GM exec: Sales slide finally over

[wildcat]

We all know GM has a long way to go, but how about this headline: "GM exec: Sales slide finally over". To read the article, which is in today's Detroit News, click here.

[LTB51]

"LaNeve said a truer measure of performance is retail sales to regular customers"

%of sales which are fleet for GM:

2000 21.2%

2001 18.4%

2002 18.8%

2003 21.1%

2004 24.5%

2005 25.9%

2006 29.0%

(2006 is YTD)

Well said, LaNeve. I'm getting the impression that GM is pulling out all the stops right now to make it appear that they have turned a corner, even if they haven't.

[I hope GMRULES again]

He should of waited another month to make this statement, I'm sure August will be down too compared to last year's employee discounts.

[enzl]

"LaNeve said a truer measure of performance is retail sales to regular customers"

%of sales which are fleet for GM:

2000 21.2%

2001 18.4%

2002 18.8%

2003 21.1%

2004 24.5%

2005 25.9%

2006 29.0%

(2006 is YTD)

Well said, LaNeve.  I'm getting the impression that GM is pulling out all the stops right now to make it appear that they have turned a corner, even if they haven't.

176197[/snapback]

Source? That seems high.

[C.H.U.D.]

Source? That seems high.

176271[/snapback]

Yeah...I thought they were reducung fleet sales.

[enzl]

Yeah...I thought they were reducung fleet sales.

176294[/snapback]

In raw numbers, yes....in proportion, apparently not.

[chevelle454]

Not all fleet sales are as bad as others. Sales to rental car companies might suck for image, but If you see a large construction firm or a city works department using lets say Silverados, it says that the trucks are tough enogh for professional uses and abuse so they will be more then enough for me, how many times do you see a crappy Tundra doing any real work.

[enzl]

Not all fleet sales are as bad as others. Sales to rental car companies might suck for image, but If you see a large construction firm or a city works department using lets say Silverados, it says that the trucks are tough enogh for professional uses and abuse so they will be more then enough for me, how many times do you see a crappy Tundra doing any real work.

176327[/snapback]

Correct. However, fleet sales are not only image issues, they also are much less profitable than your average retail sale, for GM & the dealer as well.

Most Municipal Contracts I have seen lose money on the sale of the vehicle and profit only on 'aftermarket' or contract - specific add-ons each vehicle needs to perform its intended task.

[Newbiewar]

"LaNeve said a truer measure of performance is retail sales to regular customers"

%of sales which are fleet for GM:

2000 21.2%

2001 18.4%

2002 18.8%

2003 21.1%

2004 24.5%

2005 25.9%

2006 29.0%

(2006 is YTD)

Well said, LaNeve.  I'm getting the impression that GM is pulling out all the stops right now to make it appear that they have turned a corner, even if they haven't.

176197[/snapback]

but if those numbers are correct... in 2006 they have done 718,000 units to fleet... and in 2005 they did 746,00...

so techinically the fleet sales are down...

[ellives]

Without the source, those numbers are garbage. No source means no credibility.

[LTB51]

Without the source, those numbers are garbage. No source means no credibility.

177282[/snapback]

Well even numbers with sources may be "garbage" or have "no credibility".

For example, some might have read a recent certain article where GM was talking about fleet being way down for the year. Others might have read LaNeve's comments in the above article and had the same impression. In both cases, GM brass seems to be implying that they are taking the high levels of fleet seriously and have been addressing them. In both cases there are sources, but "misleading" is the word that comes to mind, not "credible".

But how do you say that in spite of relying on ~12% more fleet over last year your sales are still down ~12% (IIRC)? It is really quite clever to turn this around and make the headlines proclaim that total fleet sales will be down by 60-70K units. As I mentioned in another thread and as Newbievar pointed out in this one, while it might technically be accurate now, or perhaps by the end of the year, it is still purposely misleading.

If you don't think it is misleading, then ask yourself if you thought fleet would be up or down based on recent statements by GM. Did you suspect that, as a percentage of total sales, GM is the highest they have been in the past 7 years? And that was only as far back as I looked. I would not be surprised if this is their highest level ever.

