GM Europe’s head, Nick Reilly, has suggested that the job losses at Vauxhall UK may not be as bad as was feared. Before GM did a U-turn with the sale of Vauxhall/Opel, Magna agreed with Vauxhall to cut 800 jobs, no forced redundancies, and keep the Luton and Ellesmere Port plants open. Then, GM realised they liked Vauxhall/Opel so much, they kept the company and put its European operations back at square one. So far, with “New GM” in control, the results can be summed up in 4 words: Annoyed the German government.

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Swedish business site di.se has done some numbercrunching, and figured out that GM has lost SEK 35,000,- (eq aprox $ 5,100, at the current exchange rate) on each Saab sold the last 8 years. As many of TTAC’s readers have pointed out in various comments, GM never made money on Saab. Truth is; they lost a total of SEK 39 billion (3.9 billion Euros) during their ownership, according to di.se’s analysis . The last 8 years has been heavy; a loss of SEK 32,2 billion, or 35.000,- kronor on each Saab sold. That’s $ 5.100,- on each car. This year alone GM has had to take an SEK 6.2 billion cost on the ailing carmaker, SEK 5.2 of those are amortization of debts.  This is why it’s crucial for Koenigsegg Group that the EU commission rules that Swedish government’s guarantees on Koenigsegg’s loan from the EIB are not subsidies. But since Saab has been on life support for so long, it would be almost impossible to defend Saab as a healthy company, and without the Swedish government’s guarantee, the financial plan from Koenigsegg Group will fail. Maybe they can argue that when it comes to Saab, there are no subsidies, just business as usual.

Check out GM’s complete video of the conference here.

Well, we’ve already been warned that GM’s 4Q cash burn and financial results will be worse than the just-released 3Q results; now we have another reason why. Even though GM has been averaging just over $4,000 per vehicle in incentives, a traditional Red-Toe-Tag sale has been planned for year’s end, reports Automotive News [sub]. As in years past, the answer lies in shoddy inventory management. GM’s Susan Docherty explains:

All of our efforts will be to sell down our remaining 2009 inventory. We’ll have a little bit of carryover of that into the first quarter of 2010, but the objective is to keep our inventory somewhere between 425,000 to 450,000 units. I’d rather have very slow, incremental movement up [in market share] than the peaks and valleys we saw all over 2008 and of course in the first six months of the 2009 calendar year

Wait, there were peaks to go along with all the valleys in 2009? More to the point, how does Docherty’s desire for organic growth square with the decision to spike sales at year’s end with as-yet non-specific financing and cash incentives? The real irony is that GM is having an easier than expected time moving its remaining 10,000 Pontiacs and 8,000 Saturns; The Red Tag event is for Chevrolet, Buick-GMC gets the “Holiday Event” and Cadillac will hold a “Seasons Best” sale. Non-stop incentives on “core brands,” goes against much of the “sell the product, not the deal” rhetoric coming out of GM post-bankruptcy. And unless holiday sales blow up, the profit-sapping incentives will help justify GM’s 4Q loss warnings. The turnaround still has yet to show itself.

According to GM’s 3rd Quarter financial results announcement:

GM plans to repay the United States, Canadian and Ontario government loans in quarterly installments from escrowed funds, beginning next month with an initial $1.2 billion payment to be made in December ($1.0 billion to the UST and $192 million to the EDC), followed by quarterly payments. Any escrowed funds available as of June 30, 2010 would be used to repay the UST and EDC loans unless the escrowed funds were extended one year by the UST. Any balance of funds would be released to GM after the repayment of the UST and EDC loans.

Though this sounds like positive news, don’t let it fool you. GM’s financials only acknowledge $6.7b in government debt, a sum that barely scratches the surface of the taxpayer “investment” in The General (let’s use $52b as a baseline). The escrow fund in question contains $13.6b of the final $30b GM was given as it exited bankruptcy. Having burned through nearly half of that princely sum, GM now plans on using at least part of the rest to pay off the “outstanding $6.7b.” The escrow account expires in June 2010, at which point whatever is left unpaid of the $6.7b will be returned to the government, and GM will keep the rest. GM will then declare victory and pretend like it has squared up with the tax paying public, when in fact the public will have merely paid itself back a paltry fraction of what GM actually owes. This “repayment” will then be dutifully reported without question by the mainstream media, and the stain of bailout will be symbolically lifted. Except, of course, it won’t. GM and the government are playing a classic shell game, taking advantage of the public’s inability to keep the billions straight. Shameful.

