The Truth About GM

[Geee]

PJMedia:

An important reminder from NRO:

Admirers of the GM bailout should bear in mind that it was the Bush administration that first decided to intervene at the firm, offering a bridge loan on the condition that it draw up a deeply revised business plan. President Obama’s unique contribution was effectively to nationalize the company, seeing to it that the federal government violated normal bankruptcy processes and legal precedent to protect the defective element at the heart of GM’s troubles: the financial interests of the UAW. It did this by strong-arming GM’s bondholders into taking haircuts in order to sweeten the pot for the UAW. The Obama administration also creatively construed tax law to relieve GM of tens of billions of dollars in obligations — at the same time that Barack Obama & Co. were caterwauling about the supposed lack of patriotism of firms that used legal means rather than political favoritism to reduce their tax bills.

Cadillac is doing OK, thanks to a multi-billion dollar revitalization program begun a decade ago. But much will depend on the success of the new XTS full-size sedan, which GM was just forced to halt sales of due to a software glitch. It’s a quick fix, but does nothing to help the sullied reputation of the brand once known as “the standard of the world.”

 

Chevy’s record is mixed, but losing $49,000 per Volt has got to make the company grateful that they don’t sell many of them.

There’s no way an honest bankruptcy would have allowed the GMC marque to survive. It’s a vestigial of GM’s Bad Old Days of badge-engineered crap — GMC doesn’t produce a single model of its own, merely rebadged Chevy trucks. That hurts GM’s economies of scale, and also requires duplications in its expensive marketing efforts. Instead of making one truck, you have to pretend to make two. And instead of selling customers on one truck, you have to sell them on two. That also puts one of GM’s divisions in direction competition with another of GM’s divisions. This is a big part of how GM got into this mess, starting 30 years ago.