Thus, what was an almost 28,000-vehicle lead for GM in August shrank by more than half to less than 13,000 in September. No one has a crystal ball, of course, but if GM falls and Ford surges by similar amounts in October, Ford will become the top-selling brand in the USA.

Associated Press reporters Tom Krisher and Dee-Ann Durbin apparently believe that Ford’s move to within clear striking distance of taking over GM is not news that anyone can use. They had their opportunities to mention the situation in their coverage today, and blew right by them.

Oh, and wait until you see what GM is doing to try to keep from losing its Number 1 status.

Here is some of what Krisher and Durbin disseminated (bolds and number tags are mine):

US auto sales remain sluggish despite new models

New models and Labor Day promotions didn’t do much to fire Americans’ appetites for new cars in September.

Sales at Chrysler and Ford rose slightly from August. They fell at General Motors and Honda and were flat at Toyota. Car companies say a recovery is still happening, but it’s not as strong as they had hoped following a terrible 2009.

Expressed as an annual rate, September sales came in at a 11.76 million pace. That’s up from a 11.47 million rate in August, but far below 2007’s pre-recession total of 16 million. "We’re not going to bust loose as you sometimes see after a downturn, but we’ll see steady growth," said Don Johnson, GM’s vice president of U.S. sales. [1]

… Sales dropped 4 percent from August to 958,966 cars and light trucks, according to AutoData Corp. While it’s typical for sales to decline after Labor Day, this August was one of the weakest on record.

… So far, automakers have refused to pump up sales by offering big incentives, which was the usual tactic earlier this decade. Because car makers are now leaner and producing fewer vehicles, they aren’t forced to use big discounts to move cars off lots. Incentive spending fell 3 percent from August to September to $2,683 per vehicle, according to auto pricing site TrueCar.com. [2]

But they’ll try winning customers in other ways. GM has a new in-house car financing company and plans to offer new lease programs and target buyers with poor credit, a big part of the car buying market. [3]

Auto loans are still restricted for people with poor or mediocre credit scores, Ford’s chief economist Ellen Hughes-Cromwick said. It will probably take a few years – and more job creation – for buyers with medium and poor credit to return to the new car market.

But loans are available to people with high credit scores because banks and finance companies are extending credit more easily after last year’s all-out freeze, she said. [4]

Notes:

[1] – Of all the people to quote about "busting loose" and "steady growth," Krisher and Durbin picked the spokesman for GM, whose sales from August to September declined by 6.5%.

[2] – According to TrueCar.com’s blog, GM vehicles occupied the top four spots in percentage vehicle discounts offered during September. The vehicles involved also appear to have MSRP’s that are significantly lower then their direct competition. Additionally, TrueCar’s month-earlier comprehensive report (go to Page 3 at this PDF link) indicates that Chevrolet, at 16%, had the highest overall discount level in the industry — and they’re still having a hard time keeping up their sales volume.

[3] – This bad-credit outreach is coming from a company owned by the same government which gave us the Card Act earlier this year.

For those who aren’t familiar with it, that law, which is taking effect in gradual, ever more restrictive stages, has placed major restrictions on the amounts and types of credit that can be extended by certain categories of lenders, including the consumer finance arms of department stores and oil companies. It has imposed strict government-mandated credit-granting formulas on those lenders, who in turn have had to severely cut the credit lines of many customers — not only of those who are clearly overextended, but even of those whose records have never been problematic.

Now GM, in an attempt to preserve what’s left of its overall sales lead, has completed its purchase of "non-prime" lender AmeriCredit, is rebranding it as General Motors Financial, and will aggressively pursue granting credit to many of the same consumers/borrowers the government was allegedly trying to "protect" with the Card Act. You can’t make this up.

[4] – Krisher, Durbin, and a large swath of the rest of the business press insist on perpetuating the myth of the "all-out freeze" on credit which has supposedly occurred at various times in the past two years (it seems to go all over the place depending on the whims of the reporters involved).

