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Is Obama propping up GM with increased gov’t fleet purchases?

Is Obama propping up GM with increased gov’t fleet purchases?

That’s the allegation from the National Legal and Policy Center, GM’s Government Fleet Sales and Truck Inventory Rise (h/t a reader):

It looks like General Motors will be throwing everything in but the kitchen sink to help fluff its second quarter earnings numbers. Taxpayers continue to help with the cause as President Obama campaigns on the “success” of GM following the manipulated bankruptcy process that cost taxpayers $50 billion and another $45 billion of tax credits gifted to GM to help protect powerful UAW interests. We now learn that government purchases of GM vehicles rose a whopping 79% in June.

The discovery of the pick-up in government fleet purchases at the taxpayers’ expense comes just weeks before GM announces its second quarter earnings. 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….

The upcoming earnings announcement by GM is, politically, the most important to date. The pressure is on Government Motors to appear financially strong as this may be the last earnings report before November elections and sets the stage for how “successful” GM is. One of GM’s past tricks to help fudge earnings numbers has been to stuff truck inventory channels. Old habits die hard at GM. According to a Bloomberg report, “GM said inventory of its full-size pickups, which will be refreshed next year, climbed to 238,194 at the end of June, a 135 days supply, up from 116 days at the end of May.” 135 days supply is huge, the accepted norm is a 60 day supply. The trick here is that GM records revenue when vehicles go into dealership inventories, not when actually sold to consumers.

Obama has hitched his campaign to saving General Motors:

What he does not say is that “saving” General Motors means a relationship of permanent dependency, rather than a truly effective private restructuring which could have resulted in an independent company not dependent on the government dole.


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So what do you do when you’re deeply in debt? Buy a bunch of brand new vehicles! But only if you’re a government official. The rest of us make do with what we have.

Henry Hawkins | July 6, 2012 at 12:33 pm

Obama saved GM like Germany saved Poland in 1939.

iconotastic | July 6, 2012 at 12:38 pm

Just your basic channel-stuffing. In a normal corporation this would be justification for investor lawsuits and even SEC legal action. The FBI also investigates channel-stuffing in fraud cases too.

But when the customer AND the investor is the federal government, all those previously good corporate regulations and oversight is thrown out. The federal government has only the people’s interest in mind, after all. Why watch them for misbehavior?

Pres. Dog Breath, saving fascist motors with Federal orders…????

Naw. THAT couldn’t happen.

No, no. Sparky Pinto (da Volt) is just really, really popular.

Escaped from RI | July 6, 2012 at 1:25 pm

The part that no one talks about with channel stuffing: Dealers don’t get vehicles on consignment, they buy them from GM, then re-sell them. Most dealers do it with bank loans. The dealer has to eat the interest payments on those cars until he can sell them. That’s why you get a much better deal on a car that’s been on the lot for 60 days than one that just came off the truck. 135 days of inventory kills a dealer, he pays four months interest that comes straight out of his profit.

    iconotastic in reply to Escaped from RI. | July 6, 2012 at 1:44 pm

    One of the reasons that investors really, really hate channel-stuffers is that not only does it warp the quarterly report and impact the next two quarters negatively, it tends to put distributors out of business–which is generally considered to be a bad thing when one is running a business.

    But maybe that will not be a problem in the future. After all, since the federal government can force anyone to purchase a product (according to the SCOTUS), the answer is simple–pass a law forcing people to either buy Ladas (oops, I meant GM cars) or pay a tax to the IRS. Problem solved!!!

It makes me want to scream when Obama takes credit for GM. The failure of the MSM to call him on his Romney wanted them to go bankrupt shouldn’t surprise me but yet it does. Romney called for “managed bankruptcy” which is ultimately the prescription the wizard Obama used to “save” GM. Nothing underscores Obama’s complete disregard for the truth and utter contempt for intelligence of the American people than his pretense to have saved the company by any other means. Bush negotiated the funds with Pelosi and Reid when Obama was MIA in the transition. There was never any intention government should take ownership of GM along with Obama’s union cronies. As Romney pointed out everything Obama did do on his own was “crony capitalism on a grand scale.” Handing credit to Obama for GM is like detailing the exquisite workmanship in the brass buttons of the Naked Emperor’s new suit. There’s nothing there people.

Evidence Obama may be propping up flagging sales in GM’s sales reports is completely in keeping with the delusional thinking that credits Obama for GM in the first place. That Obama has GM and little else he can tout in a stump speech is really quite telling. If the press wants to let this stand as his “proof of life” fine, leave it for Romney to call the bluff in the debates.

    OcTEApi in reply to Mary Sue. | July 6, 2012 at 3:03 pm

    Mitt Romney on Meet the Press vs. Jennifer Granholm

    Listen to Mitt describe managed bankruptcy Vs two-penny Jenny and her Chinese market socialism (WTF Investment) and lifting massive corporate healthcare burdens off their backs and onto the taxpayers.
    Which is exactly what taxpayer bail-out losses amount to.

      Mary Sue in reply to OcTEApi. | July 6, 2012 at 3:48 pm

      I hadn’t seen that before. You’re right, that’s exactly what happened.

        OcTEApi in reply to Mary Sue. | July 6, 2012 at 4:41 pm

        I watched this episode of Meet The Press and Mitt came down quite hard on Granholm.
        Its been said that Mitt made the virulent progressive moonbat cry, she stomped off set, collected herself and came back for the above exchange.

