GM News, New Models and Market Share

bpizzuti

Boo hoo. They want to buy it back, offer us enough where we don't take a huge bath on the stock.

busiris

Although, in the grand scheme of things (and total government spending), selling the shares today wouldn't be that much of a loss from a financial perspective (whats a few billion when you're talking trillions?), but it would surely be a political "poison pill"... And I suspect it will remain that way after November, regardless who wins POTUS.

As long as the government owns shares, it really hasn't lost/made money.

Losing even a few $$$ on GM would amount to hanging a political albatross around a politician's neck...

Just look at all the political "hay" made when the government lost its investment in Solyndra, and that was only a small fraction of what a current-day sale of GM shares would cost...

stever

I bet they'll be gone soon after November, no matter who wins. Otherwise the issue will drag on for the congressional elections two years later. Well, that may delay the sale if leaving hay in the field means more points against the current ins. :shades:

Meanwhile GM's 104th birthday passes quietly where it began (Detroit Free Press)

berri

I always laugh at all these corporations that extoll capitalism and then are right up there at the socialist feeding trough looking for government money and favors. If GM wants the gov gone, then pony up to help make that happen. Otherwise the gov should take its time and try to minimize its loss. It strikes me as kind of two faced for GM to get all that gov bailout dough and then want even more by getting the gov to take a big loss on its equity stake.

busiris

An old adage used to go ..."It all depends on whose ox is being gored."

Now, it's ..."It all depends on whose entitlement is being de-funded."

stever

Just don't make me fly commercial with the peons. :P

anythngbutgm

LOL, and yet there are ones who have suggested we need to pony up more money on top of the existing debts...

These clowns just gave 2 billion to Puegeot so obviously they (Government Motors) don't see the pay back as a big priority either. :lemon:

bpizzuti

But this is why we need to give them more money, so they can buy the stock back. It makes perfect sense. After all, how can you expect them to be successful while flying Coach? There isn't enough room in those seats for the appropriate-sided ego for success. :shades:

uplanderguy

I clearly remember those '67 Ford padded center 'flower pots'. I'm thinking that was a one-year thing, but can't remember for sure. We've discussed it here before, but back then it seems like GM design had it all over Ford in the instrument panel area, IMHO anyway. Have no idea how it worked in an accident.

uplanderguy

Today, I rode in a new Escape for about 100 miles, and drove it about three miles, tonight. My coworker sold his very clean '02 Escape to his mechanic, and bought a maroon SEL Escape, fully loaded. When I first saw pics of the Escape, I thought it was 'Asian' looking (particularly the side rear quarter window), but it has grown on me. My friend's has the chrome wheels and all the buttons. Seemed to me it had a bit of tire/road noise that surprised me a little bit, and when I drove it, it had some of the thing that bugged people about the GM dustbuster vans when they came out...sloped windshield and a lot of top of instrument panel stretching out there...but a nice vehicle. Seemed better to me in the back seat than an Equinox--at least back in '11 when we test-drove one. The console doesn't seem to intrude in the back seat as much as the Equinox.

andres3

(whats a few billion when you're talking trillions?),

A few billion here, a few billion there, pretty soon your talking a trillion or more.

A penny saved is a penny earned; Even moreso, because your not borrowing a saved penny; nor paying taxes on it.

busiris

Similar to what has been attributed to Sen. Everett Dirksen...

"A billion here, a billion there... Sooner or later your talking about real money..."

For Uplanderguy...

On my way to see my dentist today. I saw a deep dark red Avanti, in excellent shape, driving down the road. I have no idea if it was an original or post-Studebaker unit, but it was sure maintained well...

uplanderguy

I like Avantis, but they seem to be a love-it or hate-it car. I think when parked next to most anything else built at the same time back then, they are amazingly free of things like excess brightwork, fake scoops, and that kind of thing. The Studebaker ones had a factory 'nose down' attitude, but the later ones didn't...had to do with getting the Chevy engine to fit under the hood.

circlew

Even AIG made money! :P

The government expects to lose $85 billion on the bailout of GM and rival Chrysler Group, a stark contrast to the profit picked up by its bailout of the financial industry and insurance giant AIG during the 2008 crisis.

Go Hyunkia!!! :shades:

Regards,
OW

bpizzuti

If they knew how to make money they'd be in the private sector. :shades:

fezo

I'm in the love Avantis crowd. I don't dare go by one with a for sale sign on it.

imidazol97

Gotta love the masochism going on here with GM from some people: They want GM free of government but don't want their government to sell the shares and be free of GM. They don't like GM because the government forced ownership of shares by current government and by their labor arm, the UAW, as part of the improper bankruptcy. That all has been roundly criticized by some here, but yet those same folks don't want GM to be free of the ownership?

