulted?

pilamaye on July 5, 2011 at 1:08 PM

All of their late successes were due to front-loading, so they have never really had any success after the bailout. I wouldn’t be surprised if they cried for a new bailout based on the fake subsidized front-loaded sales.

Buddahpundit on July 5, 2011 at 1:08 PM

They want to make as many vehicles as they can BEFORE the new milage requirements go into effect !

singlemalt 18 on July 5, 2011 at 1:08 PM

Never buy a GM new or used!

Bambi on July 5, 2011 at 1:08 PM

And to think, with all these shenanigans…they have succeeded in turning off EVEN MORE potential buyers. I had bought three consecutive Pontiacs…and now will never buy another GM product again! Good job, Team Obama!

search4truth on July 5, 2011 at 1:09 PM

What Doug Ross said.

+1000

Tim Zank on July 5, 2011 at 1:09 PM

“It’s unbelievable that after this huge taxpayer bailout and the bankruptcy that we’re right back to where we were,” Nesvold, who has a “hold” rating on the stock, said in a telephone interview.

Actually, it was predictable.

Vashta.Nerada on July 5, 2011 at 1:10 PM

“I would have done the same thing. It was a good move.” – Mitt Romney 2008

“I would NEVER had done this. It was a bad move.” -Mitt Romney 2011

portlandon on July 5, 2011 at 1:11 PM

“Is GM falling into old, bad habits?”

I’d posit that GM never dropped its old, bad habits. The huge amount of money stolen from generations of taxpayers and inflationary printing it up for them by Bernanke and Geithner merely covered it up for a while .

LegendHasIt on July 5, 2011 at 1:11 PM

“I would have done the same thing. It was a good move.” – Mitt Romney 2008 June

“I would NEVER had done this. It was a bad move.” -Mitt Romney 2011 July

portlandon on July 5, 2011 at 1:11 PM

FIFY

faraway on July 5, 2011 at 1:15 PM

Mandate everyone buy GM – QED.

Chip on July 5, 2011 at 12:58 PM

Well if they can mandate purchasing health insurance, mandatory automobile purchases must also be constitutional.

Wait for it.

Talon on July 5, 2011 at 1:15 PM

You mean that abrogating bankruptcy law, screwing over secured creditors and rewarding Democrats’ union supporters with billions in equity, tax breaks and subsidies didn’t really fix GM?

Yup, that’s succinct.

Let Government Motors crash and burn in bankruptcy, like the airlines do, with a lean, mean (private) General Motors rising from the ashes.

petefrt on July 5, 2011 at 1:16 PM

They’re not even a business anymore. It’s merely a money transfer system from the public, to unions, to democrats.

Let it fail.

darwin on July 5, 2011 at 1:17 PM

The whole thing is an accounting gimmick. They take the direct costs (materials, labor and overhead) and move it from the income statement to the balance sheet (inventory). What they do is then declare a profit and trumpet how the workforce has increased. Eventually, you will write-off the product or lay off people until the inventory comes down. Either way, GM will take a “one-time write-off” (obsolete inventory or layoff wages) that can easily be dismissed by the media. In the meantime, the American taxpayers will either have to infuse more cash into the company or get a reduced price on the stock that the American people own.

djaymick on July 5, 2011 at 1:18 PM

Gee, they fixed GM just like they fixed the mortgage crisis. Ain’t Gov’t great? They piss not billions, but trillions away and then say they need more revenue, with a straight face mind you.

ernie on July 5, 2011 at 1:18 PM

The whole-sale ruination of America under the cover of good intentions…
-

RalphyBoy on July 5, 2011 at 1:20 PM

I’m in the market for a new car, but it’s going to be a foreign brand. Honda, Mazda, something like that. The only American brand I may – MAY – wind up buying is Ford, and only then because I know someone who could maybe give me a discount.

Enough of this “Government Motors” crap.

Vyce on July 5, 2011 at 1:21 PM

Big 3>Detroit 3>Ford. Chrysler got bail out funds, and then incrementally increased the ownership by the Italians until majority ownership, and GM is STILL 1/3 owned by the US Government, whose debt is foreign financed.

