Are you confident about GM’s future?

by Russ Roberts on January 5, 2010

You could do a survey on whether people think GM is going to improve its products and profitability with the help of the government’s steadying hand. Or you could just turn to the invisible hand for a measure of how people think it’s going at GM. The WSJ reports:

Ford Motor Co. posted a 33% rise in December U.S. light-vehicle sales, ending a stellar year for the auto maker compared with its rivals. Ford recorded its first full-year market-share gain since 1995.

Meanwhile, Chrysler Group LLC posted a 3.7% decline compared with a year earlier and said its full-year sales were the worst the auto maker had seen in 47 years.

The largest U.S. auto maker—General Motors Co.—posted a 5.7% decline, but said its process to sell down Pontiac and Saturn inventory was ahead of schedule and reported a 2.2% increase for the four brands GM will keep after its streamlining.

Toyota Motor Corp. of Japan said its U.S. sales rose 32% to 187,860 vehicles last month.

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Randy

"find a penny pick it up" "see a chevy key it up" you paid for it... might as well have fun with it.

sethstorm

I didn't let the bailouts steer me away from GM when I bought my car.

Until the transplants stop making golfcarts or underpowered clones, I'll go for the US-built GM vehicles. They can't make anything compelling in that regard without making it overly exotic/expensive.

I'll just make sure that any purchases I make of a GM vehicle are dependent on a >80% US input, and that the engine block or major parts are not Third World sourced.

Randy

lol... what a blind dumbass, lmfao I'll buy a gm... only if Japan builds them. I sold almost all makes of cars over the last 28 years..and gm is the worse.

Davidwilliams

Let them die. If they succeed it will justify bailouts in the future. They will never succeed with the suffocating UAW labor pact.

The bailout was not just a Government take over it was a Union takeover. With many of the pesky bondholders out of the way the Union is one of the largest owners of GM stock. Which only strengthens and entrenches their position.

A bankruptcy during the Bush administration would have mean that the according to bankruptcy law bondholders would have been paid first. The labor contracts would have been null and void and renegotiated. But Bush granted them a reprieve.

geckonomist

Are you confident in VW/Audi/Porsche´s future?

also a government run company, but the one that is beating Toyota at the moment...

mark

Beating them at what exactly?

geckonomist

profits & growth in Europe, China, Russia, Brazil etc. Unlike the other (german) car makers they were bright enough to stay out of the USA and leave the losses to BMW, Daimlerchrysler, GMC, Ford and of recent: Toyota.

Toyota fears apparently itself that it will be overtaken by the VW group soon, according to the special report on Toyota in The Economist a few weeks ago...

Seth

Which government runs it?

geckonomist

the state government of lower saxony has absolute veto rights over every decision.

Jess

Gecko - you are behind the times. The Stadt no longer has that (absolute) veto.

Seth

And which decisions has Lower Saxony vetoed?

My guess is that their interest and blocking minority power is used primarily to keep jobs in the the region. Is there evidence that they have involved themselves in the day-to-day operations to the extent that the U.S. Federal Government has been in GM's?

I think calling it a government run company is a stretch. It has a government minority ownership interest to protect the jobs. I'm not saying that's good (perhaps they would be doing better without Lower Saxony's interests that may not always line up other shareholders), but it's different than a 'government run company'.

J Cortez

Am I confident in GM's future?

If you mean I am confident that, via government intervention and subsequent market distortion, GM will continue to be horribly inefficient and prone to losses and near failure, then sure.

Russ Nelson

I have no confidence in them either. Consider that all of the railroads subsidized to build the transcontinental railroad eventually went bankrupt, but the one that wasn't (Hill's Great Northern Railway) didn't. I think something along the lines of "profit proves need" applies here.

Randy

Your comment about railroads brings Amtrak to mind. And that is probably the model for GM's future. A zombie auto maker.

gamut

I don't think so. When it comes to trains, we really have no choice in which operator to go with, so they can be a zombie and still have riders. Unless the USG slaps a big "you're not one of us" tax on every car maker other than GM and Chrysler, then I don't think many people will buy cars from a zombie company.

Richard A.

We certainly do have a choice when it comes to railroads; we can choose not to use them in favor of some other transportation method. What's forgotten when you get mired in specifics like what other railroads are there is that all goods and services compete against each other at varying levels. No one is intent on buying a railroad ticket so much as they are intent on being or getting something tansported from A to B. And for that, there are plenty of options and substitutions to lend elasticity to the market, hence a zombi railroad wouldn't find it so easy to survive. And Hill's railroad was a perfect example of a private alternative that worked better than the government subsidized spaghetti lines.

martinbrock

I was happy with my last two Saturns, but as of two months ago, I drive a Mazda. Had GM not accepted the bailout and then terminated the Saturn line, I'd have seriously considered another Saturn.

But the U.S. auto market is increasingly irrelevant. Demand was flat here for a decade and now has fallen precipitously. We might not see a new high in this decade. China is the largest market now, and demand there can only increase.

We drank the PNAC, unipolar koolaid, and we're still drinking it, but the cyanide is starting to kick in.

Randomobserver

I am not confident in GM at all. At the moment, I wouldn't consider purchasing a vehicle of theirs. The only American car manufacturer I am fond of is Ford. They've managed to learn a few tricks from the European manufacturers, and are reasonably reliable.

Mark

This has to be a lie. In the GM takeover, we have government standing up to the powerful business interests, right, muirgoo?

Just you guys wait. They'll have a good quarter, someday. You'll see! You can't keep a good government backed entity down! Look at what a blessing Fannie and Freddy have been.

Keep the faith, comrade Muirgoo!

randian

It will be interesting to see what GM does with Cadillac. I love the CTS-V, but I hesitate to get one because I'm worried the UAW will start slacking off on Cadillac's current high quality.

Mark

You're worried they'll START slacking off?

randian

I know GM has a reputation for low quality cars, but the CTS-V has so far possessed quality befitting a $60k car, if owner's comments on various Cadillac owner websites are to be believed. It's amazing what "we'll shut you down like we did Buick" did for the motivation of Cadillac's workers.