The Detroit News reports that top White House economic adviser Austan Goolsby indicated today that the government would be exiting its equity position in GM in the short term. The DetN’s David Shepardson quotes Goolsby as saying

The writing is clearly on the wall that the government is getting out of the GM position. The government never wanted to be in the business of being majority shareholder of GM. It was only to prevent a wider spillover, negative event on the economy. So we’re trying to get out of that. We’re not trying to be Warren Buffet and figure out what the market is doing

And he’s not kidding: GM’s stock just closed at its lowest level since the IPO, after GM’s Q4 results came in below analyst expectations and the overall market experienced turmoil due to Middle East unrest.

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One of the strongest criticisms issued in the Congressional TARP Oversight Panel’s most recent report on the auto bailout concerned GM’s lack of effort to bring its former captive lender GMAC (now called Ally Financial) back to the fold, an omission the Panel termed “disconcerting.” After all, Ally’s business is still closely intertwined with GM’s, as the financial firm provides 82% of GM’s dealer floorplanning and 38.2% of GM’s consumer loans. And, as bailed-out businesses (Ally is now 73.8% owned by the US Treasury), any competition between GM and Ally will result in a lose-lose scenario for taxpayers. In recent months it seemed that the two firms were moving towards a deal at the initiative of GM CEO Dan Akerson (and likely motivated to some extent by the COP’s criticisms), but now Bloomberg reports that there are no negotiations between GM and Treasury about a reconciliation of the two firms… in fact, with an Ally IPO planned for this year, it seems the two firms are going to war.

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GM has announced its full-year results for 2010 [Highlights here, Chart set here, in PDF], and has achieved its first full-year profit since 2004 by pulling in $4.7b. Perhaps more significant than the numbers alone, however, is GM’s claim that it has whipped its “material weakness” in terms of financial reporting and internal controls, an issue that had haunted The General since being disclosed in the runup to its IPO. Still, GM’s earnings were well below the $5b+ full-year profit expected by analysts, and its half-billion Q4 profit was considerably more “pinched” than the $1b that Wall Street expected. More importantly, GM burned $1.7b in automotive operating cash (including a $4b pension contribution) and another $1.1b in CapEx in the fourth quarter, resulting in a $2.8b automotive free cash burn for the quarter. Over the course of 2010, GM’s cash pile has gone from $36.2b to $27.6b, although GM has access to over $5b in new credit facilities while cutting debt from $15.8b to $4.6b. Still, a weakly-profitable Q4 is better than last year’s $3.4b Q4 loss.

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Analysts are reporting that GM could announce full-year 2010 profits of over $5b tomorrow, although Q4 profits may have dipped to $1.06b. That would make its full-year results the best since a $6b profit in 1999, but Q4 results could be the second-worst since emerging from bankruptcy. Why the slowdown? Analysts give Bloomberg a number of possible explanations, including

• GM’s spending on cars including the Chevrolet Volt plug-in hybrid and future products may lead to higher costs similar to those that restrained profits at Ford and Daimler AG.
• Automakers are paying more for materials such as steel and are struggling to pass the costs to consumers amid a “somewhat weak” economy
• Restructuring unprofitable European operations

Of all these dynamics, however, CEO Dan Akerson’s rush to revamp GM’s lineup and expand the applications of the Volt’s drivetrain could end up driving the most cost. Though GM is making a healthy profit again (and not paying taxes on it), an overly-ambitious speed-up in product cadence could combine with rising costs to slow The General back down (as they have already done to some extent at Ford). In any case, we will certainly have a better picture of GM’s financial performance tomorrow, when the firm’s results are announced.

Despite launching a frothy IPO, EV maker Tesla’s net loss nearly tripled last year, losing more than $154m compared to a $55.7m loss in 2009. Total revenues were up nearly $5m, but only due to a nearly $20m bump in “development services” income. Revenue from “automotive sales” was down by around $15m. R&D costs skyrocketed from $19.3m to nearly $93m, while “selling, general and administrative” costs doubled to $84m. Still, CEO Elon Musk is all optimism in the firm’s press release, crowing

We are very pleased to report continued revenue growth, improving margins and a steady progression in our Roadster and powertrain activities,. Our powertrain team delivered solid results, with an increase in orders and record deliveries of battery packs and chargers for the Daimler Smart fortwo electric drive, the completion of our development program for the Daimler A-Class, and the commencement of the phase 1 development program for the Toyota RAV4 EV.

Musk noted that the firm is on-track to start delivery of its forthcoming Model S sports sedan in mid-2012. It had better be, because Tesla’s clearly not going to sustain itself on Roadsters.

Reuters reports:

Trading in the shares of China’s top carmaker SAIC Motor Corp will be suspended from February 14 pending a material corporate announcement, SAIC said on Friday.