First, let’s get something out in the open.The Detroit Free Press’ story on the jobs impact of Uncle Sam’s Motown mega-order forgets to mention one salient fact. As TTAC reported back in June, one-third of the 17,600 vehicles ordered from Chrysler, Ford and GM were/are/will be assembled outside the United States. Any article about the order’s effects on American jobs should begin with that fact, which this one has. Surprise! The federal fleet sailing to The Big Three’s rescue did no such thing for American autoworkers. “The overriding purpose of the stimulus was to jump-start the economy and create jobs, though Obama never claimed the vehicle purchases would create jobs. While the latest reports from stimulus recipients show all three carmakers getting orders totaling $270 million so far, job creation from the purchases was nil.” Don’t you just love it when the media pre-apologizes for the President? How about when a major manufacturer lies about its federal blessing to please its federal taskmasters?

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An uncouth interview, given by GM Chairman Ed Whitacre to the German newspaper Muenchner Merkur at the sidelines of an event at the Texas Lutheran University, has shut the doors on any donations Berlin may make to Opel’s cause. Aus. Vorbei.
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We liked Fritz. We felt that Fritz had more energy and more drive and got the message that things had to change and was being groomed to be CEO and deserved a chance… He’s shown that he can manage. Whether he can fundamentally change the culture of the company is another matter.

Bloomberg’s fresh sound bite from former car czarlet Steve Rattner. Well, considering you left him in charge, Steve, he’d damn well better change the culture of the company. Otherwise it reflects just as badly on the restructuring task force as it does on GM, doesn’t it? Come to think of it, picking Fritz because he had “more drive” than Rick Wagoner wasn’t really a good setup for fundamental culture change, was it? You don’t hire Larry to move your piano because he’s “higher energy” than Moe. But it’s not Rattner’s fault: GM’s inability to change its culture comes from its inability to hire the professionals. Which means Ken “the pay czar” Feinberg and his ridiculous pay limits are really to blame.

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Crank up production of the big green Hybrid stickers, ’cause the Regal is going to sport some serious hybrid regalia. No less then two of GM’s raft of hybrid systems may find their way into the Opel/Buick. gm-volt.com cites a report in Ward’s Auto [subscription] that GM will start production of an updated version of their not-even mildly successful mild-hybrid belt/alternator/starter BAS system in late 2011. The current version of that hybrid in name only system was available on the Malibu, but its economics compared to the four cylinder/six speed automatic made it irrelevant, as in canceled. But this new version has a plus symbol attached, so its going to really fly this time: (Read More…)

Automotive News [sub] reports that President Obama’s Pay Czar has done an about face. Kenneth Feinberg pledged to remove the $500,000 salary cap for NEW executives hired for TARP-recipients—if he’s convinced that a rule-busting pay boost would help the bailout queens return U.S. taxpayer’s money. Feinberg’s climb-down comes just two days after New GM’s federally-appointed Chairman of the Board said that Uncle Sam’s pay caps could be, indeed should be, “modified.” Of course, Ed Whitacre didn’t make his suggestion directly. Nor did Feinberg reveal the locus of his “come to Jesus with cash” moment. “[Feinberg] said the automotive firms did not appeal his rulings. But he said he would be open to requests to hire in new executives at competitive pay. ‘If General Motors or any other company wants to bring someone in laterally — laterally — and competitive pay packages require that lateral hires get certain competitive pay, what have you, we’re perfectly willing to examine that.'” So the new rule: GM can hire someone for more than $500,000 in cash per year if that person was already making $500,000 per year doing the same job, only better (one would hope). Which would exclude, uh, no one. And create mucho resentment at that special place where RenCen’s express elevators ascend to glory. More Feinbergian 180 after the jump, and a mystery to be solved . . .

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The Opel/GM saga has more twists than New York’s Peppermint Lounge. Yesterday, we reported that GM’s Smith & Reilly went to Berlin to beg money from German Economy Minister Rainer Bruederle. They received the cold shoulder.

