The CBC reports that:

Ontario premier Dalton McGuinty said Friday his government will wait to see how General Motors prices its public share offering before deciding whether to sell its stake in the company.

McGuinty said the government needs to be “patient” and sell at the most profitable time.

The Canadian and Ontario governments own about 12 percent of GM. The US Treasury, which owns about 60 percent of GM has said that it expects to sell “some” of its GM stake during the IPO, which is expected to occur by the end of this year. In short, as Ken Elias predicts, GM won’t stop being “Government Motors” after it goes public. No matter how emphatically Ed Whitacre declares victory.

I understand the economic argument for the off-shoring of production, but I think the practice is reprehensible. U.S. automakers have benefitted greatly from federal largesse and should feel morally compelled to retain and create as many domestic jobs as possible.

As one of the strongest proponents of the Detroit Bailout, Rep John Dingell (D-MI) carries some weight when he makes statements like this. But how can Detroit rise again by ignoring the undeniably strong “economic argument” for outsourcing? In a Bloomberg BusinessWeek feature, Thomas Black shows why production numbers are on the rise in Mexico, and makes the case that the Detroit automakers will only increase their reliance on Mexican production when they are free from government ownership.

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Two Republican congressmen have written to GM CEO Ed Whitacre, asking him to halt the destruction of electronic documents as long as the automaker is owned by the government, reports the Detroit News [Full letter in PDF here]. Reps Darrel Issa (R-CA) and Jim Jordan (R-OH) allege that documents destroyed by GM could have helped their House Oversight Committee investigation of GM’s decision to run its infamous “payback” ad, and shed light on government interference in day-to-day operations including influence over plant locations and a “secret agreement” on revised EPA standards. The congressmen write:

In light of these ongoing investigations, we are deeply disturbed to learn that GM is engaging in a continuous process of destroying documents relevant to the Committee’s oversight efforts

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Thanks to congressional arbitration, GM’s dealer cull has been steadily downsized since The General made the decision to axe nearly 2,000 dealers during last year’s bankruptcy. Going into bankruptcy, GM had about 6,000 dealers nationwide, and it culled nearly 2,00 of them in an attempt to lean out its distribution channels. But now the Detroit News reports that GM’s North American boss Mark Reuss has said that about half of those culled dealers will have been reinstated by this July, bringing GM’s dealer count back to the 5,000 ballpark.
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With a GM IPO in the fourth quarter of this year looking more likely than ever, GM has revealed just how much its top management stands to gain from the automaker’s post-bailout share offering. Based on trading of Motors Liquidation bonds, which GM will convert into stock and warrants, a JP Morgan Chase report pegs the company’s value at $70b. Based on yesterday’s bond trading prices, however, BusinessWeek estimates new GM’s value at $48b. With a float of 500m shares planned, that puts GM’s current stock price at about $96/share. With that in mind, let’s take a quick look at GM’s planned executive stock compensation.

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We don’t need an aircraft carrier and “Mission Accomplished” banner, but isn’t it time to agree that the auto rescue has been a success?

Former auto czar-let Steve Rattner picks an unfortunate choice of metaphors to celebrate the possible success of the auto bailout in an op-ed for the Washington Post. Meanwhile, the latest Treasury estimates still show a projected $24.6b loss on the bailout, so yeah, let’s hold off on that carrier-based victory party.

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One year ago today, General Motors took the “unthinkable” step of filing for bankruptcy. It was a seminal moment in the history of the American auto industry: the day that once-dominant GM finally shed its illusions, faced up to reality, and plunged into the cold, cleansing waters of bankruptcy reorganization. Or, to use a more accurate metaphor, it was pushed in. After decades of decline masked by decades of PR-driven denial, GM had literally lost the ability to self-correct.