Let’s be clear: With the possible (emphasis: possible) exception of a brief period during the fall of 2008, people with high credit scores have had no problem finding lenders willing to consider their applications, and have encountered few if any problems getting their credit applications approved. To prove otherwise, Krisher, Durbin et al owe us a procession — not a few sob stories, guys, a really procession in the thousands at least — of people with great credit who will attest to having been turned down, refused or couldn’t find lenders who would even take credit apps. I’m still waiting for the proof. I don’t believe it will ever arrive, because it’s not there.

I haven’t been able to determine when October’s auto sales announcements are coming out, and of course GM could have a good October and continue to keep Ford at bay. But wouldn’t it be something if news that Ford has overtaken GM arrives on November 1, the day before Election Day?

Cross-posted at BizzyBlog.com.

First, August sales results were disappointing. Second, it become known today that GM will attempt to go public on November 18, a later than originally hoped post-election date chosen to hopefully allow for another reported quarterly profit to boost investors’ appetite for its shares.

As so often has been the case during Democratic administrations when unfavorable developments arise, the UK press has seen potential problems with the IPO, while the Associated Press has been acting as if all is well.

In two separate items, AP reporters couldn’t even bring themselves to tell readers what the company’s real August sales decline was.

In a report yesterday on the industry’s awful August, reporters Dee-Ann Durbin and Tom Krisher were appropriately gloomy overall, but they massaged GM’s reported result (bolds are mine throughout this post):

Americans nervous about the drumbeat of bad economic news stayed away from auto showrooms. Automakers nervous about their bottom lines didn’t offer deals to lure them in.

As a result, it was the worst August for U.S. auto sales since 1983, when the country was at the end of a double-dip recession. General Motors, Toyota, Honda and Ford all reported declines from the month before and from a year earlier.

The bleak results were a reminder that, for all the good news about the turnaround of the Detroit automakers, the market for cars and trucks in the United States remains frail. Initial data showed sales came in at about 997,000, down 5 percent from July, according to AutoData Corp.

"Coming in below a million units is eye-opening for August," said Paul Ballew, a former chief economist for GM. "I never thought I’d see that. That’s a tepid month for August, which is supposed to be one of the top months of the year."

… "We know it’s going to be a modest recovery. It’s going to be bumpy," said Don Johnson, GM’s vice president of U.S. sales. "What we don’t want to do is get back to putting incentives in the marketplace to keep the plants running."

… Overall, sales at Ford were down 5 percent from July and 11 percent from last August. At GM, sales of its four remaining brands were down 7 percent from a month ago and 11 percent from a year ago.

For the year so far, sales are up 5 percent at GM, which is preparing for an initial public offering of its stock that could come as early as next month.

We learned today that the "next month" part concerning the IPO isn’t going to happen. In her report today, Durbin’s massage was more thorough:

Analyst: GM plans to sell shares on Nov. 18

General Motors plans to start trading shares again on Nov. 18, timing that allows the company one more quarter of earnings to build its case to investors, a firm that researches initial public offerings said Thursday.

Scott Sweet, the managing partner of IPO Boutique, said GM plans to price the shares on Nov. 17 and begin selling them the next day. He said the automaker wants to start a two-week a road show to drum up investor interest on Nov. 3, the day after the midterm congressional elections.

It’s unclear if the IPO dates have been finalized. Two people with knowledge of the process say the automaker’s board hasn’t approved a date for the IPO but is expected to meet next week to discuss the issue. GM is in a "quiet period" before an IPO, so no one is authorized to discuss the process publicly.

… Sweet said his information comes from multiple people on Wall Street but declined to name them. He says the company hasn’t yet established a price for the shares, but hopes to raise $15 to $20 billion with the initial public offering.

The timing could disappoint some Democrats who supported the government’s $50 billion bailout of GM last year and wanted to point to a successful IPO before the elections.

… But one more quarter of earnings could help the automaker establish that it is healthy and capable of making sustained profits. GM earned $2.2 billion in the first half of 2010 despite depressed U.S. auto sales, but it lost $3.4 billion in the fourth quarter of last year.

GM also hopes the U.S. auto market sees some modest improvement this fall. On Wednesday it said its U.S. sales fell 5 percent from July and 11 percent from last August, when they were boosted by the Cash for Clunkers program.

