GM, Ford Post Sales Gains While Toyota Struggles

According to CNN, auto sales were up in November, but still remained near historic lows. So far this year 12.3 million vehicles have been sold. GM sales were up 11% compared to last year, Ford saw a nearly 20% increase, while Toyota's sales were down 3.2%. As it turns out, we’re all still hesitant to make big ticket purchases.

The overall numbers are an encouraging sign that the recovery is taking hold, and consumers are once again confident enough to purchase big ticket items, said Jesse Toprak, vice president of industry trends at TrueCar.com.

When comparison is limited to the four brands GM (GM) still sells -- Chevrolet, Buick, GMC and Cadillac -- sales rose 21% over last year. The 11% figure includes sales for discontinued brands such as Saturn and Pontiac.

"November sales results are consistent with our expectations and show that the plan we laid out earlier this year to steadily grow in the U.S. market is working," Don Johnson, vice president, U.S. sales operations said in a statement.

Continue reading at CNN.com…

GM Could Get $45 Billion Tax Break, Thanks to Bailout

General Motors is expected to receive over $45 billion in tax breaks because of its government-financed restructuring. The huge tax incentive is a result of their federal bailout, which will allow GM to apply a tax credit to previous losses and business expenses.

DailyFinance.com reports

This is unusual because GM has changed ownership. Normally, when a company restructures, the government imposes limits on this form of tax benefit.

The government inserted this clause in the bailout in order to make companies that benefited from the TARP program more attractive to investors. The rationale was that this would be a better deal for taxpayers because it would stop the bailed out companies from going out of business altogether.

"The Internal Revenue Service has decided that the government's involvement with these companies, both its acquisitions plus its disposals of their stock, means they should be exempt" from the rule, Robert Willens, a New York tax consultant, told The Journal.

The $45.4 billion in future tax savings is made up of $18.9 billion in carry-forwards based on past losses and savings related to costs such as pensions and property.

Read more here

Government Could Seek Foreign Investors for GM

From Yahoo News:

Investment bankers handling the upcoming General Motors Co. stock sale are expected to court foreign investors as well as those in North America, according to a U.S. Treasury Department statement.

GM and the Treasury Department would not comment Sunday on reports that the automaker is in talks with its current partner in China, SAIC, about buying a stake in the Detroit company. SAIC is owned by the Chinese government.

The Treasury Department, in a statement issued late Friday, said investors in GM would be sought across "multiple geographies," with a focus on North America.

The U.S. Treasury loaned GM about $50 billion to help it through bankruptcy protection last year. GM has repaid $6.7 billion. The rest of the bailout money was converted to a 61 percent government stake in the company.

The government hopes to get the remaining $43 billion back with stock sales that could start in mid-November.

Foreign investment in U.S. automakers and other companies is common. Before the stock sale, GM will put on a two-week "road show" of presentations for investors, and several stops are expected to be in cities outside the U.S.

GM's Auto Sales in China Top US for First Time

From CNBC.com:

General Motors' first-half sales in China, the world's biggest auto market, exceeded sales in its home U.S. market for the first time, according to data released on Friday.

GM's China auto sales jumped 48.5 percent to 1.21 million units in January through June, compared with the 1.08 million light vehicles it delivered in the U.S. over the same period, company data showed.

China overtook the U.S. as the world's top auto market in 2009, helped by government incentives and a 4 trillion yuan ($590 billion) economic stimulus package.

GM's June China auto sales rose 23.2 percent to 176,486 units.

Sales of Shanghai GM, the Detroit automaker's flagship car venture with SAIC Motor, came to 71,782 units, up 18.9 percent on a year earlier.

GM to Announce It Will Pay Back Government Loans Soon

Tomorrow, General Motors is supposed to announce its plan for repayment of government bailout loans, something they have been promising for months. As this USA Today article explains, the recovering auto manufacturer still owes money to the U.S government as well as the Canadian government, in the amount of $5.8 billion.

CEO Ed Whitacre is set to announce the payment at GM's plant in Fairfax, Kansas assembly plant. He'll then fly off to Washington to meet with House Speaker Nancy Pelosi and Michigan's Congressional delegation, The Detroit Free Press says.

Anyone who takes the repayment as a sign that business is completely back on track may want to pause before taking a victory lap.

The $4.7 billion check going to the U.S. Treasury and the $1.1 billion check going to the Canadian governments comes directly out of an escrow fund the two governments set up for the automaker when it was coming out of bankruptcy. The automaker was required to pay back that money by June.

And repaying the loans doesn't mean the automaker is free from government ownership: The U.S. still has a 60.1% stake in GM.

Senate set to Advance $1.1T Spending Bill

While the country focuses on the Tiger Woods scandal and the upcoming holidays, the United States senate is set to pass a filibuster proof end-of-year $1.1 trillion spending that will reward most federal agencies with a generous budget increase. It also includes a loan guarantee program for steel companies, and an improved arbitration process to challenge General Motors' and Chrysler's decisions to close more than 2,000 dealerships.

