November 19th, 2010 at 12:30pm
A new study says the U.S. government bailouts of GM and Chrysler saved over a million jobs the past two years. Volkswagen plans to invest more than $70 billion in its automotive business over the next five years. General Motors will host open house events at all 54 of its U.S. manufacturing facilities and Aftersales parts warehouses by the end of next year. All that and more, plus a preview of this week’s Autoline Detroit with Laura Soave, the President and CEO of Fiat North America.
Hey now, don’t sneak up on people like that! You nearly scared the soil out of me. Jim Hall here of 2953 Analytics bringing you another enlightening and entertaining episode of Autoline Daily for Friday, the 19th of November, 2010. TGIF! Here’s all the news that fit to broadcast.
GM’s IPO PERFORMANCE (subscription required)
As a few of you may be aware, a new automotive stock that debuted on the NYSE yesterday had a pretty good first day of trading with well over 610 million shares finding new homes. The stock closed with its price up a tick more than 3.6 percent over an initial sales price of $35.00 per certificate. Of course, the stock is General Motors. According to the Wall Street Journal, retail pricing for the shares opened at $35. The stock climbed to an inter-day high of $35.99 before closing at $34.19.
This is a pretty good performance for a company that many said was dead and cold as yesterday’s oatmeal less than two years ago. Even with a massive influx of capital from the company’s IPO, the General is not out of the woods yet. There are still issues with fully funding the company’s pension, some still-fuzzy math coming from the financial guys and getting the perception of its remaining four core-brands polished up. That said, the company is in the right place to take advantage of a slowly strengthening economy. And this brings us to one of the core issues of the General Motors IPO, the valuation of GM’s stock. After its first day of trading since entering bankruptcy, GM stock closed at $34.19 a share . . . and the price is puzzling . . . to me at least.
GM VS. TESLA
Compare GM’s price to that of the last automaker to have an IPO, Tesla Motors. Yesterday Tesla closed the day at $29.89 a share. Only $4.30 less than GM. Yet Tesla has yet to fully engineer and manufacturer a single car. Yes, I know about the Roadster, but it’s a case of assembling a car from a series of commodities. I don’t want to sound like I’m ragging on Tesla, but something is seriously wrong on the street when the two companies are valued so closely.
Using market capitalization, the value of the issued stock, at the close of trading yesterday, Tesla had a value of $2.76 Billion. By comparison, GM’s market cap was $51.3 Billion. For the third quarter of 2010, GM was able to turn a profit of $2 Billion. Tesla posted a $34.9 Million loss for the same period. Look, either GM is grossly undervalued or Tesla stick is selling for waaaay more than it should. And don’t get me started on Ford’s stock price. I just don’t get it. If GM turns a fourth-quarter profit of say, half what it did for the previous period it should just buy Tesla and be done with it.
But enough of my coffee-fueled rant. Now it’s time for news . . .
BAILOUTS SAVED OVER A MILLION JOBS (pdf)
While the bailout of General Motors and Chrysler created a lot of controversy, a new study from the Center for Automotive Research shows just how important it was to help these companies out. Researchers modeled the impact of the $80 billion in U.S. aid to GM, Chrysler, GMAC and Chrysler Financial using actual economic performance for 2009 and 2010. In 2009 alone, over 1.1 million jobs were saved and more than 300,000 were saved this year. To date, $13.4 billion has been repaid to the government. The study shows that $28.6 billion in net losses to the U.S. Treasury were averted by providing assistance to General Motors and Chrysler. So, that means the government, i.e. us taxpayers, only need to recoup $38 billion at this point to break even. A mere bagatelle. The study was conducted before GM’s IPO.
TOYOTA LAWYER BLAMES DRIVERS (subscription required)
Could Toyota finally be growing a pair? The company’s been lambasted for a year or so from all sides for its alleged unintended acceleration problem. Its CEO apologized and appeared before congress; it put out a slew of print and television advertisements promoting how hard it’s working to keep customers safe; and it comprehensively reviewed its vehicles . . . but it’s all for nothing. Its found no problems that point to an electronic cause of unintended acceleration. Now, according to the Wall Street Journal, one of its lawyers is blaming drivers for crashes. Finally! He said most of the 48 deaths a safety expert blamed on sudden acceleration involved drivers who were elderly, had medical issues and were distracted or navigating slippery roads. The company probably won’t fall as hard as Audi did in 1989, but still, expect this to drag out in the courts for years to come. If only Americans took responsibility for their actions.
VOLT RAKES IN AWARDS
It looks like GM’s got a hit on its hands, at least with the motoring press. A couple days ago the Chevy Volt was awarded Motor Trend Magazine’s golden calipers, winning its annual car-of-the-year competition. Yesterday, at the Los Angeles Auto Show, the extended-range electric took home another victory, that being the 2011 Green Car of the Year award from the folks at Green Car Journal. The Volt’s on a roll and I’d say watch it rake in a few more wins like these in the future. You can put me on the record for this; I predict it will win North American Car of the Year award as well. It’s a great EV that’s actually a REAL car you can live with everyday. As one of the Motor Trend Car of the Year judges put it, “I expected a science fair experiment. But this is a moon shot.”
VW INVESTS BILLIONS TO BECOME #1
Be careful Volkswagen; don’t let your reach exceed your grasp. Bloomberg reports the German automaker is investing nearly 52 billion euros – yes, that’s BILLION with a “B” – in its automotive business over the next five years. In U.S. funds for our ‘Merican audience, that’s nearly $71 billion! You don’t need me to tell you, that’s A LOT OF MONEY! The push is to help fund a product offensive from the company’s nine brands, with the singular goal of surpassing Toyota in sales and profitability. VW is aiming to sell more than 8 million cars by 2012 and 10 million as early as 2015.
GM HOSTS OPEN HOUSE EVENTS
We car enthusiasts know how big a role the auto industry plays in local economies and the world at large. But some people view the business as an obsolete dinosaur of the rustbelt. Perhaps in an effort to silence these critics, GM will host open house events at all 54 of its U.S. manufacturing facilities and Aftersales parts warehouses by the end of 2011. The idea is to give the American public an opportunity to learn about its products and its plants. This is kind of cool! I’m not aware of any other automaker that’s tried something like this before. It’ll be interesting to see how the public reacts to the plan.
You know the routine. After the break we’ll preview this week’s episode of Autoline Detroit, so don’t go anywhere . . . hey, get that cursor away from your browser’s back button! I mean it!
This week on Autoline Detroit John is joined in studio by Alisa Priddle of The Detroit News and by Tim Higgins from Bloomberg. His special guest is Laura Soave, the President and CEO of Fiat North America. In the following clip he asks her about one of the BIG changes the company had to make to the Fiat 500 in order to sell it in the U.S.
For more about Fiat’s plans in the U.S. market, swing by our website, AutolineDetroit.tv where you can watch this week’s entire episode immediately, as in RIGHT NOW.
And sadly like all good things, today’s installment of Autoline Daily must also come to an end. Once more, I’m Jim Hall of 2953 Analytics. Thanks for watching and I’ll see you ‘round!