Is General Motors Truly Back on Top of Auto World?
General Motors Corporation recently laid claim to being the world’s largest automaker, as headlined in The Detroit News last month. “General Motors Co. says it sold more than 9 million cars and trucks worldwide last year — a 7.6 percent increase that allowed the company to reclaim the title of world’s largest automaker.” After GM posted it’s profits and sales figures boasting of reclaiming to be the world’s largest automaker, German manufacturer Volkswagon released a statement saying that when trucks are added into the equation, that Volkswagon, not GM took over the title as largest automaker in the world. Also of note is the fact that the massive earthquake and subsequent tsunami that struck Japan last march disrupted Toyota’s manufacturing and distribution systems, and after Toyota was back up to speed, flooding in Thailand forced key parts suppliers to suspend shipments, opening the door for other manufacturers to overtake Toyota’s title of world’s top automaker that it had held since overtaking GM in 2008.
Motor Trend published Volkswagon’s claims as follows: (emphasis added)
Now Volkswagen is disputing the claims and suggesting that it bested GM last year. According to Automotive News, Volkswagen’s 8.16-million figure doesn’t include sales from commercial truck divisions MAN and Scania. Once those figures are added, it will significantly bolster VW’s annual sales tally.
On top of that, GM’s sales figure was padded with about one million sales by Chinese automakers SAIC Motor Corp. and Wuling Motors Co. — companies with which GM has joint ventures, but in which the American company does not have a controlling stake. If those sales were excluded and VW’s truck figures added, Volkswagen would probably steal the global sales crown from GM.
2011 Automotive Company U.S. sales fast facts:
GM- U.S. sales rose by 13% over 2010 numbers, while Volkswagon’s U.S. sales rose by 23.3%. Chrysler sales rose by 26%, and Ford’s sales rose by 11% over 2010. Imports BMW and Merceces Benz were also up 13%, according to KHSLTV.
GM’s Chevy volt sales took a nosedive from previously reported anemic sales due to the reports of the car exploding in a fireball during testing. GM sold 7700 Volts in 2011 and only 603 volts were sold in Jan. 2012. This was well short of stated goals of 10,000 in 2011 and has forced GM to walk back there stated goal of selling 45,000 Volts in 2012.
Due to under-performing GM stock prices, the U.S. taxpayer is currently estimated to be on the hook for almost $24 billion dollars in losses.
GM Avoids Paying Taxes on Profits thanks to Obama and Geitner adding illegal exemptions into TARP deal. Pay-to-Play 101.
GM to date has not mentioned the total of $45 billion dollars in tax write-offs given to them in the Obama/Geitner TARP deal. The Harvard Law School Forum published the following little-know facts about GM’s deal:
New GM has the factories, offices, designs and some of the workers that Old GM had. It also acquired some $18 billion worth of its NOLs (the losses themselves were $45 billion). It could not use them to reduce its corporate income tax liability immediately – it earned no income against which to apply them. But in 2010 New GM did finally turn a profit. Presumably, it will now start using its NOL’s (net operating losses) to avoid its corporate tax. (emphasis added)
The problem lies within certain “notices” written by the Treasury where GM/U.S. Treasury will not have to abide by tax laws that other companies who sell stock do.
To solve this problem, the Treasury issued a series of “Notices.” The Sec. 382 rules, it declared, simply did not apply to itself. When it sold its shares in New GM, its buyers might increase their ownership stake by 50 percentage points, but they would not trigger the Sec. 382 limits. The tax code offered no exception for government-owned shares, and the Treasury did not purport to find one. Instead, it just declared that the law did not apply. Treasury issued several similar “Notices” for AIG and Citigroup. Through the TARP transactions, both of these firms experienced ownership changes over 50%. By law, they lost their NOLs. By “Notice,” the Treasury announced that it would let them keep the losses. (that allows GM and the Obama-supporting UAW, to avoid paying approx. $45 billion dollars in taxes.)
In an article titled Can the Treasury Exempt its Own Companies from Tax? The $45 Billion GM NOL Carryforward, the author of the above-linked report worked with Eric B.Rasmussan to expose just how the U.S. Treasury and the Obama administration illegally gave the GM Unions tax exempt status as the GM bailout moved forward: (emphasis added for clarity)
We do not address the wisdom of the bailouts. Neither do we ask whether giving a multi-billion-dollar tax break to an automobile or financial company makes sense. Instead, we focus on the propriety of the Treasury’s manufacturing a tax break. We find two aspects of the transaction especially troubling:
- a. The GM Notice transfers a large amount of money to one of the largest contributors to the administration’s party, the UAW. The UAW was merely an unsecured creditor to GM – yet through the reorganization it emerged with a much larger equity stake than its interest warranted. Through this Notice, the government now transferred vast sums of money to it.
- b. The GM Notice hides the real cost of the TARP bailout. Involving as it does very complex provisions of the corporate tax code, the Notice escapes virtually all public scrutiny. Yet at root it cuts the firm’s future taxable income by $45 billion. The true total cost of the TARP transactions does not involve only the direct outlay; it also includes the $45 billion in future income that the Treasury freed from tax.
Finally the report further states that in order to avoid public outcry about the huge transfer of cash to the Obama-supporting UAW, they did it through a legally unauthorized exemption.
Had the administration given such a large amount of cash to the UAW, the public would have complained massively. The administration gave it through a legally unauthorized Sec. 382 exemption, and no one noticed.
We conclude the article by exploring procedural reforms Congress might adopt to prevent a recurrence of what happened with GM. We urge it to give legislators standing to contest in court any tax benefits that the Treasury provides.
Understanding these truths about how the Obama administration and the Treasury have transferred billions of taxpayer dollars to the crony-capitalists at GM and the UAW also debunks the rosy picture the media is painting about GM’s current boasting of a planned $10 billion dollars in profits in 2012. The stock held by the U.S. Treasury, bought and paid for with tax dollars is currently worth about half of what it needs to be to break even and recuperate the bailout cash. When Obama and the Liberal Democrats preach about evil corporations and successful business owners not paying their fair share of taxes today, they somehow refuse to mention GM and their $45 billion-dollar tax exemption gift that was given to them as a down-payment for the United Auto Workers reelect Obama 2012 campaign.
Footnotes: Do Americans want four more years of these types of taxpayer abuse and Liberal crony-capitalism? Barack Obama claims to have saved a million autoworker jobs while refusing to discuss how much it cost the taxpayer in real-time total dollars. While Obama-supporting Union workers at GM rake in record salaries and benefits, along with huge bonuses, the rest of America is stuck dealing with skyrocketing energy prices and an overall massive increase in the cost of everyday necessities, while the average wage increase for 2011 was a measly 1.9%, according to this BLS report. Unemployment is still stubbornly high , and now the Obama-led Democrats want to hand out another extension of an already record high time limit of federal U/E benefits at taxpayer expense. America is being systemically collapsed under the weight of trillions of dollars in debt, and now we will soon see Obama and company raise the debt limit another trillion-plus dollars. The big news last week was that GM is the “largest” automaker in the world, (which is debunked here) and the “new GM success” is being used to promote Obama’s reelection. Had Ford Motor Company got a $45 billion-dollar tax exemption, ( like GM) their profits would in fact, surpass GM’s 2011 earnings by tens of billions od dollars. It is about time the American people demand an end to big corporations such as GM being allowed to steal billions of taxpayer dollars in order to give them to reelect Obama cronies and assorted union bed-pals. That starts with defeating Barack Obama in 2012.