Let’s Not Forget Ethical Shortcomings of Auto Bailout

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.

The offer was for bondholders to accept a … Read More ➡

More Bad News for the Chevy Volt

Volt photoAs 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.

According to a piece posted on theaustralian.com, “emissions from manufacturing electric cars are at least 50 per cent higher because batteries are made from materials such as lithium, copper and refined silicon, which require much energy to be processed.” The bottom line seems to be that vehicles like the Chevy Volt are not as green as perceived to be.

Another recent report published by the Reuters news agency reveals that the consulting group, Boston Consulting, lowered its estimate for … Read More ➡

Is GM Feeding Rumors About its Finances?

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?

GM CEO, Dan Akerson, also floated the rumor when he was asked in a Detroit News interview if GM was considering buying back … Read More ➡

GM Confirms Chevy Volt Tax Credit Abuse

On Monday, I revisted my Chevy Volt story on Eric Bolling’s “Follow the Money” show on Fox Business Network. Here’s a transcript:

Eric Bolling: It is the story you saw here on “Follow the Money” first our friend Mark Modica, first broke the story that car dealers were selling the Chevy Volt as used and claiming thousands in tax credits for themselves. Now the LA Times is following the money and confirming the story with us now from the National Legal and Policy Center is Mark Modica. Also joining us on the panel is attorney Joe Jackson. Mark go ahead boy, you are being vindicated by the LA Times but thank you for breaking story right here on “Follow the Money.” Tell us about it.

Mark Modica: Thank you and thanks for breaking it on your show. Yeah, we ran the story, and basically the story was that … Read More ➡

Akerson Wants $5 Gas; CEO Unfit to Lead Bailed-Out GM

gas price signGeneral 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.

I have questioned the management at GM in the past, but these comments prove that Dan Akerson is not the right guy to get GM headed in the right direction. My main recent … Read More ➡

GM China Sales Fall as CEO Cites ‘Cultural Revolution’

Akerson photo“Baseball, hot dogs, apple pie, Mao Zedong and Chevrolet.” That could be GM’s new slogan if recent comments by CEO Dan Akerson are taken to heart. Akerson shared a somewhat bizarre vision for GM in an interview with the Detroit News when he stated, “Whoever comes after me; it’s going to be a more important appointment than mine because he or she will have to carry on a cultural revolution here. It’s just like the Communist Party in China in the 1960s, there has to be a cultural revolution here.” These comments come just weeks after the Washington Times reported GM’s sponsorship of a Chinese Communist Party propaganda film.

There seems to be a strange dichotomy at GM as marketing hints at patriotic roots for the company while corporate vision exposes a viewpoint that the philosophies of Communist China are worthy of praise. Akerson also has described China in the … Read More ➡

Obama Ballyhoos Auto Bailout as Economy Tanks

GM logoToday’s jobs’ report raises worries that the US may be headed for a double dip recession. Jobs creation was much lower than expected and the unemployment rate rose to 9.1%. And where is President Obama? Traveling to Ohio to brag about how many jobs were saved by spending billions of taxpayer dollars to bail out the auto industry. Oh well, Nero fiddled, Obama campaigns. While Obama tries to convince the majority of people who will be voting in 2012 that auto bailouts are a wonderful thing, individual investors in General Motors should consider the specific risks the company faces if the economy does not improve.

GM has staked much by investing in raising production capacity and freely spending taxpayer money on environmentally friendly plant upgrades as well as on spending to create high paying jobs for the politically powerful UAW. While these moves help Obama on the campaign trail, investors … Read More ➡

Bailed-Out GM Relies on Incentives; Volt Sales Underwhelm

General Motors shares fell 5% on Wednesday after May auto sales figures were reported. Most auto manufacturers were hit as sales for the industry fell pretty much across the board. Excuses for the industry shortfall ranged from higher prices for vehicles to Japan parts shortages. GM cannot claim the latter, since they earlier declared that there were no issues with parts supplies. The one telling statistic on GM is one that was not reported in most of the media coverage, which was the fact that incentives at the automaker were, once again, well above industry averages.

According to Edmunds, the “true cost of incentives” per vehicle at GM was $3,373 per vehicle compared to an industry average of $2,094. Ford’s incentives came in at $2,283. GM was not willing to discuss the numbers during its sales conference call, rather citing an “anomaly” for incentives during the month. Well, that’s reassuring. … Read More ➡

GM Admits that Dealerships are Taking Chevy Volt Tax Credits

Chevy Volt photoAutomobilemag.com reports that General Motors has responded to my report questioning whether dealerships are gaming Chevy Volt tax credits. Chevy Volt spokesperson, Rob Peterson, states that “NLPC is confused.” He then goes on to confirm that the dealerships purchasing Chevy Volts and reselling them as used vehicles are entitled to the $7,500 tax credit. Clearly, it is GM that is confused, considering that this was the main point of my report.

GM does not deny that Chevy dealerships are selling Chevy Volts to other dealerships, including a KIA dealership, for resale. At the same time, Peterson also touts the high demand for Volts claiming, “we don’t sell Volts at the moment – it’s almost like we deliver them.” By this statement, you wouldn’t know that sales for the Volt averaged a dismally low 425 per month for the first four months of the year. GM recently stated that they … Read More ➡

Taxpayers Get Scammed on Chevy Volt Tax Credit?

On Friday night, I discussed the appearance that GM dealers are gaming the Chevy Volt tax credit on Fox Business Network’s “Follow the Money” show with Eric Bolling. Here’s a transcript:

Eric Bolling: Outrage alert. Former Saturn dealer, Mark Modica says there is something rotten in the business of marketing and selling the Chevy Volt. He claims he uncovered underhanded shenanigans that make the Volt appear to be a success story. Mark is here with us right now. Ok, Mark, tell us what happens. Dealers are selling to each other to grab that tax incentive.

Mark Modica: Hi Eric. Yes. What I did, was I did a search on some websites to check the availability of Volts. GM was claiming that demand was exceeding supply and that there was not enough out there. What I found was that there is plenty out there including six of them within … Read More ➡