The fact is, as seen in this Wall Street Journal compilation, that GM’s August 2010 sales were 24.5% lower than August 2009. For Dee-Ann Durbin’s and Tom Krisher’s benefit, that’s the result you get when you go to the WSJ link and compare the 185,105 vehicles sold in August 2010 to the 245,066 sold in 2009, and divide the difference (59,961) by 245,066. Yes, according to the company, sales of the company’s four remaining brands were down "only" 11% from a year ago. But it’s your job to report the full story, not merely to parrot the company’s press release.

The folks at the Financial Times understand that, and also see how a company reporting declining sales in its largest market might encounter a bit of difficulty foisting its shares on the investing public. Reporter Bernard Simon also managed to find space for the actual year-over-year sales decline in yesterday’s coverage (link requires free registration):

GM Sales Dip Casts Shadow Over IPO

General Motors’ sales in its core US market sagged in August, potentially complicating its bid to drum up investor support for its forthcoming public share issue.

Sales were a quarter lower than in August 2009, when demand was bolstered by the Obama administration’s cash-for-clunkers scrappage incentives. GM has also eliminated four brands since then.

More worrying, however, was a 7.2 per cent decline from July. Low-margin sales to car rental operators and other fleet owners climbed to 28 per cent of the total, from 25 per cent in July. “August was definitely what we call ‘one of those months’,” said Don Johnson, GM’s head of US sales operations.

Mr Johnson said that consumers remained cautious amid an unexpectedly slow revival in employment. In the longer term, however, he forecast that there was “pent-up demand building” that would “eventually be released when the economy gets a firmer footing”.

… GM filed a bulky draft prospectus for an initial public offering with US and Canadian regulators last month. The US and Canadian governments hold 72 per cent of GM’s equity.

The document warns that in spite of a pick-up in demand since late last year, “many of the economic and market conditions that drove the [earlier] drop in vehicle sales, including declines in real estate and equity values, increases in unemployment, tightened credit markets, depressed consumer confidence and weak housing markets, continue to impact sales”.

If the recent revival falters, the prospectus warns, “our results of operations and financial condition will be materially adversely affected”.

It’s hard to fault Mr. Johnson for his optimism, but if he thinks the revival in employment has been "unexpectedly slow," he’s been reading too many happy-talk missives from Team Obama.

Durbin at the AP and an unbylined Reuters article both report that GM will conduct its IPO "road show" during the two weeks after the November elections. Reuters says that "The final value of the IPO has not been set but one source said early plans for the IPO envisioned selling $12 billion to $16 billion in common stock and $3 billion to $4 billion in preferred stock that would convert to common stock under a mandatory provision." That’s $15-$20 billion of the $50 billion (really more) the government "invested" in return for a 61% stake during the company’s emergence from bankruptcy. Even if the IPO flies, it will still be Government Motors.

Both Reuters and the New York Times correctly noted GMs 25% year-over-year August sale decline. Since AP couldn’t bring itself to do so, the graphic at the top right of this post, which may have seemed a bit over-the-top when it appeared a few weeks ago, is more appropriate than ever.

Cross-posted at BizzyBlog.com.

My early afternoon post at my home blog dealt with Government/General Motors’ profitability and CEO Ed Whitacre’s "coincidental" step-down from his CEO position. That post originally noted two things that seemed problematic in the Associated Press’s reporting about the company’s plans for an initial public offering this year (the IPO is problematic thanks to Obamanomics, but that’s not the topic here).

In the  AP’s original report (since revised, which is why it’s saved here at my web host for future reference, fair use and discussion purposes), reporters Tom Krisher and Dee-Ann Durbin, with assistance from Dan Strumpf, reported the following two items in supposedly relaying the results of a discussions with "Scott Sweet, senior managing partner of IPO Boutique in Tampa, Florida, which advises investors on IPOs," Whitacre, and unnamed government officials (bold is mine):

Several recent IPOs have been postponed because of concerns that they won’t get a high enough share price, he said. He also said the Obama administration is pressuring GM to sell prematurely to influence the November congressional elections. Last week, Whitacre said the elections are not being considered, and the government has repeatedly said GM is in charge of the sale timing.