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When the music finally stopped at Old GM, the UAW’s VEBA fund was left holding a lot of IOUs. On those merits, the union’s benefit trust was given about 17.5 percent of the equity in the bailed-out and re-organized New GM. UAW leadership has always maintained that having its membership’s benefits staked on the company’s financial performance would not change its mission, and that VEBA’s representative on GM’s board, Steve Girsky, would operate free from union influence. And one hopes he would, considering he’s being paid well to advise CEO Ed Whitacre. But the tension between GM’s IPO sprint and the UAW’s non-VEBA interests never goes away, and the Wall Street Journal [sub] is reporting that the latest spat is over the old hobbyhorse of buyouts.

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Speaking at a Brookings Institution summit on cities affected by the auto downturn, National Economic Council director Larry Summers said that taxpayers will likely see “most, if not all” of its $42b outstanding “investment” in GM returned when the automaker goes public. According to the Detroit Free Press:

Summers’ comments were backed up by an analyst estimate today that suggested the new GM’s equity could be worth between $75 billion and $78.5 billion – giving the government more than $42 billion for its 60.6% stake.

Obama Administration officials had previously said that taxpayers stand to lose as much as $34b on its bailout of the auto sector, including GM, Chrysler and their finance unit formerly known as GMAC (now called Ally Financial).

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Nissan made quite a stir in EV-watcher circles by announcing that its UK-produced Leaf battery packs would cost under $400/kWh, but as we noted at the time, those numbers are being supported by various government incentives. Now, with a new government taking over number 10 Downing Street, Nissan’s UK Leaf production incentive might be on its way out. With the UK’s new Conservative-led government facing profound budget challenges (try a $240b deficit on for size), The Telegraph reports that a $30.5m grant approved by the outgoing government could fall victim to an overarching review of new expenditures by the incoming government. And that’s just the beginning…

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Sadly, my internet came crashing around my ears just as GM’s Q1 results conference call was getting interesting. Typical Monday. I’ll rock myself to sleep tonight with a recording of the call and report back tomorrow, but at this point the big news is plainly visible on this single slide. Yes, GM finally got control of its incentives and wrestled them below the industry average… for a month. That month (March) also just happened to be the worst month this year for GM market-share wise. The next month (April), the incentives went back over the industry average, and market share increased once again. The lesson seems obvious: GM won’t gain market share on promises of high-quality cars and taxpayer payback alone.

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What, you want more context from a headline? It’s not like we’ve lied to you or anything. Technically, every word of it is true. OK, OK, here’s the fine print: CGI Holding, owners of “Old Chrysler” and Chrysler Financial paid $1.9b of a $4b pre-bankruptcy TARP loan, according to Automotive News [sub]. Though far less than face value, that payback “is significantly more” than what Treasury was expecting in return. In other words, this is great news if you thought the bailout would be a complete loss. Otherwise, it means that the various remains of Chrysler have repaid $3.9b of the $14.3 invested by taxpayers into the company pre-bankruptcy… and unless Chrysler’s IPO brings in about $100b, Treasury will still take a bath on the rescue.

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Well, the suspense is over. General Motors announced its Q1 earnings this morning, and for the first time since 2007 the quarterly numbers are positive. GM’s net revenue jumped to nearly $31.5b on strong performances from its North American and GM International Operations (GMIO), and across-the-board sales improvement for the Chevy brand. General Motors Europe was The General’s sole unprofitable division for the quarter, losing half a billion dollars while it waits for a deal on financial assistance to clear. Operating cash flow was $1.75b, with about $755m of that going towards capital expenditures. That left just under a billion dollars in free cash flow, as GM finished the quarter with $35.7b in cash on hand. Net income attributable to shareholders was $1.068b, less $203m for cumulative dividends, for a total net profit of $865m [Full financial highlights in .doc format available here].

News that GM is considering a number of options for a return to captive finance, has lit a fire under Chrysler CEO Sergio Marchionne, who tells the Detroit News that

One of the things that we do not wish under any circumstance is to have an uncompetitive relationship vis-À-vis GM