Snoopy

No Hyper, it's not 61% (even though I listed it as such), it's 26.5%. U.S. Government NOW owns about 500M shares of GM. They already recovered about $22.3 billion from the loan repayment AND earlier stock SALES (interesting), which leaves the balance to be recouped by the sale of remaining shares at around $53/share.

Therefore, GM and the "public" have control of the company. And I'm told that the U.S. Government is out of the daily, as well as the strategic, management of GM. That was GM's goal on the loan repayment, and such, and it was also part of the loan agreement.

The next part, the government selling the balance of shares, will be the hard part.....selling shares at $53/ea. Experts are saying that share price will not be attained for, at least several more years (they have been wrong before). Unless of course, the government sells at a loss.

Tominator......that deal is not unusual, if you consider all the "deals" that a company will get to locate in a specific region, state county, city. Many relocating companies, are provided property and income tax waivers by citys, etc. for some period of time, for example. But I do understand your direction of thought.

The Volt was significantly "financed" by the DOE, as I understand it. So if this is true, yeah it can be called, legitimately, the Obama car as many have suggested.

hyperv6

Nancy will keep her mouth shut unless Bama loses. Then if a Republican wins they will start to support GM and the Dems will then demand that they are sold.

It is just a game for both sides. Just like the Middle East and other things that the Dems opposed till they won and then they changed views of things like Gitmo etc. They both play this game.

Untill GM is sold off by the goverment they will remain a issue for both sides.

Tominator

The difference is that this falls within State's Rights and should not even be discussed by the federal government..and yes, both 'sides' do this, but the Republicans have defectors in their ranks this time...

russruth

I don't mean to bust anyone's bubble, but GM did not turn a profit . . . at least in the real world business sense.

They owe the Gov. 30 billion in stock that will never be paid back in full, got to write off 45 billion (after bankruptcy which is virtually illegal and never allowed before because bankruptcy essentially wipes out your debt.), GM has a 7 year income tax moratorium and the Volt was financed through the DOE (Department Of Energy).

GM has less profit per vehicle than Ford and Ford pays 241 million in interest on their loans, GM's average union workforce is $58 per hour and the UAW has already made rumblings that they want more on the next negotiations.

GM also has a huge drag with Opel and is now pretty much stuck, as they won't sell Opel outside of Europe and european sales are down and going to drop further.

Look for Opel to be either sold to the Germans or cut loose.

GM has new product coming out, but Ford is a year ahead with new product and regardless of what people think the U.S. auto industry is doing ok. Problem is the companies are Honda, BMW and Mercedes.

I want GM to succeed, but not this way, not at our expense and not with a non level playing field.

We can all debate this until we're blue in the face, talk about the million of jobs saved, but the loans and Government stock ownership (along with the UAW giveaway) was not needed. What was needed was a standard bankruptcy, then probably Government backed loans which allowed the bond holders to be paid more than 38 cents on the dollar.

Wiping out the bondholders made wall street nervous and lost a lot of credibility with GM.

Now . . . GM does have a strong network in China which could save it from it's stock dropping another double digit hit.

hyperv6

You need to state it this way the goverment is holding 61% of the stock along with the UAW. It is not so much GM has not paid this back but the goverment has not sold it since the price has not come up yet. That was to be expected as they are still in the middle of thei rturn around. It will take a more stable economy and the rest of their new products to bring about a sale at higher stock prices.

Yes the Volt has DOE money but so does nearly all electric cars out there. The money has been offered and taken by nearly all the MFG for use on electric cars.

The only reason Ford is ahead in their turn around is they went belly up 2-3 years sooner. At that time they could leverage their pants for low interest loans. This option was not available to GM or Chrysler at the time and there was little choice for the goverment to step in at prevent a much great loss of jobs. I am not a fan of the present goverment but either side would have done it when in office. Things are not good now and would have been much worse if they went down.

The UAW is rumbling to all MFG. Ford is a greater target right now. Since they hold a stake in GM they are less inclined to rape them right now. That is not to say that could change as their greed always gets the best of them.

Opel does have labor issues in Europe but they are not alone. Most MFG in Europe are in a stangle due to the Euro. With it threat of failure sales are down for them all. The key to Europ is Chevy as they are now a full brand there as Opel goes up scale. GM could easily import Opel and already does import Chevy to Europe. The sale has been brought up several times but GM has changed their minds on it. As of now they are in talks with Peugeot Citrone but will not disclose the info yet.

I agree the bankruptcy would have been better to do but it would have had to been done 2-3 before the goverment bail out. After the bank crisis and higher interest issues this option was not viable at the time GM went down.

GM sales are doing ok here. THey have even gain market shares here and elsewhere. This turn around is going to take some time as we have only see one of the new car lines that is a post Chapter 11 car in the ATS. The rest were projects that were stopped by the chapter 11 and has to be restarted to buy time till the other cars are ready.

There is a lot I do not like on this deal but GM is making gains and will get back in time. They still face issues with gas prices and the Euro question but they all are dealing with that.

Might note Ford has had to offer some pretty big incentives to keep the cash flow up as if they fall behind they will lose plants. They also will not get bailed out at this point with all the trouble that the goverment had with the others.

JoeSchmoe

The average wage is not $58/hr.

Perhaps with benefits calculated in.... but not on salary alone.

Blue_SS

...and, the UAW doesn't always get what it wants, either. A lot of what's in the press is posturing. They own large chunks of both GM and Chrysler, and they have "hired guns" telling them what's up with the companies' books. They also have a "no-strike" agreement at GM and Chrysler until 2015.

So they can't always get what they want, but they will probably get what they need...

And, how is GM behind Ford on model intros? The new Malibu is here - now. The Fusion isn't due till the fall. Cruze, late as it was, still beat Focus to market, too. Sonic followed Fiesta, but appears to be a much better product. In fact, other than the positively geriatric Impala, I see GM doing real well with new product.

Snoopy

russruth.........

Very well written and a good analysis, I commend you (even though I may not fully agree with a couple of issues).

I also see you are a "follower" of Newt Gingrich (which doesn't make you a bad person).


hyper......you still have it wrong and I think it's important to understand this, for the sake of arguments. The government is holding 26.5%...not 61%....of GM stock They did hold 61% but sold roughly 35% over the last year. Now, we don't know what value was given to the stock (maybe several) at the time of the "loan"..... usually in this type of deal, less than market value, but I would hope the Government recognized SOME profit from the sale...for the tax payers sake.

Because GM is a registered stock with the SEC, you can find this information on any good financial website.

Old Lar

I am sure GM will pass off bonuses to the employees prior to repaying the US taxpayer and reduce their gross income for tax purposes. I'm waiting until GM comes up with an HHR replacement (small crossover). Not much in their inventory that is worth close the sticker price.

JoeSchmoe

They also agreed to a two-tier wage system. New employees start out at around $15 per hour from what I have read. That is a very significant cut in starting wages...

And on your second point, I agree. GM products look pretty good from what I am looking at. I like the Cruze and the Sonic! I would own either of those if they came out in performance guises.