GM sales dip casts shadow over IPO

GM sales dip casts shadow over IPO http://www.ft.com/cms/s/0/c740d78c-b5de-11df-a048-00144feabdc0.html
General Motors’ sales in its core US market sagged in August,
potentially complicating its bid to drum up investor support for its forthcoming public share issue.
Sales were a quarter lower than in August 2009, when demand was bolstered by the Obama administration’s cash-for-clunkers scrappage incentives. GM has also eliminated four brands since then.
More worrying, however, was a 7.2 per cent decline from July. Low-margin sales to car rental operators and other fleet owners climbed to 28 per cent of the total, from 25 per cent in July. “August was definitely what we call ‘one of those months’,” said Don Johnson, GM’s head of US sales operations.
Mr Johnson said that consumers remained cautious amid an unexpectedly slow revival in employment. In the longer term, however, he forecast that there was “pent-up demand building” that would “eventually be released when the economy gets a firmer footing”.
Most other carmakers also posted lower sales in August than a year earlier due to the cash-for-clunkers incentives.
Toyota, one of the scheme’s chief beneficiaries, saw a one-third drop. Toyota’s sales last month were also 12.3 per cent lower than July. Ford Motor posted declines of 11 per cent and 7.5 per cent respectively. But Chrysler bucked the trend, with 7 per cent gains in each period.
US sales totalled 11.5m at an annual rate in August, a slight fall from July and down from 14.1m in August 2009, according to Autodata. GM’s market share dipped to 19.1 per cent in the first eight months of this year, from 19.4 per cent in January-August 2009. Toyota, which has been battered by a series of recalls, saw its share drop to 15.2 per cent from 16.6 per cent. By contrast, Ford, Nissan, Hyundai and Volkswagen have grown market share.
GM filed a bulky draft prospectus for an initial public offering with US and Canadian regulators last month. The US and Canadian governments hold 72 per cent of GM’s equity.
The document warns that in spite of a pick-up in demand since late last year, “many of the economic and market conditions that drove the [earlier] drop in vehicle sales, including declines in real estate and equity values, increases in unemployment, tightened credit markets, depressed consumer confidence and weak housing markets, continue to impact sales”.
If the recent revival falters, the prospectus warns, “our results of operations and financial condition will be materially adversely affected”.
In spite of the soft market in August, both GM and Ford are sticking to their estimates of total industry sales of 11.5m-12m this year.
Emily Kolinski-Morris, Ford’s senior economist, said the carmaker interpreted recent economic data “as a moderation of the pace of recovery, but not a collapse”.
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It is all part of the plan.
GM was too big to be closed down all at once.
Now they are closing it down in pieces.
Sell of some brands, close others, stop all benefits and decrease the sales force and all support.
Change manament often so no one will get all the blame.
Only thing that remains is money for bonuses and lobby activity.
This plan is working better than expected and soon all that will be left is oversees production.
The IPO is a part of the smokescreen that everything is ok.
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Perhaps, but GM would not import any of their vehicles made in Europe. Build costs in the socialist countries of Europe are greater than in the US. That is the reason BMW and VW are making vehicles in the US, rather than importing them for Europe
wrote:

It is all part of the plan.
GM was too big to be closed down all at once.
Now they are closing it down in pieces.
Sell of some brands, close others, stop all benefits and decrease the sales force and all support.
Change manament often so no one will get all the blame.
Only thing that remains is money for bonuses and lobby activity.
This plan is working better than expected and soon all that will be left is oversees production.
The IPO is a part of the smokescreen that everything is ok.
Add pictures here
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<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
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While corporate fleets generally buy their vehicles at the beginning of the calendar year, rental car fleets buy every quarter of the model year, with the largest buys in the third quarter.
The reason is corporate fleets. because of US corporate tax laws, must depreciate the cost over five years or 300,000 miles because their vehicles are a "tool" like a computer or a lathe.
For Rental fleets the vehicles are their "product," which can not be sold off until after the end of the model year. The lower the mileage, the higher the selling price for the 'product" and the lower their investment.

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