Will GM Be "Government Motors" Forever?

Last month, the U.S. Treasury announced the launch of a trading plan to sell the rest of its stake in General Motors (NYSE: GM  ) by early 2014. This followed a decision by GM last December to buy back 200 million shares from the Treasury Department for $5.5 billion. By the end of this month, the Treasury will own just 14% of GM stock, down from a whopping 61% in 2009.

We are thus closing in on the end of the government ownership era for GM in the United States. The "Government Motors" tag has stuck to GM like a barnacle, and the resulting blow to GM's reputation has driven many former customers to rivals like Ford (NYSE: F  ) , and even foreign automakers like Hyundai and Kia.

Most Americans who opposed the auto bailouts in 2008 and 2009 have not forgiven either the government or the automakers for what they see as an intrusion by the government into the free market and the normal bankruptcy process. Recent articles about GM here at the Fool have often inspired multiple comments from our Foolish readers to the effect that they would never consider buying a GM vehicle again because of the bailouts.

If this vocal group represents a substantial portion of U.S. consumers, the implications could obviously be massive for GM. How big of a threat does this "Government Motors" stigma pose to GM's long-term success? We won't know for sure until this story plays out over the coming years (and decades), but today it looks like the Government Motors scandal could cause GM to lose its long-held No. 1 spot in the U.S. market. Ford therefore seems like a more promising investment opportunity.

"Government Motors" still weighing GM down
While Ford and GM have both been launching many new models in the U.S. recently, Ford is outperforming GM with better sales growth and better margins. GM's "Government Motors" perception problem is probably one major cause. As of the end of May, GM's 2013 vehicle sales were up 8.3% year over year, while Ford's sales were up 13.0%. GM also lagged Ford in 2012, with vehicle sales growth of 3.7%, versus Ford's 4.7% increase.

More importantly, Ford has been delivering superior margins in North America. That's why Ford's North American pre-tax profit exceeded GM's by $1.4 billion last year, even though GM still sells more vehicles. The difference in margins implies that GM resorts to price cuts and incentives to move vehicles off dealer lots more than Ford does.

It would be wrong to draw a straight line between the "Government Motors" label and GM's underperformance relative to Ford. Certainly Ford has been doing a lot of things right. It is releasing boldly designed vehicles like the new Fusion, which has helped Ford gain share vis-à-vis the Japanese automakers that have dominated the U.S. car market recently.

The 2013 Ford Fusion (courtesy of Ford)

However, it's no secret that GM executives believe the company's status as a "political punching bag" hurts sales. That is a major reason why they have been so eager for the Treasury to sell its shares. GM has not shared any concrete data about lost sales, but the numbers are probably significant to warrant such attention.

Hitting where it hurts
Moreover, lost sales are probably hitting GM where it hurts the most -- in high-margin trucks and SUVs. The auto bailouts quickly became highly politicized, with most Democrats supporting them and most Republicans opposing them. Yet a 2012 survey of auto buyers found that buyers of full-size pickups and SUVs disproportionately self-identified as Republicans.

GM is in the midst of rolling out a new line of full-size trucks and SUVs, and the success of these new models will have a tremendous impact on GM's profitability over the next six years or so. Analysts believe that GM could earn up to $6 billion in gross profit annually from the Silverado and Sierra pickups alone. However, if the stigma of the bailout continues to haunt GM, this expected windfall will not materialize.

Moreover, pickups inspire especially high user loyalty. This could be good or bad for GM. If loyalty to GM trucks overcomes distaste for the auto bailouts among most "conflicted" buyers (i.e. Chevy and GMC owners who opposed the bailout), it will sharply mitigate the damage to GM. On the other hand, if those same individuals switch to Ford or Ram trucks, they could be lost to GM for life, making the bailout especially costly.

Lastly, truck buyers do have other good options. Ram refreshed its truck lineup last year, and Ford is planning to debut a new full-size pickup next year, which is expected to offer major fuel efficiency improvements over today's pickups. GM can't just cruise home in the truck and SUV markets. It needs to find a way to appease disaffected customers; simply getting the government to sell its stake (at a big loss, no less) will not get the job done.

