Tag: General Motors

Color Me Surprised

GM is going back into bankruptcy court:

A U.S. bankruptcy judge on Friday urged settlement talks in a dispute between General Motors Co and plaintiffs seeking compensation for the lost value of their cars stemming from a massive recall over a faulty ignition switch, though neither side seemed ready to negotiate quite yet.

Judge Robert Gerber, of the U.S. Bankruptcy Court in Manhattan, said he would welcome the prospect of a resolution that avoided a “monstrous battle.”

Gerber is the same judge who in 2009 oversaw GM’s whirlwind Chapter 11 bankruptcy case. Now facing dozens of lawsuits over a faulty ignition switch that has led to the recall of some 2.6 million vehicles, GM is asking Gerber to enforce the so-called bankruptcy shield, in a pre-emptive move aimed at staving off dozens of lawsuits from customers who say they took a financial hit from the recall.

Under the plan approved by Gerber, GM channeled its burdensome liabilities into a shell known as “Old GM,” while selling its profitable assets to “New GM,” a separate corporate entity that took GM out of bankruptcy and now operates as General Motors Co.

Accident victims are not involved in the dispute before Gerber, which concerns only claims for loss of car value.

The law here is quite complicated. As far as I understand, piercing the bankruptcy shield is difficult. However, if the GM (and the government) committed fraud by concealing the ignition switch problem before bankruptcy, this could make new GM liable. And if the judge finds that, this could end up before the Supreme Court.

I suspect this is the first of many deceptions and financial shenanigans that were swept under the rug in GM’s controlled bankruptcy. Do not be surprised if they end up in court again. And do not be surprised if we find out that some shady and illegal stuff goes on with industry and government ride in the same cart.

Low Voltage

Last week, the Democrats told us how much they oppose big businesses, money in politics, subsidies, tax breaks … all while praising the auto bailout. Now let’s ignore that we, the taxpayers, still own billions of dollar in Chrysler stock that is worth less than we paid for it. Let’s forget that the Chapter 11 proceedings were hijacked to make sure unsecured union obligations were prioritized over secured lenders. How’s the revitalizing going?

Not well:

Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts. GM on Monday issued a statement disputing the estimates.

Cheap Volt lease offers meant to drive more customers to Chevy showrooms this summer may have pushed that loss even higher. There are some Americans paying just $5,050 to drive around for two years in a vehicle that cost as much as $89,000 to produce.

And while the loss per vehicle will shrink as more are built and sold, GM is still years away from making money on the Volt, which will soon face new competitors from Ford, Honda and others.

The Volt is supposed to be ground-breaking technology and ground-breaking technology can be a loss leader. But this is ridiculous. Given its construction costs, the Volt is a really a high-end gimmick for wealthy buyers (like the taxpayer-loan-receiving Tesla motors). But they insist on marketing it to the general public as a … what? … high-end sedan? Meanwhile, the less-subsidized and not-bailed-out Prius continues to sell.

Someone wake me when our investment in these companies pays off.

LSM misses the real issue here

It seems that US News ran an article on Hilda Solis, President Obama’s Labor secretary – another one of those unelected Czar jobs – buying a Canadian car:

To show her support for American workers, President Obama’s labor secretary, Hilda Solis, has junked the standard black limo and purchased a new Chevrolet Equinox to ride around Washington in. The problem: the crossover SUV is built and assembled in Canada from parts also made in Canada.

Solis proudly arrived at a media breakfast hosted by the Christian Science Monitor today in the shiny silver vehicle, which she has dubbed the “bullet.” She was asked about why she traded the standard-issue limo for the SUV. “What better example could I set if I encouraged my staff to go and purchase and seek how we could acquire a vehicle that would for me would send a signal that we’re for supporting our American workers, American-made products, fuel efficient as well,” she told the Monitor’s Dave Cook, who provided this video of her answer.

Solis added that she was inspired to buy the Chevy because of the pride she saw in American auto workers during trips to U.S. car and truck plants. She said that she was wowed by “the pride that they take making our automobiles here in America.”

What they all failed to realize and point out in this article, which stands out to me, is that like all of Team Obama, Hilda Solis seems to have no clue about how things work in the real world and the foggiest about any kind of economics, and yet, here she is in charge of driving economic changes in the real world. Their defense when presented with the facts?

When Whispers notified her office that her “American-made” car was actually Canadian, Labor spokesman Carl Fillichio said, “Modern automobile manufacturing is a global industry and General Motors is a company whose reach extends far beyond the boundaries of the United States. Cars assembled here in the U.S. are made from globally sourced parts, just as cars assembled in other countries utilize parts made in America. Not only is the Equinox the second fastest selling SUV in America—a good sign for the overall health of the U.S. auto industry—66 percent of its parts were made in America. That’s up from about 50 percent just a few years ago.”

So WTF makes what GM is doing with their cars any different from say a Honda or BMW assembled in the US? Are those car manufacturers not part of that “global industry” as well? Are US workers putting them together not part of the modern automobile manufacturing capability? I’ll tell you what makes the difference here: Obama bought GM, which was going broke, to pay off the unions that helped elect him. With tax payer money to boot. Hence this stupid show.

My wife owned an Equinox. It was a decent car and I liked it. Had it for 5 years. Was still running good but my wife wanted something new because it was paid off. We looked at the new Equinox, and she was not too impressed with it. I hated the idea of spending my money to help Team Obama out. So this year we got her a Ford instead of another Government Motors car.

Anyway, back to the major lesson here. These morons without a clue of how things are in the real world and apparently seriously lacking in economic know-how, are the ones making the economic decisions for the country. It’s not by accident that things are looking down and not up.