The debate over Detroit’s bailout was dominated by a narrative that portrayed the automakers as victims of Wall Street excess, and placed blame for their collapse on the frozen credit market. And though the credit crunch certainly hurt GM and Chrysler as well as their customers, Detroit was a victim of the credit crunch in the same way an addict is a victim of his dealer. By leveraging easy credit to fuel the SUV boom which covered for unprofitability in passenger cars (or didn’t, as the case may be), Detroit binged on zero-percent financing as the market road confidently to 16m annual sales. And then, finally, the music stopped and the Domestics crumpled, victims of their own greed, but with a convenient scapegoat in the hated Wall Street bankers. But if the bailout was intended to not only get GM and Chrysler back on their feet but also to prevent future collapses, there’s some troubling news in the offing: subprime auto lending is starting to roar back, and if it goes unchecked, it could reach pre-recession levels in short order…

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As of last December, GM’s pension accounts faced a $17b shortfall, raising a real concern about the long-term viability of the bailed-out automaker. With its IPO put to bed, GM is now announcing that it will pay $4b into its salaried and hourly pension accounts, and plans on adding another $2b in stock to the accounts by year’s end. That roughly approximates the $5.9b that GM will have to pay by 2013, which still leaves a $6b minimum payment due by 2014. Add that to the billions likely required by its Opel and Daewoo divisions, as well as the billions needed to pay back taxpayers, and it’s clear that GM’s dwindling cash pile still faces considerable demands. But at least the firm isn’t pretending like its pension shortfalls don’t exist.

The Korean Development Bank, which owns 17 percent of GM’s GM-Daewoo Korean subsidiary, has been rolling about a billion dollars in Daewoo’s debt over on a monthly basis for most of this year. The debt, a legacy of a $2b+ loss on currency speculation. Now, The Korea Times reports that GM-Daewoo has paid back about a billion of that mature KDB debt, as GM-Daewoo boss Mike Arcamone explains

this action reflects GM Daewoo’s strong financial performance this year enabling us to make full payment on the outstanding facility … Full repayment of the credit facility will decrease the company’s future borrowing costs

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GM’s stock may be hovering near its IPO price of $3/share, but the UAW doesn’t need much more growth to cash out with every penny it wanted from GM. The UAW’s VEBA account has banked $3.4b in stock sales so far, and Forbes reports

The VEBA will break even on its investment if it can sell the remaining 206 million shares at an average price of $36.96.

Taxpayers, meanwhile, need GM’s stock to top at least $52/share in order to break even on the bailout that it funded. Because it’s just not a bailout unless the least deserving benefit the most. Meanwhile, with its accounts once again flush with cash, the UAW is turning South in hopes of accomplishing what it has never accomplished before: unionizing at ransplant auto factory in a right-to-work, Southern state.

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Redflex shareholders on Friday approved big pay hikes for the photo enforcement firm’s top management at the annual meeting in Victoria, Australia. Redflex has cornered 44 percent of the red light camera and speed camera market in the US, although Arizona-based rival American Traffic Solutions (ATS) is catching up to its down under competitor with a 41 percent market share.

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General Motors went public at $33/share today, generated huge trading volume (452m shares traded) and ended the day at $34.19. Automotive News [sub] reports that the government stake in GM “could” be as low as 33 percent post-IPO. Only five percent went to “large foreign investors,” including one percent to the Chinese bête noir SIAC, which hinted at future cooperation with The General on “exploration of overseas markets.” The only bad news? Had the Treasury sold its entire stake at the closing price today, it would have been down $9b. Now GM’s stock price needs to hit $48.58 before taxpayers make good on their investment. But with a market capitalization of about $63b, GM is at least worth more than the taxpayers put into it. Which, using a variation of Project Car Hell logic, is a real accomplishment.

After claiming a $2b Q3 net profit last week without releasing any data, GM has just dropped some more complete numbers for the last quarter… but we’re still waiting for complete, audited, GAAP-approved numbers. In the meantime, make what you will of the limited data [.doc here]. UPDATE: TrueCar sends us complete by-brand breakdowns of GM’s incentive, market share and transaction price.

California EV maker Tesla has reported its Q3 results, and they’re a sizable helping of not great. But before we dive into the messy reality, let’s check in with CEO Elon Musk for an unreasonably rosy take on the loss:

We are very pleased to report steady top-line growth and significant growth in gross margin, driven by the continued improvement in Roadster orders and our growing powertrain business. Roadster orders in this quarter hit a new high since the third quarter of 2008, having increased over 15% from last quarter. While some of this is due to seasonal effects associated with selling a convertible during the summer months, we are pleased with the global expansion of the Roadster business and the continued validation of Tesla’s technology leadership position evidenced by our new and expanding strategic relationships

Translation: Toyota is investing in us… now get out of here with your awkward questions. Unfortunately for Mr Musk, it isn’t quite that simple…
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Chrysler lost $84m last quarter on an operating profit of $239m, showing slow but consistent progress from last quarter’s $172m loss [Press release here, slides here, both in PDF]. Chrysler has lost $453m since the beginning of this year. Overall deliveries and sales were down slightly compared to Q2 2010, but thanks to a strong launch for the profit-generating Grand Cherokee, revenues were up just over 5 percent to $11b. As the slide above proves, “Mix and Net Price” accounts for one of the biggest contributions to operating profit, and that’s largely thanks to the new Grand Cherokee which (at 12,721 units last month)  is the second-best selling vehicle in Chrysler’s lineup after Ram pickups. That’s a good sign for the future of a company that needed a hero, but there are some troubling signs under the surface.