So, even though they are not really a "good" source, the source of my numbers is GM itself.

http://www.gm.com/company/investor_information/sec/

Select the July 26 8-K. Page 21 of the html document, and I believe 27 of the word document.

As I said in an earlier post, something isn't right with GM. I still haven't figured out how they managed to raise revenue as much as they claimed. The revenue/vehicle in the above article seems to contradict their posted financial results by a wide margin. It also seems the magical halt of market share slide in Aug over July only happened because Chrysler's overproduction finally caught up with them (and GM was no dobut aided by high fleet sales). IIRC, GM was actual down slightly in total units while Honda and Toyota (And perhaps others) where up >10% month on month.

I hate to "go all Buickman", but I think GM is just acting as if they have turned the corner and hoping that it will come true.

Edited August 8, 2006 by LTB51

[CARBIZ]

The real question is: does GM actually take in more money than it actually costs to build and market the vehicles it builds? The answer is yes.

The rest is all accounting BS. 2005 was made worse by "write downs" that GM took. 2006 will be hampered by paying off a lot of employees to go away.

Accountants are rapidly going onto my list along with lawyers and politicians for the biggest liars out there. Need a good year? Then slide this over to that side. Need a bad year, then slide it back.

[evok]

The real question is: does GM actually take in more money than it actually costs to build and market the vehicles it builds?  The answer is yes.

  The rest is all accounting BS.  2005 was made worse by "write downs" that GM took.  2006 will be hampered by paying off a lot of employees to go away.

  Accountants are rapidly going onto my list along with lawyers and politicians for the biggest liars out there.  Need a good year? Then slide this over to that side.  Need a bad year, then slide it back.

177655[/snapback]

From GM's 2nd Q Release:

Total cash and securities June 30, 2005: $55B

Total cash and securities June 30, 2006: $23B

Yea - that is funny money? I think it is time you get your head out of your a$$ and grow up.

Edited August 8, 2006 by evok

[zete]

Not all fleet sales are as bad as others. Sales to rental car companies might suck for image, but If you see a large construction firm or a city works department using lets say Silverados, it says that the trucks are tough enogh for professional uses and abuse so they will be more then enough for me, how many times do you see a crappy Tundra doing any real work.

176327[/snapback]

When I finally buy either the Acadia or Enclave next year it'll count as fleet as I'll buy it through my company. I know everyone I work with will, in the next couple of years, buy a car from one of the Big 3 and it'll all be considered fleet. We buy loads of trucks and sedans for sales and our fleet and the Big 3 extend the fleet pricing to all employees. I'm looking forward to getting a nice chunk off and I would be stupid not to take it.

So, yes, not all fleet is bad. I'm a senior manager in a huge multinational so though it'll be a fleet sale it won't look like one :-).

[VenSeattle]

When I finally buy either the Acadia or Enclave next year it'll count as fleet as I'll buy it through my company. I know everyone I work with will, in the next couple of years, buy a car from one of the Big 3 and it'll all be considered fleet. We buy loads of trucks and sedans for sales and our fleet and the Big 3 extend the fleet pricing to all employees. I'm looking forward to getting a nice chunk off and I would be stupid not to take it.

So, yes, not all fleet is bad. I'm a senior manager in a huge multinational so though it'll be a fleet sale it won't look like one :-).

177766[/snapback]

Don't say that too loud, there are some people on this board who can't handle fleet sales being equal to conquest or return-buyer retail sales. They only believe 'Fleet = base-model Rental' and that's it.

PS... Get the Enclave!

[91z4me]

From GM's 2nd Q Release:

Total cash and securities June 30, 2005:  $55B

Total cash and securities June 30, 2006:  $23B

Yea - that is funny money?  I think it is time you get your head out of your a$$ and grow up.

177671[/snapback]

OK apparently I must be having a hard to breathing with my head where it is but what does "total cash and securities" mean? Is that cash on hand and easily saleable assets?

[SimonDavid]

OK apparently I must be having a hard to breathing with my head where it is but what does "total cash and securities" mean?  Is that cash on hand and easily saleable assets?

