Breakingviews

A fat and happy GM is a dangerous company

February 12, 2015

It’s an irony bordering on conflict of interest that Harry Wilson, who helped Uncle Sam convert debt to equity in bankruptcy, is pressing the carmaker to reduce its cash cushion. Yet absent externally imposed fiscal discipline, GM runs the risk of repeating mistakes of the past.

Rob Cox: When CEOs are worth more as former CEOs

February 5, 2015

Investors this week applauded the abrupt exits of bosses at Ally and Petrobras, whose market value surged by $8 bln. Ousters at McDonald’s recently and Microsoft in 2013 earned similar welcomes. The common thread seems to be relief after a CEO becomes entrenched and inflexible.

Rob Cox: It took the Grim Reaper to restructure GM

January 14, 2015

The carmaker’s swift bankruptcy sparked less soul-searching than the process of determining who died from faulty ignitions. Bringing Ken Feinberg in will go down as CEO Mary Barra’s smartest decision. She should go a step further and memorialize the dead in the lobby of GM’s HQ.

GM can find small comfort in Toyota’s ride

April 1, 2014

The U.S. automaker recalled more cars and doubled the estimated cost for the first quarter ahead of boss Mary Barra’s Capitol Hill grilling. Even so, Toyota’s recent fiasco suggests the financial fallout should be manageable. GM’s culture will be harder to repair.

GM’s dividend hits right spot on multiple levels

January 15, 2014

At 30 pct of expected 2013 net income, it’s a punchy return to shareholder payouts. GM’s profit is rising, it has plenty of cash to handle its challenges and the timing implies shareholder returns rank ahead of executive pay. Mary Barra is set for a good first day as CEO.

GM navigates smart route to CEO succession

December 10, 2013

New boss Mary Barra has a reputation for both good design and keeping a firm handle on costs. That’s what the automaker, freshly liberated from the U.S. government, needs as it chases more profitable rivals. GM also appointed an independent chairman for good governance measure.

U.S. auto sales put brakes on economy’s detractors

April 3, 2013

Americans are buying more cars. Cheap loans and pent-up demand are factors. But so is the housing recovery. That and other economic data suggest consumers are looking beyond slimmer paychecks. Federal spending cuts allowing, that means the U.S. engine may be about to purr.

Fiat pegs Chrysler as most undervalued carmaker

January 14, 2013

CEO Sergio Marchionne’s latest offer to buy a stake in Chrysler from the UAW trust sets the U.S. manufacturer’s worth at $6 bln. True, it lacks the cash and margins of Ford or GM. But it’s a purer play on a recovering U.S. market. Fiat can safely value Chrysler more generously.

Ally’s mortgage misery needs a clean ending

March 27, 2012

The home loan mess still ails GM’s ex-finance unit and is still hampering its ability to repay $14 bln of taxpayer aid. Bankruptcy should be the ideal solution. But as an activist investor points out, that could get messy. Without greater clarity, Ally may want to hold fire.

Peugeot’s $1.3 bln cash call inspires confidence

March 7, 2012

Underwriters sought a 32 pct discount to the theoretical ex-rights price for the carmarker’s fundraising in its alliance with GM. That seems steep, but reflects a challenged industry. Indeed, for a company raising a third of its market value, the 6 pct share price drop is muted.