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Er, not here… you have to go over to retailroadshow.com for the non-embeddable presentation pitching investors on the new General Motors. But since retailroadshow doesn’t have a comments section, make sure to surf back to TTAC when you’re done taking in the pitch. Meanwhile, consider this: Saudi Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, a major investor in Citi, EuroDisney, The Four Seasons, AOL, Apple, News Corp, and more has said his investment firm would look “very seriously” at buying into GM’s IPO. Oh yes, and the White House has reiterated its confidence that all the money it invested in GM’s bailout would be repaid. Even though GM pushed against the higher IPO price ($30/share) requested by Treasury, which would have slowed future appreciation of the stock, but would have given the government a higher initial payback. Also, it seems that UBS has been dropped as an underwriter of the IPO after one of its large-cap, non-automotive analysts sent an email that disclosed information restricted by the SEC.

With its IPO hitting markets, GM has released limited preliminary results that show the firm earned $1.9b to $2.1b in the third quarter of this year. That performance outstripped Ford’s $1.73b Q3 profit, and GM’s $36b in revenue also beat Ford’s $29b figure for the same quarter. GM also announced that it expects to generate positive EBIT in the fourth quarter, although it warned that its Q4 results would not be as strong as the previous three quarters in which GM claims to have earned $4b to $4.2b in net income attributable to shareholders. The projection of weaker Q4 results proves that political considerations weren’t the only factor pushing for an immediate post-election IPO. One note of warning, however: GM has not released complete data on its results, meaning we haven’t seen the impact of GM’s recent debt-cutting moves on cashflow. On the other hand, with a $5b revolving line of credit secured and profits rolling in, GM isn’t likely to be facing liquidity problems in the immediate short term. We’ll wait for full results before we pass final judgment, however.

Perhaps one of the least-covered elements of the auto industry restructuring has been the numerous tax advantages GM has earned as a government-owned automaker. Unlike most bankruptcies, GM was allowed to hold onto some $16b of net operating loss credits (tax-loss carry-forwards), which can be used to offset future tax bills. Typically, companies that restructure in bankruptcy lose existing carry-forwards as the price of wiping out debt, but because the government is invested in GM, it decided to allow old tax losses to flow into the new company even as debt was left behind. In the latest update on this story, The Wall Street Journal notes that some $18.9b of GM’s carry-forwards were from the old company, and that the firm has a whopping $45.4b in future tax savings. And because carry-forwards can be banked up to 20 years before they are spent, GM will have to make massive profits before it starts actually paying taxes to the federal government. The government’s position:

the profit-shielding tax credit makes the bailed-out companies more attractive to investors, and that the value of the benefit is greater than the lost tax payments, especially since the tax payments would not exist if the companies fail

Which is all well and good, but the reality is also that this practically doubles the taxpayers’ cost of bailing out GM. As a policy this makes sense for the reasons given (assuming the bailout was a foregone conclusion), but it would be nice if this “hidden charge” were at least noted on the bill.

Reuters has followed up its look inside the Government’s involvement in GM with a breaking report on the specifics of The General’s IPO. According to Reuters sources, the IPO will include 365 million common shares for $26 to $29 each, for a total of between $9.5b and $10b. The Treasury is expected to sell between $1.5b and $2b of its 61 percent stake in GM, likely to “four or five sovereign wealth funds,” bringing its stake down to 43.3 percent. The Canadian and Ontario governments are expected to sell down their stake from 11.7 percent to 9.6 percent, while the UAW VEBA trust-owned stake is likely to to drop from 17.5 percent to 15 percent. A Reuters source concludes that

The IPO would likely value the entire company at close to $60 billion, below the $67 billion needed if U.S. taxpayers are to break even on the common stock held by the Treasury

The WSJ adds

At the midpoint of the proposed price range, GM’s stock outstanding, including warrants, would be worth about $50 billion, roughly the same level as Ford Motor Co. The IPO’s underwriters are hoping to sell at the top end of the range, and for the stock to rise 20% or more when trading begins. At that level, GM could be worth $60 billion or more.

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With about $7.84b of cash on-hand and $7.4b in debt to the US and Canadian governments, Chrysler wants to take a page out of GM’s IPO playbook and secure a Wall Street refinance of its government debt, which bears interest of between 14 and 20 percent. CEO Sergio Marchionne had already complained that servicing its government debt prevented Chrysler from achieving profitability in the second quarter. According to Automotive News [sub] Chryler is shopping banks as it seeks loans at newly-low interest rates in order to shore up its balance book ahead of an IPO sometime next year. Chrysler needs $3b of cash on-hand for its operating and debt servicing costs, so a failure to secure new funding could cause its cash levels to dip to dangerous levels. GM has said that its recently-acquired $5b revolving credit line would not be tapped right away, but would provide a liquidity cushion of the kind that Chrysler arguably needs even more than The General. On the other hand, it’s easier to borrow money when you have money, and GM is sitting on considerably more cash than Chrysler. Meanwhile, Fiat has yet to inject a single Euro of cash into Chrysler. Maybe this is Marchionne’s chance to put some real skin in his Chrysler play.