How Deep Does GM Boycott Run?

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Media headlines about General Motors trumpet events that would lead one to believe that the company has successfully transformed itself into a self-sustaining, profitable American corporation. Readers are to believe that thousands of jobs are now being created at GM and the taxpayers are on their way to reaping the rewards of their so-called "investment" of $50 billion in an ownership stake of the company, even as Wall Street pricing of GM shares indicates otherwise. However, there is a portion of Americans who do not buy into the GM success story and now refuse to purchase vehicles from the company based on moral grounds.

Amidst the GM internet headlines can be found dissension by those who do not agree that the Obama auto bailouts and subsequent taxpayer funded initiatives exemplify actions that were in the best interest of America. Comments by readers, like those at the end of an article at biggovernment.com criticizing the government intrusion that sees taxpayer funds being used to support sales of the controversial Chevy Volt, unveil a quiet boycott of GM products by many who have a negative view of the bailouts.

Another piece on the web entitled "Obama Haters Shun GM" speculates that those who dislike President Obama are punishing GM by not buying the company's cars or shares. I think the title is a bit over the top, but the point of some consumers shunning GM is valid. As for the sentiment influencing share price, that's ridiculous. Markets are too efficient to allow a widely traded security to be driven by such a sentiment. The fact is, the institutions and people who control the "smart" money are not buying the GM hype, it has nothing to do with their feelings about Obama. The article quotes comments from a seemingly wise fellow named Mark from the Philadelphia area who states the reason for not buying GM shares is that the stock is a dangerous investment and has nothing to do with personal feelings about Obama.

The strategy at GM and at the White House is to convince the majority of Americans (i.e. auto consumers and voters) that General Motors is the picture of patriotic, domestic industrialism at its best. Add the hype for the Chevy Volt as a savior for the environment and the hope is that enough Americans will have a favorable enough view to ensure the success of GM and the 2012 Obama election campaign. Proponents of GM will argue that relatively strong sales (of vehicles other than the Volt) are proof of acceptance by the American public.

Those Americans who view the actions at GM as the epitome of crony capitalism at its worst will remain unconvinced that the auto bailouts were a great success. They saw that favored classes, such as the UAW, benefited while other less politically connected groups, such as GM bondholders, accident victims, taxpayers, etc., sacrificed. Many recognize that government support for the struggling Chevy Volt is costing taxpayers billions of dollars. The question is, how widespread is the negative sentiment?

I really don't believe that the majority of the populace pays close enough attention to the happenings at GM to have it influence their car buying decision. Most consumers will buy the vehicle they believe offers the best value. What is important to recognize, however, is that in such a competitive field as the auto sector, every advantage is crucial. Ford is now running ads that play upon Americans dissatisfaction with GM's costly taxpayer funded bailout.

If even a small minority of Americans will not consider purchasing a GM vehicle, General Motors will have to spend extra on marketing initiatives and incentives to maintain market share. Add the risks of a slowing economy threatening already thin profit margins and the quiet boycott of GM may be enough to make the difference between success and ultimate failure. Perhaps for both an auto company and an administration.

Mark Modica is an NLPC Associate Fellow.