The $1.1 trillion measure combines much of the year's unfinished budget work - only a $626 billion Pentagon spending measure would remain - into a 1,000-plus-page catchall spending bill that would give Cabinet departments such as Education, Health and Human Services and State increases far exceeding inflation.

After a 60-36 test vote on Friday in which Democrats and a handful of Republicans helped the measure clear another GOP obstacle, the bill was expected to win on Saturday the 60 Senate votes necessary to guarantee passage. A final vote is expected Sunday.

The measure provides spending increases averaging about 10 percent to programs under immediate control of Congress, blending increases for veterans' programs, NASA and the FBI with a pay raise for federal workers and help for car dealers.

It bundles six of the 12 annual spending bills, capping a dysfunctional appropriations process in which House leaders blocked Republicans from debating key issues while Senate Republicans dragged out debates.

Just the $626 billion defense bill would remain. That's being held back to serve as a vehicle to advance must-pass legislation such as the debt increase.

Continued at ApNews.MyWay.com…

Electric-Car Companies Grab U.S. Cash to Blunt Risks

From Bloomberg.com:

Electric-car makers ranging from Ford Motor Co. to California startups are using $11 billion in taxpayer funds to supply a market that doesn’t yet exist.

Fisker Automotive Inc., backed by a $528.7 million U.S. loan, said today it will join the rush to the assembly line by buying a closed Delaware plant from the former General Motors Corp. for $18 million. It will spend $175 million to refurbish and retool the factory to build plug-in hybrid cars.

Obama administration aid to spur demand for more fuel- efficient autos is luring companies including General Motors Co. and Nissan Motor Co. into the electric-car push. The result may be a supply of new vehicles that outstrips demand, said Michael Omotoso, a senior manager for J.D. Power & Associates in Troy, Michigan.

“The U.S. government is saying we’ll have 1 million electric vehicles on the road by 2015; we’re saying it will take three to five years longer,” Omotoso said. “Realistically, manufacturers could be selling 80,000 to 100,000 by 2015.”

Investors betting on acceptance of electric autos include Kleiner Perkins Caufield & Byers, the venture-capital firm that employs former Vice President Al Gore and is backing Fisker.

“A huge amount of private capital is on the sideline, so a new locus for funding right now is the U.S. government,” said Ray Lane, a managing partner at Kleiner Perkins who works on the firms’ alternative energy investments. “The Department of Energy has stepped into the role of private capital, at least temporarily.”

Taxpayers Face Heavy Losses on Auto Bailout

A new report coming from a congressional oversight panel suggests that a majority of the $81 billion given in the auto bailouts last year may never get paid back. This means that U.S. taxpayers will have taken a decent loss in order to keep the American auto industry from collapsing.

The Congressional Oversight Panel did not provide an estimate of the projected loss in its latest monthly report on the $700 billion Troubled Asset Relief Program. But it said most of the $23 billion initially provided to General Motors Corp. and Chrysler LLC late last year is unlikely to be repaid.

"I think they drove a very hard bargain," said Elizabeth Warren, the panel's chairwoman and a law professor at Harvard University, referring to the Obama administration's Treasury Department. "But it may not be enough."

The prospect of recovering the government's assistance to GM and Chrysler is heavily dependent on shares of the two companies rising to unprecedented levels, the report said. The government owns 10 percent of Chrysler and 61 percent of GM. The two companies are currently private but are expected to issue stock, in GM's case by next year.

The shares "will have to appreciate sharply" for taxpayers to get their money back, the report said.

For example, GM's market value would have to reach $67.6 billion, the report said, a "highly optimistic" estimate and more than the $57.2 billion GM was worth at the height of its share value in April 2008. And in the case of Chrysler, about $5.4 billion of the $14.3 billion provided to the company is "highly unlikely" to ever be repaid, the panel said.

Continued at APNews.MyWay.com…

Toyota to End Calif. Joint Venture with GM

Just last week I posted a blog entry discussing how California lawmakers were struggling to find a way to save the State’s last remaining auto plant. However, earlier today I came across this Associated Press article published by the SacBee.com announcing that Toyota Motor Corporation has indeed decided to liquidate its joint venture with General Motors. For those of you who do not recall, the plant assembled vehicles for both Toyota and GM. However, just because Toyota is pulling out does not mean the factory will close, but it does not give GM a short time frame to decide the fate of the factory and the 6,400 California taxpayers it employs. Check out a clip from the AP story below, or check out the full article below.

Toyota Motor Corp. has decided to liquidate its stake in a California manufacturing plant that it jointly operated with General Motors, a Japanese news agency reported Thursday.

The Japanese carmaker will begin negotiating with the "Old GM" starting next week, Kyodo News reported, citing unnamed company officials.

Toyota spokesman Mike Goss would not confirm that the Japanese automaker had made a final decision on the fate of Fremont, Calif.-based New United Motor Manufacturing Inc., also known as NUMMI. Goss said Toyota will begin negotiations with the GM officials about the plant and added that the company is conducting an "extensive review" of its production needs.

A GM spokeswoman was not immediately available to comment.

