Readers here can attempt to fill in the blank, and will get to the the correct answer after the jump.
In their coverage of U.S. vehicle sales in February, Tom Krisher and Dee-Ann Durbin at the Associated press, aka the Administration's Press, wrote the following in an item headlied "US AUTO SALES POWER AHEAD IN FEBRUARY": "Americans want new cars and trucks, and they're not letting higher gas prices or political dysfunction stand in their way. New car and truck sales were up ___ percent in February as rising home construction and cheap financing kept the U.S. auto recovery on track." So by how much did car sales in February 2013 exceed the level seen in February 2012?
While it's not fair to criticize the press's coverage of November's vehicle sales as unfair or not balanced, it would be more than fair to say that the press is either ignoring or minimizing the impact of two important influences which have been at work all year. The first is the continued loss of combined market share at the industry's two US-headquartered makers, General Motors and Ford (Chrysler, the other member of Detroit's "Big 3," is owned by Fiat).
The second is that 2009 government bailout beneficiary GM continues to "channel-stuff" its dealers with vehicles they won't sell for four months or longer -- and that's if the economy doesn't slow down or go into a recession. Dealer inventories are now twice as high as they were three years ago -- and no, GM's sales haven't doubled in the meantime -- which makes one wonder, especially this fall, if it was being done solely to make the government and President Obama look good.
In a Friday report at the Associated Press on Friday with a celebratory headline ("2 YEARS AFTER IPO, GM IS PILING UP CASH"), Auto Writer Tom Krisher described bailed-out General Motors as "thriving," but didn't identify one of the important reasons for that characterization.
In paragraphs about the company's profitability and cash stockpile, Krisher failed to note that the company still hasn't paid any U.S. income taxes since emerging from bankruptcy, or why that's the case (bolds are mine throughout this post):
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.
It's hard to figure out why Tom Krisher at the Associated Press bothered filing a report on the status of contract talks between Detroit's Big 3 automakers and the United Auto Workers. The only reason I can discern is that he wanted to brag about how he and his wire service pals have access to anonymously-sourced info about how the talks are going. Surprise: As has been the case almost always for about the past 30-plus years, It's coming down to the wire with the two sides supposedly far apart at two of the three companies. Knock me over with a feather.
Krisher failed to inform readers of three quite important sets of facts. First (seriously), he never told readers that General Motors and Chrysler workers have no-strike contract clauses prohibiting them from job actions until 2015, i.e., only Ford is financially vulnerable. Second, he failed to note that the government still holds a significant (and probably board-controlling) share of GM, or that a UAW healthcare trust owns 46.5% of Chrysler (down from an original 55%). Finally, because he didn't disclose the ownership stakes, he failed to note the obvious conflict of interest the UAW has in negotiating with Ford, or the possible government-influenced pressure on the union to drive a hard bargain with Ford on GM's behalf.
Did you know that car buyers in July took "worries" over the debt-ceiling debate in Washington into account when they decided to buy -- or apparently decided not to buy?
Neither did I. But Dee-Ann Durbin and Tom Krisher rolled out that excuse this evening as one factor explaining why July's car sales were "disappointing," and then appeared to stuff those words into the mouth of the spokesman for General Motors.
Sale were indeed "disappointing," up less than 1% of over July 2010, which was described at the time by CNNMoney.com as "Best Since (Cash for) Clunkers, But Still Weak" (that's the window title; the article title got sanitized later).
Here are several paragraphs from the AP pair's report (the excuse and the word-stuffing are in bold):
Early Tuesday morning, David Shepardson and Christina Rogers at the Detroit News ("GM's Akerson pushing for higher gas taxes") reported that General/Multi-Government Motors CEO Dan Akerson "wants the federal gas tax boosted as much as $1 a gallon to nudge consumers toward more fuel-efficient cars."
Later in the interview, Akerson was much more emphatic about what he would like to see done immediately:
"You know what I'd rather have them do — this will make my Republican friends puke — as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas," Akerson said.
In a Monday Associated Press dispatch, reporter Tom Krisher virtually celebrated the idea that Government/General Motors "may be Number 1 again," with happy talk of "dethroning" and "overtaking" Toyota.
Nowhere did Krisher mention the inconvenient fact that Toyota's revenues dwarf GM's to the point where comparing unit sales is an absurd waste of time. Specifically:
Man, it is getting really deep around here -- and no, I'm not talking about the snow, though there is no shortage of it here in Southwestern Ohio.
What's really deep is the claim by current Government/General Motors Chairman and CEO Daniel Akerson that because of the company's government-engineered, unsecured bondholder-shortchanging trip through bankruptcy, "we lost roughly a year in terms of development."
The Associated Press's Tom Krisher apparently doesn't mind traipsing around in thigh-high boots while he's covering the Detroit Auto Show, as he displayed no skepticism whatsoever at the utter ridiculousness of Akerson's assertion, drily observing near the end of his report that "New products from GM were noticeably absent from the North American International Auto Show in Detroit this year."
A few weeks ago, just before GM's initial public offering went to the market (at the Washington Examiner; at BizzyBlog), I noted that Multi-Government/General Motors had spent the past several months shipping more cars than its dealers were selling, to the point where dealer stocks represented an unusually high number of days of dealers' sales.
GM's December 1 press release made that trend even more obvious, as month-end dealer inventory rose to 536,000 units, about 30% higher than May's level.
As seen below, the trend was already pretty obvious in October, and a vigilant press should have been alert enough to notice it and attempt to gauge its financial impact:
It was one thing when the United Auto Workers agreed many years ago to temporary "two-tiered" wage structures at the plants of Detroit's Big Three automakers. After all, it was argued, they'll be brought up to a level of full pay and benefits in several years, and new employees aren't as productive as the veterans.
