The Wall Street Journal recently reported that Fiat Chrysler Automobiles CEO, Sergio Marchionne, has been pressing for a merger with General Motors. Marchionne has been appealing to hedge funds and activist investors in a move that seems to verge on desperation. The main takeaways from the appeal are that the government bailouts of GM and Chrysler were not a long-term fix for the industry and that Mr. Marchionne is one of the few experts on the industry who is honest enough to admit it.
Marchionne has had a history of speaking his mind on topics that are not politically palatable to other auto industry executives, such as GM CEO Mary Barra. In 2014 Marchionne asked consumers not to purchase Fiat’s entry into the money-losing electric car segment, the Fiat 500e. Unlike Barra and GM, who refuse to admit to the struggles of electric cars like the Cadillac ELR and Chevy … Read More ➡
The New York Times reports that the Justice Department has concluded that there was criminal wrongdoing by General Motors as the company covered-up a deadly ignition switch defect for years. That defect has now been blamed for causing the deaths of at least 107 motorists. While many observers may have been able to come to the conclusion that GM was guilty long before the Justice Department’s recent epiphany, the bigger question now is, what’s next?
GM still faces litigation risks as ongoing lawsuits seek justice for the victims’ families that suffered as a result of GM’s criminal actions. Full justice may never be served for those who suffered their losses prior to GM’s Obama-orchestrated 2009 bankruptcy process as the bankruptcy judge in that case, Robert Gerber, has given GM a free pass on any losses that occurred prior to the government bailout in a recent ruling.
There is one major … Read More ➡
It appears that General Motors is trying to remedy one of the latest criticisms against them. That criticism is that the company has way too large a “cash hoard” and most recently came from former Obama Auto Task Force member turned shareholder activist, Harry Wilson. Well Harry, be at ease; GM has managed to reduce that so-called hoard by over $3 billion in just three months as first quarter earnings flopped on Wall Street.
An analysis of GM’s earnings data release shows that cash and cash equivalents plunged from $19 billion to $15.8 billion. Marketable securities’ value also fell from $9.2 billion to $8.4 billion. Unfortunately for GM optimists who might want to point to GM’s share buy-back as the reason for the cash burn, it turns out that GM only used $400 million in cash during the quarter to repurchase 10 million shares. Despite that buyback, the number … Read More ➡
The verdict is in from the National Highway Traffic Safety Administration (NHTSA) on General Motors’ corroding brake line problem. Despite having received thousands of complaints from motorists regarding brake failure due to brake line rust, the agency claims GM does not have higher failure rates than other manufacturers. The clear evidence to the contrary makes this a classic case of what economists call "regulatory capture." First identified by Nobel laureate George Stigler (in photo) in 1971, it's when a government agency tasked with protecting the public interest instead acts to the benefit of an industry or particular company.
In this case, it's a particular union. The ersatz GM bankruptcy and taxpayer bailout were orchestrated by the Obama Administration with the goal of preserving the political power of the United Auto Workers. Since that time the administration has sought to prop up GM in every conceivable way, with NHTSA just one … Read More ➡
Depositions for General Motors’ executives, including CEO Mary Barra, will begin in May, according to the Detroit News. The testimonies will be at the center of class-action lawsuits (set for trial in January, 2016) against GM for its ignition switch defect cover-up and are slated to conclude in early October of this year. It will not be the first time Barra has testified under oath about the recall debacle which is now blamed for having caused 74 deaths.
Attorneys for plaintiffs now claim they have evidence that GM executives knew about (and covered-up) the defects long before they admitted they did. Barra has testified under oath on four occasions before congressional committees regarding her knowledge of the deadly ignition switch defect that went unaddressed by GM for years. Barra has stood by her testimony that she only learned of the ignition switch defect in December of 2013, despite her having … Read More ➡
The death toll for General Motors’ defective ignition switch cover-up has reached 67. Up to now, you were more likely to hear crickets chirping than you were to hear calls for justice for those who died as a direct result of GM’s actions (or inaction) in the case.
That may finally be coming to an end as major news outlets are reporting today that GM has officially been accused of a huge cover-up, and that the proof is still being hidden from the public.
Bloomberg reported on the GM cover-up and quoted attorney Lance Cooper, who played a key role in bringing the ignition switch defect to light when he represented one of the many GM victims. Here’s a succinct excerpt:
General Motors Co. executives participated in a cover-up of ignition-switch defects for years before 2014 recalls, according to lawyers for a family whose wrongful-death lawsuit led to the callback
… Read More ➡
A Consumer Watchdog is trying to expose another unaddressed safety issue with some General Motors’ vehicles. The problem, once again, involves loss of steering and occurs on later model year Chevy Malibus, Chevy Cruzes and Buick Veranos. Also, once again, GM and NHTSA (National Highway Traffic Safety Administration) are aware of the dangerous defect and choose to issue a “service bulletin” instead of recalling the vehicles with safety problems.
Christine Young is the Consumer Watchdog that has written about the newest GM safety concern on timesleader.com. Ms. Young tells the story of a frustrated Chevy Cruze owner who is afraid to drive his vehicle because of problems with power steering. GM’s response to the problem belies the perception that the company is properly addressing safety issues on its vehicles.
You see, GM has sent letters and issued a service bulletin that admits a dangerous defect exists. However, owners are … Read More ➡
The Wall Street Journal recently reported that electric car resale values are plunging. The report confirms what I had reported back in August of last year when I examined auction sales for the rapidly depreciating Chevy Volt. The resale values of cars like the Chevy Volt continue to suffer, further bringing in to question the wisdom of government subsidies for green vehicles that are unable to succeed in the free marketplace without the taxpayers' support.
A recent search of Manheim’s auction site gives the best indicator of Chevy Volt’s wholesale value. A whopping 138 model year 2012 Volts sold in just one week at the auction. That’s about the same amount of NEW Chevy Volts that are sold by General Motors in a week!
The news for Volt owners is not good. The average sale price for a 2012 Volt at auction was below $12,000. That’s about $3,000 less … Read More ➡
Is the fix in? General Motors is acting like it faces a major decision in responding to the self-nomination of Harry Wilson for its board of directors. Wilson was one of the key members of President Obama’s Auto Task Force, and purports to be acting at the behest of hedge funds who want GM to spend the “cash hoard” that was made possible by US taxpayers.
Ironically, Wilson was one of the people who determined how much of a “hoard” GM would accumulate, an amount he now criticizes as being excessive. During, and just prior to, GM’s bankruptcy process, taxpayers supplied about $50 billion to “invest” in the company. Canadian taxpayers chipped in about $10 billion while GM had its balance sheet cleared of about $30 billion of debt. The liabilities owed to the politically-favored UAW remained intact.
Why did the Auto Task Force that Wilson served believe that GM … Read More ➡
Harry Wilson, the nemesis of General Motors bondholders who were wiped out in the government-orchestrated GM bankruptcy, is back on the scene. On the front page of today’s Wall Street Journal, Wilson is portrayed as an “activist” investor, who seeks to maximize shareholder value. While his suggestion that GM buy back $8 billion of common shares would give a temporary boost to share price, Wilson’s motivations may not be entirely pure. His real agenda could be to expand the already-favored position of UAW shareholders, and to bolster the political fortunes of unions in general.
Wilson was a retired banker elected to serve on President Obama’s Auto Task Force and was the driving force behind preventing old GM bondholders from receiving due process during the GM bankruptcy process. His involvement led to his current status as a “restructuring expert” and CEO of the MAEVA Group. It now seems that our … Read More ➡