GM: What Its Progress Report Doesn't Say

General Motors has some genuine good news. The automaker's June 1 bankruptcy filing hasn't been nearly as ruinous as GM executives once feared. New vehicles like the Chevrolet Camaro, Cadillac SRX and Buick LaCrosse are wowing reviewers and drawing buyers. The Chevy Volt, an electric plug-in that could help move the car industry away from gas-powered engines, remains on track for launch late in 2010. Fewer dealers and a streamlined workforce are finally bringing GM's size in line with its customer base.

But unlike its rival Toyota (TM), GM has a long history of exaggerating its virtues and denying its liabilities. Since GM is now a privately owned company, CEO Fritz Henderson's recent briefing on GM's progress offered useful insight into the company now 60 percent-owned by American taxpayers. But there's more to the story. Here are a few important things Henderson didn't mention:

The competition is getting tougher. While GM and Chrysler have been busy restructuring, competitors have taken advantage of the turmoil to woo their customers and increase market share. Ford and Hyundai appear to have benefited the most from their rivals' woes. GM's U.S. market share so far in 2009 is 19.7 percent, according to J.D.Power & Associates. That's nearly three percentage points lower than at the same point in 2008. Ford's (F) market share, meanwhile, has risen by 1 point, and Hyundai's (HYMLF.PK) is up by more than 2 points. Both companies are aggressively rolling out new vehicles, and they're not about to give back hard-won market share just because GM gets all four wheels back on the pavement. Toyota, meanwhile, has had a terrible year — but still held its U.S. market share steady. And like GM, Toyota is revamping itself for leaner times.

GM's forecasts are still optimistic. Henderson is hopeful that GM's market share will increase, but there's a good chance it will go the opposite direction. The four brands GM is getting rid of - Saab, Saturn, Hummer and Pontiac -still have a combined U.S. market share of about 3 percent. Once they're out of GM's portfolio, there's no guarantee that those buyers will shift over to other GM brands; they could buy Fords or Hyundais instead. And fewer dealers means GM may have a harder time reaching some customers. GM's hope is that new models like the LaCrosse, Chevy Equinox, GMC Terrain, Chevy Traverse and GMC Acadia will make up the difference. Others doubt they will. Forecasting firm CSM Worldwide predicts that GM's market share will drift down to about 18 percent in 2011 and stay there through 2015. That's not what GM wants to hear.

GM still has some duds. Company execs are right when they point out the quality improvements in new GM models, but there are still a few dogs weighing down the whole lineup. You won't hear anybody at GM bragging about the Chevy Aveo, Cobalt, HHR or Impala, largely relegated to rental fleets. The Buick LaCrosse might be a fresh hit, but the aging Buick Lucerne, not so much. (Good luck remembering which is hot and which is not.) And the Cadillac STS barely rates a mention where it competes, against the middle range of the BMW (BAMXY.PK), Mercedes and Lexus lineups. GM has plans to replace most of these middling legacy vehicles, but the replacements will have to prove themselves, and that takes time. Reliability is still a GM weakness and nobody's going to automatically assume that new models are better than the weak ones they're replacing.

Taxpayers probably won't get all their money back. GM is hoping to have an initial public offering next year, selling stock to the public in order to pay back the $51 billion in bailout money that has kept GM alive. That would clearly be a sign that GM has recovered—but the odds that taxpayers will get back all their money are low. The Ethisphere Institute, a private research group that studies corporate responsibility, recently calculated that to fully pay back the government, GM would have to achieve a market value of $80 billion. That would be 43 percent higher than GM's value in 2000, when the automaker was highly profitable and much larger. Ethisphere estimates that a much smaller GM will only be able to pay back about $20 billion, or 40 percent of its bailout money. GM argues that its implied market value, taking into account its bond prices and other factors, will allow a higher repayment, closer to $34 billion. Maybe we should all start shilling for GM.

Disclosure: No positions.