My original reactions to the two items in my original post were as follows:

• (to the assertion about government pressure to sell prematurely) "The AP’s quoted expert also dropped a bombshell — apparently without qualification — that may not survive future AP revisions."
• (to the possibly contradictory assertions about who’s controlling the IPO’s timing) "(Whitacre) saying that GM ‘is in charge of the sale timing’ is NOT the same as saying ‘we’re not trying to influence the timing.’”

Amazingly, the 4:51 p.m report by the same three reporters, with additional help from Ken Thomas (also saved at my web host, for the same reasons as above), revised — perhaps more accurate terms might be "cleaned up" or "covered the tracks of" — the wire service’s earlier report thusly (bolds are mine):

Sweet said the Obama administration may be pressuring GM to sell prematurely to influence the November congressional elections and make the government’s controversial investment look smart. Whitacre and the government have both said GM is in charge of the timing of the IPO.

So Sweet went from an unqualified affirmative assertion concerning government interference to a "maybe." Oh, and now GM and the government are magically saying the same thing about who’s in charge of the IPO’s timing, even though it seems that they weren’t before. As legendary Yankee broadcaster Mel Allen might have said, "How ’bout that!" Or, given the last name of the statement-changing subject matter expert involved, it might be the late Jackie Gleason’s "How Sweet it is!"

I’ll leave it to readers to decide whether AP’s version 1 or version 2 is more accurate, and whether version 2 might have been influenced by yours truly’s critique of version 1.

If it’s the latter, I would like to formally welcome the AP reporters involved to the self-correcting (or is it track-covering?) mechanism known as the blogosphere. Say hi to Tom Curley & Co. for me, will ya? And while you’re at it, ask him how his war against bloggers, search engines, and the online world in general is going.

If it’s the former, readers and commenters are free to speculate on what instigated the changes.

Geez, I didn’t even cross-post my initial effort at NewsBusters. But this one has been.

Cross-posted at BizzyBlog.com.

Mentioned by writers Dee-Ann Durbin and Tom Krisher, but not until their eleventh paragraph, is the fact that new workers, whose starting wage (mentioned in Paragraph 2) is "about half what veterans make under their current contract," have to "pay the same union dues as those who have been at the plant for years." But the AP pair didn’t tell readers how much those dues payments are, and how harshly they affect entry-level workers. The web site ProCon.org estimates that it’s in the neighborhood of $700 at Ford and Chrysler, and as much as $950 at Government/General Motors. When you’re making $14 an hour, that’s not chump change; it’s about 34-46 cents per hour, or about 2.5% – 3.3% of base pay. A union official (not directly quoted) deadpans that "he understands their resentment." Sure.

As bad as that easily rectifiable AP oversight is, it’s not the worst reporting error Durbin and Krisher committed. The following excerpted sentence is, in several ways:

Last year, as GM and Chrysler tumbled into bankruptcy, workers agreed to concessions, including the lower starting wage and suspension of cost-of-living raises that could amount to thousands of dollars over the life of a contract.

The AP pair gives readers the impression that the "concessions" were some kind of major giveback by UAW President Ron Gettelfinger and his merry band of negotiators. The truth is that the "concessions" really amounted to next to nothing for current workers. The UAW itself even said so in communications with its members.

The most obvious point to make about the "concessions" is that there has been virtually zero official inflation since they took effect. But it goes beyond that, as I noted in a related post (at NewsBusters; at BizzyBlog) in October of last year.

In that post, I included a graphic of the first page of a “contract outline” presented by the union to its members shortly before the changes therein were ratified in May 2009, which is reproduced here (red box added by me):

The key sentences inside the red box are the following (bolds are mine):

For our active members, these tentative changes mean no loss in your base hourly pay, no reduction in your health care, and no reduction in pensions.

…. Unfortunately, in this process our retirees are required to make difficult sacrifices as is explained later in the summary.

As I noted last year: "In other words, the UAW protected its currently working members, the ones who get to vote on contracts, from any meaningful sacrifice, while hosing its retirees, who don’t get to vote."

