In a deal to prop up their books, GM is selling more assets to the Chinese. GM sold its Nexteer Automotive steering-parts unit to China’s Pacific Century Motors, a company formed by China’s Tempo Group and the Beijing government’s investment arm E-Town. (Read More…)
Despite having more cash than debt for the first time in decades, GM is going back to Wall Street in search of fresh debt. Over the weekend, The General has been in talks with several banks to secure a $5b revolving line of credit to shore up its liquidity position ahead of an IPO that’s rumored to take place in August. At $5b, GM’s desired line of credit would essentially replace the $5.8b the automaker has repaid to the Treasury, and will help it deal with a number of pressing cash needs to maintain its shaky global empire. But with so many pressing uses for the cash, and political pressure mounting for a rapid IPO, can GM deal with its issues and take on more debt and be worth what the government wants it to be worth? Troublingly, the answers to these questions are not to be found on GM’s balance sheet.
Last week, we reported some totally discombobulated June sales numbers from China. People’s Daily had reported that “China’s auto sales slumped by 17.4 percent in June from May, to less than 10 million vehicles.” Hooooo-kay. If you say so.
Now, state-run news agency Xinhua reports numbers that make a bit more sense. Still not the official CAAM data, but close enough. (Read More…)
And again, it’s time for a TTAC tradition. We ask the patent-pending TTAC market oracle: What were last month’s new car sales in China? TTAC was forced to develop this oracle, because China is always a bit late in reporting official numbers (it’s a big country.) So we devised our patent-pending China prediction system, call it the I-Ching of the automotive business: Take GM China, deduct a few points, and like a miracle, you have the performance of the Chinese market. Works all the time. Usually. Sometimes, it doesn’t.
Our oracle says that the Chinese market will come in at a growth in the low 20 percentile range. Why? (Read More…)
Sales of GM’s four “core brands” were up 36 percent last month [release here], however that number is compared to June 2009 sales, when GM was in bankruptcy. Even against this backdrop, however, GM’s sales show some signs of continued weakness. Though Chevrolet gained 32 percent in overall, its retail sales improved a mere 11 percent, meaning a huge number of Chevy’s sales went to fleets. Out of Buick’s 53 percent volume gain, retail sales increased only 28 percent. Cadillac had much less of a fleet problem than Buick and Chevy, increasing sales 339 percent and retail sales 35 percent. GMC did not release retail numbers for GMC, but noted that GM’s overall fleet sales were 59,571 for the month. That means nearly one in three vehicles sold by GM last month went to a fleet, a percentage that accounts for the lion’s share of GM’s sales growth. Once again, Detroit seems addicted to fleet sales…
According to BusinessWeek‘s David Welch, GM’s New York market share has slipped below ten percent for the first time, prompting The General to consider a 5th Avenue GM “salon” showcasing the company’s products. Now, the arguments against the idea are too easy: spending government money on some of the world’s most expensive real estate isn’t great PR-wise. Besides, isn’t GM trying to emphasize the individuality of its brands, and break down the monolithic image of GM as the all-seeing, all-rebadging automaker? Wouldn’t a GM “salon” go against the alleged independence of, say, Cadillac? On the other hand, GM does finally have some good products, and can’t afford further erosion in market share in America’s affluent coastal cities. Would it really hurt to showcase them in a prominent setting? It’s a debate that’s surely racking the RenCen at the moment, so why not weigh in before a decision is made. Is this a plain bad idea? Should a variation of the idea move forward, possibly highlighting individual brands in a more targeted manner? Or does GM need a world-class flagship retail outlet in order to manifest itself as a world-class automaker?
GM has been showing off all kinds of future product at its day-long “Global Business Conference,” as it drums up support for its upcoming IPO. Sadly TTAC was not invited, but a wealth of exciting news is percolating through the autoblogosphere. Like this item: Compact MPVs are a big deal.
Will the North American market for cars go up 45 percent in the next four years? I’m not convinced. Certainly the momentum hasn’t shown up yet. But this slide is from GM’s “Global Business Conference” which the company is holding in Michigan this week to drum up support for its forthcoming IPO. So… a little over-optimism is hardly surprising. But we’re not the only ones skeptical of GM’s ability to take flight as a public company. Automotive News [sub] reports that
Mirko Mikelic, a fixed income portfolio manager at Fifth Third Bank in Grand Rapids, Michigan, said he expected GM to face grilling about the risks of a return to recession in the United States.