177782[/snapback]

Yes cash and easily saleable assets like short term investments Tbonds etc

This is the point Mr K and Jerry York were making forcefully - GM is chewing cash. Apart from the trading losses, all those buyouts cost money. Sure they payoff in the long term but that is no consolation if the company can't make it through the next couple of years.

Given that they need about 10 billion in working capital just to run the business there is not a hell of alot of cash left. Fuel prices or a general economic downturn could really push them close to the edge - as could a strike. (Though I still think theyre in a much stronger position than Ford)

[CARBIZ]

Evok would rather have personal attacks than actually try to analyse the numbers.

[evok]

Evok would rather have personal attacks than actually try to analyse the numbers.

177880[/snapback]

And I will say it again - get your head out of your a$$.

I know it is hard to ask of you.

But just looking over the thread, I actually put financial numbers to GMs problems; where you make blanket, unsupported statements.

So that we are all on the same page:

The real question is: does GM actually take in more money than it actually costs to build and market the vehicles it builds? The answer is yes.

No - The answer is N-O based upon GM SEC filings.

The rest is all accounting BS.  2005 was made worse by "write downs" that GM took.  2006 will be hampered by paying off a lot of employees to go away.

27 Billion "funny money" write down? No that is spent cash. Gone. Money that will not be going toward new product.

Accountants are rapidly going onto my list along with lawyers and politicians for the biggest liars out there.  Need a good year? Then slide this over to that side.  Need a bad year, then slide it back.

Enough said.

Edited August 9, 2006 by evok

[CARBIZ]

Does double posting make you feel important?

[evok]

Yup - dodge the facts.

Your opinion is not supported by the realities of the situation, change the subject.

Deflect.

You behave just like the politicians and liars you claim are on your long list.

Edited August 9, 2006 by evok

[CARBIZ]

Unless you are a Chartered Accountant, then you, Sir, are not qualified to analyse the FACTS either.

I ran my own company for 11 years, so I know a thing or two about financial statments, cash flows, etc., but I would be the first to admit that I am not an accountant either. I do, however, have eyes and ears and world experience. If you would rather just shoot someone down because they don't think your word is directly from God, then that is valid, too.

What I am saying is that I have seen how numbers can reflect whatever the author of those numbers wants to show.

We all KNOW GM is losing money, but depreciation and write downs are a bunch of hocus pocus that only make tax accountants happy.

[evok]

We all KNOW GM is losing money, but depreciation and write downs are a bunch of hocus pocus that only make tax accountants happy.

177908[/snapback]

$32 Billion in Assets in the form of Cash and cash equivalents and Marketable securities have been liquidated in the past 12 months. Those are cash assets GM no longer has at its desposal.

That is not depreciation, that is actually cash assets.

i.e - Income < Expenditures.

My advice - consult a CPA.

Again you post many words but do not say anything that supports your position.

Edited August 9, 2006 by evok

[CARBIZ]

GM has reported an operating earnings of $1.2 billion for the second quarter of 2006. Then the accountants get involved and that number becomes a negative as several "one time charges" are factored in, bringing the total to a LOSS of $3.4 billion.

So, GM is making money off of what it actually sells: ie., brings in more than it costs to keep the factories open, keep the suppliers paid, etc., BUT when all the legacy costs and other intangibles, such as depreciation, are factored in GM is LOSING money.

If GM is going to wrestle the UAW into the ground next year, then having a bad year on paper this year is a good thing.

There - is that a little more plain for ya?

[evok]

According to the second Q results for their automotive operations:

GMNA's net income loss of $0.085B in the second quarter before the write down.

For the year GMNA's net income loss of $0.547 before any special charges.

[jbartley]

"LaNeve said a truer measure of performance is retail sales to regular customers"

%of sales which are fleet for GM:

2000 21.2%

2001 18.4%

2002 18.8%

2003 21.1%

2004 24.5%

2005 25.9%

2006 29.0%

(2006 is YTD)

Well said, LaNeve.  I'm getting the impression that GM is pulling out all the stops right now to make it appear that they have turned a corner, even if they haven't.

176197[/snapback]

These percentages are useless, unless we see the original numbers, any fool can manipulate numbers to argue a point. 29% fleet sales for the year sounds bad, but GM is also selling less retail vehicles this year but at a much high price point, as evident of the fact they are very close to showing a profit.