Foolish bottom line
As long as President Obama is in office -- which will be until early 2017 -- the auto bailouts will remain fresh in the minds of many conservatives. Bailout stigma could therefore follow GM long after the Treasury sells the last of its GM shares next year. GM will feel the impact primarily in the high-margin full-size pickup and SUV markets, where most buyers are Republicans.

Investors should therefore watch the launch of GM's new truck and full-size SUV platform closely. If GM can pick up market share over the next 12 months (when it will have a brand-new pickup platform and top rival Ford will have an outgoing model), it should ease concerns about any continuing "Government Motors" stigma.

On the other hand, if Ford continues to pick up market share or GM resorts to high-incentive spending to drive sales volume, investors should be worried. GM faces a formidable competitor in Ford in the truck and SUV markets. The company will have to deliver a stellar product to keep pace from a performance perspective. However, GM doesn't have a chance in this competition if a significant proportion of truck and SUV buyers won't consider a Chevy or GMC for political reasons.

Worried about GM?
Few companies provoke such strong feelings as General Motors. But ignoring emotions to make good investing decisions is hard. The Fool's premium GM research service can help, by telling you the truth about GM's growth potential in coming years. (Hint: It's even bigger than you think. But it's not a sure thing, and we'll help you understand why.) It might help give you the courage to be greedy while others are still fearful, as well as a better understanding of the real risks facing General Motors. Just click here to get started now.


Read/Post Comments (46) | Recommend This Article (14)

Comments from our Foolish Readers

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  • Report this Comment On June 19, 2013, at 11:05 AM, BillD64 wrote:

    I believe anybody no matter what their political views that refuses to buy a GM product because of the bailout is a fool. Why do I believe that?

    Their money was used as an investment in GM. They may not have liked that but that is what happened and now they are a shareholder in GM. I and millions of other people are similar share holders. As share holders we owe it to ourselves and other share holders to support our investments and make them profitable. Purchasing the companies products is one way we can do that. If you refuse to consider its products because of your political beliefs you are doing your best to destroy your investment thus you are a fool.

    Bill

  • Report this Comment On June 19, 2013, at 11:26 AM, TMFGemHunter wrote:

    That's an interesting point. However, it has somewhat less relevance now when the US gov't owns just 14% of GM stock (and is planning to sell the rest in the next year). When GM was majority-owned by the government, that would have been more true.

    Adam

  • Report this Comment On June 19, 2013, at 11:34 AM, ejazz2095 wrote:

    Bill - you could just buy Ford stock and buy a Ford and accomplish the same goal. The difference is I had the option to buy Ford stock, unlike being forced to invest by the gov't in a loser company like GM.

  • Report this Comment On June 19, 2013, at 11:35 AM, TMFTwoCoins wrote:

    Germany tried to take the world over, twice, and I still see many Audi's and Volkswagen's in my neighborhood ;)

    Bailout shmailout.

    I agree with most of the details in the article though, nice write.

    Daniel

  • Report this Comment On June 19, 2013, at 11:51 AM, tslghtr wrote:

    For GENERATIONS,my family has driven nothing but Fords. It is hard to feel sorry for GM, when their CEO flies in on a private jet, is all GQed out, and stands in front of the government,with his exuberant salary and acts like a homeless man begging for change.

  • Report this Comment On June 19, 2013, at 11:53 AM, TMFGemHunter wrote:

    Yes. I'm sure that in seventy years few people will think about the bailout when deciding whether to buy a car from GM. But here are still some people to this day who won't buy German or Japanese cars because of WWII.

    The bailout/financial crisis is much more top-of-the-mind than WWII today.

    Adam

  • Report this Comment On June 19, 2013, at 12:01 PM, fatwhiteboy53 wrote:

    Notice how new owners of Twinkie arent unionizing? GEEEE I WONDER WHY????

  • Report this Comment On June 19, 2013, at 12:08 PM, TMFTwoCoins wrote:

    Adam,

    My point was that the Bailout is much less significant. We won't need 70 years...

