General Motors didn't have a very good second quarter, as the Associated Press's Tom Krisher duly noted on Thursday.
What Krisher didn't note, and what almost no one in the establishment press ever notes, is the fact that the company doesn't have to pay any income taxes on its U.S. profits until it uses up losses carried forward from before its 2009 bankruptcy filing accompanied by at least $50 billion in government capitalization -- something other companies emerging from bankruptcy are almost never allowed to do. Based on the company's reported North American income for the quarter of $2 billion, most of which would have been realized on U.S. business, taxpayers subsidized the company to the tune of several hundred million dollars in just three months.
Another item the press routinely ignores is how high its dealers' inventories are, as seen in the company-published graphic which follows:
Calculated strictly on GM's June sales of 201,137 while assuming that the next several months may end up no better, the days' the supply on hand at dealers might be more like 99 days instead of the 79 listed. This is a level of supply not seen at most of GM's domestic or North American transplant competitors.
This is significant for two reasons. First, since the company, in accordance with generally accepted accounting principles, recognizes a vehicle sale when it leaves the plant, it's booking revenues far in advance of when a consumer actually ends up buying it. Second, if the vehicle market heads south in the coming months, and there is some reason to believe this is already happening (GM was down 6% year over year in June, and Ford was down 4%; most other makers did well, but GM and Ford may be bellwethers), dealers will be forced to slash prices to move their merchandise, and will push back hard if the company tries to force too many vehicles onto their already crowded lots.
Don't ever expect the press to spend a lot of time on this -- at least while President Obama continues to tout the GM bailout as one of his administration's signature achievements.
Cross-posted at BizzyBlog.com.