[evok]

These percentages are useless, unless we see the original numbers, any fool can manipulate numbers to argue a point. 29% fleet sales for the year sounds bad, but GM is also selling less retail vehicles this year but at a much high price point, as evident of the fact they are very close to showing a profit.

177991[/snapback]

Problem is I believe those percentage are buried in the 10ks or other filings. You would have to do a lot of research to put the story together including digging up the SEC filings and sales numbers for the US. And I assure you it takes time.

[lakefire]

a couple of things you guys should note about fleet sales.

1) if their total sales are going down and fleet sales stay the same, then that will manipulate the numbers.

Let's assume that's the case. Then you could also assume that GM is selling less cars for higher margin in the non-fleet sales and thus giving the media the impression that they are doing better.

One thing to remember, Statistics never lie, but liars always use statistics.

Sorry for the random, incorherent rambling.

Edited August 9, 2006 by lakefire

[LTB51]

$32 Billion in Assets in the form of Cash and cash equivalents and Marketable securities have been liquidated in the past 12 months.  Those are cash assets GM no longer has at its desposal. 

177913[/snapback]

And don't forget that their liabilities have also gone up ~16 Billion in the last year.

[SimonDavid]

Problem is I believe those percentage are buried in the 10ks or other filings.  You would have to do a lot of research to put the story together including digging up the SEC filings and sales numbers for the US.  And I assure you it takes time.

177993[/snapback]

Gents

I'm a CPA. I have not reviewed GM's filings in detail, but a few points :

1) Profit is very different from cashflow, for any company.

Spending on capital items is not an expense and therefore does not create a loss in terms of reported earnings / accounting profit. It does however remove cash from the bank.

Examples of capital items

- employee buyouts

- spending on plant and equipment

- purchasing shares in another company

some of which GM has been doing alot of recently - may well explain the cash outflow.

Another possible explanation - suppliers tightening credit terms, because of ratings downgrade

Again this causes cash outflow but does not actually affect reported profit

2) Cashflow, not profit, is what is relevant to bankruptcy

A company is bankrupt if it cannot meet its obligations as and when they fall due, not because it is unprofitable. Typically a small business that goes bankrupt is usually profitable, but suffering a cashflow crunch because its customers aren't paying on time

3) With GM it is infinitely more complicated because of their pension / health liabilities

I understand GM's pension fund is worth about 80 billion - which is about 5 times the market cap of the company. The health liabilities are much greater.

GM only needs to recognise a pension expense when the actuaries predict that the growth of the pension fund over the next 40 years is not enough to meet - that's when GM needs to contribute more.

During the boom stockmarket of the late 1990's GM got away with not putting a dime into the pension fund for I think 5 years because the returns they were getting were so good. So in a sense their reported profitability during that time was flattering GM - I mean how realistic is it to run the biggest company in the world with zero pension expense?

I suspect these are the sort of tough questions York has been asking at board level. GM is facing a cash crunch for the next couple of years, and in a cash crunch reported profit becomes almost irrelevant. The cash is going out the door due to big capital spending on the GMT900s, credit ratings downgrades and cost of all those employee buyouts.

[evok]

Gents

1)  Profit is very different from cashflow, for any company.

178312[/snapback]

I agree. A number that is consistently overlooked in GMs 2005 results was a negative cash flow of $20 billion for the NA automotive operations.

[LTB51]

1)  Profit is very different from cashflow, for any company.

Spending on capital items is not an expense and therefore does not create a loss in terms of reported earnings /  accounting profit.  It does however remove cash from the bank.

Examples of capital items

- employee buyouts

- spending on plant and equipment

- purchasing shares in another company

178312[/snapback]

GM does seem to be claiming the majority of the employee buyouts as an expense the Q (some to follow in Q3). Or are they only claiming a part of the buyout?

[97regalGS]

I agree.  A number that is consistently overlooked in GMs 2005 results was a negative cash flow of $20 billion for the NA automotive operations.

178337[/snapback]

does anyone really grasp how large that number is? $20B??? that number is staggering.