Gloat Glut: Obama’s ex-auto-semi-czar Steve Rattner took to his friend Pinch’s pages to argue that bailed-out General Motors’ stock “remains undervalued,” in part because
[d]isastrous past industry practices – from bloated inventories to excessive sales incentives — have been curbed.
Hmm. Does Rattner keep up with the industry he didn’t quite save? If so he’d know this is the month** it became clear that GM has a massively bloated inventory and is once again resorting to heavy sales incentives to move unsold product. That’s true for pickup trucks, and also, apparently, for cars. ‘
P.S.: Rattner also refers optimistically to a “passel of shiny new models” from GM that are “about to hit showrooms.” Which models are those? The screwed-up new Malibu, which is already such a flop that production has been curtailed? The BMW-fighting Cadillac ATS? (I live in West L.A. BMW-land and have seen exactly one ATS in the last month. It’s been on sale since August. GM now plans to cut production of the bigger CTS to give the ATS “breathing room.”) The Chevy Impala, which is already boring automotive writers even though it won’t be on sale until next year? Meanwhile, Honda’s redesigned Accord (which competes with the Malibu) is looking like a huge critical and sales hit. …
P.P.S.: Bizarrely, Rattner makes a point of placing the blame for some of the bailout’s costs on GM management:
the $17.4 billion initial round of bridge loans that was provided at the end of 2008 was necessary only because GM and Chrysler had been utterly derelict in not preparing for restructurings through bankruptcy that were clearly inevitable. G.M., in particular, wallowed in an irresponsible state of denial. Had the companies been properly prepared, the loss of that $17.4 billion could have been avoided.
Does Rattner think the people who criticize the bailout believe GM’s management wasn’t derelict? If the company had been well-run it wouldn’t have needed any bailout billions at all–bridge loans or after-bridge loans. That’s pretty much the critics’ point. They argue that GM’s dysfunctional management-labor culture had been selected by the market for oblivion–and that Rattner poured tens of billions of dollars into that culture without changing it enough to survive over the long haul. …
**– It’s also the month immediately following an election in which GM’s owners at the Obama Treasury Department had an interest in making bailed-out GM’s production look as robust as possible. Funny how that happens.