It looks like the Obama Administration and the UAW are again working hand in hand as the two entities are coordinating on an offering of a total of 50 million General Motors shares. Treasury is planning on selling 30 million shares as the UAW's VEBA (Voluntary Employee Beneficiary Association) Trust will sell 20 million shares. The VEBA Trust was formed to cover retiree's medical benefits for the UAW and received about a 17.5% ownership stake in GM as part of the 2009 bankruptcy process.
The IRS scandal that revealed targeting of conservative groups by the Treasury Department has reopened speculation that the Obama-orchestrated auto bailouts unfairly targeted Republican-leaning dealerships for closure. Republican Congressmen Mike Kelly (PA) and Jim Renacci (OH) have penned a letter to Treasury Secretary Jack Lew requesting documentation so that an investigation can determine what criteria was used to shutter dealers that appear to have had one thing in common: their political affiliations.
A recent search for new Chevy Volts on cars.com unearthed 9,254 vehicles currently at dealerships for sale. There were another 258 late-model, used Volts available. About half of those had less than 5,000 miles on them. Considering the abysmal sales rate for the self-proclaimed electric wonder-car (1,306 in April for those keeping track), the unofficial inventory numbers point to about a seven month supply of Volts available. Ideal inventory levels are considered to be in the two month range. It may be near time for General Motors to halt production, yet again, for the floundering Volt.
Great news for consumers who are considering buying General Motors' green wonder car, the Chevy Volt. I know how excited those environmentally conscientious Volt enthusiasts can get, but a little patience can pay off big time if potential buyers hold off for a year or so on their purchase. According to GM CEO Dan Akerson and following another dismal month of Volt sales (1,306 in April), the car that defies logic will soon be available for up to $10,000 less money. The good news extends to shareholders of GM as the next generation of the Volt will supposedly be profitable for the company. So, as we say prepare to say goodbye to the current generation of the obsolescent Volt, let's take a trip down memory lane to review how past promises for the car panned out.
Earlier this year, I reviewed General Motors' first quarter earnings report and annual results. My take-away from the report was that GM relied upon shady accounting techniques and a build-up of US dealer inventories to produce some rosy-looking results. Channel stuffing to the tune of an over 20% increase in inventory from year end 2011 provided for GM's revenue growth. The trend continues as GM has further pumped-up inventory for quarter one.
The Chevy Volt has inarguably been the poster child for President Obama's push to electrify America's auto fleet. Billions of taxpayer dollars have been spent to produce and subsidize the plug-in electric car. For years we have heard about the supposedly amazing technology for the Volt which would lead America to energy independence, be a "game-changer" for General Motors and provide a multitude of new green jobs. Proclamations were made that supply for the wonder-car could not keep up with the demand. Well, March's sales figures are in and give further confirmation that the lofty claims were all lies.
There has been an important story brewing over the past several months regarding General Motors' flawed bankruptcy process that has been widely ignored by the media. GM may have to readdress its 2009 bankruptcy settlement due to a lawsuit by a group of GM creditors against hedge funds over a settlement involving the company's Nova Scotia debt. The creditors brought to light the fact that the company did not have its ducks in a row at the time of its 2009 bankruptcy filing and allege that GM was still in the middle of backroom negotiations with hedge funds beyond the deadline. A court decision is now imminent.
Bin Laden is dead and Twinkies are alive! That might have been the rallying cry if we were in an election year and if the Bakers Union was deemed as important as the UAW to the parties seeking reelection. But the Obama Administration is not as dependent on smaller unions, like the Bakers Union, for contributions and votes. That fact allowed the Hostess bankruptcy to proceed in an unimpeded manner in which such processes were designed to.
I recently wrote about how government-owned Ally Financial was the only big bank that failed the Federal Reserve's stress test and how that ties in to General Motors' operations. The bailed-out bank formerly known as GMAC received about $17 billion of taxpayer money as part of the auto bailout (aka bankruptcy) process. It is now possible for GM, which relies on the auto lending unit of Ally Financial, to buy back the best segment of the bank on the cheap after taking advantage of the taxpayer largesse that saved the lender.