These virtual non-concessions for current workers were only possible because the Obama administration and its car-czar managers hijacked the bankruptcy processes at GM and Chrysler, shafted creditors’ contractual and common-law rights (certain secured creditors at Chrysler; unsecured bondholders at GM), poured tens of billions of dollars of taxpayer money into the emerging entities, and kept the existing union contracts essentially intact. In a normal bankruptcy, the union contracts at a minimum would have become fair game for meaningful negotiation, and at worst could have declared null and void.

Durbin’s and Krisher’s description of "lower starting wage" for new employees as a "concession" is also seriously inaccurate in two ways.

First, those at the negotiating table and the UAW members they represented at the time conceded nothing. They pushed the lower wage onto future union members (with, as noted earlier, no reduction in their fixed cost of union membership).

Beyond that, the $14 an hour is not something new employees will endure for a few years while their pay is gradually stepped up to full scale over a 3- to 5-year period, as has been the case in several previous "two-tiered" contracts. The "lower starting wage" is for all practical purposes a "permanently lower wage." This section of the AP pair’s report proves that point:

Bobbi Marsh, 32, was hired at a GM plant in Lordstown, Ohio, two years ago, making $14 per hour. With raises she now makes $16, but that’s still less than half the wage of her father, a machinist at the Lordstown plant.

Her father’s job helped pay for her college and family vacations. She is afraid she will not be able to provide the same for her 10-year-old son.

"I feel bad for my child because I want him to have the same opportunities I had when he was my age," she said.

In other words, Ms. Marsh is acknowledging what Durbin and Krisher won’t directly admit — that her wage is not wired into the contract to catch up to a level anywhere near that of her father’s.

Thus, new UAW hires are shouldering the burden of the union’s decades-old unstated rules:

1. Concede nothing for workers who get into the club early enough.
2. To adhere to Rule Number 1, first shortchange new members with two-tiered wages, whereby they can still get into the club in 3-5 years.
3. To adhere to Rule Number 1, next shortchange retirees (who can’t vote on contract changes).
4. To adhere to Rule Number 1, after Rules 2 and 3 have been exploited as much as possible, give new members the permanent shaft.

These rules, which in essence amount to a current member protection racket, explain the wholly justified resentment cited earlier. According to this link, starting wages at Toyota in Georgetown, Kentucky are $18-$25 an hour. The UAW rules just outlined are why GM, Ford, and Chrysler newbies start making less, and will continue making less.

The current administration in Washington is ultimately responsible for making the political decision to preserve the UAW’s current member protection racket. Hades will probably freeze over before we’ll see the Associated Press or any other establishment media outlet acknowledge that harsh truth.

Cross-posted at BizzyBlog.com.

In their report on Ford’s November sales results, the Associated Press’s Tom Krisher and Dee-Ann Durbin seemed to downplay the company’s pretty decent month, and definitely downplayed the company’s better near-term prospects compared to its principal rivals. Additionally, despite the report’s Wednesday time stamp, the pair didn’t update the item’s content to compare Ford’s performance to its competitors.

Via the Wall Street Journal, here are the details for Ford and the others:

• General Motors — 150,305 units sold, down 1.5% from November 2008.
• Toyota — 133,700 units, up 2.6%.
• Ford — 118,215 units, down 0.1%.
• Honda — 74,003 units, down 2.9%.
• Chrysler — 63,560 units, down 25.5%.
• Nissan — 56,288 units, up 20.8%.

Here are excerpts from Krisher/Durbin’s work; wait until you see what the Krisher and Durbin saved for their last paragraph (bolds are mine):

Ford’s November sales steady
1 day ago

Ford Motor Co. said Tuesday U.S. sales held steady in November as buyers snapped up fuel-efficient cars and crossovers, a sign that the market for new vehicles remains on a path to recovery.

Ford’s sales were essentially flat compared to last November, at 122,846. But sales of crossovers rose 26 percent and sales of cars rose 14 percent. Trucks and SUVs saw double-digit declines. Other automakers are reporting sales on Tuesday.

…. But carmakers continued to rely on discounts and other incentive spending to move inventory. Sales incentives rose 2 percent in November to $2,713 per vehicle, according to the auto Web site Edmunds.com.