Nummi's fate was thrown into question last month when GM announced it was withdrawing from the 50-50 joint venture. GM emerged from bankruptcy protection shortly after the announcement and the company's stake in NUMMI is now part of Motors Liquidation Co. - also known as Old GM - where it will be liquidated under court supervision.

The NUMMI plant, established in 1984, employs 4,600 workers and makes the Pontiac Vibe station wagon for GM, and the Corolla compact car and Tacoma pickup truck for Toyota.

Michigan May Owe GM $116M In Tax Refunds

From the Associated Press:

General Motors Corp. may get tax refunds totaling $116 million after a judge ruled for the automaker in its dispute with the state.

Ingham County Circuit Judge Rosemarie Aquilina on Friday declared unconstitutional a 2007 Michigan law that retroactively made GM pay use taxes on vehicles driven by employees for testing and marketing.

The automaker claimed it unnecessarily paid taxes on demonstration vehicles for more than a decade.

The Department of Treasury denied GM's request for refunds, pointing to the 2007 law.

The judge ruled GM is exempt from paying use taxes on vehicles used for demonstration purposes. She next will determine what GM is owed.

Aquilina faulted lawmakers for passing the bill without committee hearings to avoid public scrutiny.

Stimulus Includes GM Tax Break

From The Associated Press:

General Motors Corp. would receive a tax break in the $790 billion stimulus bill after the automaker argued its government-led restructuring would unintentionally lead to at least $7 billion in tax liabilities.

General Motors, which received a $13.4 billion lifeline from the Bush administration last year, would have been required to pay additional income taxes from its government loans, potentially undermining its turnaround plan.

GM received $9.4 billion in federal loans and is expected to receive another $4 billion, while Chrysler LLC has received $4 billion in loans and hopes to get another $3 billion. The companies must submit plans next week showing how they will restructure their companies and become profitable.

President Barack Obama, in an interview Wednesday with about a dozen selected reporters from news organizations, said he was committed to helping the U.S. auto industry and more help could be available if the plans are realistic.

If not, Obama said, "Then we're going to have to ask them to go back to the drawing board."

"Get me a plan that works," Obama said, according to the Detroit Free Press and The Detroit News.

GM Pleads for Relief on Taxes

The NY Times discussed GM and their newest financial problems in a recent post. GM is asking for more financial relief, in their taxes. A segment of the article can be read below, but the full post can be found here.

General Motors (GM), which is borrowing $13.4 billion from the federal government to remain solvent, is pressing Congress to waive a tax liability of as much as $7 billion related to the overhaul plan that it is completing this month, people with knowledge of the discussions said on Sunday.

The tax bill, which could be enough to force the company into bankruptcy, would be a consequence of the terms that the Treasury Department required as part of the rescue package approved last month by the Bush administration. In accepting the loans, GM pledged to persuade its creditors to swap a large chunk of the automaker’s debt for equity in the company.

The equity-for-debt exchange is aimed at ensuring GM’s viability in the future, but under corporate tax law, the swap would amount to debt forgiveness and count as income for G.M. The resulting tax bill could take GM’s cash level below the minimum needed for daily operations.

GM is lobbying Congress to reduce or eliminate the tax liability, said people with knowledge of the effort, who spoke on the condition of anonymity because the discussions were private. The Detroit News first revealed the lobbying effort on Friday.

New GM Concept Camaro

GM car czar Bob Lutz announced a new Camaro concept car on one of his recent posts on the Fastlane Blog. He describes the new car as being remarkable claims the new Camaro is intended to be "the finest car in its class, ever." Check out a picture of the concept car below, thanks to the GM Fastland Blog.

GM May Have 60,000 Volt Electric Cars Out In 2011

Insiders at GM have revealed that the auto-maker may be planning to have over 60,000 of their Volt electric cars on the road within one year of launching in 2010. GM product chief Bob Lutz said he plans to sell the first Volt by late 2010, and expects to have prototypes ready for testing early next year. Insiders claim that production is set to produce 60,000 vehicles for the official launch, however GM spokesman Scott Fosgard declined to comment on the plans. ``If they {GM} were able to get 30,000 to 60,000 on the road in a year, it would be a huge leap in technology,'' claims Brett Smith, an alternative-fuel analyst in Ann Arbor, Michigan. ``It will be difficult, though, because there are so many barriers to making this happen.'' Source: Bloomberg.

GM Fuel Cell SUVs Go 300 Miles

According to the Cincinnati Enquirer, General Motors Corporation set a new world record last week when their Sequel SUV fuel-cell vehicles were each driven 300 miles on public road using only one tank of hydrogen. The point of the drive was to prove that the vehicle was ready for the public, and that it could travel long distances without problems. "This is a very significant event to us," notes Larry Burns, Vice President of Research, Development and Planning. "Our goal was to go 300 miles because that is what our customers tell us they need. This is a vehicle that can carry four or five passengers, but this is also a vehicle that emits just water. We are in the infancy of a whole new automobile." The test came just one day after President George W. Bush announced his plans to increase vehicle fuel-economy standards by the end of 2008.