Do not expect the Detroit News and Detroit Free Press to ask questions regarding ownership of these car companies, the investors screwed, nor the amount of money expected to never be repaid to the US Government.

Scary as it is disgusting.

sDs61678 on July 5, 2011 at 1:22 PM

But, but…….GM is thriving, right? I mean, they paid back all the government loans early.

Oh, wait…..

iurockhead on July 5, 2011 at 1:22 PM

Don’t worry, they can solve this easily enough by just requiring Americans to buy GM cars.

Commerce clause.

sandberg on July 5, 2011 at 1:23 PM

I can’t wait until the government runs our health care – what could go wrong?

PatMac on July 5, 2011 at 1:24 PM

The whole-sale ruination of America under the cover of good intentions…
-

RalphyBoy on July 5, 2011 at 1:20 PM

Personally, I doubt the good intentions.

iurockhead on July 5, 2011 at 1:24 PM

Don’t worry, they can solve this easily enough by just requiring Americans to buy GM cars.

Commerce clause.

sandberg on July 5, 2011 at 1:23 PM

Why even bother with that. Just issue a royal decree and have his majesty, King Obama sign it.

darwin on July 5, 2011 at 1:25 PM

It’s because Ford has that “Man-step” on their tailgates.

Come on GM, get with the program!

Youngs98 on July 5, 2011 at 1:27 PM

I’m in the market for a new car, but it’s going to be a foreign brand. Honda, Mazda, something like that. The only American brand I may – MAY – wind up buying is Ford, and only then because I know someone who could maybe give me a discount.

Enough of this “Government Motors” crap.

Vyce on July 5, 2011 at 1:21 PM

Cars are expensive these days no doubt but isn’t a foreign car even more so?

I’ve pretty much always had Fords and they’ve been excellent cars. In fact I still have a ’92 Ranger.

darwin on July 5, 2011 at 1:27 PM

Wait for it….

Unexpectedly

bloviator on July 5, 2011 at 1:29 PM

Don’t worry, they can solve this easily enough by just requiring Americans to buy GM cars.

Commerce clause.

sandberg on July 5, 2011 at 1:23 PM

Why even bother with that. Just issue a royal decree and have his majesty, King Obama sign it.

darwin on July 5, 2011 at 1:25 PM

Is there anything the Interstate Commerce Clause can’t do?

/crr6

Chip on July 5, 2011 at 1:30 PM

I’m in the market for a new car, but it’s going to be a foreign brand. Honda, Mazda, something like that. The only American brand I may – MAY – wind up buying is Ford, and only then because I know someone who could maybe give me a discount.

Enough of this “Government Motors” crap.

Vyce on July 5, 2011 at 1:21 PM

Mr. D on July 5, 2011 at 1:31 PM

Let Government Motors crash and burn in bankruptcy, like the airlines do, with a lean, mean (private) General Motors rising from the ashes.

petefrt on July 5, 2011 at 1:16 PM

It might be best to avoid crash and burn analogies when discussing airlines.

Cheers

Mason on July 5, 2011 at 1:33 PM

I’m in the market for a new car, but it’s going to be a foreign brand. Honda, Mazda, something like that. The only American brand I may – MAY – wind up buying is Ford, and only then because I know someone who could maybe give me a discount.

Enough of this “Government Motors” crap.

Vyce on July 5, 2011 at 1:21 PM

Oops. Meant to quote you, then respond. One thing to know — you can buy a Honda Accord (made in Marysville, OH) or a Hyundai Santa Fe (made in Montgomery, AL). I own one of each. Before these vehicles, I owned a Chevy and a Dodge, both of which were made in Canada.

Mr. D on July 5, 2011 at 1:34 PM

djaymick on July 5, 2011 at 1:18 PM

Good catch!

elfman on July 5, 2011 at 1:34 PM

Another highly successful Obama Empire company.

Union worker party employees a higher priority than the business itself?

Who knew?

Speakup on July 5, 2011 at 1:36 PM

“I would have done the same thing. It was a good move.” – Mitt Romney 2008

“I would NEVER had done this. It was a bad move.” -Mitt Romney 2011

portlandon on July 5, 2011 at 1:11 PM

I do not like Romney but I do believe he has been consisten in his opposition to the auto bailout. I recollect he took a lot of flack for his opposition due to his family history with GM.

