GM (Govt Motors) "turnaround" reports rely on "overbuilding", jam-packed dealer lots

[Little-Acorn]

In case it wasn't already clear, here's another reason why Obama bailed out GM and bought so much of its stock when private individuals and groups didn't want to risk their own money.

Now GM has been building far more cars than it can sell, in an effort to fill up dealers' lots and pretend the cars are sold when they're not.

Why would they do this, when such inflated sales claims today, will inevitably harm sales reports later?

Answer: Because "later" comes after the November elections.

So much for the claims that Obama is "saving" GM. In fact, all he is doing, is using GM to save himself... with no regard for what this will do to GM later.

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http://dailycaller.com/2012/07/19/gm-turnaround-reports-rely-on-overbuilding-jam-packed-dealer-lots/

GM ‘turnaround’ reports rely on ‘overbuilding,’ jam-packed dealer lots

Published: 1:33 PM 07/19/2012
By Ryan Lovelace

President Obama’s campaign claim that he rejuvenated the ailing General Motors depends on practices called “overbuilding” and “channel stuffing,” critics say. Car dealerships’ lots are filling up with unsold trucks and SUVs because GM built more vehicles than it can sell in order to inflate sales claims and artificially boost its profits, The Daily Caller has learned.

The Detroit automotive giant records sales for vehicles in dealers’ inventories before car buyers make their purchases, said Mark Modica, a National Legal and Policy Center associate fellow.

GM’s overbuilding “probably helped [GM] in the second quarter, but will hurt in the third quarter,” a Standard and Poor’s Capital IQ analyst added.

Third quarter results won’t be made public until after the November election, allowing Obama to tout the company’s short-term success while masking troubles that are not yet apparent to voters.

[fj1200]

^Well, they're not going to fool the analysts or the market which will reflect the true value, already close to or at new lows iirc, but why won't Q3 come out before the election?

[Anton Chigurh]

The Dems want the economy to collapse immediately after Obama loses.... Hedging their bets. If he wins, they can pretty much bury stuff like this.

Problem is, the economy will probably blast off like a rocket when Obama loses - including a all time record Christmas sales boom - allowing them to say "See? Our policies WORKED!" and try to have Obama take credit for the actual recovery.

I keep telling people, HOLD OFF on any major purchases until AFTER inauguration day!

[Kathianne]

The Dems want the economy to collapse immediately after Obama loses.... Hedging their bets. If he wins, they can pretty much bury stuff like this.

Problem is, the economy will probably blast off like a rocket when Obama loses - including a all time record Christmas sales boom - allowing them to say "See? Our policies WORKED!" and try to have Obama take credit for the actual recovery.

I keep telling people, HOLD OFF on any major purchases until AFTER inauguration day!

Well they must have listened last 1/4, spending way down on 'durables.'

[fj1200]

I keep telling people, HOLD OFF on any major purchases until AFTER inauguration day!

No matter, the market will see through that and decide if Romney policies are good for growth anyway.

[Kathianne]

Feb 2009:

http://dealbook.nytimes.com/2009/02/23/rattner-to-serve-as-lead-adviser-on-auto-bailout/


...“The Obama administration’s selection of Steve represents a distinct honor for him and a rare opportunity for him to help facilitate our country’s economic recovery,” Quadrangle said in a statement. “While we will clearly miss Steve, we recognize the utmost importance of this appointment.”


The Obama administration last week said it had eliminated the idea of a “car czar” who would mastermind the negotiations among the car makers, the unions and other parties involved in the auto bailout. Mr. Rattner was widely believed to be the front-runner for that position.


General Motors and Chrysler have already received billions of dollars from the government’s banking bailout. As part of that aid, they have submitted plans for restructuring their operations, a process they have said would be extraordinary difficult without a car czar with broad-ranging powers.


G.M. and Chrysler are continuing talks with the union and bondholders, but the companies face skepticism that it can extract the concessions needed to put it on a track to recovery.


Mr. Rattner started his career as a financial reporter for The New York Times. He has been active in New York’s Democratic Party, holding a variety of fund-raisers for candidates; he originally backed Hillary Clinton for president. Mr. Rattner’s wife, Maureen White, was a co-chairwoman of finance for Mrs. Clinton’s campaign.


He previously worked at Lehman Brothers, Morgan Stanley and Lazard as a mergers and acquisitions specialist. ...



December 2011:

http://wot.motortrend.com/rattner-says-uaw-wages-should-have-been-cut-during-bailouts-147425.html


Steve Rattner, former auto advisor to the U.S. Treasury Department (http://blogs.motortrend.com/rattner-gms-impending-ipo-5952.html), said on Thursday that the Auto Task Force assigned by the Obama administration should have forced stakeholders of General Motors and Chrysler Group, including the United Auto Workers (UAW), to make more sacrifices as part of the conditions for the bailouts of 2009, according to The Detroit News. He also said General Motors must do more to convince Wall Street that it’s turned over a new leaf, and is on its way back to sustained profitability.


Speaking at the Detroit Economic Club luncheon, Rattner said he wished the task force had done more to close the gap in wages between American automakers and foreign competitors, as labor in the U.S. costs substantially more than overseas. That wage gap has been the subject of recent talks between American automakers and UAW leaders, as new contracts were discussed (http://wot.motortrend.com/ford-gm-face-challenges-uaw-76327.html).


“We asked all the stakeholders to make very significant sacrifices,” Rattner said. “We should have asked the UAW to do a bit more. We did not ask any UAW member to take a cut in their pay.”


Rattner also said both Chrysler’s and GM’s bondholders should have gotten less from the bailouts, as they would have probably lost everything in an uncontrolled bankruptcy anyway. According to The Detroit News, the bailout cost taxpayers $82 billion, money that was distributed between GM, Chrysler, and other U.S. auto companies to prevent a collapse of the industry following the economic crisis of 2008.


But Rattner doesn’t believe Washington gave GM too much. Speaking to The Detroit News, Rattner said, “We put more cash into GM than we probably needed to – and we knew this. It’s part of why GM is so well-capitalized today.”


...



Yesterday:

http://dailycaller.com/2012/07/27/rattner-off-mesage-outsourcing-is-inevitable/



http://youtu.be/WIGoSUnvYtU





Getting mighty crowded in that woodshed: Obama’s ex-semi-auto czar, Steve Rattner, goes off message and says he doesn’t “believe we can reverse” the outsourcing of manufacturing jobs.

Apparently it is not Mitt Romney’s fault. Rather, the wage gap is just too great. Using GM as an example, Rattner says the company’s Michigan workers make $55/hour, its Mexican workers make a little more than $7/hour — while in China it’s $4.50 an hour and in India $1/hour. [Video is from Brookings Institution, 7/12] … Caveats: Rattner’s obviously including benefits in his $55 figure — I’m not sure it’s directly comparable. The difference between $7/hour in Mexico and the $14-plus that Volkswagen is paying in its Tennessee plant doesn’t seem insurmountable in itself, given the compensating advantages (e.g., better control) of manufacturing in the U.S. …


Rattner himself could have done a lot to make the U.S. more competitive if he’d pushed Detroit’s unsustainable UAW wages in VW’s direction when he was coordinating Obama’s auto bailout. Too bad he didn’t. UAW autoworkers didn’t lose a penny in hourly wages, even as their employers were driven into bankruptcy — something Rattner himself has noted (http://wot.motortrend.com/rattner-says-uaw-wages-should-have-been-cut-during-bailouts-147425.html). You have to wonder if his comments are tainted by guilt over his failure. …. [Thanks to alert reader V]