SAIC, the Chinese partner of General Motors and Volkswagen, and owner of the MG Rover plant in Britain, said it has been notified by its holding company SAIC Group that it is working on a major plan involving SAIC and discussions over the proposal are continuing, it said in a filing with the Shanghai Stock Exchange.

SAIC said it expects to make an announcement regarding the plan in five trading days following the trade suspension.

SAIC owns about one percent of GM, it is the majority owner of its Shanghai-GM joint venture and controls GM’s Indian-market operations… in fact, the last time SAIC suspended shares this way was when it took over GM’s Chinese and Indian ventures. So, what’s next? The mind boggles…

Ever since it beat back expectations of bankruptcy, Ford’s stock has been on fire, pushing the Blue Oval to the highest market capitalization of the Detroit automakers. Then, on Friday, when Ford announced its best financial results in over a decade, investors mysteriously sent the stock tumbling, pushing GM’s market cap higher than Ford’s for the first time since its government-ordered restructuring. How did that happen? Even with the one-time expenses Ford blamed for its Q4 drop in earnings, analysts expected Ford was expected to earn $2.05 per share… and analysts punished the automaker for making only $1.91 per share before special items and $1.66 after same. Since markets re-opened today, Ford’s market cap has gone on to $55.39b while GM has dropped back down to $54.73b, suggesting that GM’s stock price has been corrected downwards relative to Ford’s disappointing financial performance. Still, despite greater European-market problems, GM’s strong Chinese-market position will keep The General hanging just behind Ford waiting for the upstart automaker to stumble again.

How did Chrysler do last year? It all depends on how you slice the numbers, isn’t it? As warned, Chrysler’s Q4 was a bit of a letdown, as net revenues dropped from $11.018b in Q3 to $10.763b, resulting in a $199m Q4 net loss. Interest expenses continue to be a major drag on Chrysler’s performance, costing $329m in Q3 and a whopping $1.228b over the course of the year. Cash dropped by nearly a billion dollars from Q3 to Q4, ending the year at $7.347b (not counting $2.3b in undrawn government facilities). Chrysler nearly hit the 1.6m worldwide sales number touted in its Five Year restructuring plan, as well as the 1.1m US-market target (although fleet mixes appear to have been higher than anticipated). Chrysler also hit its goal of $40b+ in net revenues and exceeded Operating Profit and EBITDA projections, but as the slide from Chrysler’s Q4 financial presentation [PDF here] shows, Both debt (which will likely be restructured this year to reduce costs) and depreciation/amortization have killed Chrysler this year… which is why EBITDA and Modified Operating Profit take the top billing in Chrysler’s financial reporting.

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Regular TTAC readers know that there’s more to a successful performance from an automaker than pure volume alone. Average transaction prices, market share, and incentives all play a role in translating production numbers into profits. Luckily, our pals at TrueCar  have broken all that lovely data down, and they’ve sent over the numbers behind Ford’s recently-announced $8.3b profit, the Blue Oval’s best performance in over a decade. And, as you can imagine, a performance like that requires not only a hefty increase in volume (up nearly 20% on the year) but also improvements in market share (up 1.23%), and transaction price. Yes, incentives stayed stronger than they perhaps needed to be, but they now make up a lower percentage of the average transaction price. And that, ladies and gents, is how you make a $5.4b pre-tax operating profit in the US market alone [Q4 and historical data after the jump].

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IGA Automobile, a new closed-end partnership fund, is planning on investing $150m into “a collection of 20 to 40 trophy marque vehicles with distinguished race or ownership histories” which it claims will appreciate some 15 percent over the next seven years, according to the Detroit News. Though collective buying of super-exotic cars is not new in itself, IGA Automobile fund Director Lancaster claims

This is the first classic-car fund that’s purely for financial returns, rather than passion

The fund, which is advised by Pink Floyd drummer and car nut Nick Mason, has identified several “potential acquisition targets” including the Ferrari 250 GTO, Aston Martin DB4 Zagato, Ford GT40, McLaren F1, Shelby Daytona Coupe and Porsche 917. And, since investors in the fund will be shelling out a minimum of half a million dollars to buy cars that they won’t even be able to keep in their own garage, the investment had better have a chance of making some money. And the fund’s managers think they can make that pitch, as

The Hagerty’s Cars That Matter “Blue Chip” Index, based on the values of the 25 most collectable postwar vehicles, has increased 67 percent from September 2006 to the end of 2010… The Historic Automobile Group International (HAGI) Top 50 index of exceptional classic-car prices was up 6.6 percent in 2010, lower than its average annual growth of more than 12 percent from 2003-08.

That’s better than plenty of investments did over a similar time period… but luxury-goods speculation still has a shaky track record. Besides, doesn’t it seem just a little bit wrong to treat these epic classics like a bond certificate, keeping them stashed away in a vault somewhere? Here’s hoping there’s room in the business plan for some kind of museum.