Like good salesmen, they didn’t take no for an answer.
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Were you looking forward to GM’s first post-bankruptcy financial report, set to be released on Monday? We sure were. Right up until we read that the earning statement won’t be compliant with a little something called Generally Accepted Accounting Principles. Automotive News [sub] reports that GM will use so-called “managerial accounting,” (do we have an accountant in the house?) until Q1 2010 results are filed using SEC-approved “fresh start accounting.” The SEC is apparently aware that GM is still transitioning to the post-bankruptcy accounting system, and has reportedly approved GM’s timetable for compliance. Meanwhile, GM’s 3rd quarter results will be announced in two parts, for the period it was in bankruptcy (June 1- June 9) and after (June 10- September 30). GM’s spokesperson is kind enough to explain:

In some cases, it’s not comparable to do a year-to-year comparison. Anything with a cost component to it, won’t be comparable. For sales and revenue, it will be comparable. It’s going to be kind of complicated this time around. There’s no way around that. It’s not a standard situation.

Don’t you just hate it when that happens? You try and you try to be transparent, and then your financial results come out all unintelligible because it takes the better part of a year to switch accounting systems. No wonder Whitacre is downplaying talk of a Summer 2010 IPO.

The single trim level is what tipped us off, and if we’d looked closer at its spec sheet, we’d have seen that its manufacturing location is listed as “Rüsselsheim, Germany.” Automotive News [sub] reports that Regal will be built in Germany for 15 months before production shifts to Oshawa. Which makes the Regal even more of an odd duck. In addition to being stuck into GM’s bursting lineup of Epsi-II midsize sedans, it’s also losing whatever profit it might have made on the dismal foreign exchange rate and the boat ride over from Europe. Or it will be just plain overpriced. Think of it as the love child between a Saturn Astra and a Pontiac G8. And another sign that some things never change.

When GM CEO Fritz Henderson promised Congress he would run the nationalized automaker with complete transparency, we knew he was full of shit. How could anyone expect New GM to do anything but lie, misdirect, prevaricate and obfuscate when the same Bozos that ran it into the ground were still large and in charge? Which GM dealers are canned? Which GM dealers have been resurrected? Why? Who is the GM executive (other than Fritz) who earns more than $500,000 per year—that the company refuses to name? What are the internal targets that GM says it’s meeting? Why did the company overestimate sales of some of its key models in its November press release? Why did Fritz and CFO Ray Young promise a 2010 GM IPO without the Chairman’s approval? And so on. To that list, add this from the AP: “But GM postponed the Cruze’s April build date about three months, said Mark Reuss, GM’s vice president of global vehicle engineering. The company, he said, wasn’t happy with the Cruze’s performance, especially with the six-automatic transmission. ‘No one was thrilled with where it shifted, how it shifted.'” Well that’s the first I’ve heard of that. And while it’s nice that GM is putting our money where it’s mouth is in its desire to ensure the Cruze’s “flawless launch,” what the hell happened? And why wasn’t anyone fired for it? Oh right, GM.

GM spokesfolks tell Automotive News [sub] The General is “in the process of re-establishing select points in certain markets around the country as part of our ongoing analysis of our dealer consolidation efforts.” Don’t hurt yourself thinking too hard about that though, because it’s one of those “we must destroy the village to save the village” things. GM is apparently contacting certain former dealers and inviting them to open new dealerships, having already forced them out of business once in bankruptcy court. According to the Committee To Restore Dealer Rights, former dealers in Pennsylvania, Illinois, Michigan, Ohio, Colorado and Massachusetts have been contacted to open new dealerships, in urban and rural markets. Some culled dealers located in areas GM has targeted for new dealerships were not invited by GM to submit proposals, and the CTRDR considers this a play by GM to drive a wedge within the ranks of the culled dealers. Negotiations between GM and its aggrieved former dealers resume tomorrow, and news that GM is re-opening dealers less than a year after it shut down 1,300 won’t be good for their political popularity. And yes, that matters. Meanwhile, details on how many dealerships are being opened are still forthcoming from General “Transparency” Motors.