TheRightMan on July 5, 2011 at 1:38 PM

However, the basic management issues remained and apparently still do. Even with the bailout, the company has trouble operating in a profitable and efficient manner. That points to the bailout being a very bad investment for taxpayers

This is patently untrue and false- are you so desperate to come up with a story that you have to go out on a limb? First, the inventory backlog is a result of high fuel prices and demand for more fuel efficient vehicles. If you look across their product line, GM is winning in the MPG wars with cars such as the Cruze and Malibu. The market share numbers speak for themselves.

Second, GM is operating in s highly profitable and efficient manner with outstanding financials backing the company up. GM is today a very profitable company, period. No one capable of reading an income statement will contest this reality. The bailout, from a business standpoint, has unquestionably been an excellent investment for taxpayers. The government will realize only small losses that will be more than covered by tax revenue generated from the survival of these companies and the millions of employees’ income taxes.

It’s time to get over the fact that Bush and Obama saved the US auto industry and our status as a manufacturing power. GM not only is winning at home but in key growth markets like China, buyers are willing to pay a huge premium for models such as Buick. You’re hope for their failure is just a dream.

bayam on July 5, 2011 at 1:38 PM

GM backlog looking a lot like 2008

…and wait ’till auto buyers figure out that it’s impossible in the real world to find a place (must have a meeting room and motel to spend the 6.5+ hours) to recharge a VOLT…

GM is a LEAD BALOON!!

(sad to see it: I bought nothing but Buicks and Chevy’s for decades…but no more!!)

landlines on July 5, 2011 at 1:39 PM

The whole-sale ruination of America under the cover of good intentions…
-

RalphyBoy on July 5, 2011 at 1:20 PM

I think it’s a serious mistake to even give them the benefit of the doubt that any of this is done with ‘good intentions’.

Bailing out GM was about tax revenue transfers to their cronies and reliable voting block, knowing that it was screwing over the taxpayer to do so – nothing more.

Midas on July 5, 2011 at 1:40 PM

Chevy is selling less than 500 of its prized eco-friendly Volts a month but still stands by its projection of a million sold by 2014. How can anyone take this company seriously?

tommyboy on July 5, 2011 at 1:41 PM

bayam on July 5, 2011 at 1:38 PM

Nice Obama propaganda talking points/

Zzzzzzzzzzzzzzzzz

Knucklehead on July 5, 2011 at 1:42 PM

This is patently untrue and false- are you so desperate to come up with a story that you have to go out on a limb? First, the inventory backlog is a result of high fuel prices and demand for more fuel efficient vehicles. If you look across their product line, GM is winning in the MPG wars with cars such as the Cruze and Malibu. The market share numbers speak for themselves.

Second, GM is operating in s highly profitable and efficient manner with outstanding financials backing the company up. GM is today a very profitable company, period. No one capable of reading an income statement will contest this reality. The bailout, from a business standpoint, has unquestionably been an excellent investment for taxpayers. The government will realize only small losses that will be more than covered by tax revenue generated from the survival of these companies and the millions of employees’ income taxes.

It’s time to get over the fact that Bush and Obama saved the US auto industry and our status as a manufacturing power. GM not only is winning at home but in key growth markets like China, buyers are willing to pay a huge premium for models such as Buick. You’re hope for their failure is just a dream.

bayam on July 5, 2011 at 1:38 PM

Wow, there’s so much to ridicule there, I’m not sure where to start.

Are you really that dense, or is someone paying you to spread that fertilizer?

Midas on July 5, 2011 at 1:43 PM

I’m in the market for a new car, but it’s going to be a foreign brand. Honda, Mazda, something like that. The only American brand I may – MAY – wind up buying is Ford, and only then because I know someone who could maybe give me a discount.

Enough of this “Government Motors” crap.

Vyce on July 5, 2011 at 1:21 PM

Cars are expensive these days no doubt but isn’t a foreign car even more so?

