Mark Modica's blog

Obama/Barra Embrace Shows GM is Still Government Motors

Barra SOTUThe Obama Administration may have sold the last of the taxpayers' shares in General Motors, but it appears that politics will continue to play a powerful role in the management of the company. New GM CEO Mary Barra did not seem too concerned about appearances when she attended the State of the Union as Obama's guest. Her predecessor Dan Akerson in previous months had gone to great lengths to distance GM from the federal government.

Chevy Malibu Problems Epitomize GM's Struggle

Government MotorsGeneral Motors is now approaching its fifth year of existence since emerging as a new entity as a result of the 2009 auto bailouts which saw taxpayers fund a bankruptcy process to the tune of $50 billion. Much has been debated about the "success" of GM since the controversial government-orchestrated restructuring. While GM management recently announced a dividend in an attempt to ensure investors of financial stability, a more telling indicator of the likelihood of future profitability may be found through an analysis of how competitive the company's vehicles are.

Curious Timing for GM Dividend Announcement

The internet was ablaze Tuesday evening with stories presenting a perceived positive move by General Motors' outgoing government-appointed management. All hail! "General Motors to pay first dividend since 2008," trumpeted the headlines. GM shares immediately spiked up in after-hours trading with shares rising about $1.60 or 4% on the news. Unfortunately for those duped by the proclamation, GM followed the story hours later with a profit warning. For the time being, the bad news outweighed the good with GM shares reversing course and ending the day Wednesday with a loss of over one and a half percent on a day that the market rallied.

Awards Won’t Drive Sales for Recalled Chevy Silverado

Silvardo awardGeneral Motors seems to be really good at winning awards for its vehicles. The Chevy Silverado just took home the North American Truck of the Year Award at the Detroit Auto Show. The truck also was just embarrassingly recalled due to a potential fire hazard. Unfortunately for GM, the bad news outweighs the good as awards do not always result in increased sales. Just look at the award-winning Chevy Volt as an example.

Dismal Chevy Spark EV Sales Make the Volt Look Good

Barra and VoltThe final tallies for 2013 sales are in for the Chevy Volt and its little sister, the Chevy Spark EV. The results are ugly.

While the Volt relies on both a gas engine and electric power, the Spark is actually an electric-only vehicle, assumedly designed to compete with the all-electric Nissan Leaf which had sales of 22,610 for the year. The Spark EV did not compete well, with sales for 2013 coming in at only 589 for the seven months in which it was offered. Chevy Volt sales for the year also disappointed, coming in at 23,094 and down from 2012 sales. The Volt's sales drop came during a year when overall US car sales rose about 8%.

Chevy Volt Electric Range Drops to 20 Miles in Cold

Volt in snowA recent study by fleetcarma.com unveils yet another drawback of General Motors' much-hyped Chevy Volt. It appears that the environmentally-conscientious, affluent owners of the vehicles who drive in cold weather will get about half of the electric range, on average, of those who drive in warmer climates.

Obamacare Pork to UAW Rolled Out Without a Glitch

Obama UAWWhile the Obama Administration is still pumping resources and taxpayer money into the implementation of Obamacare, the initial disbursement of pork included in the bill was successfully doled out almost a full two years ago. And the main recipient of taxpayer largess was, once again, the UAW.

The Obamacare pork came in the form of a program called the Early Retiree Reinsurance Program or ERRP. $5 billion of taxpayer money was allocated to help pay for healthcare costs to retirees between the age of 55 and 65. Number one on the union-dominated list of recipients was the UAW, which received $387.2 million for its VEBA fund, which was set up to pay UAW retiree health care costs. This amount was still not good enough for the UAW as they penned a letter to Congress in February of 2012 requesting an increase in ERRP funding to $10 billion.

GM Spends $1.3 Billion to “Create or Retain” 1,000 Jobs

Just days after the US government announced their exit from General Motors, the company announced a move that sounds like it could have come directly out of the Obama Administration playbook. GM is boasting about "creating or retaining" roughly a thousand jobs at the cost of approximately $1.3 million per job in a move that could only be viewed as a positive from a political point of view.

Cadillac ELR: Mary Barra’s First Embarrassment?

Mary BarraGeneral Motors has announced that Mary Barra will be replacing Dan Akerson as CEO as of mid-January. Ms. Barra was previously the head of global product development. As such, she already has to take partial responsibility for the over-hyped and low-selling Chevy Volt along with the upcoming Cadillac version of the car. With Consumer Reports now stating that the new Cadillac ELR (a glorified Chevy Volt) gave them "sticker shock," will the ELR be the first major embarrassment for Ms. Barra?

GM's Balance Sheet Not as Healthy as it Looks

GM UAW logosOne of the major architects of the General Motors bankruptcy process, Harry Wilson, recently gave a very optimistic outlook for GM future share price. Mr. Wilson was a member of President Obama's Auto Task Force, and was an instrumental player in seeing that UAW interests were put ahead of other creditors, like old GM bondholders.

Automotive News now reports that Mr. Wilson feels that GM may be a target for activists because of their "huge" cash hoard. According to the piece:

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