One bright spot in the economic landscape has been the improvement in car sales. So far this year—the best year for auto sales since 2007—they’ve seemed to be on their way back to normal, pre-2008 crisis levels.
But GM’s backlog of vehicles is dimming this economic indicator’s glow. In fact, on July 3, 2012, GM stock hovered around its record low, cutting the value of US taxpayers’ $26.5 billion stake in the company to $9.8 billion.
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A share price of $53 would put US citizens’ stake in the company at breakeven. Here’s the catcher. Some GM dealerships have been selling cars at a loss just to keep up with the competition. The strategy has been to keep enough inventory on hand to carry the company through a design change for next year.
But the strategy may be backfiring. Dealerships may not even be keeping up with just how much supply they have from day to day. This is hardly a recipe for increased shareholder value—in this case, US citizens, a.k.a. the federal government.
On the other hand, watchers of economic indicators
are being told by analysts that the seasonally adjusted annual sales rate (SAAR) was skewed this month because it was reported without an update from the US Bureau of Economic Analysis.
Without that information, different calculations are used to report the SAAR. Market share for GM is suffering globally. This could translate into a disappointing third quarter report, especially in light of the sudden resignation of GM’s global marketing head, Joel Ewanick.
Ewanick is the guy who closed the door on GM’s Facebook page as well as advertising at next year’s Super Bowl. Regardless of Facebook’s share price, there’s little doubt that its power in the marketplace
is showing up in GM’s results. And the old saying what’s good for GM is what’s good for the country seems to have lost its luster long ago.