I’ve pretty much always had Fords and they’ve been excellent cars. In fact I still have a ’92 Ranger.

darwin on July 5, 2011 at 1:27 PM

Go out and compare a Civic, Camry, Cruze, and Focus. Most auto blogs will tell you that the foreign-made cars are incredibly bland and defined by cheap plastic. The American cars have pulled ahead, at least in terms of aesthetics, design, and gas mileage. And given the lower value of the dollar, the US cars cost less.

bayam on July 5, 2011 at 1:44 PM

Nice Obama propaganda talking points/

Zzzzzzzzzzzzzzzzz

Knucklehead on July 5, 2011 at 1:42 PM

Really? I just reviewed the company’s balance sheet and income statement. Tell me, where do you see that the company is failing as a highly profitable company?

bayam on July 5, 2011 at 1:46 PM

Go out and compare a Civic, Camry, Cruze, and Focus. Most auto blogs will tell you that the foreign-made cars are incredibly bland and defined by cheap plastic. The American cars have pulled ahead, at least in terms of aesthetics, design, and gas mileage. And given the lower value of the dollar, the US cars cost less.

bayam on July 5, 2011 at 1:44 PM

O.K. now you sound just plain stupid.

Who’s paying you?

Knucklehead on July 5, 2011 at 1:46 PM

Payback: The Auto Workers Union should be forced to buy a GM.

TN Mom on July 5, 2011 at 1:47 PM

Don’t worry, they can solve this easily enough by just requiring Americans to buy GM cars.

Commerce clause.

sandberg on July 5, 2011 at 1:23 PM

If they can do it with Obamacare, they will do this because it will save American jobs…

Khun Joe on July 5, 2011 at 1:50 PM

Started my own business in ’93. I have owned 13 GMs since then. All new vehicles will be Ford pickups (I hate buying union) and either VW or Toyota for the cars. Large trucks, 2 tons, will be Toyota.

chicken thief on July 5, 2011 at 1:51 PM

It’s time to get over the fact that Bush and Obama saved the US auto industry and our status as a manufacturing power.

bayam on July 5, 2011 at 1:38 PM

At what cost to the rest of our economy?

Chip on July 5, 2011 at 1:52 PM

The bailout, from a business standpoint, has unquestionably been an excellent investment for taxpayers. The government will realize only small losses

Only liberals believe small losses are a sign of excellent investments.

Unless capitalists have had it wrong all these years.

Profit: Bad investment
Loss: Excellent!

BobMbx on July 5, 2011 at 1:53 PM

When Obama made a deal with the unions and screwed the bond holders, he should have known that I and probably a lot of people like me, vowed then and there to never buy GM. Ever. Law of unintended consequences?

pappy on July 5, 2011 at 1:53 PM

It’s time to get over the fact that Bush and Obama saved the US auto industry and our status as a manufacturing power.

bayam on July 5, 2011 at 1:38 PM

Please explain what they were saved from?

Before you do, I must let you know I’ll be arguing how bankruptcies of most major US airlines in the early 2000s had no effect on the economy, just on the unions.

Which is the entire reason Obama “saved” the auto makers. They were about to shed themselves of the union liabilities for pensions and healthcare. Thats the only reason the WH involved itself in the bankruptcy.

BobMbx on July 5, 2011 at 1:57 PM

It’s time to get over the fact that Bush and Obama saved the US auto industry and our status as a manufacturing power.

bayam on July 5, 2011 at 1:38 PM

No he didn’t. He saved the union. The best thing for the US auto industry would have been the collapse of GM.

I will guarantee you if GM had not been unionized Obama couldn’t have cared leass what happened to it.

darwin on July 5, 2011 at 1:57 PM

the government is not the asnwer. GM should have went out of business. it’s business model is a failed model. the sooner poeple understand that and let the free market work the better.

unseen on July 5, 2011 at 1:57 PM

bayam on July 5, 2011 at 1:46 PM

You own a GM?

darwin on July 5, 2011 at 1:58 PM

Can’t the government just mandate everybody buy GM healthcare to help the unions out? We know GM doesn’t sell cars anymore, just healthcare

tarpon on July 5, 2011 at 1:58 PM

Out: Lincoln saved the Union

In: Obama saved the Unions

faraway on July 5, 2011 at 2:00 PM

I’m in the market for a new car, but it’s going to be a foreign brand. Honda, Mazda, something like that. The only American brand I may – MAY – wind up buying is Ford, and only then because I know someone who could maybe give me a discount.