Can we go back through the posts and see how many people have wailed, "I won't buy GM as long as they are owned by the 'government.'"

So wouldn't we want them free of those strings? Sell the darned shares so the whining can stop.

I'm still with those who felt a more normal bankrupcy, overseen with help by the government, that cleared GM of some contractual labor costs, etc., in a cleaner fashion, i.e., no UAW costs. Then GM would have been able to better compete with the foreign companies.

dieselone

Can we go back through the posts and see how many people have wailed, "I won't buy GM as long as they are owned by the 'government.'"

I don't think I've ever made that claim. I've probably said I'll never buy another GM vehicle;) Reality is I'll buy what I like the best for the amount I want to spend. Currently, I don't see any GM vehicle that I'd buy. With every category GM makes a vehicle, there is a vehicle from a competitor I prefer.

But that can change. GM has improved to the point that they have a few vehicles I'd probably be satisfied with and GM actually has a few vehicles I'd at least consider, that hasn't been the case in a long, long, time.

Currently, trucks is the one area GM could earn my business, but with the current offerings I'd definitely go with a Dodge or Ford.

IMO, I'm probably most impressed with the Cruze. Mainly because GM has never made a compact I'd remotely consider. Though I haven't driven one, I find the Cruze to be as good or better than any compact on the market.

I'd likely go with the Focus, mainly because I prefer it's more aggressive styling, it comes in a hatch, and it has more power, and from what I've read, is more fun to drive. That's not to take away anything away from the Cruze, and I understand completely why someone (uplanderguy for example) would far prefer the Cruise over the Focus. Plus I'd definitely go with a manual which would eliminate issues with Fords maligned DCT in the Focus.

I don't like how the bailout was handled either, but at this point, what's done is done. Who knows how long it will take for the stock to go up enough for the treasury to at least break even.

dieselone

Today, I rode in a new Escape for about 100 miles, and drove it about three miles

Do you know which engine it had? I'm curious regarding how well the new ecoboost 4cyl engines perform.

My wife's taurus also has a bit more road/tire noise than I expected too. I wonder if it's the tires, lack of insulation, or a little of both. While it's something I notice with the radio off, I rarely drive without tunes playing, so I don't notice it often.

busiris

Aren't you one of the few that's been repeatedly suggesting MORE government infusion and investment into GM?

As for most of what I've read here, including my own opinion...

We want GM to be free of the government, and government to be free of GM, but not at the loss of $$$ billions of taxpayer dollars.

So, I doubt you're going to see much agreement with your desires, either here on this forum, or from the general public...

I do agree, however, that this forum certainly does have its share of GM detractors

stever

I don't know where this "improper bankruptcy" stuff came from. Most Chapter 11's are pre-planned, deals are cut, and then there's a lot of court oversight. Plus creditor's committees and lawyers out the ying-yang fighting for a piece of a usually too small pie. If there was something improper, it's not rocket science to file an appeal.

Interesting take in the Detroit News today about American Axle's success story. They would have gone Ch. 11 except GM essentially bailed them out. Reminds me of Microsoft saving Apple's bacon in '97 when they bought a bunch of stock.

About the only thing sort of different about the GM & Chrysler bankruptcy was that no private lender was willing to give them financing so they could reorganize. But it's not like the feds or state and local government don't know their way to the bankruptcy courts.

busiris

"Most Chapter 11's are Pre-planned..."

In the 4 companies I was involved in assisting that were going through bankruptcy, that was certainly the case.

One of the things that a bankruptcy lawyer will often tell you is that, by the time many companies realize they are headed towards bankruptcy and want to go the Chapter 11 route, they're already Chapter 7 material.

It's often the largest creditors that see the upcoming problems and initially guide the troubled company to "see the light" of going the Chapter 11 route, and of course, they make sure they (the creditor) have the best position possible.

stever

Probably should have said most successful Chapter 11's are pre-planned. I bet 90+% of them just delay the inevitable.

GM certainly isn't out of the woods yet - practically a perfect storm with China getting shaky and the EU in precarious shape.

Meanwhile, GM is denying the stock sale news:

"The Wall Street Journal reported Monday that the Treasury Department rejected a GM request earlier this year to offload its remaining stake through a combination of a new public offering and GM share buybacks.

But a source familiar with the discussions told the Free Press that GM has not made such a proposal."