GM has just dropped a press release [in .docx format here] announcing that it has withdrawn its request for $14.4b in low-cost government retooling loans through the Department of Energy’s “Section 136” or ATVM loan program. Says CFO Chris Liddell

This decision is based on our confidence in GM’s overall progress and strong, global business performance. Withdrawing our DOE loan application is consistent with our goal to carry minimal debt on our balance sheet. Our forgoing government loans will not slow our aggressive plans to bring more new vehicles and technologies to the market as quickly as we can. We will continue to make the necessary investments to assert our industry leadership in technology and fuel economy.

Color us stunned. The “136” loan program was nearly used as a slush fund to bail out GM and Chrysler before President Bush ruled that the automakers qualified for TARP relief. Shortly after the bailout, GM said that the loan program was “one of the sources of liquidity GM is factoring into its plans in order to meet its capital requirements in the future.” More recently, it seemed that the loan program was on hold while GM and Chrysler were qualifying for loan requests that would have drained the program of funds. Now, with GM’s request dropped from the queue, there could be as much as $10b left for other manufacturers. Plus, by turning down cheap government loans, GM has made its first major (voluntary) step towards beating back the Government Motors moniker. Good for them.

One of the more dangerous conflicts embedded in the US auto bailout that was identified in the recent Congressional Oversight Panel report has been a TTAC hobbyhorse for some time, namely the tradeoff between GM’s success and that of its former captive finance arm GMAC (now known as Ally Financial). As we wrote back in May,

if government-owned Ally isn’t interested in underwriting GM’s volume gains with risky loans but also isn’t interested in seeing its auto lending business bought by GM, there’s trouble brewing. After all, that would leave GM with only two options: partnering with another bank, or starting a new captive lender. Either way, a new GM captive lender would likely force Ally into offering more subprime business anyway, or face losing its huge percentage of GM business.

Fast forward the better part of a year, and GM has indeed bought its own in-house subprime lender, leaving the COP to term The General’s lack of interest in taking care of “the Ally Tradeoff” as “disconcerting.” After all, with over 20 percent of GM’s equity and over 70 percent of Ally’s stick, the Government should have been able to work out some kind of deal that gets GM and Ally back on the same page… right? Not so fast, reports the WSJ. Ally turned down a $5b GM offer for its wholesale lending business earlier this year, and now it seems another deal may be in the works. But it has nothing to do with maximizing taxpayer payback, and everything to do with shoring up GM’s floorplanning credit. And it’s not coming from the government, but from GM’s newly-ubiquitous CEO Dan Akerson.

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Fiat split its auto business from the rest of its industrial operations today, creating two new companies: Fiat and Fiat Industrial. Fiat CEO Sergio Marchionne announced the move as a way for Fiat to unlock its share value and concentrate on its core business, telling the AP [via Newser]

This is a very important moment for Fiat, because it represents at the same time a point of arrival and a point of departure. Faced with the great transformations in place in the market, we could no longer continue to hold together sectors that had no economic or industrial characteristic in common.

But with Fiat Industrial taking care of the truck-and-tractor side of the business independently, Fiat SpA is focusing on the task at hand: Chrysler. With a 35 percent stake in the bailed-out American automaker in the bag, Fiat is aiming for a controlling stake when Chrysler’s IPO hits the markets later this year. And though the spin-off of FIat’s non-automotive business opens the door for a full merger of Fiat and Chrysler, Marchionne denies that a full merger will take place, saying only that

I don’t know whether it is likely, but it is possible that we’ll go over the 50 percent mark if Chrysler decides to go to the markets in 2011. It will be advantageous if that happens.

But don’t mind Sergio’s equivocation. Fiat will almost certainly snap up the remainder of a controlling stake by the end of this year. Here’s why…

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ABC reports that GM has purchased $2.1b worth of its stock from the Treasury Department, bring the government’s stake in the bailed-out automaker to 33 percent. GM’s stock price must now reach $53/share in order for the government to recoup its remaining $16.88b investment in The General. GM’s stock currently trades at around $33.70, and recent analysis from UBS shows that the company faces significant short-term challenges as an investment.

GM CEO Dan Akerson may believe that

There’s more to life than money,

but he tells the Freep that GM is running the risk of losing top managers to the competition, and must seek more flexibility on pay rules from the Treasury. Akerson wouldn’t clarify what kind of concessions he’s asking for from Treasury, but says that the risk of losing employees in the short term is very real. Meanwhile, even though the government isn’t the majority stakeholder in GM any longer, it will have to OK executive compensation packages until the bailout is paid back. Which prompts The Atlantic‘s Daniel Indiviglio to suggest

there may also be ways to structure pay to minimize cash in compensation packages. For example, if a large portion of compensation is awarded in GM stock that does not vest until the company has paid back the bailout, then this would provide additional incentive to these executives and limit their immediate cash compensation. Unfortunately, there’s no perfect solution to this problem, because the government shouldn’t be involved in the business of bailouts in the first place.