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    Is Obama propping up GM with increased gov’t fleet purchases?

    Is Obama propping up GM with increased gov’t fleet purchases?

    That’s the allegation from the National Legal and Policy Center, GM’s Government Fleet Sales and Truck Inventory Rise (h/t a reader):

    It looks like General Motors will be throwing everything in but the kitchen sink to help fluff its second quarter earnings numbers. Taxpayers continue to help with the cause as President Obama campaigns on the “success” of GM following the manipulated bankruptcy process that cost taxpayers $50 billion and another $45 billion of tax credits gifted to GM to help protect powerful UAW interests. We now learn that government purchases of GM vehicles rose a whopping 79% in June.

    The discovery of the pick-up in government fleet purchases at the taxpayers’ expense comes just weeks before GM announces its second quarter earnings. Overall fleet sales (which are typically less profitable than retail sales) at Government Motors rose a full 36% for the month, helping to drive decent sales improvements year over year….

    The upcoming earnings announcement by GM is, politically, the most important to date. The pressure is on Government Motors to appear financially strong as this may be the last earnings report before November elections and sets the stage for how “successful” GM is. One of GM’s past tricks to help fudge earnings numbers has been to stuff truck inventory channels. Old habits die hard at GM. According to a Bloomberg report, “GM said inventory of its full-size pickups, which will be refreshed next year, climbed to 238,194 at the end of June, a 135 days supply, up from 116 days at the end of May.” 135 days supply is huge, the accepted norm is a 60 day supply. The trick here is that GM records revenue when vehicles go into dealership inventories, not when actually sold to consumers.

    Obama has hitched his campaign to saving General Motors:

    What he does not say is that “saving” General Motors means a relationship of permanent dependency, rather than a truly effective private restructuring which could have resulted in an independent company not dependent on the government dole.


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    OcTEApi | July 6, 2012 at 7:58 pm

    Is Obama propping up GM with increased gov’t fleet purchases?

    Many of the Federal Contracts for purchases of Gov’t Fleet Vehicles were embedded into the Obama Stimuless.

    Federal Government purchasing should be easily available and transparent, if these are new contracts since that time.

    Owego | July 6, 2012 at 9:01 pm

    Funny you should mention it, we noticed earlier this week that that our local GM dealer (Cadillac, really) had taken delivery of a virtual fleet of bright shiny new GMC pick-ups.

    1) The Federal fiscal year contributes to this, large purchases (such as vehicles) are generally held off until just before EOFY (Sept 30) in case of hiccups in budget.
    2) Federal agencies such as GSA are required by law to purchase their Government Owned Vehicles from US manufacturers (so no Toyotas manufactured in the states).
    3) Loving and Kind Congresscritters tend to have flashes of Genius and mandate government agency purchases be “Green” or “Modern”, therefore sticking agencies with the overpriced not-ready-for-prime-time models that nobody else wants, which drives down the number of vehicles an agency can buy, and cranks up their maintenance costs (and by coincidence, these happen to have the highest profit margin).
    4) Yes, an *amazing* number of GM vehicles seem to be in this years purchases for Progressive agencies. And for some reason, Congress is fairly quick with the purse-strings for them, even while slowly strangling the “Less Progressive” department budgets for office supplies. (A rough analysis of inter-governmental budgets can be fascinating, as certain departments are cut to disguise the explosive growth of others in the same agency)

    […] Is Obama propping up GM with increased gov’t fleet purchases? ( […]

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