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GM CEO Akerson Rejects Repaying Government for Losses

“The die was cast,” said executive.

by on Dec.17, 2013

GM CEO Dan Akerson said the government took the same risks as other investors.

Soon-to-retire General Motors Chairman and CEO Dan Akerson has said thanks, but no thanks, to suggestions the now-profitable automaker should pay back the roughly $10 billion the U.S. Treasury is believed to have lost on its 2009 bailout of the then-bankrupt automaker.

Speaking at the National Press Club in Washington, D.C., Akerson told his audience that the government took a risk like any other investor – including those wiped out when GM filed for Chapter 11 protection.  And, the CEO stressed, the bailout was far less expensive than the tens of billions of dollars in lost taxes and other revenues that would have been lost if GM had gone out of business.

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“I would not accept the premise that this was a bad deal,” said Akerson, who plans to retire on January 15, when his protégé Mary Barra becomes the first woman CEO at a major auto manufacturer. “The die was cast” when the government decided to take shares rather than make its investment in the form of a loan, Akerson emphasized.


GM Bailout Saved 1.2 Mil Jobs, According to New Report

Feds to sell off last stake by month’s end.

by on Dec.09, 2013

Bailout "put food on the table for 10s of 1,000s," says GM Pres. Mark Reuss.

The federal government bailout of General Motors spared at least 1.2 million U.S. jobs, according to a new report – and even though taxpayers will lose more than $9 billion on the rescue effort, that was more than offset by nearly $40 billion in additional taxes generated in just the year the government pulled the beleaguered automaker out of bankruptcy in 2009.

The white House has been rapidly selling off its final shares in what critics have called “Government Motors,” and expects to be completely out of the automotive business by the end of this month.  The most recent Washington forecast indicated taxpayers could lose $9.7 billion on the bailout, though the rapid run-up in GM stock this past month could trim that loss, analysts note.

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“Any complete cost-benefit assessment of the federal assistance to GM in its restructuring must consider the total net returns to the public investment,” declared authors Sean McAlinden and Debra Maranger Menk, in the study, “The Effect on the U.S. Economy of the Successful Restructuring of General Motors,” released today by the Ann Arbor, Michigan-based Center for Automotive Research, or CAR.


Strong April Car Sales Could Buoy Sliding Economy…Again

"Irrepressible buying behavior" keeps showrooms busy.

by on Apr.22, 2013

Ford continues to see record demand for its new Fusion despite signs of an uncertain economy.

Sales of new vehicles during the first half of April remained in a healthy holding pattern as buyers continued to replace aging vehicles, according to the updated monthly sales forecast developed by J.D. Power and Associates’ Power and Associates and LMC Automotive.

That could be good news for analysts fretting about other weakening signs in the U.S. economy. The auto industry was one of the strongest sectors of the economy coming out of the last recession and could help maintain that pace in the months ahead.

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“The irrepressible buying behavior of consumers is driving auto sales growth in 2013, as consumer spending remains remarkably stronger than the economy suggests it should be,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive.


US Auto Market in Full Recovery Mode

Demand expected to surge – though Washington gridlock still poses a risk.

by on Nov.28, 2012

Toyota's Jim Lentz sees good times ahead for the U.S. auto industry.

It’s been the little engine that could, driving along an economy long struggling to avert a double-dip recession. And now, amidst growing signs that the U.S. economy is clearly on the mend, industry leaders are increasingly confident the auto industry is heading in fast-forward towards some extremely good – though probably not record – years.

As manufacturers get set to report extremely strong numbers for October, Toyota’s top American executive, Jim Lentz said he expects to see 2012 end with sales of 14.3 million – about 1 million more than a year before and a roughly 40% increase from the depths of the recession.

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“And the forecast ahead looks even better,” Lentz said as he opened his keynote remarks at the opening of the annual LA Auto Show. “Analysts expect we will reach 16 million in just a few short years.”


US Car Sales Likely to Escape Fiscal Cliff

Demand expected to keep rising over next two years.

by on Nov.19, 2012

U.S. car sales are expected to keep growing even if Congress fails to reach a settlement preventing the feared fiscal cliff.