“There’s concern about a double dip out there. That’s probably the biggest thing that’s weighing over GM coming to the market because that’s going to keep (auto sales) down for another year or two,” he said.
Check out the complete presentation in PDF format here, and decide for yourself if The General is worth an investment. The slides after the jump are certainly more convincing…
This video, of the presentation at GM-SAIC’s 2010 Shanghai Expo pavilion, is not the newest video to hit the web (nor, necessarily, the most exciting), but it’s definitely worth a peek. The world of the future, as imagined by the automaker, is a classical leitmotiv of the industry, and its changes over the years can often reveal deep truths. Granted, this particular show is aimed at the international and Chinese audiences, but the contrast to footage of Futuramas past couldn’t be more stark. See for yourself, after the jump.
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The WSJ [sub] reports that GM is officially looking outside of its former captive finance arm Ally Financial (formerly GMAC) as it seeks more subprime loan deals to drive sales volume ahead of its IPO. GM execs tell the WSJ that The General could do even better with an in-house finance arm, but that these deals will help. And, according to Experian Automotive’s Melinda Zabritski, GM needs the help because
By not financing [subprime] consumers, they are locking out about 40% of the U.S. population
GM’s restructuring consultants AlixPartners add that loyalty improves for customers who buy using a captive lender. The downsides? Higher default risks, the temptation to overload on incentives, and then there’s one more biggy…
(Read More…)
After North America and China, we have other markets in our sights. Buick has no plans for Europe at this moment, but that could change.
GM’s Jim Federico spills possible plans for a Buick expansion to Auto Motor und Sport.
The Detroit News reports that GM will file paperwork to register its initial public offering as soon as next week, citing anonymous sources. This registration will be our first look at exactly what GM and its masters at the Treasury Department are trying to achieve with the offering. Analysts are predicting that the government will sell only one-third of its 61 percent stake in GM, which would rid it of an absolute majority stake but would preserve its status as the largest GM stakeholder. The Canadian and Ontario governments, the UAW’s VEBA fund and bondholders in Motors Liquidation may sell parts of their stakes as well, but there are still no estimates as to just how much of GM’s equity will be up for grabs in this offering. Or what the market response will be. And with the car market still shaky, Opel demanding more of GM’s cash, IPOs being canceled right and left, and only one profitable quarter under GM’s belt, voices are already starting to wonder if GM isn’t rushing this offering for political reasons.
It stands to reason that Japanese car makers would rejoice over rising wages in competing China and over an appreciating Chinese currency. Rising wages make production there more expensive, a rising Yuan makes exports more expensive. Both should give the Japanese more breathing room. That reasoning is falling by the wayside. The Nikkei [sub] reports that these developments pose ”serious threats to Toyota’s profitability in China, strategic challenges that other Japanese companies must also deal with.” Just goes to show that you need to be careful what you wish for. And wait who else should worry. (Read More…)
Remember GM’s Heated Windshield Washer Fire Fiasco? The one where the “Hotshot” unit got so hot that cars went up in flames? It sounded like it was a dispute between GM and the now defunct Microheat. Our friends at Carquestions did a little investigative reporting. Result? (Read More…)
If you go back for what seems to be years, TTAC never gave Opel big odds for getting state aid. Ever since GM reneged on the Magna deal, their chances were pretty much nil. Since then, the German government had been subjecting Opel to water torture. A few days ago, Berlin made it obvious. They had to, because GM was like a psychiatric patient that was slowly going through all stages of the Kübler-Ross model: Denial (“They said they would help us”), anger (“Maybe this will make your chancellor happy”), bargaining, depression, now finally, acceptance. Today, GM and Opel officially threw in the towel. Opel officially gave up on state aid. They will turn to the entity that supposedly wasn’t allowed to help them: The GM mother-ship. In other words: You and me will pay to save Opel.
Of course, GM didn’t just cry uncle. (Read More…)
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