Enough of this “Government Motors” crap.

Vyce on July 5, 2011 at 1:21 PM

If you’re worried about “buying American”, relax. Most of the Hondas, Toyotas, and Nissans sold in the United States are MADE in the United States, by non-unionized American workers, mostly in the South. Who cares if the head honcho is Japanese, if he’s hiring American workers to build the cars, who will spend their paychecks in America? Buy one of those “Japanese” cars instead of Government Motors, and you’re helping to break the UAW stranglehold on the car industry!

Steve Z on July 5, 2011 at 2:03 PM

Obama: “Keep the union workers busy!”

GM Management: “But we’re running out of room to store all the cars we can’t sell. A lot of people won’t buy a GM car because of the bailout.”

Obama: “I don’t care! We can’t lay anyone off until November of 2012! Maybe we should give you another loan to pay off the current loan. Then you could announce you paid off the loan.”

GM Management: “We’ve already tried that. Either it didn’t fool enough people or there’s a significant segment of car buyers who just won’t buy a GM vehicle on principle now. We’ve lost significant sales to Ford, Honda, and Toyota.”

Obama: “Get the NTSB on the line. We need trump up some bogus charges against Ford, Honda, and Toyota. Tell Holder to start some investigations as well. I need those union votes.”

ClanDerson on July 5, 2011 at 2:05 PM

They’re not even a business anymore. It’s merely a money transfer system from the public, to unions, to democrats.

darwin on July 5, 2011 at 1:17 PM

Succinct.

GM should have been required to follow normal bankruptcy procedure, as the airlines do, to enable a failed enterprise to reorganize on the basis of a profitable business model.

petefrt on July 5, 2011 at 2:06 PM

The last paragraph says it all! Republicans should be jumping all over this because had GM gone thru bankruptcy its likely a new owner would be in place and making profitable cars and trucks in a competitive fashion. Saving jobs was the clarion call for the bailout – - but all its done is pour money into the rat hole and delayed the inevitable. In fact, the delay has just made things worse. Now that the union runs GM . . . let the union fix it.

kens on July 5, 2011 at 2:07 PM

Let me be perfectly clear, GM needs to hire more workers.
http://www.freerepublic.com/focus/f-news/2718829/posts

esnap on July 5, 2011 at 2:10 PM

the Devil’s Advocate would say:

Correlation doesn’t mean causation. The best management in the world couldn’t poop a new, top-selling GM full size truck line in a year or two. The current trucks were designed in the early 2000s with a 2007 release. They are outdated. The new ones will be out in another year or so. Add that to $4/gal gas and bingo, you have 120+ days of inventory sitting on the lot.

GM does seem to be doing far better in areas where new product is out.
June Luxury top sales:
1st BMW with 9 models, 2nd Benz 13 models, 3rd Buick 4 models, 4th Cadillac 7 models (this showing is FAR better than in the past with fewer models than the top competition)
June Mid-size:
1st Chevy Malibu, 2nd Toyota Camry, 3rd Ford Fusion
June Small-Car:
1st Chevy Cruze, 2nd Ford Focus, 3rd Hyundai Elantra, 4th Corolla

Also selling well: Camaro, Equinox, and several others of the newly redesigned products.

Perhap’s Ed’s main drive of his post is correct–that GM’s management sucks and is dooming the “new GM.” It’s entirely possible and maybe even probable.

But I’m not sure you can make that judgement based on the sales of one dated product line which also happens to be most affected when gas prices are high.

Youngs98 on July 5, 2011 at 2:13 PM

Nevermind that “Buy America” is un-american.

hicsuget on July 5, 2011 at 2:15 PM

Typo in my previous post, obviously. Mea culpa.

hicsuget on July 5, 2011 at 2:15 PM

On principle, I will not buy any car manufactured with union labor. I admire Ford for making a go of it on their own, but it is only a matter of time before the labor unions at Ford strike and hold them hostage to their marxist agenda. My next vehicle will be made in America without the assistance of union labor.