Small monthly auto sales increases are likely as the economy continues its slow improvement, but larger auto sales gains will not happen until the unemployment rate drops substantially, and people feel confident spending money on big-ticket items, said Martin Zimmerman, a former Ford Motor Co. chief economist who now teaches at the University of Michigan.

…. Ford said its hybrid sales increased 73 percent, to 2,361, as buyers gravitated toward gas sippers. At about $2.65 per gallon, regular gasoline is up around 50 cents over November of last year.

The Ford Fusion sedan, which leads the mid-size category in fuel-efficiency at 34 miles per gallon, posted a 54-percent increase from last November, shattering its previous record for full-year sales.

…. Ford showed some optimism for the coming year, increasing first-quarter production plans by 58 percent to 550,000 vehicles. Its fourth-quarter production plan is unchanged.

Points:

• The fact that about 900 buyers "gravitated" towards hybrids at a company that sells over 100,000 vehicles a month is hardly worth reporting.
• The incentives figure cited is for all companies. The incentives at Ford were actually about 15% higher, which despite the generally good news out of Dearborn is probably not a good thing.
• Here’s a question no one seems to be asking — Are buyers going to fuel-efficient cars and crossovers because of gas prices, or are they hurting so badly financially that they can’t afford anything better?

Finally, when’s the last time you saw a planned 58% increase in production described as an expression of "some optimism"? If Ford keeps that up during all of 2010, it will produce about 1.9 million units after taking shutdowns and holidays into account. That would lead one to believe that Ford is anticipating double-digit increases in unit sales next year, which starkly contrasts with the overall "on the path to recovery" picture painted by Krisher and Durbin.

Does anyone think that government/union-controlled GM or Chrysler are planning big production increases next year?

Cross-posted at BizzyBlog.com.

In the eighth paragraph of their article covering October’s auto sales, AP reporters Tom Krisher and Dee-Ann Durbin recognized part of the reason — and perhaps the most important reason — why Ford has been cleaning the clocks of General Motors and Chrysler all year long:

Ford has benefited from consumer goodwill because it didn’t take government bailout money or go into bankruptcy protection, as General Motors and Chrysler did.

Though October seems at first glance to have turned out somewhat differently than the first nine months of the year for Detroit’s sort-of Big 3, that really isn’t the case:

• Yes, GM scored its first year-over-year improvement in 21 months (+5.6%), but that was after a 45% year-over-year decline in October 2008.
• GM’s unit sales increase in October over September, which was marred by a post-Cash for Clunkers hangover, was only 13.5%. The analogous gains at both Ford and Toyota were over 20%.
• Chrysler only eked out a 5.8% improvement from September to October, and has been consistently selling fewer than 70,000 vehicles per month.
• GM is overdosing on buyer incentives, which the AP pair said averaged $4,100 per vehicle. Though I don’t have specific comparables for the competition, Edmunds reports that industrywide incentives were on average far lower. GM’s profitablity has to be suffering (more likely it is hemorrhaging cash), unless its Chinese operations are somehow propping up North America.

Ford reported a profit of almost $1 billion in its most recent quarter. GM and Chrysler should be reporting results soon — I think. GM passed on telling us what happened in the quarter that ended in June, but promised that it would issue full-blown financials covering its emergence from bankruptcy through September 30, even though (brace yourself) it said that as "a private company," it doesn’t really have to. Chrysler’s results will my be incorporated into the financial statements of minority owner Fiat, and depending on how presented may or not be readily separable from Fiat’s other worldwide operations.

Regardless of which financial numbers if any get released, the unit sales numbers tell us all we need to know. Ford is heading up, while GM and Chrysler are tumbling down. Either the Obama administration and its car czars failed to consider the possibility of public rejection of the companies once they received federal money and went through bankruptcies, or they didn’t care and went ahead anyway. At least $81 billion later (much more if the bailout at GMAC is considered, as it should be), here we are.

Media coverage of the full extent of already recognized and possible additional taxpayer losses has rarely escaped the business pages, even though the decisions involved in "saving" the two companies were mostly if not entirely political.

Cross-posted at BizzyBlog.com.