GM: We didn't ask U.S. to sell shares (Detroit Free Press)

Missed this the other day:

"Toronto-based bond rating agency DBRS raised General Motors' credit rating to investment grade, the first agency to do so.

The agency upgraded GM from BB (high) to BBB (low), reflecting what it called a "sound business profile" with "impressive geographic diversification." (Detroit Free Press)

imidazol97

>I don't know where this "improper bankruptcy" stuff came from.

How did the bondholders fare in this government run bankruptcy? Did they get any of their value?

stever

I think the law sets out who gets paid first. If the bondholders got left holding the bag, then they were behind other claims with a higher priority. There's nothing "improper" about having an investment go to zero. I got one in my IRA that I can show you. :P

busiris

In a company the size of GM, the establishment of debt subordination can get quite complex.

Who gets paid what amount and when they get paid is a factor of where one happens to be in the subordination "pecking order", combined with how and where the courts place them in the repayment "line".

imidazol97

What happened to the value of bonds in GM? It has been my impression that they essentially lost most of their value. That was partly because the UAW was given ownership in the new GM rather than having lost their rights in the old contract.

berri

I believe that is essentially what happened. The unions were treated advantageously to the decrement of the bondholders and other creditors. This subordination of creditors (look at the recent airline BK's to see how it is normally done) means creditors are likely going to be much more careful and probably reluctant in potential BK situations in the future. Could come back to haunt GM down the road if it needs another cash infusion.

busiris

I have no idea what happened to the bond value. Nor do I know the debt subordination schedule GM was operating under, and I suspect few outside the "deal" have a complete understanding, either.

I DO KNOW that, if the bond holders felt they had any sort of sufficient claim against the asset vale remaining in GM before the bankruptcy, they would have definitely exercised their rights under bankruptcy law.

That's exactly what I would have done.

Since I don't remember anything substantial in the news about them doing that, it would appear they were down the list in subordinated debt so far that the chances of collecting anything of substance was very low.

There isn't any law that prohibits investors, whether it be in equity or debt, to lose invested money. Happens every day.

This is what the WSJ said about it...

http://online.wsj.com/article/SB124377589042969721.html

And from Bloomberg...

http://www.bloomberg.com/news/2011-04-06/old-gm-bondholders-getting-shares-in-ne- w-general-motors-may-depress-price.html

imidazol97

WSJ doesn't speak to the question of bondholders, but it does say the remaining money is NOT a loan and doesn't need to be paid back. So GM has fulfilled their debt payment. US administration is just left owning part of it along with their UAW union.

busiris

Doesn't speak to the question of bond holders?

Did you read the same article I read and posted?

It clearly stated that bond holders holding $27 billion in debt obligations traded their debt for equity positions in the new GM.

Trading debt for equity positions in reorganized companies is extremely common.

But, you are correct in that the government owns an equity position in GM, and it's equity, not debt.

Now, you can talk semantics all day long, but I doubt you'll find many taxpayers keen to accept a huge loss on that equity without reserve.

imidazol97

>Doesn't speak to the question of bond holders?

I did find near the bottom that bondholders got approximately 10 cents on the dollar for the bonds they held.

stever

Better than a walk down the road; likely would have gotten nothing if GM had undergone liquidation. :shades:

circlew

Here is an interesting piece that begs the question. I'll post the link for the fans.

“Around 1960 the automobile industry all of a sudden became a ‘global’ industry,” Drucker noted. “Different companies reacted quite differently. . . The companies that refused to make hard choices, or refused to admit that anything much was happening, fared badly. If they survive, it is only because their respective governments will not let them go under."

Why a Turnaround at GM Isn't Auto-Matic

Here is the reality at the end of the day post-bailout:

In GM’s case, this remains the great question: Has the company truly reconsidered and refashioned its theory of the business? On this, the experts are decidedly mixed.

Without such fundamental change, it’s doubtful that Drucker would have altered his view, expressed nearly 20 years ago: “I am increasingly coming to ask whether anything short of a General Motors breakup…is likely to enable General Motors (or its successors) to make a successful turnaround.”

I vote breakup...No More GM. :surprise:

Regards,
OW

greg128

I don't know where your $85 billion figure comes from. I just looked it up from numerous articles within the past week.

The facts: GM received about $50 billion in 2009.

as of now they owe about $27 billion. Governments GM shares are worth about $12 billion as of right now.

Therefore as of now GM owes US about $15 billion( IF those shares are sold now) or less than a third of the original loan.

