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GMs 'Crown Jewel' Losing Luster as China Sales Fall
National Legal & Policy Center ^ | August 8, 2011 | Mark Modica

Posted on 08/08/2011 9:39:03 AM PDT by jazusamo

A few months back General Motors CEO, Dan Akerson, made claims that future profits at GM would be driven by China sales and the Chevy Volt. It has become apparent that the Volt is a non-issue, so let's take a look at the performance of what Akerson described as the "crown jewel" of GM.

China sales in July for GM actually fell 1.8% year over year. GM and its "joint ventures" sold 173,398 vehicles in China for the month of July. Of this number, 77,944 units were sold by SAIC-GM-Wuling. It is another overlooked half-truth by GM that they count these as GM sales, even though GM is a minority owner of the division.

Second quarter earnings from the region were roughly flat from the previous year's quarter. The region, which includes India, contributed approximately 20% of total earnings and was only about one fourth that of North American profits.

A few years back another GM CEO, Rick Wagoner, touted strong Chinese demand as the driver of profits. A television "hypeumentory" made claims that the Chinese demand would be "saving GM" as warning signs were growing that the company was in dire financial trouble. At the time, Wagoner stated that "bankruptcy was not an option." We now know that statement and the claims of China strength being a savior for GM turned out to be false.

So now we are again in a situation where we have the same TV personalities talking up the strengths at GM and a different CEO making claims that China is the future. Credibility is waning fast for all that have touted GM stock as a virtual sure winner as shares have underperformed broader markets by about 25% since first trading. Treasury continues to lose taxpayer money on its market timing gamble of its GM stake and investors who bought on the hype are suffering huge losses.

Perhaps there is a way of saving GM the second time around. False claims about magical green cars that can not be built fast enough to keep up with demand and claims of a Chinese mother lode will not be the answer. A removal of government overhang along with the removal of the cronies put in place to manage GM would be the best course to right the ship. For the sake of taxpayers, workers and investors, America should hope that GM will be managed in the future with an emphasis on profitability and quality products rather than upon politically motivated goals of green initiatives, UAW job creation and claims of financial strength that do not gibe with stock market negativity on the company.

Mark Modica is an NLPC Associate Fellow



TOPICS: Business/Economy
KEYWORDS: akerson; bailout; chevyvolt; china; gm; governmentmotors; nlpc; uaw

1 posted on 08/08/2011 9:39:11 AM PDT by jazusamo
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To: jazusamo
On the other hand...


2 posted on 08/08/2011 9:47:51 AM PDT by Joe Brower (Sheep have three speeds: "graze", "stampede" and "cower".)
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To: jazusamo

I, for one, am shocked that people aren’t lining up out the door to shell out $40,000 for a bucket that can only go about 25 miles between “charge-ups”. Shocked, I am.


3 posted on 08/08/2011 9:57:05 AM PDT by Newtoidaho (Fight organized crime. Vote out all incumbent Democrats!)
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To: Joe Brower

Wow! Now that is YELLOW! :)


4 posted on 08/08/2011 9:58:30 AM PDT by jazusamo (His [Obama's] political base---the young, the left and the thoughtless: Thomas Sowell)
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To: Newtoidaho

Yep, that $40,000 price tag will have to come down considerably and I don’t see it happening, GM is losing on every Volt sold already.


5 posted on 08/08/2011 10:02:24 AM PDT by jazusamo (His [Obama's] political base---the young, the left and the thoughtless: Thomas Sowell)
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To: jazusamo

Please bump the Freepathon or click above and donate or become a monthly donor!

6 posted on 08/08/2011 10:03:17 AM PDT by jazusamo (His [Obama's] political base---the young, the left and the thoughtless: Thomas Sowell)
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To: jazusamo
“General Motors CEO, Dan Akerson, made claims that future profits at GM would be driven by China sales and the Chevy Volt....”

the fact that a CEO of ANY major automotive company could believe or even SAY with a straight face, that the Volt is a practical, transportation appliance is an insight as to the depths and extent of liberal delusion.

No human, that deluded, is cognitively capable of successfully running any business successfully, ever.

7 posted on 08/08/2011 10:08:09 AM PDT by mo
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To: jazusamo
Volt is a non-issue

I'll say $40,000 for a car that doesn't get any better mileage than some already in production with a $5,000 battery that will have to be replaced every five years or so...sheese!!!

8 posted on 08/08/2011 10:16:09 AM PDT by ontap
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