    In your mind, to what degree would you compare the bailouts significance to the two world wars? Pro-rate that in the difference of years between 70 and how far we've come since the bailout, you might find that we've passed the threshold of time where it's important to most buyers that opposed the bailout.

  • Report this Comment On June 19, 2013, at 12:52 PM, irishjestor wrote:

    I have never liked GM ! I owned an Oldsmobile once & it was nothing but trouble. The moniker Government Motors is apt because they make vehicles "good enough for government work."

  • Report this Comment On June 19, 2013, at 1:00 PM, al8603 wrote:

    I'll consider replacing my Escalade and 'Vette when every single gov't appointed officer is gone, the share holders who were screwed are made whole and, every dime given is paid back with interest.

    Oh, and they discontinue the tax payer subsidized sales of the Dolt and it's Caddy equivalent.

    I won't be holding my breath for all this to occur.

  • Report this Comment On June 19, 2013, at 1:06 PM, it23 wrote:

    It's not the bailout that is their problem it is the quality of their vehicles. Do a search for Acadia Transmission problems.

  • Report this Comment On June 19, 2013, at 1:57 PM, luckyagain wrote:

    "Will GM Be "Government Motors" Forever?"

    Yes, because it is such a slick use of GM initials. Ford has "fix or repair daily" comment. All of the other car companies have similar gnarly comment about them.

    Does it hurt GM sales? Probably does but few people say "fix or repair daily" about Ford and so it will fade with time. Very few people even realize that Henry Ford the founder of Ford Motors went bankrupt twice before succeeding. In time it will fade and be just an answer to a trivial question, especially if GM makes a lot of money.

  • Report this Comment On June 19, 2013, at 2:04 PM, CrazyDocAl wrote:

    Until GM pays back the government for every cent that was lost I will never buy anything made by GM. The company and the union members who work for them are dead to me.

    The fact is that the government is selling GM stock, only bought to bail out GM, at a big loss. It's doing so because GM stock will be flat for years. Because of the billions of tax payer money lost on GM I will not give them a cent more.

    A lot of people feel as I do, that's why GM is lagging behind other brands in sales. If GM wants to change this then take those profits and make direct payments to the tax payers to show thanks for our help or be known as Government Motors forever.

  • Report this Comment On June 19, 2013, at 3:32 PM, mzllrc wrote:

    GM will always be Government Motors until they pay the money back.

    GM was purchased by the US government and the lost 50% of the investment. This is the opposite of everything the US stands for, America is about pulling yourself by your boot straps. It's about making it on your own. Instead GM was rewarded for incompetence.

    Add to that GM has invested more money outside of the US (China) than in the US. WSJ called GM General Tso Motors given they are so in bed with the Chinese.

    Pay it back. That's all GM has to do and it's over. Pay it back and they are no longer Government Motors.

  • Report this Comment On June 19, 2013, at 5:21 PM, BMFPitt wrote:

    I owned a Malibu when the bailouts happened. I stated at the time and still hold that it will be my last GM car.

    Now in 20 or 30 years, if GM has been completely separated from my tax dollars for some time, and there is a GM car that really presents a better value than anything else out there I might soften my stance. But it will take a clearly superior product to make me even think about it even under those circumstances.

  • Report this Comment On June 20, 2013, at 5:25 PM, daedalian wrote:

    As a kind of an aside on this interesting discussion, the thought occurs to me that besides taxpayers in general, & shareholders in particular there are more than a couple bondholders who also took a hit. They probably should be factored into the Government Motors calculus, Though Fools generally don't consider the impact of disconcerted bondholders, for this discussion perhaps we should. Many of them are seniors and used to drive high end GM. Some, I hear tell, support the current administration, but still hold the takers at fault. While we're thinking about it, there used to be a company that used to do business under the name of General Motors Acceptance Corporation. They sold bonds, too. I think I read some place that they changed names to ALLY (catchy, isn't it?) to get ahead of contemplated reputational problems and encourage their potential customers to feel a little cozier in their association. Maybe GM could use a similar name-change tact to help folks forget faster. I just bit my cheek. But maybe it's worth while considering that there are other stakeholders when calculating the likely persistence of the Government Motors tagline. It's been a while since I've heard anyone seriously use the quote "What's good for GM is good for America" whether its true or not. .

