GM exported the first Chevy Volts to China earlier this year. A PR video Faces of GM touts the electric vehicle as a perfect fit . The subtle message is that the newly restructured, profitable GM is–thanks to the bailout–actually creating American jobs by exporting cars to China. But there’s a lot GM is not telling you.
Volt sales have been flat so far in the US. Washington recognizes that the Volt’s 40K MSRP is a bit pricey in the US and even offers a $7500 bribe to taxpayers who buy one. The sticker price in less-affluent China is $79,000. Don’t expect many of these to roll off the lot in Shanghai, especially at this price.
GM is one of the top foreign automobile manufacturers in China, selling about 227,000 vehicles there through its joint ventures in April, compared to about 213,000 in the U.S. I certainly don’t mind production and sales in other nations, but a recently filed GM document titled Global Assembly Footprint forecasts that 80% of its production growth over the next 5 years will occur in low-cost countries like the BRIC (Brazil, Russia, India & China) nations and Mexico. Moreover, the Chinese government is pressuring foreign carmakers to share technology and produce vehicles with a Chinese brand. While other carmakers have attempted to resist, GM was the first to comply by introducing the Baujun brand with Chinese partner SAIC last year.
Here’s my problem: Taxpayers financed a bailout and GM responded by producing more cars abroad, sharing technology, and launching a Chinese brand. Executives even plan to export cars back to the US in a few years. GM has already benefitted from CARS (Cash for Clunkers) and other government “incentives,” and Obama is calling for an increase in the Volt tax break to $10,000. To add insult to injury, a special TARP provision means that pre-bankruptcy losses can be counted against future profits, resulting in a potential additional taxpayer drain of as much as $45 billion down the road.
If you’re looking for a definition of crony capitalism, you’ve found it.