Behind the Wheel with Phil Lebeau

GM Deal Can't Buy Supporters


Calling all GM critics!

Calling all GM critics!

GM Headquarters

It's time to once again take a shot at the government owned auto maker.

And believe me, they are already firing away at the latest move from GM.

Spending $3.5 billion to buy AmeriCredit Corp.

It's a move that will give GM a captive finance division so its dealers can have a better shot at securing loans from sub prime auto buyers (4% of GM buyers fall into this group).

More importantly, with a captive finance arm, GM will be more attractive for investors when it goes public later this year.

So on paper, this deal makes sense.

Ahh, but not to the legions of GM critics. To them, it's ridiculous that the company will spend $3.5 billion when it's highly unlikely the Federal Government will get back all the money it put into GM. In the eyes of these people, GM should not spend any money acquiring other businesses or entities as long as the taxpayer (which owns 61% of GM) is not made whole. In other words, these people want GM to make the government whole before spending any of the $30 billion in cash the company is holding.

So to these critics I have a simple question: What do you want from GM?
Behind The Wheel, CNBC
Phil LeBeau

These critics baffle me.

On one hand, they want GM to make sure Uncle Sam gets all of the $50 billion it put into saving the auto maker. On the other hand, they don't want GM to spend any money buying companies that will make the auto maker more valuable and better positioned to pay back the government.

So to these critics I have a simple question: What do you want from GM?

If your answer is that you want the company to repay Uncle Sam, then you have to realize this AmeriCredit dealis a good move. Having a captive finance division should help GM grow sales. More importantly, it will make the GM IPO more attractive for Wall Street. The IPO is going to be the best shot the government has at recovering the money it has pumped into GM. Remember, Uncle Sam needs GM shares to do well so it can gradually sell off its stake in the auto maker and recover billions of dollars.

If your answer is that GM should be punished for being bailed out by the Federal Government, then there's nothing this company can do that will sit right with you. In your eyes, GM should have been sent into chapter 11 bankruptcy and then into chapter 7 where it would be broken up and dissolved.

For you critics, almost any move GM makes is a bad move.

Now, If GM screws up AmeriCredit and runs the business as poorly as it did GMAC, then by all means the company should be blasted. But until then, let the new leadership at GM try to build a company that can compete, win, and do well as a publicly traded company.


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Editor's Note: An earlier post misstated the number of GM's subprime customers - this has been corrected.
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