Comments

[Jeff B.:]

Rick: I agree with you right down the line. GM likes to over-promise & under deliver. Remember "We have 30 models that get 30 mpg". Oh sure, how many colors does the Cobalt come in? Each is a different "model" right?
My 'worldclass' 2009 Malibu fleet car is going in for it's first recall repair tomorrow. Nothing too serious, but I've owned 6 new Hondas, and 3 Acuras, and no recalls at all. I also had a 2008 Impala, sincle my employer uses these for fleet cars. They are quick & get good gas mileage (better than the Malibu on gas, ironically) but otherwise are truly a bad car. Many engineering glitches including defective steering system that GM only acknowledges when you press them REALLY hard. Maybe Fritz ought to adopt a new policy: Keep his mouth shut, cut back on advertsing smoke & mirrors, and put the cash into engineering?

Oct 08 03:07 PM

[Douglas Kor...:]

General Motors is a proven liar and perverter of the truth, about everything from the EV1 to the VOLT. The same nincompoops leading GM now are the ones who fatuously and arrogantly led it into the toilet over the last few decades. Ironically, GM just RAISED salaries to "retain talent"!! With talent like that, there is NO HOPE.

GM's only hope is to flush out bad management, from top to bottom; but they are living in a dream world, still blaming the line worker for GM's management failures.

I can see it now. Fritz thinks "it was all the UAW's fault! What they should have done was design better cars, and cut management fat!!".

Unfortunately, Obama has just funded the same crew of bozos to continue blowing money down the toilet for another couple years. They will need more, of course.

Oct 08 05:19 PM

[303820:]

JEFF...GET OFF AMERICA AND GM'S REAR END...IF YOU DID NOT GET A RECALL NOTICE FROM HONDA ITS PERHAPS BECAUSE YOU DON'T OWN ONE!!!!!!!!!!!!
March 3, 2008

• More automotive news ...


Honda is recalling 273,000 2004 to 2008 ACURA TL sports sedans because power steering fluid may leak, leading to a fire in the engine compartment. The company is also recalling 129,000 2004 to 2005 Acura TL sports sedans, this time because of a windshield wiper problem.

“Prolonged high under-hood temperatures may cause the poser steering hose to deteriorate prematurely causing the hose to crack and leak power steering fluid,” according to the National Highway traffic Safety Administration (NHTSA).


Read more: www.consumeraffairs.co...


On Oct 08 03:07 PM Jeff B. wrote:

> Rick: I agree with you right down the line. GM likes to over-promise
> & under deliver. Remember "We have 30 models that get 30 mpg".
> Oh sure, how many colors does the Cobalt come in? Each is a different
> "model" right?
> My 'worldclass' 2009 Malibu fleet car is going in for it's first
> recall repair tomorrow. Nothing too serious, but I've owned 6 new
> Hondas, and 3 Acuras, and no recalls at all. I also had a 2008 Impala,
> sincle my employer uses these for fleet cars. They are quick &
> get good gas mileage (better than the Malibu on gas, ironically)
> but otherwise are truly a bad car. Many engineering glitches including
> defective steering system that GM only acknowledges when you press
> them REALLY hard. Maybe Fritz ought to adopt a new policy: Keep his
> mouth shut, cut back on advertsing smoke & mirrors, and put the
> cash into engineering?

Oct 08 10:08 PM

[303820:]

BTW...CHEVY COBALT AT $16,000 AND 37MPG...COMPARE IT TO YOUR ASIAN HYBRID RUST BOXES AT $24000...YOU'D HAVE TO OWN YOU RUST BOX 23 YEARS TO BREAK EVEN.


