NEW YORK (TheStreet) -- I find it frustrating to see a company do all the right things and get punished for it. Looking back at the actions of Ford (F) - Get Report reminds me of the old saying "no good deed goes unpunished." It eloquently applies to both Ford and GM (GM) - Get Report.
I need to take a step back and explain my latest frustration with the administration's actions and the consequences for taxpayers. I will begin with Bob Lutz, a self-described "car guy" who I respect, but left me scratching my head yesterday after reading a piece he wrote
. Lutz recently wrote an
about the possibility of GM declaring bankruptcy again.
Lutz gained my respect about four years ago when, as noted
, he stated he was a skeptic of global warming and that the Japanese hybrids didn't make economic sense.
Even though Lutz was, at the time, praising GM's plans for its own fleet of hybrids, including the Volt, I had to admired his integrity in stating his opinion so boldly. It is difficult in today's politically correct world to speak your mind, especially as an executive of a public company knowing you face wide-spread differences in opinion.
But Lutz's remark about the Japanese cars was clearly correct for hybrids in general. Even after pouring on tax credit after tax credit like gravy on top of Thanksgiving potatoes, hybrid sales remain lackluster. GM's Volt is currently about as popular as any other model, but should be selling for much more than buyers are paying. If it wasn't for all the taxpayer's money subsidizing these battery-packed federal deficit increasers, they would (and should) have price stickers well over $100,000 each.
I have to give Lutz credit; he was a key decision maker in GM bringing the Volt to market. Despite knowing better, he went ahead and gave the company (and government) what they wanted. In Lutz's Aug. 17 article he states "No other car company has yet demonstrated the ability to duplicate the Chevrolet 'Volt'."
It's factually correct, but I thank goodness common sense has prevailed in avoiding more "Volts," because as Lutz very well knows, we cannot as taxpayers afford many more without worrying about Washington going bankrupt. Hundreds of millions in taxpayer money went into the car battery maker
, which is now in part-owned by foreigners,
as reported by Reuters
We all "get" Lutz is simply defending GM in the face of a writer questioning if GM will need another bailout, but it's really disappointing to read that the Volt is provided as an example of why GM is flourishing and not treated as the embarrassment and example of why government should stay out of the car business as it really is.
Giving credit where credit is due, Lutz pointed out that GM does make a great performance vehicle at a great price. The Corvette is not only affordable for what you receive in performance, but fun to look at and fun to drive. I owned a convertible Corvette and while I am lucky I didn't kill myself in it, it made for a lot of great memories. (I am currently married with three young sons so I am now almost required by law to have a minivan or SUV).
However, in the same Aug. 17 article Lutz also states, "No other company can challenge GM's dominance in full-size SUVs, nor does any other maker offer the advanced hybrid system that makes these large vehicles economically and environmentally acceptable." Again, that is only made possible with hidden government subsidies. Without all the government money distorting the true cost, it's challenging to have an honest debate about how "economically acceptable" GM's SUVs are (disclosure I drive a GM non-hybrid SUV).
Mr. Lutz, you were honest and correct with your assessment about hybrids earlier, and some may read your article and say "shouldn't you know better?"
Meanwhile back at Ford, where management didn't allow their company to go bankrupt, and the government didn't provide a bailout; Ford's stock suffers as a result of crony capitalism. How many more Ford vehicles would have sold in America and in Europe if GM would have not received government welfare?
Maybe instead of posting a loss in Europe, Ford would have posted a profit as a result of a different selling environment following a GM restructuring without taxpayer money? We will never know for sure how much Ford shareholders should have received for their investment, but we know the government's investment in GM is, up to this point, a big loser.
If I was a Ford shareholder I would be mad about GM's taxpayer funded bailout, but more importantly, I would be livid about owning a stock knowing that my taxpayer money was used to depress my stock price.
At the time of publication, the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.