Of course we don't want the facts to get in the way of the "truth" that is rampant on this forum.

greg128

GM owes US about $15 billion

By the way that's about the amount of money our government prints out of thin air every 4 days.

busiris

Well, technically the $15 billion shortfall due to the reduced value of equity (shares) isn't a debt, but one can rest assured that the general public considers it to be one.

uplanderguy

Do you know which engine it had? I'm curious regarding how well the new ecoboost 4cyl engines perform.

I drove it about ten or twelve miles tonight, most of which by accident. The owner doesn't go out for dinner, so he gives me the keys (pushbutton start though) and I and the other guy go out for dinner. Coming back, I accidentally got on I-79 North. It drives nicely on the highway. While driving, I didn't seem to notice the road noise as much as I did as a passenger in the rear seat. It says "Ecoboost" on the tailgate, and I kidded my coworker, "Will it catch on fire?" and he said, "Nah, it's a 2 liter". He had the underneath of it Ziebarted and I hadn't smelled that smell in over 30 years...used to definitely be part of a 'new car smell' up in NW PA!

dieselone

The 1.6 ecoboost was the model recalled. It should perform well with the 2.0 ecoboost. IIRC, that should be in the 230+hp range.

dieselone

GM owes US about $15 billion

By the way that's about the amount of money our government prints out of thin air every 4 days.

That doesn't make me feel any better;)

berri

You don't think Uncle, playing a major role in this BK, may have exercised some muscle on the major bondholders with the financial industry in trouble also...

If the BK hadn't treated the union with kid gloves compared to what usually happens to labor in a BK, then there would have been more left for the bondholders. I think this is the major issue involved - the White House played politics with the UAW against the bondholders interests. I'm not sure the gov has ever been this involved in a corporate BK settlement before except for perhaps a major defense contractor?

uplanderguy

I have only worked in our Pittsburgh office three times in three months. One regular there has a Black Granite '11 Malibu like mine, but an LTZ. He didn't strike me as a car guy, but I asked him today if he'd seen a '13. He said, "I like the taillights, but I don't think I like it in profile as much as mine".

I have said exactly the same thing.

He also said he's looking forward to the "new" Impala, as I am.

Great minds think alike.

bpizzuti

Actually, bondholder debt is senior, they would have been paid before most others, including preferred and common stockholders. A bond is a loan agreement, with the company as collateral, and the bond holder is a creditor. On the other hand, stock is not a loan, it's ownership of the company. A stockholder is owed nothing, they purchased a piece of the company, and if that piece's value goes to zero, that's depreciation for ya.

berri

I haven't driven the new Malibu, although I did sit in one. I had a few of your gen as rentals. The V6 drove nicely, the 4 banger probably needed to be smoothed out a bit (which I'm presuming the new 2.5L 4 will accomplish). But those Malibu's were very comfortable cars. Exceptionally comfortable front seats - much better than in my Camry. I think the new Malibu buyers will also miss the longer wheelbase. I'm guessing the new Impala will eat the Taurus for lunch in comfort and sales. Another thing GM has going for it in my view is that Ford doesn't generally build cars for tall guys, whereas GM usually does.

busiris

In theory, you're correct.

In practice, it gets far more complicated. Some classes of stock may actually have senior subordination to certain debt. It all depends upon how the total debt/ equity arrangement is structured, and you can bet with GM, it was pretty complicated.

In regards to government pressure, I'm guessing it didn't take much. The government was the only source of "ready cash", and the message sent to the bond holders was probably "take the deal offered, or the government will balk on investment, and you will lose 100% of your investment". Even if it's only 10% that the debt holders get back, it's 10% more than they would get otherwise.

Later estimates point to a debt-recoupment of 30-40%, the last I heard...

imidazol97

>He had the underneath of it Ziebarted

Why? It'll just cause trouble late holding moisture where the coatings fail.

Who has a vehicle undercoated these days? Do they put on clear vinyl seat covers too?

imidazol97

>bondholder debt is senior,

That's what I was thinking.

stever

My guess is that the UAW stuff was treated as either a wage claim and/or a pension claim and that was even higher a priority.

Dollars under the bridge at this point.

GM is hiring in Austin. Bringing IT in house. Up to 500 new jobs. In three years, they'll outsource the jobs to save money, lol. (Yahoo)

andres3

How about of instead of blowing 2 billion + on foriegn french car companies, GM buy back 2 billion worth of gov't shares at "full" price, the price whereby taxpayers break even.

I think that would be the honest honorable thing to do, but, no, they go off and blow money on other car companies.

berri

The UAW stuff wasn't about debt or money owed to them. It was how much they were going to have to give in salary and benefits toward the reorganization, as well as how much stuff was retained in house to protect their jobs.