  • Report this Comment On June 20, 2013, at 8:17 PM, Stagewalker wrote:

    While I understand all the analysis and emotion, I think the real issue is the vehicles. When my Saturn was dying, not long after the company did, I test drove a dozen cars and rented a couple that I considered buying while on vacation. When I was done, I bought a Fusion.The turning point was comparison of the recall records of all the vehicles I considered. The Fusion was by far the best.

    There are people who refuse to buy pizza from Dominoes because of their support for anti-abortion organizations. there are others who refuse to buy from Dow Chemical because they made Napalm used in Vietnam. Still others refuse to buy anything German because of the Holocaust or others who boycott Japanese goods. At some point you have to decide to put all the superfluous ideology aside and make your decision based on the product. Is the product the most appropriate for you of all the similar products available or not?

    If it is, buy it. If not, walk away.

  • Report this Comment On June 21, 2013, at 6:06 AM, djplong wrote:

    The people who won't buy GM because of the bailout are probably the same people who would have screamed at the government for allowing a million jobs (GM + suppliers and ripple effect) to go up in smoke.

    I used to buy GM until the local dealership refused to do warranty work on a 6-month-old Oldsmobile because the computer couldn't tell them what was wrong with it - I even got a letter from said dealership asking if we could "part friends". The dealership 25 miles away did everything they could to fix the car - really going above and beyond - and DID discover a wiring problem (the reason the computer couldn't tell the first dealership). That was on a car costing nearly $30K in 1990.

    If my current Toyota holds out long enough, my next car will be a Tesla Gen III sedan and I won't have to deal with sleazy independant dealerships that rely on overpriced service for their profit margins.

  • Report this Comment On June 21, 2013, at 9:04 AM, borneofan wrote:

    I recall a Georgia Tech Alumni Job Conference I went to in Atlanta around 96 I think, (one of several as the new economy has done quite a bit of damage to engineering employment). The brand new parking garage in Buckhead was filled with Honda, Toyota, BMW and VW. Mainstream mostly practical and fuel efficient middle class cars. Not one GM, Ford, or Chrysler to be found.

    As the operating systems wars faded in computers, so have car wars as they internationalized. GM is more a chinese company by earnings. They should spin off into separate companies, close down Buick, consolidate all the trucks and SUV remnants into one division. Just become chevy, cadillac, trucks, and china.

    I haven't driven GM since a donated 77 Nova. With any luck I can get another 100k from my second VW, and the third VW should take me deep into retirement or death, a 3 car life.

  • Report this Comment On June 21, 2013, at 11:34 AM, Jarmbru wrote:

    GM is extremely competitive. They will do anything to make a buck. Except for one thing. They are unwilling to build quality and value into their cars.

    And what's with that clunky old logo and the horrible exterior colors? Ugh.

  • Report this Comment On June 21, 2013, at 4:09 PM, freeordead wrote:

    I will never again consider a GM vehicle. I know and like people who work for GM -- that's not the point. GM went bankrupt anyway -- they "went under" -- and people didn't lose their jobs. But the Obama thugs and UAW thugs stole taxpayer dollars, put families out of business, and thumbed their nose at the rule of law. If I had the money, I'd by a Corvette convertible, set it on fire, and send it flying off the highest cliff I could get to. I'd put it all on Youtube.

  • Report this Comment On June 21, 2013, at 4:23 PM, EdGrey wrote:

    It would make a lot more sense for GM-haters to switch their banking and investing to companies that weren't bailed out and weren't involved in predatory lending and betting against their customers.

    Bailing out GM made a lot more sense than bailing out - with no enforceable strings attached - the billionaire banksters.

  • Report this Comment On June 21, 2013, at 5:17 PM, dj1962 wrote:

    I have a hard time believing the GM's sales problems are significantly affected by people not wanting to buy from Government Motors. I think it is far more due to GM not coming out with products the market wants at the price points it wants.