Government/General Motors saw its total vehicle sales fall in September to 173,031 from 185,105 in August. At the same time, Ford's sales increased from to 157,327 to 160,375.
Thus, what was an almost 28,000-vehicle lead for GM in August shrank by more than half to less than 13,000 in September. No one has a crystal ball, of course, but if GM falls and Ford surges by similar amounts in October, Ford will become the top-selling brand in the USA.
Associated Press reporters Tom Krisher and Dee-Ann Durbin apparently believe that Ford's move to within clear striking distance of taking over GM is not news that anyone can use. They had their opportunities to mention the situation in their coverage today, and blew right by them.
Oh, and wait until you see what GM is doing to try to keep from losing its Number 1 status.
The news out of Government/General Motors during the past couple of days hasn't been particularly good.
First, August sales results were disappointing. Second, it become known today that GM will attempt to go public on November 18, a later than originally hoped post-election date chosen to hopefully allow for another reported quarterly profit to boost investors' appetite for its shares.
As so often has been the case during Democratic administrations when unfavorable developments arise, the UK press has seen potential problems with the IPO, while the Associated Press has been acting as if all is well.
In two separate items, AP reporters couldn't even bring themselves to tell readers what the company's real August sales decline was.
In a report yesterday on the industry's awful August, reporters Dee-Ann Durbin and Tom Krisher were appropriately gloomy overall, but they massaged GM's reported result (bolds are mine throughout this post):
Unplanned but necessary "improvements," or induced corrections? I'll report; readers can decide.
My early afternoon post at my home blog dealt with Government/General Motors' profitability and CEO Ed Whitacre's "coincidental" step-down from his CEO position. That post originally noted two things that seemed problematic in the Associated Press's reporting about the company's plans for an initial public offering this year (the IPO is problematic thanks to Obamanomics, but that's not the topic here).
In the AP's original report (since revised, which is why it's saved here at my web host for future reference, fair use and discussion purposes), reporters Tom Krisher and Dee-Ann Durbin, with assistance from Dan Strumpf, reported the following two items in supposedly relaying the results of a discussions with "Scott Sweet, senior managing partner of IPO Boutique in Tampa, Florida, which advises investors on IPOs," Whitacre, and unnamed government officials (bold is mine):
In what I believe is the first direct acknowledgment by the wire service of what so many have known for so long, the Associated Press's Tom Krisher wrote the following in an August 5 story about plans for an initial public offering by government-controlled General Motors (bolds are mine throughout this post):
Ever since the Obama administration gave the automaker a $50 billion dollar survival loan last year, many drivers have scorned the company and bought cars from rivals. Even though GM has cut costs, changed leadership, and reported its first quarterly profit since 2007, the resentment will linger as long as taxpayers have a 61 percent stake in the company.
Actually, the "resentment" goes back to December 2008, when the Bush administration bowed to pressure to use Troubled Asset Relief Program funds to "temporarily" loan a combined $13.4 billion to GM and Chrysler. Also, the total bailout dollars involved are at least $63 billion when GMAC is included, as it should be.
If you have relied exclusively on AP reports and its news feeds to subscribing publications since then, Krisher's assertion that "drivers have scorned the company" would more than likely be the first time you have seen an AP reporter record that observation.
There several annoying aspects of today's Associated Press report on the plight of newly-hired employees at U.S. auto plants represented by the United Auto Workers.
Mentioned by writers Dee-Ann Durbin and Tom Krisher, but not until their eleventh paragraph, is the fact that new workers, whose starting wage (mentioned in Paragraph 2) is "about half what veterans make under their current contract," have to "pay the same union dues as those who have been at the plant for years." But the AP pair didn't tell readers how much those dues payments are, and how harshly they affect entry-level workers. The web site ProCon.org estimates that it's in the neighborhood of $700 at Ford and Chrysler, and as much as $950 at Government/General Motors. When you're making $14 an hour, that's not chump change; it's about 34-46 cents per hour, or about 2.5% - 3.3% of base pay. A union official (not directly quoted) deadpans that "he understands their resentment." Sure.
As bad as that easily rectifiable AP oversight is, it's not the worst reporting error Durbin and Krisher committed. The following excerpted sentence is, in several ways:
The Wall Street Journal's headline and reporter Jeff Bennett's opening paragraph concerning Chrysler Corporation's first announcement of financial results since 2007 got right to the key points:
Chrysler Reports $4 Billion Loss Since Exiting Bankruptcy
Chrysler Group LLC lost nearly $4 billion since exiting bankruptcy last year, but the company reported a first-quarter operating profit this year and increased its cash reserves, bolstering Chief Executive Sergio Marchionne's claim that the auto maker will break even by the end of the year.
That $4 billion consists of $3.78 billion in the last 205 days of 2009 and $197 million during the first quarter of 2010. The WSJ and Bennett basically did a nice job, though I have a problem with companies trumpeting "operating profit" when there is an "actual loss."
I wonder if the Associated Press's headline and the opening paragraph from AP reporters Tom Krisher and Colleen Barry presented the situation as well as the WSJ?
Executives from Government/General Motors and Chrysler are at the North American International Auto Show in Detroit vaguely holding forth on the prospect of reopening previously shuttered production facilities.
Uh, don't sales have to start heading seriously upward before that happens?
Apparently the Associated Press's Tom Krisher, who has his hands in separate stories on the two companies, and Jeff Karoub, who is co-spokesman -- er, co-author -- of the report on Chrysler, aren't asking that question.