On Oct 08 03:07 PM Jeff B. wrote:

> Rick: I agree with you right down the line. GM likes to over-promise
> & under deliver. Remember "We have 30 models that get 30 mpg".
> Oh sure, how many colors does the Cobalt come in? Each is a different
> "model" right?
> My 'worldclass' 2009 Malibu fleet car is going in for it's first
> recall repair tomorrow. Nothing too serious, but I've owned 6 new
> Hondas, and 3 Acuras, and no recalls at all. I also had a 2008 Impala,
> sincle my employer uses these for fleet cars. They are quick &
> get good gas mileage (better than the Malibu on gas, ironically)
> but otherwise are truly a bad car. Many engineering glitches including
> defective steering system that GM only acknowledges when you press
> them REALLY hard. Maybe Fritz ought to adopt a new policy: Keep his
> mouth shut, cut back on advertsing smoke & mirrors, and put the
> cash into engineering?

Oct 08 10:17 PM

[303820:]

YOU WANT TO TALK ABOUT LIARS? GOOGLE THE ASIAN BOGUS MPG ON MOST OF THEIR PRODUCT.


On Oct 08 05:19 PM Douglas Korthof wrote:

> General Motors is a proven liar and perverter of the truth, about
> everything from the EV1 to the VOLT. The same nincompoops leading
> GM now are the ones who fatuously and arrogantly led it into the
> toilet over the last few decades. Ironically, GM just RAISED salaries
> to "retain talent"!! With talent like that, there is NO HOPE.
>
> GM's only hope is to flush out bad management, from top to bottom;
> but they are living in a dream world, still blaming the line worker
> for GM's management failures.
>
> I can see it now. Fritz thinks "it was all the UAW's fault! What
> they should have done was design better cars, and cut management
> fat!!".
>
> Unfortunately, Obama has just funded the same crew of bozos to continue
> blowing money down the toilet for another couple years. They will
> need more, of course.

Oct 08 10:21 PM

[Ralph Hunkey:]

A message to GM..........start manufacturing auto's that we want......Example: Bring back the Monte Carlo......If not, I am for the first time a Toyota buyer....

Incidently: I still drive my 2002 Monte......22 miles per gallon...so shove your 40,000 Volt.....or sell it to Obama

Oct 09 11:47 AM

[BeachRider:]

I am not comfortable with this author flipping-off the potential for the taxpayers to get their money back. A lot of people said that about the Bank TARP and they have silently been proven wrong (there were some losses, but the gains prevailed). We need to keep GM's feet to the fire to see that we get the Automotive TARP back. GM doesn't have to hit 100-for-100 for that to happen (and they won't).
The TARP wasn't intended as a giveaway, just a bridge-loan the resulted in taxpayer ownership. The credit markets had seized and the unnecessary labor-loss that would have spiraled the US economy downward was avoided.
Even with the TARP, there has been substantial labor-loss (unemployment in Detroit is about 35%). Killing off Pontiac and Saturn (and liquidating Hummer and Opel) have saved monstrous operating cost at GM. We need to be diligent. We need to ignore those folks that advise that the money is already lost.

Oct 09 12:22 PM

[Thadeus Tho...:]

Hello

Oct 09 12:36 PM

[303820:]

GM IS STILL #1 IN THE USA...APPARENTLY MORE PEOPLE WANT GM CARS THEN ANY OTHERS..IF YOU WANT TO BUY TOYOTA RUST BOXES GO AHEAD, BUT DON'T BLAME GM.

BTW...TOYOTA DOESN'T MAKE MONTE CARLO IETHER!!!!!


On Oct 09 11:47 AM Ralph Hunkey wrote:

> A message to GM..........start manufacturing auto's that we want......Example:
> Bring back the Monte Carlo......If not, I am for the first time a
> Toyota buyer....
>
> Incidently: I still drive my 2002 Monte......22 miles per gallon...so
> shove your 40,000 Volt.....or sell it to Obama

Oct 09 01:36 PM

[sethmcs:]

What really bugs me is government money is referred to as our money. Every time I write a check to the government it was my money until I mail it then its thIRS.

Oct 09 10:38 PM

[a64hoo:]

is 303820 a GM union goon or is 303820 the white house spoksman

Oct 22 11:05 AM

[Austrian Ec...:]

Max Keiser on GM: US predators sacrifice workers as lambs


maxkeiser1.blogspot.co...

Nov 05 09:39 AM