Fiscal cliff or no fiscal cliff, U.S. car sales are expected to continue rising over the next two years, according to the economic forecast prepared by the University of Michigan. The U-M forecast is important because it serves as the basis for production and sales forecast.

In addition, Richard Curtin, the directors of U-M’s widely quoted surveys of consumers, also reported that consumer sentiment is inching up. The improvement in consumer sentiment indicates the likelihood of strong economic growth during the year ahead, Curtin said.

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In addition, in another sign economic conditions are beginning to improve, providing a broader platform for car sales, personal income is also positive for the first time in years, he noted. But mortgage debt is still considered excessive, Curtin cautioned.

Nonetheless, the auto industry appears to few obstacles that could slow it down.


Auto Industry to Add Nearly 200,000 U.S. Jobs

Car business again a key driver of the economy.

by on Dec.01, 2011

Workers at a Ford plant in Detroit. The maker will add thousands of jobs as part of its new UAW contract.

There’s an old adage that when the economy catches a cold the auto industry comes down with pneumonia, as was apparent when Detroit’s makers struggled for survival in 2009, two of the Big Three plunging into bankruptcy. But with the overall economy now struggling to turn around it seems that the auto industry is pushing it into high gear – car sales showing newfound momentum and –according to a new study – carmakers getting ready to go on a hiring spree.

A new study by The Center for Auto Research estimates the U.S., auto industry will add 60,000 new jobs next year, and 190,000 jobs between now and 2015.

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Detroit’s three makers and their “transplant” rivals have already added or announced plans to add tens of thousands of new workers but the CAR study suggests the bulk of the new jobs it is anticipating will be added by automotive suppliers.


August Auto Sales Defying Gloom-and-Doom Forecasts

Japanese makers still struggling through product shortages.

by on Aug.31, 2011

GM products like the Chevy Cruze continued to post sales gains in August.

Despite the roller-coaster ride on Wall Street, sales of new vehicles remained steady during August with Detroit makers collectively experiencing an increase in demand, according to new estimates of current sales trends.

If there was any drag on the U.S. new car market for August it was the result of the ongoing product shortage faced by some of the key Japanese makers due to the March 11 Japanese tsunami and earthquake.

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Both Edmunds and, two Internet sites that collect and analyze car and trucks sales data, indicated August sales will be up 8% over year-earlier totals — and also up slightly from July — despite the turmoil in the stock market.  That echoes other recent reports that suggest that despite concerns about a possible double-dip recession consumers have been slowly loosening their pocketbook strings.

The sales projections, however, were made before Hurricane Irene hammered the East Coast on what is usually a busy weekend for sales, so the final numbers that are due out later this week could be weaker than initial projections.

Detroit’s automakers — General Motors, Ford and Chrysler — are all expected to post double-digit, year-over-years sales increases, but only GM and Chrysler will see month-over-month sales increases in August from July.

“Auto sales stayed on a relatively flat road this month, even as the stock market took a roller coaster ride,” said Lacey Plache, Edmunds chief economist.

“Stronger buying conditions are telling consumers to go ahead and make their car purchases, but a weak economic landscape is telling them to wait until later this year, or even longer. This is the battle that will determine exactly how much the auto industry will grow this year,” she said.

Plache said Edmunds also projects Toyota has done little in August to build on its momentum from July, when it gained a modest 1% in sales — with August expected to bring a decrease of 0.2 percentage points in market share over the same period. Toyota’s August sales are expected to be down 14.4% compared with last year.

Even with lingering inventory issues still to sort out, Honda will likely show some month-over-month sales gains this month. projects that Honda’s August sales will grow 5.4% over July, with a market share gain of 0.2 percentage points. Compared to last year, however, August sales are still expected to be off about 25%.

“We fully expect August will be the worst month of the year in terms of the inventory situation” caused by the March disaster, said Mike Accavitti, Honda of America’s new marketing chief.  “The good news is that our plants are back up in full production and product is now on its way to dealers,” which could bode for a better performance in September. forecasts that Ford will be the only major automaker this month to report a decline in sales from July to August. Ford’s sales are expected to be down 0.5% from July, leading to a market share loss of 0.5 points.

