In a move that could hardly be called unexpected, GM's Board of Directors asked interim CEO Ed Whitacre to stay on in a permanent role. This after a two-month executive search that presumably yielded little in the way of better options.
This is probably a good move in the short term as it reduces the amount of upheaval that a new CEO would inevitably cause. Longer term, this is bad for GM.
Whitacre may be a smart executive with plenty of business experience, but he knows very little about the car industry and probably even less about actual cars. He's not even planning to move to Detroit full time, that's how committed he is to the cause.
The only other news to come out of this morning press conference is Whitacre's promise that GM will pay back its government loans by June. This sounds like a big step on the surface, but it doesn't mean much. GM is simply giving back the money the government gave it in the first place, and it's only a small piece of the total government investment.
throwback says:
10:20 AM, 01/25/10
As for EW, did anyone ask him if he has learned anything about the car business yet? Nice of him to pay back the "loan", what about the billions we paid for the lousy stock?
alman08 says:
11:15 AM, 01/25/10
I'm asking just mainly because I don't know, but what has he done differently to improve GM?
inlinesix says:
01:08 PM, 01/25/10
Ed:
Just because he doesn't move to Detroit he's not committed to making the business profitable?
That really worked for the others that ran the company before him...maybe an outside perception is a good thing?
Throwback:
Business gets profitable--people want to invest again (maybe)--company/government sells shares (IPO)--government/population get money back. Long-term profitability and perceptions in investing make or break the deal.
1487 says:
01:20 PM, 01/25/10
isnt Mulllaly and outsider who is being praised for turning Ford around? Who says you have to know cars to lead a car company. Whats important is that the people under him DO know cars and are allowed to create and sell compelling product.
WasAPasserBy says:
02:32 PM, 01/25/10
Non car guys can't run car companies because....mullally has driven ford into the ground?
throwback says:
04:30 PM, 01/25/10
Comparing this guy to Mullaly is laughable. Mullaly had experience running a large industrial company that actually made things. He also had experience turning around a large industrial company. Ed ran At&t and some folks think not very well.
inlinesix says:
12:02 AM, 01/26/10
Whether we're comparing him to someone else or not, the goal is to make GM a company with cars people want to buy for a long time. If he is a good leader and gets a good product to buyers, he has completed the job better than people who "knew" cars. GM went through an upheaval, if they can make good cars now, let them do it. I dont care if the CEO is a ballerina.
kgrgunman says:
12:54 AM, 01/26/10
how nice of GM to give us back $6.7b of the $52b we gave them. now we just have to sell the GM stock we own for $45.3b and we'll have broke even.
whats that you say? all of GM combined is not worth $45.3b? doh.
zjev says:
05:15 AM, 01/26/10
A non car guy CEO may be a good thing as long as he listens to his staff that hopefully know the car business (other than Bob Lutz) Please don't listen to him! As far as repaying the government loan: Your company is in the crapper, you are continuing to lose money every quarter, what money are you paying your loan back with?
1487 says:
05:42 AM, 01/26/10
"whats that you say? all of GM combined is not worth $45.3b? doh."
No one knows what GM is worth right now. How much the stock is worth is going to depend on the financial results they deliver and the overall size of the US market going forward. If sales recover and they maintain share the company will be worth a lot of money. I'm pretty sure the government would be happy to get 50% of the money back in the short term.
throwback says:
05:58 AM, 01/26/10
The government maybe happy to get back 50 cents on the dollar, but this tax payer wil not be happy with 50%.
bodyblue says:
07:24 AM, 01/26/10
What about the bondholders who lost their ass in the BK? Oh sorry they dont matter....This "payback" of the loans will get a lot of press but in reality it means crap. GM is still getting clobbered and losing money. Ford will pass it up in sales within 3 years. The biggest problem for GM is that the Chevy brand is being outsold by the Ford brand.......dont kid yourselves that is a really big deal.
1487 says:
07:46 AM, 01/26/10
throwback:
Considering when all of this started critics (who happened to be champions of GM's Asian based competitors) said Gm woudl fold within a year or two and there was no hope of salvaging the company and taxpayers wouldnt get a dime back I would say that 50% would be a success for the government. Not that they can't get more but if they ended up getting $25B back within 2 years with the possibility of more down the road they would be happy. GM paying back that money has nothing to do with you or any other tax payer. I like how people talk as if a bailout raised their taxes. All of this is borrowed money, if wasn't for GM it was for a bank. Won't change your taxes or lifestyle one way or another. In case you forgot, the money they got was already set aside for financial institutions.
"GM is still getting clobbered and losing money. Ford will pass it up in sales within 3 years."
You just told two lies. How do you know they are losing money? Whitacre just said he sees good things happening on the profitability front in 2010. Stop making inaccurate statements just because you lost money as a bondholder. If GM folded you weren't going to get squat anyway so I don't understand your point. Ford outsells Chevy for two reasons- the F150 competes against a Chevy and GMC and the Cobalt does not sell well at all. Chevy has a shot at passing Ford again once the Cruze is on sale and once Equinox production levels are ideal.
throwback says:
08:03 AM, 01/26/10
"All of this is borrowed money, if wasn't for GM it was for a bank. Won't change your taxes or lifestyle one way or another."
Really? How do you think we (tax payers) will pay back the borrowed money? The government borrowed this money by issuing debt, not GM, and not from a "bank". Who do you think is on the hook to pay this back? You really think we can pay back all the debt we have rung up in the last 2 years without raising taxes? When was the last time the government actually cut spending, not cut spending increases, but actually spent less year over year on any program? It does not happen, the only way we are going to pay down this debt is by raising taxes.
1487 says:
09:05 AM, 01/26/10
throwback:
Try and follow me here: the borrowed money was borrowed and would've been spent ANYWAY. It was a matter of allocation. You nor I were getting any money back nor would GM's failure have resulted in lower long term debt payments for the government. One reason they did all this was because the loss of jobs would have ended up costing states and the US government billions anyway. Spending billions to sustain unemployed workers seemed less attractive that spending billions to keep GM alive so it could make it through the recession.
Due to inflation and increased population you never spent LESS to provide services year over year. That's common sense. Government doesnt cut spending because whenever you cut a program back you anger a constituency that is liable to vote someone out of office. It's pretty simple. Every is for cuts- until you try and cut something they care about. Politiicans generally know its suicide to vote to eliminate or reduce something that is important to their constituents which is why they rarely vote to cut anything.
You are right that raising taxes is probably necessary- wont happen though.