General Motors recently launched a pilot program in the Pacific Northwest offering free auto insurance on GM vehicle purchases. The move immediately drew criticism from independent insurance agents who point to possible legal problems with the move, as reported by liveinsurancenews.com. The agents are obviously concerned with the potential loss of business, but they make valid points that there are regulatory and licensing requirements that go with the offering of insurance products.
The Detroit Free Press reports that the House committee holding hearings on the auto bailout process wants clarification from former head of President Obama's Auto Task Force, Ron Bloom, regarding testimony he gave about a statement he allegedly made at a 2009 celebratory dinner. According to a news article written at the time and fellow ex-car czar, Steve Rattner, Bloom stated that he "did this all for the unions." Bloom denied making the statement while under oath. The congressional panel isn't buying it and has written a letter to Bloom requesting that he amend his testimony.
It looks like General Motors is up to its old tricks as it stuffs inventory channels with higher profit trucks. GM is able to record revenue when vehicles are shipped to dealerships as opposed to actually being sold to consumers, so the move will help to paint a false picture of positive second quarter earnings.
According to CNBC, General Motors has ramped up its lobbying efforts to the tune of $3.58 million in the first quarter of 2011. This is nearly triple the $1.36 million it spent in the first quarter of the prior year. It is also over double the $1.67 million spent by non-bailed out Ford in the same quarter. The $50 billion that taxpayers gave to bail out GM is now partially being distributed back to President Obama, Congress and a variety of agencies in an effort by GM to, well, receive more taxpayer money.
The auto bailouts are now being touted by President Obama as a "success" even though the taxpayer is about to take at least a $10 billion hit when the government sells its remaining GM shares. There is, however, a missing dimension in this debate. It is the moral one.
Prior to General Motors filing for bankruptcy in June of 2009, I was involved as a GM bondholder advocate for a group called the Mainstreet Bondholders. Attempts were made by my group to bring about fair negotiations for creditors of GM, attempts that were ignored by the Obama Administration's Auto Task Force, headed by Steven Rattner. The Task Force stated that their goal was to restructure GM outside of bankruptcy as they laid out a "take it or leave it" bond exchange offer that was supposedly designed to keep GM out of bankruptcy.
As General Motors gambles on ramping up production of the Chevy Volt, a couple of new reports point to headwinds for demand of electric hybrid vehicles, like the Volt. A new British study disputes the perception of eco-friendliness of electric vehicles. The study takes into consideration driving, manufacturing and disposal and undermines the case being made for a rapid introduction of electric vehicles as a means to address environmental concerns.
There are some big rumors circulating about the finances of bailed-out General Motors. The first of these is that GM is considering repurchasing Treasury's stake in the automaker and were circulated by sources who, according to a Bloomberg report, "didn't want to be identified." The message was that GM is so cash-rich that they were considering buying back shares from Treasury, thus eliminating the government overhang on the company. This stance raises questions about past actions at GM. Why did GM issue $2 billion of new stock to help fund pension plans if they have adequate cash to do so? Why did GM's wholly owned finance arm need to issue half a billion dollars of junk bonds for "general purposes" if they are so flush with cash?
General Motor's CEO, Dan Akerson, wants higher gas taxes and the price of a gallon of gas to increase closer to $5 a gallon. Are you kidding me?! The comments were made in an interview with the Detroit News. Regarding government imposed fuel efficiency increases Akerson stated, "You know what I'd rather have them do, this will make my Republican friends puke, as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas. People will start buying more Cruzes and they will start buying less Suburbans." With comments like these, Akerson might make average Americans and GM investors "puke" along with those Republicans.