Walmart Prefers Political Correctness to Profitability

Mike Duke photoLast week it was Walmart CEO Mike Duke’s duty to find an explanation for continuing declines in same store sales, as the company hosted its 20th Annual Meeting for the Investment Community on Tuesday.

Despite the fact that the most recent quarterly report ended in July and brought a surprising (to analysts) .3 percent drop for the second quarter, when a one percent gain was expected, Duke cited the two-week old government shutdown and a “tough and unpredictable global economy” as reasons for the poor performance.

“It should come as no surprise that the government shutdown is on the minds of our U.S. customers,” Duke told his audience. “As you would expect, we’re following the situation very closely.”

Of course the shutdown came long after the second quarter reports, so there had to be other explanations.

“The competition is also tough,” Duke said. “I see it when I … Read More ➡

GM’s Advertising Identity Crisis Hurting Sales

Volt gay adIt looks like General Motors is going through an identity crisis as its marketing strategy has flip-flopped by changing its targeted audience. The new General Motors’ truck ad, “Strong,” targets conservatives by honoring a heroic and manly GM truck buyer with lyrics that describe him as a “love one woman for all his life” type of guy who arrived at work on time for twenty straight years. The rugged, heterosexual identity of today’s GM differs greatly from last year’s politically correct version when the company won praise for running a “gay” Chevy Volt ad and for flying rainbow banners to celebrate America’s sexual diversity.

As mentioned recently on NLPC, the new GM truck ads have done little to pull buyers of any sexual orientation into dealerships. A recent survey (unveiled here) points to the fact that conservative truck buyers still hold it against GM for taking billions of taxpayer dollars … Read More ➡

Survey: Auto Bailout is Drag on GM Truck Sales

A consumer survey taken last week on behalf of the National Legal and Policy Center confirms that public disapproval of the auto bailout continues to dog General Motors, and is likely hurting pickup truck sales, a highly profitable segment of its line.

When 500 consumers in Texas were asked, “Would your decision to buy a specific brand of truck be influenced by whether that company received financial assistance from the federal government?,” 40.08% answered “absolutely.”  Another 11.75% responded “very likely,” and 10.60% responded “likely.” Thus, more than 60% said that the bailout would have some influence on their decision.

Only 23.89% responded “not too likely.”

Texas is the largest truck market in the country, with more sales than the next three states combined.

The release of the survey results comes amidst a major advertising campaign for GM’s full-size trucks – the Chevrolet Silverado and GMC Sierra – with significant visibility … Read More ➡

Are Truck Buyers Avoiding GM Because of Bailout?

One of the most disappointing aspects of last week’s sales results from General Motors was the underperformance of the much-hyped new truck offerings from the company. While the industry-leading Ford F-Series saw sales increase about 10 percent to around 60,500 vehicles for the month, GM’s combined sales for its competing Chevy Silverado and GMC Sierra fell approximately 8 percent to about 46,000 units.

GM’s Obama-appointed management’s performance in trying to explain the declining sales was as lame as the sales results. Amongst the excuses for disappointing truck sales, GM did not include the possibility that a hangover from the auto bailout is contributing to the dip and to many consumers GM still stands for “Government Motors.”

Demographically, truck buyers are older, less urban and more politically conservative than other consumers, just the kind of people who are responsible for all the internet postings along the lines of, “I’ll never buy … Read More ➡

New Book Identifies Cronyism as Outcome of Big Government, Source of Corruption

book coverAll too often, maintaining an enterprise, especially a new one, depends on knowing the right people in government from whom to acquire favors. Such an arrangement has come to be known as “cronyism.” And it justifiably has its critics. Among them are Randall Holcombe and Andrea Castillo, authors of a brief, but potent and timely new book, “Liberalism and Cronyism: Two Rival Political and Economic Systems,” published by the Mercatus Center, a think tank affiliated with George Mason University. Holcombe, a Florida State University economics professor, and Castillo, a Mercatus associate, view cronyism as the antithesis of liberalism. Rather than establish clearly- defined and evenly-enforced rules of behavior (as liberalism does), cronyism subordinates business decisions to political ambition and connections. It’s a science that the Obama administration in particular has taken to a new level.

