Appearing today on CNBC, Steven Rattner, the former head of President Obama’s auto task force, made some surprising observations that undermine his previously articulated optimism about the future of bailed-out General Motors. Although he cleverly tried to lump Ford in with GM, he acknowledged GM’s recent reliance on incentives to sell autos:
And you now have in the marketplace a fear that GM is pushing the incentives a little too much in January and February. And nobody wants to go back to the old ways of doing business.
The only problem is that GM has done exactly that by offering 0%, 72-month loans on some models. As I detailed last week, GM much-ballyhooed sales increases were goosed by the most generous incentive offers in the industry, some $3,700 per car sold.
Rattner also addressed the resignation of GM’s CFO Chris Liddell last week:
…you have this change in CFO at GM which was unexpected. I don’t think it will change the course of human events, but it was unexpected.
Of course, GM’s top leadership including CEO Dan Akerman was installed by Rattner’s crew. He is no doubt aware of the exact nature of the turmoil at the company, which he did not share with CNBC viewers. Perhaps the explanation is simple. Rattner’s claim, echoed by President Obama, that taxpayers will get back the money they put into GM, is looking less and less likely to pan out.
Rattner went on to assert that the “overarching” problem facing domestic auto companies is the rising price of oil. Since price hikes are almost a certainty, it seems like a nice all-purpose excuse if Detroit again flounders. According to Rattner:
Ford and GM, and especially GM, are not perfectly positioned if everyone moves back to small cars to deal with the price of oil.
Of course, the Chevy Volt was supposed to be perfectly positioned when oil prices went up. Rattner didn’t even mention it. All he could offer was:
There isn’t a lot they can do…they can’t suddenly come out with a new car model to deal with the price of oil, so they have to play the hand they have.
GM’s hand is shared with the United Auto Workers. And the two get taxpayer chips to play with, no matter how much they lose. Let’s hope oil prices are not used as a pretext for another bailout.