    A few years ago I heard an interview with Dick Armey. He explained why it is a bad idea for government to interfere with business. He said that it would lead to business decisions being made for political motivations rather than for doing good for the business. I believe he is spot on. I remember back in 2009 that GM examined its business and determined that many dealerships and offices should close. They were a drag on GM's business. Then Barney Frank made a call to GM and told them they are not going to close an office in his district that they had slated for closure. Here is an example of what Mr. Armey talked about.

    Government interfered with GM's bankruptcy, not allowed them to get out of the drag on the business that the unions imposed. GM put a lot of resources developing politically correct products with no market like the Volt. Government in GM is not just an ideological issue. The problem is that government pressure causes GM to make even more stupid decisions than they would have made on their own.

  • Report this Comment On June 21, 2013, at 5:57 PM, greyhound44 wrote:

    I bought a 2002 Subaru WRX 5 spd spt wagon new in June 2001 for cash ($500. off MSRP). It currently has 37,495 mi on the odo.

    Would never consider buying a GM or Ford product.

    ret expat MD

  • Report this Comment On June 21, 2013, at 9:14 PM, argun8 wrote:

    If Ford is so great for shareholders and supposedly no government bailout why did they screw the people of ramapough mountain giving them toxic land that most people fell ill and they had a class action lawsuit and Ford told them as it was near the time of the auto bailouts they were going to claim bankruptcy protection When they settled for a mere 11 million dollars over 600 people Ford suddenly the year after had record profit They still have not cleaned up the toxic waste which the EPA has to super fund the site to clean it Check out mann vs ford makes me sick at what Ford did

  • Report this Comment On June 21, 2013, at 11:00 PM, johnluma wrote:

    So no stats telling us exactly what percent "will never buy a GM product because of the Govt bailout? No, none cited here. I wouldn't worry about GM increasing sales for many reasons, but two are: Most younger buyers don't cling to four-year old political headlines that have little to do with their immediate lives, and will buy whatever strikes them as fitting their needs. Plus, GM has improved their products for years. Of course it always comes down to, how was your last GM car or truck. I got 190,000 miles out of my Fiero without any major maintenance. A great car. Got 270,000 out of my Expedition SUV with no engine or trans problems. I have bought GM and Ford and will continue to do so.

  • Report this Comment On June 22, 2013, at 8:10 AM, argun8 wrote:

    Do not forget that Chrysler was also bailed out the same time. then they were sold to Fix It Again Tony FIAT still same old Chrysler has been bailed out too many times they should have been let go the last time never mind bailing them out how many times has Chrysler been bailed out Next Time lat them go cannot keep a dead horse going

  • Report this Comment On June 22, 2013, at 12:45 PM, derb66 wrote:

    If the objective was to hold dear to a political philosophy, then sure, the government should have let GM fail. But, the objective was to save the economy from going into depression, and with that in mind, non-chalantly waving good bye to a million or so jobs would be unthinkable. A lot of people have quickly forgotten how dire the economic straights were in 2009, and the fact that they can forget that quickly actually shows how successful the bailouts were.

  • Report this Comment On June 22, 2013, at 5:44 PM, tfranklins wrote:

    I guess I'll never understand the rationale of my fellow Americans who continue to buy German and Japanese cars, and then hold it against G.M (and Chrysler) that government money was used to save U. S. companies and jobs. Blame yourselves for not supporting your own country! Too many selfish people today are ill-educated historically and economically. My four older brothers were in WW II (I was a bit too young and served in the U. S. Army later.

    I also taught history and practiced law in my lifetime.), and we wouldn't consider buying a German or Jap product - -it's unpatriotic! It's difficult not to buy some such products, but not cars. American cars are as good as anyones'! We've owned over 50 American cars over the past 59 years (we had up to five at once when or kids were all at home---we now have an Escalade and an H3), and haven't had significant trouble with any of them!!

