Thursday, November 18, 2010

The GM IPO Travesty

General Motors Co. "wildy successful" IPO is today. GM has annoucned that with the proceeds it plans to reduce its debt and other obligations by $11B, cutting interest costs and preferred dividends by $500 million a year. It has paid $2.8B to the United Auto Workers retiree health-care trust, and will contribute at least $6B to the unfundned liabilities of $29B in its pension funds.

The biggest travesty is the Volt, a form of hybrid car with two engines, and thus a lot more things that can break. IEEE Spectrum declared it a loser. I want  a car with fewer sensrso, no multiple oxygen sensors, EGR valves, ignition coils, MAF sensors, etc. I have replaced them all, and some. I supposed paying to fix all these things keeps the economy going, and perhaps that is their plan.

”The first year’s volume, by GM’s own calculations, is 10 000 units, and you can’t save a company with that. That’s chicken feed. You’d need a vehicle that sells 400 000 units,” says John Wolkonowicz, an auto industry analyst at IHS Global Insight, in Lexington, Mass.

”There are not enough idiots who will buy it,” Johan de Nysschen, the president of Audi of America, told auto blogger Lawrence Ulrich.

Anyone who wishes to understand who this IPO is "successful" should read this post by Steve Miller.

A travesty indeed.

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