To understand cronyism requires an understanding of its putative antidote: liberalism. The authors … Read More ➡

Tesla Fire is About Rushing, Subsidizing Immature Technology, Not Stock Price

Tesla fireA fire (screen capture from Jalopnik.com) that torched a Model S from the formerly Teflon Tesla Motors on Tuesday blackened its front end, lowered its stock price, and (further) revealed a corporate arrogance not seen since Fisker Karmas were alight.

But CEO Elon Musk saw to it that taxpayers were fully paid back their $465 million Department of Energy loan, so as watchdogs over the public purse we can forget all about it and just go on about our business – right?

Wrong. The incident near Seattle still should be of great concern because Tesla still heavily depends on tax breaks (like the consumer’s $7,500 federal credit) and the sale of emissions credits (mainly from California) to partially subsidize the costs of their electric cars. Moreover, the government has invested billions of dollars in the research and development of new battery technology, all in the name of energy efficiency … Read More ➡

Chevy Volt September Sales Plunge – Cost Taxpayers over $13 Million

Akerson and VoltGeneral Motors reported unimpressive sales results for the month of September as sales fell 11%. Core division, Chevrolet, performed the worst with sales down almost 15% year over year. Within that division, sales for the much-hyped Chevy Volt could not even be propped up with its recent $5,000 price cut as results declined to a measly 1,766 units (less than one per dealership) in September. That is a decline of over 38% year over year and just over half of what sold in the previous month.

The floundering sales of the Volt saved taxpayers some money over August when federal subsidies totaled more than $25 million. The federal tax credits for September ring in at about $13.2 million. Taxpayers are on the hook for millions of dollars more in state subsidies, as well.

My best guess for why sales of the unwanted Volt are doing so poorly compared to … Read More ➡

Why Are We Subsidizing Obsolete Electric Car Technology?

We now have had some time to digest the groundbreaking news from General Motors that it is working on a “Tesla-Killer” electric car that will get 200 miles on a charge and cost about $30,000. The most obvious takeaway is that the news is more unfounded green hype from GM, something that they have been guilty of in the past when they over-promised on the Chevy Volt. The best indicator of how serious a challenge to Tesla the new report really is would be found in Tesla’s share price, which has gone from about $165 a share at the time of the news to the current price at around $185. While that barometer would give the indication that GM is once again exaggerating the potential for its latest green miracle car, let’s assume that the technology to develop a car that goes 200 miles on an electric charge at a … Read More ➡

State Pension Funds and Big Investment Firms: What Could Possibly Go Wrong?

piggy bankThe financial crisis brought havoc to just about every financial institution in the country. But let’s focus on the current status of state pension funds, where the crisis is beginning to look particularly grim.

Just how underfunded are state pension funds?  The estimates start at well over a trillion dollars and go up from there.  The answer depends on the observed time period, the difficulty in raising taxes on an already overtaxed public, and the severe problems in getting decent returns without taking unacceptable risks.

But consider the fundamentals.  The disproportionately large baby boomer generation born from 1946 to 1964 already has begun retiring. This represents a demographic time bomb even without the economy faltering.

Then consider that a study of state pension funds released in 2012 showed that annual returns for large public pension funds averaged about 5.9% over the last ten years despite the fact that the target … Read More ➡

Bailed-Out GM Takes On Tesla – With Car That Doesn’t Exist

The internet has been abuzz with stories about General Motors competing with Tesla by offering a vehicle that will get 200 miles on an electric charge and cost only $30,000. One headline even declared that GM might be the winner of the competition with the title reading, “GM Takes on Tesla- and Just Might Win.” The only problem is that the car being hyped does not even exist. Nor may it ever.

GM has much experience in the field of green vehicle hype now having a couple of years under their belts with the Chevy Volt. Those in the media that bought on to the hype and helped spread the good (but false) word on the Volt do not seem to have learned from the experience. Perhaps it is GM’s multi-billion dollar marketing budget that helps influence coverage that is not based on facts. Or maybe it is … Read More ➡