Is Obama Propping up GM With Government Purchases?

General Motors recently reported lackluster sales results for the month of March. GM share price took a hit on the news, but there is one fast-growing area of sales for the company that is outperforming other segments. Government sales for GM rose 55% in March and capped off a first quarter that saw government sales increase 23% over the prior year.

GM did not give an explanation for the increase in government sales, localities often contribute to the sales figures. In the past federal grants went to localities to pay for GM vehicles when the Obama Administration sought to prop up crony corporation GM in any way possible. Given the close ties between the Administration and GM, more transparency is needed as to exactly how taxpayer money is getting to GM.

I reported in November of last year that the Department of Homeland Security has been overspending on vehicle purchases

GM Should Listen to Marchionne’s Pitch

Fiat Chrysler Automobiles’ CEO Sergio Marchionne’s quest to merge his company with General Motors continues to garner attention and draw suggestions that GM might be shooting itself in the foot by ignoring the offer to talk. Two respected sources weighed in on the drama, most notably CNBC anchor and ex-hedge fund manager Jim Cramer who has lost confidence in GM management and dumped his shares of the company.

In a TheStreet.com piece, Cramer was rightfully complimentary of Marchionne’s talents. Marchionne is a savvy leader who took advantage of the Obama Administration’s desperation, lack of vision and poor negotiating skills during the 2009 auto bailout process when the Italian automaker was given a free stake in a sinking Chrysler corporation at the low point of the auto sales cycle. Cramer was also right on point with his criticism of GM CEO Mary Barra. From the piece:

As for Cramer, he said

Chrysler/GM Merger Proposal Confirms Folly of Auto Bailout

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 …

Obama Claims Bailout Success as GM Falsely Claims Best December Sales in 7 Years

Obama at Ford plantPresident Obama traveled to Michigan this week to declare the auto bailout a success. Interestingly, he toured a Ford plant. The company did not participate in the bailout.
GM is still trying to shake the Government Motors moniker, and that was certainly the reason for Obama’s nonvisit.

Earlier this week, General Motors Company boasted that sales for December were the strongest in seven years. A review of the facts shows that this is not exactly true. You see, GM Co. has not been in existence for seven years. While GM points to this technicality when trying to weasel out of liability claims from the past, it continues to act as if the company is a stalwart 100 year-old American institution.

GM described December’s sales as follows in its press release, “General Motors Co. (NYSE: GM) dealers in the United States delivered 274,483 vehicles last month for the company’s best December …

Did GM Bailout Cost Lives?

The death toll for General Motors’ faulty ignition switch victims continues to rise with the last reported number being 42. There has been speculation that the death count is significantly higher, as safety advocate Clarence Ditlow has written to GM to request an expansion of efforts to uncover victims of accidents resulting from defective GM vehicles.

GM has known about the ignition switch defect for years and failed to recall the deadly vehicles for almost five years after the Obama Administration took over the company in June of 2009. President Obama’s Auto Task Force guided the company through a manipulated bankruptcy process that favored political allies like the UAW over other creditors as new management and board members were appointed by the Administration. We now must question the perceived “success” of the GM bailout and ask if a conventional bankruptcy process could have saved some of the lives that were …

Obama Silent on Chrysler Tax Inversion Deal

Obama at ChryslerIt’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.

While the Obama Administration has been quite vocal in condemning such deals (known as tax inversion deals) which lower corporations’ US tax bills, not much has been said when the companies involved are linked to cronies of the Administration. Obama friend, Warren Buffett, financed …

Dennis Williams Elected UAW President; Vows to Play Hardball with Automakers

uaw-president-dennis-williams-300x198_0The United Auto Workers may have declined in numbers, but its taste for confrontation appears as strong as ever. And its new leader, Dennis Williams, isn’t about to let anyone forget. Last Wednesday, June 4, Williams, the UAW secretary-treasurer these last four years, overwhelmingly was elected president at the union convention in Detroit. Inaugurated the following day, Williams, now 61, replaces one-term President Bob King, who at 67 retired in the face of the union’s mandatory age limit. Williams’ main priority is ending the two-tier wage system to which the union agreed in 2007 as part of a deal to keep General Motors, Ford and Chrysler afloat. He’ll get to test his mettle in contract negotiations next year. The union shouldn’t lack for funds in this or any other endeavor; delegates approved a 25 percent dues hike.

Founded in 1935 amid bitter strife in American labor relations, the United Automobile …

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:

“Any company that isn’t efficient about capital allocation is a target for activists,” said Wilson, who is now a restructuring adviser at Maeva Group LLC in Westchester, N.Y. “GM has a huge cash hoard and they are generating lots more cash each year, so they need to be thoughtful about that.”

The problem with Mr. Wilson’s statement regarding GM’s balance sheet improving is that it just isn’t true. The …

Not Even Fisker’s Fire Sale Can Dampen DOE Enthusiasm for ‘Investments’

Fisker logoAfter the Department of Energy announced this week it had given up on not-bankrupt-but-should-be Fisker Automotive, and will auction off its loan for a pittance, you’d think (and hope) Congress would have had enough of this kind of thing. Senator John Thune certainly has.

“The Obama administration has gotten into the business of picking winners and losers at a significant cost to taxpayers,” said the South Dakota Republican yesterday. “I’m calling for the Senate to consider my amendment to eliminate the wasteful ATVM loan program and for my colleagues to join me in protecting taxpayer dollars from any future risky green energy investments.”

ATVM stands for “Advanced Technology Vehicles Manufacturing,” but Fisker’s allegedly advanced technology vehicle – the once and often hyped Karma – hasn’t been manufactured for over a year. Nor is Vehicle Production Group, another failed ATVM recipient, producing any handicapped vans that run on compressed natural …

Obama’s Ex-Car Czar Wants Taxpayer Bailout for Detroit

Rattner photoPresident Obama’s former head of the Auto Task Force, Steven Rattner, helped orchestrate the auto bailouts that saw billions of taxpayer dollars spent to save General Motors and Chrysler in a rigged bankruptcy proceeding favorable to political allies (i.e., the UAW). Rattner is now calling for taxpayers to come to the rescue of Detroit as the city struggles to restructure through a bankruptcy process without federal handouts.

Rattner penned an op-ed piece for the NY Times that trumpeted the success of the auto bailouts and called for similar action to save Detroit. Rattner likens the Detroit situation to Hurricane Sandy, and as such, deserving of taxpayer money. Perhaps Mr. Rattner should contribute his own money to help the noble folks of Detroit rather than continue to try and redistribute the wealth of others to those he deems worthy.

There were many contributing factors to the bankrupting of Detroit, all of …

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