GM's IPO Will Fly, But Will GM's Business?

GM Dealership
AP
GM Dealership

As I read through the GM IPO filing (all 700 pages!) on the flight to Chicago last night, I got one question over and over from people on the plane: "Would you buy GM stock?"

Let's be honest, there are enough large institutional investors and GM is a strong enough company that this IPO will go well. Will it deliver the $18 billion return some have projected? It's too early to say. But make no mistake, there will be no shortage of investors ready to buy the new GM. The more relevant question is whether the GM stock will deliver decent returns for those who buy it? That will depend on whether GM has truly fixed its business.

Yes, GM is back in the black. It made $2.2 billion in the first half of 2010. But what investors need to ask themselves is whether GM has the products, the game plan, and the leadership to grow business consistently quarter after quarter. On that front, the jury is out. What we've seen from the new GM is encouraging. Scaling down to four brands in the U.S. has worked well. Its market share in the U.S. is holding steady. Still, when I talk with industry leaders there many who are curious to see if GM can build on this success.

Part of the problem is the perception GM still doesn't get it. As former GM Vice Chairman Bob Lutz told me this morning, "I believe General Motors has to do a much better job. General Motors needs to do as good a job in dealing with the media and presenting its case to the public as, for instance, the Ford Motor Company is doing under Alan Mulally and Mark Fields." He's right. I understand Alan Mulally is not everyone's cup of tea. That's fine. But there can be no denying the fact that he and his team have sold Wall Street and main street on the idea of "One Ford". More importantly, they've back up the talk with better than expected results.

Lutz on GM IPO
Lutz on GM IPO   

That's the challenge for new CEO Dan Akerson and his leadership team at GM. If they want America to buy into the new GM and grow the new shares of GM, then they need to convince us that the business plan they've laid out will work quarter after quarter.

Questions? Comments? BehindTheWheel@cnbc.com