GM’s US sales chief talks about impact of incentives on January sales increase

General Motors Co. posted a 22% increase in January sales, prompting questions on whether its sudden increase in incentive spending had something to do with the results. GM U.S. sales chief Don Johnson responded to this observation during a recent conference call with analysts and reporters. Edmunds.com said that GM's incentive spending in January increased by 29% from a year earlier, to $3,762 per vehicle. In the statement, Jessica Caldwell, Edmunds director of industry analysis, said that this is the highest per-vehicle figure among the six largest automakers.
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Steve - 2/9/2011 8:43:12 AM

-1 Boost

Looks like the new GM is operating like the old GM: No concept of long-term profitability.
1) "Old" GM is DOA. Bankrupt!
2) Government pours billions of bailout $$$ into "Old" GM
3) A "New" GM is born, rich in bailout cash. GM execs get bonuses.
4) "New" GM issues IPO, generates still more cash. Workers get bonuses. GM declares itself "profitable".
5) GM offers substantial incentives (i.e., margin reductions) to increase unit sales. Declares itself a success.

In case nobody noticed, the money is not coming from good business practices. It came from atypical influxes of huge cash injections (bailouts + IPO). This is not a sustainable model for long-term health. See you at the next round of bailouts, but by then, a new government administration will be in place, and Joe Q. Public's memory will have grown hazy, so the next bailouts will look like news, and a result of unforeseen circumstances.