Wanna Get Away

You could finance your dream vacation with the purchase of a Chevy Volt. Thank you Mr. President!

  by: Mark Modica ( July 12, 2012)

General Motors has announced a 60 day money back guarantee policy for all new Chevy models, including the Chevy Volt. The move sets up a scenario where purchasers can buy a Volt, claim the $7,500 federal tax credit (and most likely state credits) and return the vehicle for a refund within 60 days. Did GM really not consider this glitch, or is this just

Every Volt now comes with it’s own Fireworks Display

another way for Government Motors to prop up politically important Volt sales leading up to November elections?

IRS tax form 8936, for plug-in motor vehicle credit, does not have any minimum time requirement for buyers to own their qualified vehicles. The vehicle only has to be new and purchased during the tax year being claimed. Buyers of Volts will have documentation and VIN numbers for qualifying vehicles. The 60 day return policy lays the groundwork for a very easy way to scam the IRS out of $7,500. Buyers will most likely have to eat registration fees and sales tax paid that will be deducted from refund. So, in an effort to save taxpayers millions of dollars on the potential scam and save GM and its shareholders from losing more millions of dollars on the Volt, I suggest the Volt be exempted from the return program.

Of course, there is the possibility that Government Motors is aware of the situation. Volt sales may pick up, if enough people hear of this. Millions of dollars in tax credits will be claimed and GM can tout improved sales. GM will then have returned Volts to sell that will no longer qualify for the tax credits; the vehicles will be sold as used for thousands of dollars less. GM will have to reimburse dealerships for some portion of the losses. And unless the IRS has a database of VIN numbers for qualified vehicles, buyers of used Volts with low mileage may be tempted to claim the tax credit again, upping the federal subsidy to $15,000 per vehicle. Hopefully the IRS has safeguards to prevent double claiming of EV credits. In the past, the IRS did not seem too concerned as there was not even a field on prior year forms for VIN numbers, something that changed after my criticism of GM dealerships taking tax credits.

So, for the sake of taxpayers, let’s hope that GM tries to rely on GE to purchase a bunch of Volts to prop up sales instead of costing taxpayers lost revenue on an easy scam by purchasers of Volts.

The Volt needs a Jolt

Reuters: GM Is Losing Nearly $50K on Each Electric Volt

by:  at the Blaze

General Motors posts a $49,000 loss for each new Volt plug-in hybrid it produces, Reuters reports.

You know what this means, right? It means that for each new Chevy Volt, the taxpayer bailed out company loses what the average American makes in a year.

And on top of that, rock bottom lease offers made during the summer may have inflated the above number. According to the report, some motorists paid only $5K to drive around in a new $80K Volt for two years. Oh, yeah, and Volt production has been put on hold at GM’s Detroit-Hamtramck plant.

What we’re trying to say is that it will be a very, very long time (if ever) before GM makes a profit on the Volt.

The problem with the car is that “the Volt is over-engineered and over-priced,” according to Dennis Virag, president of the Michigan-based Automotive Consulting Group.

But hey! If it’s any consolation to GM, Nissan, Honda and Mitsubishi are all having a hard time marketing their electric and hybrid models as well. But even that minor bit of consolation disappears when you consider the fact that Toyota has had great success with its Prius model (meaning it’s possible to have a successful electric-hybrid).

“GM’s quandary is how to increase sales volume so that it can spread its estimated $1.2-billion investment in the Volt over more vehicles while reducing manufacturing and component costs — which will be difficult to bring down until sales increase,” the Reuters report reads.

“But the Volt’s steep $39,995 base price and its complex technology — the car uses expensive lithium-polymer batteries, sophisticated electronics and an electric motor combined with a gasoline engine — have kept many prospective buyers away from Chevy showrooms,” the report adds.

But more than just steep prices, many Americans simply prefer a car that gets better mileage and has the infrastructure in place to help charge and maintain it.

“It’s true, we’re not making money yet” on the Volt, Doug Parks, GM’s vice president of global product programs and the former Volt development chief, told Reuters in an interview. The Volt “eventually will make money. As the volume comes up and we get into the Gen 2 car, we’re going to turn (the losses) around,” he added.

But some analysts disagree with Parks.

“I don’t see how General Motors will ever get its money back on that vehicle,” said Sandy Munro, president of Michigan-based Munro & Associates, which specializes in vehicular analysis.

It currently costs GM “at least” $74K to produce the Volt, including development costs, Munro added.

“That’s nearly twice the base price of the Volt before a $7,500 federal tax credit provided as part of President Barack Obama’s green energy policy,” Reuters notes.

Again, as stated earlier in this article, with these type of costs tied into the vehicle’s production, it may be a very, very long time (if ever) before GM sees a profit on the Volt.

GM sales are up: Now the Rest of the Story

From:  at The Blaze

General Motors announced this month its auto sales increased by 16 percent in June, its best monthly sales gain since 2008. Considering all the company has been through, and the fact that it still owes taxpayers approximately $25 billion in TARP repayments, a 16 percent boost in sales sounds like good news, right?

Who knows? With consumers buying up all these cars, maybe GM can reestablish itself as an auto heavyweight, shareholders will finally get to see a return on their investments, and President Obama will have something to brag about on the campaign trail.

Not so fast.

As it turns out, there’s a big reason GM experienced an increase in sales last month: “government purchases of GM vehicles rose a whopping 79% in June,” according to the National Legal and Policy Center’s Mark Modica.

Seriously?

