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Signs stand in front of the General Motors world headquarters in Detroit, Michigan. The U.S. Treasury will sell its remaining stake in the company over the next year or so.
The day has finally arrived. The U.S. Treasury will sell off its stake in General Motors, the automaker that, along with Chrysler, was bailed out in 2009 before it declared bankruptcy and returned to the public markets via a massive $20 billion IPO in 2010.
The government put $50 million into GM and has gotten back about $30 billion. That figure includes a pre-loaded GM buyback of 200 million of its own shares from the Treasury at $27.50 a pop, a modest premium on Tuesday's closing price that amounts to $5.5 billion.
The remaining $2o billion (more or less) and the government's 300 remaining shares will be dealt with in slow motion fashion over the next 15 months, to avert a big dump of shares on the market. To make back the $20 billion, GM's stock price would have to rise to $72, a highly unlikely event. So the Treasury is admitting that it will "lose" money on the deal.
Anibal Ortiz / KPCC
The 2014 Chevrolet Spark EV is introduced at the LA Auto Show. It's the smallest vehicle in the entire GM lineup. It's all-electric. And its shows that GM is at long last taking small cars seriously.
Two concepts that, a decade ago, few would have uttered in the same breath. GM had left the small car market for dead. While it focused on trucks and SUVs and their nice, fat, profit margins, and also dedicated itself to turning Cadillac into a high-performance brand while simultaneously saving Buick, it left low-margin small cars to Honda, Toyota, Nissan, Hyundai, and Kia.
Honda and Toyota got started in the U.S. market with small cars, so they always knew what they were doing. Hyundai and Kia, the South Korean upstarts, simply copied the Japanese playbook.
Then the financial crisis struck. The federal government bailed out GM, then the company went bankrupt. Somewhere amid one of its numerous pre-Chapter 11 restructurings, GM got religion on small cars.
Anibal Ortiz / KPCC
The 2013 Volkswagen Beetle at the LA Auto Show. VW had another great month for U.S. sales. But it wasn't alone.
The major automakers that sell cars in North America have all reported their November sales figures. Those sales are pretty much booming. The industry is on a pace to sell more than 15 million vehicles for all of 2012; that's a substantial increase over last year's 13 million, but not as torrid as 2005's all-time high of 17 million.
The big story was Honda, an automaker that's endured something of an identity crisis of late and that lost a lot of U.S. market share in the aftermath of 2011's Japanese earthquake and tsunami. Honda's November sales hit an all-time high. Of the more one million vehicles sold in the U.S. in November, almost 120,000 were Hondas. And year-over-year, Honda witnessed November sales leap by nearly 40 percent.
"Honda definitely has momentum in the marketplace," said industry analyst Jessica Caldwell of Edmunds.com. She added that Honda was the bestselling auto brand in the areas hit hardest by Superstorm Sandy, and that a combination of the Accord sedan, the CR-V compact SUV, and the revamped Civic (revamped after a tepid entry to the market last year) all helped Honda to rack up good sales.
The Los Angeles Auto Show has in recent years defined itself as the "green" car show. California has the largest auto market in the U.S., as well as the most environmentally preoccupied. But the most dramatic auto debuts during car show season, running through next spring, are traditionally reserved for Detroit, the auto industry's spiritual home. So L.A. has had to kick off car show season with its own attention-getting twist.
The L.A. Auto Show focuses on the dream machines, the future of transportation and, over the past decade, on electric cars, hybrids, plug-in hybrids, alternative fuel vehicles — in short, things with wheels that aren't total slaves to gas. But this year, it's different.
The new story is technology. Specifically, how cars will soon become platforms for various consumer electronics, mainly smartphones. In the past, automakers have preferred to design and build their own in-vehicle infotainment systems or partner with tech companies. The most prominent of these has been Ford and its relationship with Microsoft; Ford's CEO, Alan Mullaly, has also made regular pilgrimages to the annual Consumer Electronics Show (CES) in Las Vegas. General Motors has had a loose association with Google (and Google itself is the the auto game, with its driverless car). No one has yet broken through with Apple.
Ford saw double-digit sales increases from last August for its pickup trucks. Chrysler also sold a lot of pickups, as did GM.
A good month for pickup trucks means a good month for Detroit's Big Three — General Motors, Chrysler, and Ford. Although ironically, it was Ford and Chrysler reporting big gains in pickup sales from August of last year, while GM did well with its lineup of smaller, more fuel-efficient cars.
Longtime GM watchers are still scratching their heads at how a company that, pre-bailout and bankruptcy, had abandoned the small-car market to imports so it could concentrate on the fat profits that trucks and SUVs bring in. GM did okay with its main pickup, the aging Silverado. Just not as well as its Motown rivals.
Pickup truck profits are a good thing, for two reasons. Ford and Chrysler saw double-digit increases, while GM had to settle for the mid-single digits. That's money in the bank for Detroit 's carmakers. Meanwhile, pickups being sold means that contractors are trading in their aging wheels for new sheet metal — and that's a clear signal that the new-home market is regaining some strength. You can't haul stuff to the building site in a pickup that falling apart.