ClanDerson on July 5, 2011 at 2:16 PM

You mean that abrogating bankruptcy law, screwing over secured creditors and rewarding Democrats’ union supporters with billions in equity, tax breaks and subsidies didn’t really fix GM?

Don’t forget the unemployment caused through cutting dealers for still-unknown reasons, perhaps a lack of political donations or simply being the wrong color.

slickwillie2001 on July 5, 2011 at 2:32 PM

On principle, I will not buy any car manufactured with union labor. I admire Ford for making a go of it on their own, but it is only a matter of time before the labor unions at Ford strike and hold them hostage to their marxist agenda. My next vehicle will be made in America without the assistance of union labor.

ClanDerson on July 5, 2011 at 2:16 PM

I have to agree. The greedy UAW is the problem, and the sooner they go away the sooner American car manufacturers can recover their domestic business. I will favor Japanese, Korean, and German manufacturers with plants in the USA.

slickwillie2001 on July 5, 2011 at 2:37 PM

Know what will fix this. Cut their dealerships by half.

BruceB on July 5, 2011 at 2:38 PM

You mean that abrogating bankruptcy law, screwing over secured creditors and rewarding Democrats’ union supporters with billions in equity, tax breaks and subsidies didn’t really fix GMthe U.S. economy?

FIFY, covering more than just the GM part.

IrishEyes on July 5, 2011 at 2:38 PM

I refuse to buy anything from a company “owned” by the government when it should be private.

IrishEyes on July 5, 2011 at 2:39 PM

I’m betting Government Motors returns for another sip at the trough.

On principle, I will not buy any car manufactured with union labor.

ClanDerson on July 5, 2011 at 2:16 PM

By experience I will not buy any car manufactured with union labor. I ordered a factory-built Ford Taurus MT-5 (5 speed stickshift) station wagon, and it wound up stalled on the assembly line when the UAW went on strike. When the car finally arrived, it spent 3 months of the next year in the shop for parts the union guys should have put on but didnt. Three years later, my power steering blew out causing $1800 in damages to the vehicle. The problem was traced to a missing heat shield between the power steering hoses and the exhaust manifold. Ford refused to pay for the repairs, so I sued them and won. I don’t blame Ford (the parts manual clearly showed a heat sink), but I do blame the UAW.

My current Ford is a Mazda 3, proudly built in Hiroshima. I love that vehicle and will buy another when it wears out.

unclesmrgol on July 5, 2011 at 2:40 PM

Perhaps, Obama needs to fire GM’s CEO again….

Axeman on July 5, 2011 at 2:53 PM

GM ad:

“Please Give Us a Fifth Chance”

“Proud to be American (well it’s your money)”

Sir Napsalot on July 5, 2011 at 2:54 PM

Cars are expensive these days no doubt but isn’t a foreign car even more so?

I’ve pretty much always had Fords and they’ve been excellent cars. In fact I still have a ’92 Ranger.

darwin on July 5, 2011 at 1:27 PM

Depends upon what you’re out there for. I just want a simple, fairly fuel efficient compact car. Something like a Mazda3 or a Honda Civic will do the trick, and both of those are easily purchased for $20k or less.

If you’re worried about “buying American”, relax. Most of the Hondas, Toyotas, and Nissans sold in the United States are MADE in the United States, by non-unionized American workers, mostly in the South. Who cares if the head honcho is Japanese, if he’s hiring American workers to build the cars, who will spend their paychecks in America? Buy one of those “Japanese” cars instead of Government Motors, and you’re helping to break the UAW stranglehold on the car industry!

Steve Z on July 5, 2011 at 2:03 PM

I was aware of that. It’s what makes my decision to purchase a non-American car (except for Ford, who bucked the bailout trend) all the more easy. The UAW can frack themselves.

Vyce on July 5, 2011 at 2:55 PM

They’re not even a business anymore. It’s merely a money transfer system from the public, to unions, to democrats.

darwin on July 5, 2011 at 1:17 PM

Succinct.