    Incidentally, if any of you require a history lesson on the inhuman beastiality of the Japs and/or Germans please contact me for details; you might rightly come to understand what barbaric, evil murderers they were! (The Germans at least admitted guilt, apologized and paid "repairations", but the Japs - -to this very day - -refuse to do so!)

  • Report this Comment On June 22, 2013, at 6:14 PM, JusTheUsual wrote:

    Bail out the big companies, but not the family one's and that's why I don't have a job because the family business I worked for went under just as any business should without a bailout.

    Invest in failure, bright idea dems and libs

  • Report this Comment On June 22, 2013, at 7:20 PM, dtor wrote:

    One nice thing about those who complain about GM quality - you know straight off they can be ignored because they're not paying attention.

    Bloomberg: http://www.bloomberg.com/news/2013-06-20/gm-surges-to-top-of...

    Automotive News: http://www.autonews.com/article/20130619/RETAIL/130619840#

    The Times Leader: http://timesleader.com/news/business/613755/GM-rises-in-qual...

    MSN Money: http://money.msn.com/now/gms-surprising-drive-to-automotive-...

  • Report this Comment On June 24, 2013, at 11:05 AM, Rafthand wrote:

    Dtor,

    I checked out your links and found a totally different conversation going on – not about political philosophy but about cars and trucks. Thanks so much for directing readers to some significant points for investors to consider. . Did the M. Fool author read these articles before tossing red meat to the anti-government pundits? Quality and performance used to be why people bought cars and trucks, comments by dozens of Fools notwithstanding. The response tells me more than I would like to know about subscribers of the M.Fool. A lot of them truly have axes to grind.

  • Report this Comment On June 29, 2013, at 11:13 AM, AJermo wrote:

    I think what many are missing is the fact that GM has poor management, lack of effective leadership, and no apparent vision for the future that will lead the company into dominance. This is why the government bailout was necessary.

    Anyone who would invest in GM with the current management and leadership is in my view throwing good money after bad.

    Given all of the issues they face with unions and higher cost of doing business in the northern states, the lack of leadership and vision is an overwhelming call to pass on GM.

  • Report this Comment On June 29, 2013, at 4:50 PM, ydrittmann wrote:

    Some people are forgetting that Ford was at the hearings begging for the government to bail GM out or Ford would lose its supplier base. The first bailout money was given by the Bush administration - 15 billion dollars. GM is really paying the price for building terrible cars for 30 years. Front-wheel drive Cadillacs competing against BMW and Mercedes? The Vega, Citation and converted diesels? The 4/6/8 engine? The Cimmaron? Pontiac cladding? GMing the Saab? It's hard to forget these mistakes.

  • Report this Comment On July 01, 2013, at 1:48 AM, wpmaceri wrote:

    I've read all the comments above. It's seems the content is highly emotionally charged. Although a few posters brought up the most compelling reasons supporting the bailouts. The economy was being cratered by multiple industries, to levels we never before seen the likes of. Allowing GM to fail would have resulted in massive job losses around the world, not only at GM, but for all of its suppliers as well. Consider just the screw suppliers for example; in many cases their only customer is GM, as is true for all of the other suppliers. With a customer like GM, the suppliers didn’t need any others. In addition, even with all their deductions, GM is a major tax payer to the US government, and has for over ninety-five years. It’s safe to say, the government depended on those tax dollars as much as it does the jobs for US citizens. That said it was clearly in the government’s best interests to help one of the largest US corporations (8th) from failing. I would also submit; it was the “American” thing to do. We are a country that lives by the belief of helping those in need. It’s actually one of our core unifying strengths that make us Americans. So while I’m a Ford man, always have been and always will be, and have fought the “FORD CHEVY war with anyone who enjoyed the banter, make no mistake, I believe the bailout was the right thing to do. As a motor head, assembled in Detroit, dad’s side of the family was Ford, mom’s Chrysler, both for several generations. Admittedly, the big three were guilty of many years of miss management. The overall attitude in the quality of their products, their non-response to the automotive changing market that put all of them into a tailspin lasting for the seventy’s, and well into the eighties. And yes the UAW is a huge obstacle, and still is. However, the automakers got it together, they automated their plants, and they adapted a more cost effective business models to run their businesses, started building better cars that can compete with every level of the competition. Yes, they realized they had global competition, something they only had with each other in past years. Unfortunately, the poor reputation they “earned” in those problem years seems to be very hard to turn around. I paid very close attention to the government hearings back in 2009, and was so frustrated at what I was hearing from heads of state, I wanted to get on a plane to Washington to change the perception that prevailed. The general spin of the government rhetoric was outdated by about twenty years. That was a miss representation of the facts, not to mention unfair with so much at stake. The US automakers make very good cars these days. There has been an overall improvement addressing the past issues, and yet, they still try to build the cars the US market wants to buy, and in 2009, it was big SUVs that lead sales. If that’s what was selling, how is it the automakers fault? I could elaborate but won’t. By the fourth quarter 2009, the fall of the mortgage industry had affected the economy nationwide. Gas prices were on the rise, effecting sales of those big SUVs, add to that the huge union retirement payments being due at the end of the first quarter 2010, it had the big three in the same spot that a lot of us found/find ourselves in. Just too many obstacles to overcome all at the same time. To me the bailouts made sense for the health of the country. The financial industry bailouts, not so much.