“The auto industry is a mixed bag this year, due to economic uncertainty; sales have improved compared to last year, but nowhere near the potential we had expected,” said Jesse Toprak, VP of Industry Trends and Insights for

“The strongest correlation to new car sales is the Dow Jones Industrial Average and it was shaky and nervous in August,” Toprak said.

For August 2011, new light vehicle sales in the United States are expected to be 1.077 million units, up 8% from August 2010 and 2% from July 2011.

The August 2011 forecast translates into a Seasonally Adjusted Annualized Rate, or SAAR, of 12.2 million new car sales, flat from 12.2 million in July 2011 and up from 11.5 million in August 2010, according to Edmunds.

Retail sales are up 4.9% compared to August 2010 and fleet and rental sales are expected to make up 20% of total industry sales in August 2011.

The industry average incentive spending per unit will be approximately $2,663 in August 2011, which represents an increase of 3%, Edmunds predicted.

Are Rising Gas Prices Crushing the Economy?

Fuel costs double their share of consumer spending.

by on Apr.13, 2011

$4 gas is becoming the new norm.

Karen Silverman scowls as she starts to fill up her 2007 Jeep Grand Cherokee, the numbers on the dial spinning too fast to follow until the pump clicks off at $62.

“When I got the Jeep, it wouldn’t cost me half that,” she laments.  “That’s money I could use for a nice dinner or a movie.  Now it just goes to the oil company.”

With much of the country now paying $4 a gallon, and further increases likely, millions of motorists are having to face the same decision as Silverman, a suburban Detroit legal assistant.  Prices have risen an average of 80 cents a gallon over the last year, according to the AAA, and they’ve more than doubled since slumping to an average $1.86 a gallon following the mid-2008 fuel scare.

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According to various data, Americans are now devoting an average 5% of their income to pay for gasoline, up from a little more than 2% just two years ago.

“The surge in oil prices since the end of last year is already doing significant damage to the economy,” says Mark Zandi, chief economist at Moody’s Analytics.


GM Back in Auto Financing with AmeriCredit Buy

Cash transaction creates a new captive finance company at General Motors to provide more vehicle loans and leasing.

by on Jul.22, 2010

Is Whitacre creating his own empire, just as he did at SBC, in effect reassembling AT&T ?

General Motors Company and AmeriCredit Corp. (NYSE: ACF) today announced they have entered into an agreement for GM to acquire AmeriCredit, an independent – and more importantly successful – auto finance company in an all-cash transaction valued at about $3.5 billion.

The acquisition creates a new GM captive financing arm that will enable GM to provide potential customers with more credit options. GM claimed it would not change its current incentive plans in the U.S., which are among the industry’s highest. If true, this means that taxpayers would not incur increased costs from more of the kinds of subsidized financing that auto companies often use to bolster sales.

Thus far this year GM sales are not increasing as fast as the overall market. Auto companies continue to incur loses because of overly optimistic residual values for returning lease vehicles.

GM said it needs to provide financing to “non-prime” customers – 40% of the U.S. population but only 4% of its current car buyers – who are remain pariahs in the credit markets despite lavish taxpayer financed bailouts of Wall Street firms and big banks that totaled almost a trillion borrowed dollars  – and were designed to free up credit, according to the Obama Administration.

Under the terms of the agreement approved by both companies’ boards of directors, AmeriCredit shareholders will receive $24.50 in cash for each share of stock held as of the closing date, which is due by the end of the fourth quarter of 2010, pending various conditions, including the approval of AmeriCredit shareholders

GM’s proposed purchase price is about a 25% premium over AmeriCredit’s closing share price on Wednesday. AmeriCredit has traded for as high as $26.49 a share this year.

“Adding AmeriCredit to our team will improve our competitiveness in auto financing offerings, and I am very pleased to have them on board,” said GM Chairman and Chief Executive Officer, Ed Whitacre about the Texas based financing company.

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GM claimed it will maintain its relationship with Ally Financial, the renamed GMAC, which is and now an independent taxpayer-owned company that provides retail and wholesale financing to GM and Chrysler Group. Currently GM has 57% of its transactions in the retail prime market through Ally and other banks, above the industry average of 53%.