It's official. Chrysler has now completely merged with Italian auto maker, Fiat. It had taken a bit over five years for Fiat to gain total control of the bailed out, once-American Chrysler Corporation. Back in June of 2009, President Obama gifted (payment was made in the form of "technology") an initial 20% stake in Chrysler to Fiat as part of his orchestrated auto bailout process. Fiat parlayed that into full ownership and is now showing its gratitude to the American taxpayers who helped fund the deal by relocating Chrysler's headquarters to London; a move which will lessen the company's corporate tax rate.
It has been two years since General Motors admitted that there was little demand for the Chevy Volt (as reported here) due to there being "no plug-in market." Their answer was to "create market" to drive sales for the politically popular but economically-nonviable Volt. GM manipulated sales for the Volt through the use of subsidized leases at a time when President Obama's favorite, green wonder-car was being criticized for low sales as it failed to live up to the early hype.
The Associated Press gives evidence today to how desperate General Motors is to give the appearance that the company is firing on all cylinders. GM pulled out all the stops to ensure that June sales would not disappoint when sales were slowing as a result of the company's loss of credibility during its seemingly never-ending recall saga.
At mid-June, sales for the month at GM were lagging the previous year's. The political minds at GM could not have this, and according to the piece:
On April 1st, General Motors announced that they were having "computer system" issues and that their March sales figures would not be released until later in the day. The company eventually reported a year over year sales gain of about four percent versus an estimate of less than a one percent gain. This came as GM CEO, Mary Barra, was preparing to testify at hearings over the recent GM recall scandal which is reported to have contributed to at least 13 deaths. Coincidentally, GM share price had been taking a hit as well.
Last week AAA released findings from tests it had run on three models of electric automobiles, and announced that the heavily subsidized vehicles suffer dramatic driving range loss in both cold and hot temperatures.
The news wasn’t new, but apparently the broader media noticed because the pronouncement from the nation’s largest consumer automotive club made it official. NLPC (beginning with a Consumer Reports experience) has reported from time to time on such problems since late 2011. The Tulsa Worldreported that AAA found driving distance for electric vehicles can be diminished up to 57 percent in extremely cold temperatures, and by one-third in very hot temperatures.
General Motors continues to double down on plug-in electric vehicles, now offering the Cadillac ELR, which is a gussied up version of the Chevy Volt at twice the price. The latest Cadillac ELR ad has stirred up a lot of debate regarding its pro-American capitalism message as General Motors spent roughly $100,000 for each of the commercials that it ran during the Sochi Olympics.
Although the commercial garnered much attention, the heavy ad spending resulted in just 58 of the tax-subsidized (each affluent buyer gets a $7,500 federal tax credit) Cadillac ELRs being sold in February, three months into the car's launch. The debate about the ELR ad seems to be omitting the most obvious question which is, why is GM wasting shareholder's money advertising a car that has no chance of having widespread market appeal?
Former head of the National Highway Traffic Safety Administration (NHTSA), Joan Claybrook, has weighed in on the deadly delay by General Motors on a recall for a defect that is alleged to have resulted in 13 deaths and 33 accidents. Ms. Claybrook appeared on the Cavuto Show on Fox Business where she blasted both GM and NHTSA for waiting 10 years to recall the defective models and went as far as saying that there should be criminal charges brought against GM by the Justice Department.
General Motors announced disappointing earnings results today and issued a warning that first quarter results will underwhelm as well. The reasons behind the earnings' miss are surely going to be explained away by pundits and proponents of the company still known as Government Motors to many. Sorting through the smoke and mirrors can lead to some important and simple explanations as to what is going on at GM.