        Now all that remains is the constant harping of moonbats… err keep repeating a lie, people will eventually come to believe it.

          Midwest Rhino in reply to OcTEApi. | July 6, 2012 at 8:28 pm

          Funny that she claims the US can’t compete because other countries have free health care, whereas our employers have to cover that. Where does she think the money for that “free health care” comes from? Romney mopped the floor with her.

          Obama used the deal to reward his union bosses that bought him the election. And he scolded legit’ bondholders for being greedy. Obama is just another Chicago thug, but with a prissy stride.

Somebody ought to do a comedy sketch about this!!

135 days? Holy Smokes! Apple, which everyone acknowledges is a superbly run company has a turnaround of under a week for most of its products. It’s also much more expensive to warehouse a vehicle than it is to warehouse a phone. This is a major fail.

Over-production and stuffing the dealerships is because they are planning plant shut downs and model changeovers… production line upgrades costing billions that are a 100% Obamatax expensable (via US Taxpayer) gift.

When new models arrive, dealerships want to push those models so the backlog of vehicles are given steep rebates to move metal, so those consumers whom had already purchased the previous years model w/o rebate, just took a hit on their resale value.

Besides private fleet sales (auto rental, fleet services) GM/Fiatsler has also benefited from 3-4 hundred million of US Taxpayer Gov’t Fleet Sales.
Which they use to falsely project increased sales and market share, … not to mention accounting trick like “deferred tax credits”. to simulate profits before later posting a huge loss.

Henry Hawkins | July 6, 2012 at 2:35 pm

Amazing that a corporation as large as GMC could be turned into a political marionette made to dance for a single politician.

Romney saved many companies and did it WITHOUT GOVERNMENT MONEY. You and I are keeping GM afloat. Does “Weekend at Bernie’s” sound familiar?

If I were a caring person I would feel sorry for the dealers. Except that anyone who’s still a GM dealer these days has very likely sworn fealty and future funding to Teh Won, so sorta deserves what’s being dealt. Sob!

Bitterlyclinging | July 6, 2012 at 4:36 pm

The objective should be, somewhere in Obama’s scheme of things, to put Ford out of business. They’re the only one that thumbed their nose at Obama when he profeered his Union Saving handout, instead saving the shareholders and the bondholders as well. Ford is constantly held up as the example when the objective is to heap scorn on GM and Chrysler for needing the bailout.
Unless I miss my guess, anyone that thumbs their nose at Obama, a sufferer of Narcissistic Personality Disorder like two other recent world leaders, Adolph Hitler and Joseph Stalin, is a marked man.
Obama can then move in and save the Union as he did before with the other two car makers.
This GM owes the taxpayer 23 billion. Obama gave the Union 26 billion in concessions to go along with the deal.

    OcTEApi in reply to Bitterlyclinging. | July 6, 2012 at 4:57 pm

    Ford hedged its bet, became compliant with Obama eco-religion, play-for-pay if you will to avoid the Barry banhammer.

    As most major corporations have.

Professor Star Commander lobbed a slow-pitch softball right over the plate with The Prius Presumption

Allowing conservatives to easily jump on the eco-religion bandwagon for various reasons, including $5 gas prices.

While you may not be a leftist wacko, but it sure doesn’t rectify supporting the ideological underpinnings that support these cracker boxes…
-the CAFE mandates
-the ethanol subsidies
-the bans/regs prohibitive to achieving lower gas prices
-the eco-tax credits

IF conservatism is still rooted in free markets, consumer choice, and limited government, then targeted tax credits are not part of the conservative philosophy. They are subsidies that misallocate resources and create the crony capitalistic behavior that Americans loathe.

California congressman wants to give $1 billion to American auto company that develops first 100 mpg gasoline-only car
Amir Iliaifar February 6, 2012

Recently Rep. Mike Kelly (R-PA) introduced a bill that seeks to terminate the $7,500 tax credit awarded to consumers who purchase an electric vehicle, which according to various estimates could end up costing the government several billion dollars.

Apparent doomsday ahead when a tax credit is ended…
Cash For Zombie credits

Is Obama propping up GM with increased gov’t fleet purchases?

Many of the Federal Contracts for purchases of Gov’t Fleet Vehicles were embedded into the Obama Stimuless.

Federal Government purchasing should be easily available and transparent, if these are new contracts since that time.

Funny you should mention it, we noticed earlier this week that that our local GM dealer (Cadillac, really) had taken delivery of a virtual fleet of bright shiny new GMC pick-ups.

1) The Federal fiscal year contributes to this, large purchases (such as vehicles) are generally held off until just before EOFY (Sept 30) in case of hiccups in budget.
2) Federal agencies such as GSA are required by law to purchase their Government Owned Vehicles from US manufacturers (so no Toyotas manufactured in the states).
3) Loving and Kind Congresscritters tend to have flashes of Genius and mandate government agency purchases be “Green” or “Modern”, therefore sticking agencies with the overpriced not-ready-for-prime-time models that nobody else wants, which drives down the number of vehicles an agency can buy, and cranks up their maintenance costs (and by coincidence, these happen to have the highest profit margin).
4) Yes, an *amazing* number of GM vehicles seem to be in this years purchases for Progressive agencies. And for some reason, Congress is fairly quick with the purse-strings for them, even while slowly strangling the “Less Progressive” department budgets for office supplies. (A rough analysis of inter-governmental budgets can be fascinating, as certain departments are cut to disguise the explosive growth of others in the same agency)

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