  • Report this Comment On July 01, 2013, at 7:34 PM, jeffhre wrote:

    Economists call being in line to get rewarded for doing bad things, moral hazard.

    Having your company go through a bankruptcy and being fired from your cushy corporate spot differs from moral hazard (GM's white collar workforce was greatly downsized and Two GM CEO's along with their staff were jettisoned in succession). The government looked at projects like the Volt, concluded they wouldn't make money for years to come, and asked that the Volt be terminated. GM chose to continue Volt development against government requests.

    I pretty much agree with EdGray and derb66: facts are great to have, but emotions will always color decision making.

    GM is afraid to risk it's capital to buy back shares at market rates, let alone the price premiums the government is seeking. The government does not want to lose any more money. Government Motors is a moniker that will not soon be forgotten.

  • Report this Comment On July 02, 2013, at 12:33 PM, barbarian312 wrote:

    Not once, outside of the media, have I heard anyone use the term Government Motors. Besides, no one buys a "General Motors" car. They buy a Buick, a Cadillac, a GMC or a Chevy. This will become a hazy memory to the vast majority just as the Chrysler bailout of 1979 did.

    Another saving factor for GM is the fact that very few people have the fortitude to put their money where their convictions lie.

    The best we can hope is that this bailout will last longer than the 30 years the Chrysler bailout did.

  • Report this Comment On July 04, 2013, at 12:21 PM, SkepikI wrote:

    Sorry to be so late to a fascinating party..... There were several indisputable facts relating to GM that were buried in the commentary, and emotional rhetoric.

    1. GM may be able to get beyond the Government Motors epithet someday, but someday is a long ways off. A good grudge lasts a L-o-n-g time.

    2. With a 14%, 200 million ( I thought it was 300 million?) share overhang in the treasury, to be sold in the next year or so, stock price suppression is a very real prospect, not a theory.

    3. Figures may lie and liars may figure, but SOMETHING is holding back GM sales and not Ford. Ford is getting positive consumer testing credits from 3rd parties for their vehicles and GM less so- possible cause and effect.

    4. Ford's management has taken on and continues to fix their major problems (as doc in MF articles and blogs) even though they are not done yet. The stock price shows what shareholders think. GM, not so much as evident in the article above. No matter how hard you hope, HOPE is neither a plan nor a strategy.

    5. (this not evident in any comment above or article sad to say) The last time I saw this factoid mentioned, it was to the effect that the Treasury need to sell its stake in GM at $50/sh or as high as $70/sh to come out even on the bailout. That was when Treasury owned 300 Million shares. GM still stuck in the $30/share range...pretty low chance I'd say. Looks like the Grudge holders get another positive PR announcement in a year or so....

  • Report this Comment On July 05, 2013, at 9:54 AM, wvowell wrote:

    GM will always be "Government Motors". To suggest this is all of our investment is an absolute joke.