GM should have been required to follow normal bankruptcy procedure, as the airlines do, to enable a failed enterprise to reorganize on the basis of a profitable business model.

petefrt on July 5, 2011 at 2:06 PM

Let’s get down to brass tacks:
It’s merely a money transfer laundering system from the public, to unions, to democrats.

Chip on July 5, 2011 at 2:56 PM

bayam on July 5, 2011 at 1:38 PM

I understand the point you make about GM being profitable. Efficient? I’m not sold on it yet. For 2010, GM and Ford Motor threw off GM% on auto sales of 12.1% and 12.4%, respectively. However, in the first quarter 2011, Ford Motor grew it’s GM% to 13.7%, while GM’s GM% slid to 11.7%.

Additionally, while operating income for GM and Ford remained consistent in terms of “hard dollars” at $5.084B and $5.789B, respectively. Ford’s operating income in Q1 ended at $2.484B, or an annualized rate of $9.936B (or a 71.6% increase). GM’s operating income for Q1 ended at $.949B, or an annualized rate of $3.796B (or a 25.3% decrease).

I will grant you that comparatively there are limited data points. I think you have to exclude 2009 and 2008 because those years were a disaster – plus the GM bankruptcy mucks up the analysis.

However, comparatively, the GM and Ford appear to be headed in opposite directions. Couple that with what appears to be channel stuffing on GM’s part, and I, like many of the other folks here, have significant reservations about GM’s ability to continue as a going concern.

Also, when companies are in inventory “build”-mode, there is a strong motivation for publicly-traded companies to park their manufacturing inefficiencies on the balance sheet in order to maintain current GM%s. We’ll see what Q2 and Q3 has to offer.

Neo-con Artist on July 5, 2011 at 2:57 PM

Don’t forget the unemployment caused through cutting dealers for still-unknown reasons, perhaps a lack of political donations or simply being the wrong color.

slickwillie2001 on July 5, 2011 at 2:32 PM

This argument, complaining about unemployment caused by a contraction of GM, is contrary to conservatives’ main argument against the auto bailout. As it was, the closing of the dealerships was the only sound business decision made during the whole debacle. I used to think that conservatives understood economics better than Democrats, but recent events have led me to conclude that both are roughly-equally ignorant.

Had the bailout not happened, GM and its suppliers and its dealers all would have folded, leading to mass unemployment. This would have been a good thing.

The easiest way to get to 0% (long-term) unemployment (i.e. about 4% overall unemployment) would be for the government to create a jobs program where, for $15/hr, anybody who signs up can get paid for doing nothing at all. The unemployment problem would be solved instantly, the way most people mis-understand the unemployment problem. The actual issue, though, is that such a program would divert capital from useful ends to non-useful ends. The $15/hr would produce nothing.

And that is the big problem with GM, and the bailout. All the capital that went into GM and Chrysler could have instead gone to Ford and Nissan, or to a different industry entirely (by way of consumers choosing to spend their money, instead of the government doling it out). One of the most wonderful aspects of capitalism is that people who mismanage their small piece of the economy today have a smaller piece (read: less money) to mis-manage in the future.

As with the housing bust, where every unemployed construction worker and Realtor represents one job in transition from something not useful to something more useful, an unemployed GM machinist or dealership mechanic or salesperson would have represented a realignment of the economy from the production of unwanted goods to wanted goods.

Because Republicans are too illiterate about economics to understand this, Democrats, also economically-illiterate, win with voters, also economically-illiterate, when they say “the bailout was a great success.” To them, lower unemployment and the continued existence of GM and Chrysler constitutes success. It is as if a doctor were to conflate a tumor with healthy tissue.