“Overall fleet sales (which are typically less profitable than retail sales) at Government Motors rose a full 36% for the month, helping to drive decent sales improvements year over year,” Modica reports.

The report continues:

GM claimed that sales increases did not rely on incentive spending, which appeared to remain in check, but one analyst during GM‘s sales conference call questioned whether the company’s “stair step” incentive spending was accurately depicted. This incentive spending kicks in after dealerships report final sales figures for the month and may be yet another deceptive way for GM to fudge its numbers. Not mentioned was GM card rewards programs that do not get counted as incentive spending.

Considering that the president fully intends to campaign on the company’s so-called “success,” the fed’s decision to bulk up its vehicle fleet with GM products would seem to be a clear conflict of interest.

Think about it in these terms [via NewsBusters’ Seton Motley]:

Barack Obama is now campaigning on the “success” of the government buying cars from … the government’s car company. With our money.

That’s like you setting up a lemonade stand for your kids. You buy them the lemons, sugar, cups and pitchers – and then buy most of the lemonade yourself.

Except you are President Obama. Your kids are the United Autoworkers Union. And the lemonade cost $50 billion.

As always, what’s the bottom line?

“The long-term health of GM remains in question and the true financial picture may not surface until well after voters decide who will be running our country,” Modica writes.

“Eventually we will see just how successful GM really is.”

Read the full report here.

The Bain of Our Existence

By: The Common Constitutionalist

So I guess “Venture Capitalist” or “Private Equity” are dirty words (unless it’s prefaced with Blackstone).

Years ago, Mitt Romney was a venture capitalist. If you listen to the mainstream media, you would get the impression that these companies, like private equity firm, Bain Capital, scour the countryside looking for struggling businesses. Without doing any research on the

Count Romula

companies viability, they swoop in, take over, fire everyone and sell off the carcass. That’s seems to be the way it is portrayed.

But that’s the private sector for ya. Those in private industry are looking to do one thing; make money. They don’t seem to understand that the sole purpose of the private sector is not to make a profit, but to create jobs (preferably union). Private industry is to create jobs, provide a living wage, pensions and benefits for their unionized workers and since profit is evil, all will be paid for by that large pot of gold hidden under every CEOs desk.

As an aside, I love the term “workers”. It’s such a wonderfully socialist/communist term. Like the worker bees in Woodrow Wilson’s grand “beehive” vision.

The public sector, or government, surely knows better how to invest in struggling companies.

Just imagine what would’ve become of General Motors if the government hadn’t stepped in and bailed it out with our money. GM would have been forced into bankruptcy reorganization. Union contracts would’ve become null and void and would’ve had to been renegotiated. Tragic! Many workers would’ve lost their jobs. In the private sector we would call these people dead wood, or non-essential personnel. This, of course, would have been completely heartless.

Lucky for us, our benevolent government stepped in and saved the day. They rescued the struggling healthcare auto company thus saving the jobs of many thousands of workers. Those who are students of history understand that every company that is forced to file for bankruptcy reorganization must fire every employee and shut its doors.

Thankfully that didn’t happen. Our government, with great foresight and great courage gave billions and billions of our dollars to save those union jobs. (Notice I said gave and not lent billions of dollars. We have not been paid back in full and likely never will. Bless them for that.)

In doing so, it was mandated that only about 800 Chrysler and almost 1100 GM, nonunion dealerships close. I’m sure those dealerships and all their employees were more than happy to sacrifice themselves in order to save the UAW.

It was all for the greater good. Workers of the world unite! Unless you worked for a dealership.

You see, private industry is like a casino and the private equity firms are like the high rolling gamblers that destroy everyone that stand in the way of their prize; big profits. Just ask those poor saps who work at Sealy Corp. or Staples or Sports Authority, Domino’s Pizza, Toys R Us or Dunkin Donuts, just a few of Romney’s more famous victims. Oh wait; they added thousands of jobs. Forget I said that.

Government investment in companies is where it’s at. Success stories abound.

Just look at the laundry list of prosperity from government largess.

Let’s see; give me second. I’ll think of some. Got it! How about Solyndra, Solar Trust of America, Energy Conversion Devices. Then there’s Evergreen Solar, Solar Power Industries and Spectrawatt. They took our money and parlayed that investment into viable growth companies employing many workers.

What? They all went belly up? No workers, no nothing? How could that be? I’m sure the experts in the government did countless hours of research and viability studies before handing out billions of dollars. That doesn’t sound all like our government. It sounds more like those wicked private equity firms.

In closing if I may be serious; people start and invest in business to make money. Sure, that’s not the only reason, but it’s the main reason. Someone has an idea for a better mouse trap so they start company to build the mousetraps. If they didn’t think they could make money, they wouldn’t start. They don’t set out to start a business with the aim of hiring people. That is the result of hard work and growing the business so one has to hire people.

The same goes for venture capitalists or private equity firms. They spend countless hours researching before they invest in an already struggling industry. It is of course a risk, but it is an educated risk. They don’t just throw money at something and hope for the best like the government does. They can’t afford to. Unlike the government, they don’t have unlimited funds to waste.

No matter how much research these private equity firms do, not every investment will yield success and some of the companies won’t make it. That’s called life.

It is however, almost a sure bet, that if the venture capitalist or private equity firm didn’t invest in the company, said company wouldn’t survive. With the infusion of new capital, they at least have a chance and worst-case, they may get a few more years of life that they wouldn’t otherwise have had, like GST Steel.