    Taking(Stealing) money from me and giving it to GM (actually to the Union) is not what I call an investment.

    TARP money is being used to buy back these shares again this is my money that I get absolutely zero return on.

    The other thing that I remember is that 58% of the company is owned by the UNION. This would mean 58% of the profits is going to fund the union health care, benefits, etc. What company can survive with such an arrangement. NONE!!

    Bill you are the fool to even suggest this is an investment for all of us.

    It is communism at it's finest and I will likely never buy another GM product. I will also do my best to instill this in my children and anyone else I can influence.

    The best thing for us (America) would be for GM to fall flat on it's face and go out of business!!

  • Report this Comment On July 05, 2013, at 2:39 PM, retbubhead wrote:

    The biggest problem I have with GM has nothing to do with the bailout. My problem is that they stop producing replacement parts for even their most expensive cars after ten years. Try getting electrical or electronic parts for a Corvette that is over 10 years old....

    Case in point, try finding a steering wheel position sensor for a 2000 Corvette - I tried for months before getting rid of mine.

  • Report this Comment On July 06, 2013, at 11:55 AM, Jarmbru wrote:

    General Motors has always been 100% devoted to doing whatever it takes to turn a profit as long as they don't have to make a superior car at a good price.

    Putting the blame on the unions is absurd. Management at GM has had it's head up it's as* since the 50's. Look at that clunky logo. Look at the hideous colors. Look at the cheap junk they put out. Shameful.

  • Report this Comment On July 06, 2013, at 11:56 PM, autotek40 wrote:

    I Think Ford is a joke.I Leased an explorer and Im glad I did.I turned it back to Ford because the resale value tanked because the market was flooded with them.Ive seen people get jacked on the Ignition switch recall Harness catches fire and Ford tells them to call your insurance company knowing it was due to their faulty switch.Same with the cruise control switch recall. Then the Windstar Headgaasket recall,The TFI thick film Ignitin recall which was too late everyone already replaced them and paid out of pocket.Explorer /Firestone My explorer firestone tires were junk at 15kmiles so I put the tires back on when I returned it for the lease.Toyota and Honda will replace things even when the problem was not fixed in the warranty Then there is the 4.6l engines blowing out sparkplugs threads and all,Powerstroke failures.We bail out foreign countrys every day.

  • Report this Comment On July 09, 2013, at 4:38 PM, Total06110 wrote:

    The money never was AND never was intended as, an investment in GM. It was aimed at th UAW and the ripple effect upon other union (voters) for the Democrat party.

    As for Ford, the beauty in their product is, "Old Fords never die, they just burn more oil" I bought a truck w/100K miles and added the same to it, by adding a quart of oil at every fillup. They're amazing.

  • Report this Comment On July 12, 2013, at 2:25 AM, Panth wrote:

    dtor, I have felt the comments about foreign vehicle 'superiority' to ring false for years. I had a coworker who constantly defended his Toyota truck when it spent more time in shops than several GM or Ford trucks combined. He wizened up and bought a Chevy for the next (still has it too).

    A lot of that is a 'justification' for sending our economy overseas. If everyone would spend a little effort and money on American products, our economy would be fine. I have, and continue, to buy only GM, as they have given me great service, low maintenance, and great reliability over the years. I just wish the state I was in did not need road salt, as any vehicle tends to rust out in 10-12 years.

    I was opposed to the bailouts, but realistically, if the government had not interfered, and GM went the normal bankruptcy route, a lot of their pension load would have passed to the government anyway, which may have cost more in the long run.

  • Report this Comment On July 12, 2013, at 2:29 AM, Panth wrote:

    Total06110, I had a Ford truck once, must have been something wrong with it though, it never burned oil. Everything else rusted, broke, or failed, but the engine was fine. Body rust after 5 years, rust through on the fuel tank, clutch slave cylinder went out, ball joints, and more!

  • Report this Comment On July 23, 2013, at 7:59 AM, comment101 wrote:

    I will never buy a Government Motors car. I refuse to buy a welfare-mobile. I refuse to support any company that supports Barack Obama or the democratic party in any way.

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