The bailout postponed the realignment, and the longer it is postponed, 1) the lower the unemployment statistics, for the time being, and 2) the lower the utility produced in our economy. In the context of GM and Chrysler, more unemployment is better.

hicsuget on July 5, 2011 at 2:58 PM

I’ve said it before and will say it again…

I’d rather walk than give 1 cent of my money to Govt. Motors.
Wither and die already GM.

angryed on July 5, 2011 at 3:02 PM

I will list 5 problems

1 Some idiot cancelled several thousand dealers. That hurts sales.
2 Some idiot hired idealogues to do sales and production forecasting.
3 Some idiot took them into bankruptcy and that hurts trust in the warranties and service
4 When crude went up, people postpone purchases. Some idiots and their deficit spending caused crude to go up. dollar dropped
5 The construction industry wears out trucks. The construction industry is asleep.

seven on July 5, 2011 at 3:05 PM

Chevy is selling less than 500 of its prized eco-friendly Volts a month but still stands by its projection of a million sold by 2014. How can anyone take this company seriously?

tommyboy on July 5, 2011 at 1:41 PM

The same people who believe Obama created 2 million jobs while unemployment went from 7% to 10%.

angryed on July 5, 2011 at 3:06 PM

I just started reading a book called The Passage. It is in the not to near future. Iranian jihadist attacks in America, war with Iran, skyrocketed gas prices and the best part? Governor of Texas Jenna Bush! I LOVE it!

Mr_Magoo on July 5, 2011 at 3:07 PM

“We thought that this year would bring back the kind of economic activity that would translate into us selling more trucks,” Mark Frost, the dealership’s general manager, said in a phone interview. “It’s not happening.”

You think the Obama economic team might have pressed them to make some very rosy assumptions about the near-term economic outlook? I mean, I know the White House has little influence over GM, it’s not like they appointed him or anything.

hawksruleva on July 5, 2011 at 3:20 PM

They’re not even a business anymore. It’s merely a money transfer system from the public, to unions, to democrats.

darwin on July 5, 2011 at 1:17 PM

Yep.

Here comes more bailouts for the cesspool of Detroit and the UAW “workers” who make those half-assed cars.

tetriskid on July 5, 2011 at 3:20 PM

Second, GM is operating in s highly profitable and efficient manner with outstanding financials backing the company up. GM is today a very profitable company, period. No one capable of reading an income statement will contest this reality. The bailout, from a business standpoint, has unquestionably been an excellent investment for taxpayers. The government will realize only small losses that will be more than covered by tax revenue generated from the survival of these companies and the millions of employees’ income taxes.

bayam on July 5, 2011 at 1:38 PM

Priceless.

tom on July 5, 2011 at 3:25 PM

I will list 5 problems

4 When crude went up, people postpone purchases. Some idiots and their deficit spending caused crude to go up. dollar dropped

seven on July 5, 2011 at 3:05 PM

You forgot: Some idiot stopped offshore drilling, and started a long-term engagement in Libya, driving up fears of high energy prices. When people fear prolonged periods of high energy prices, they don’t invest in vehicles that use a lot of gas.

hawksruleva on July 5, 2011 at 3:25 PM

Why does a Hyundai cost much more in Korea than it does here if they are so efficient and fair?

IlikedAUH2O on July 5, 2011 at 3:27 PM

This argument, complaining about unemployment caused by a contraction of GM, is contrary to conservatives’ main argument against the auto bailout. As it was, the closing of the dealerships was the only sound business decision made during the whole debacle. I used to think that conservatives understood economics better than Democrats, but recent events have led me to conclude that both are roughly-equally ignorant.

hicsuget on July 5, 2011 at 2:58 PM

I believe the complaint from most conservatives was not that dealerships were closed, but that the dealerships that were closed didn’t appear to be chosen based on what was good for business, but based on the political affiliations of the owners.

tom on July 5, 2011 at 3:29 PM

I hope Mitt doesn’t have this attitude

tetriskid on July 5, 2011 at 3:20 PM

Wow. A near perfect miss on the issues. I dislike the UAW, also. But hate of US products is a little extreme.

BTW, I deal with people from Japan and Korea. They are not industry experts but I do think they thank you for gutting our manufacturing base and not noticing that most of the current unemployment is in that sector.

IlikedAUH2O on July 5, 2011 at 3:32 PM

I never had anyone here tell me why they don’t let GM sell my Cadillac in your conservative paradises overseas. OH — without a huge tariff.

IlikedAUH2O on July 5, 2011 at 3:34 PM

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