GM Repays U.S. Early, In Part By Charging Us More

(MoneyWatch)  It's good news, of course, that General Motors announced it intends to repay its government bailout money sooner than expected, but don't lose sight of the fact that what's really happening is that consumers and taxpayers are repaying themselves.

First, there's the obvious fact that without taxpayer support, GM would be broke, and probably on its way to being broken up. Second, a major reason GM is prosperous enough to repay its loans early is that GM is successfully charging higher prices.

For instance, GM President and CEO Fritz Henderson said today the average transaction price - the price consumers actually paid - was up $9,400 for the 2010 Buick Lacrosse, versus the model it replaced. That was an average transaction price of $31,700, Henderson said.

Other examples included the 2010 Chevrolet Equinox, up an average of $4,100, and the 2010 Cadillac SRX, up $4,300. Naturally, GM argues that the new models are so much better than the models they replaced, they're worth more.

Overall, GM had a net loss of $1.2 billion for the third quarter, versus a net loss in the year-ago quarter of $2.6 billion. That comes with a big asterisk, because that's comparing "Old GM," that is, pre-bankruptcy GM, versus "New GM." A year ago, for the nine months ended Sept. 30, 2008, GM reported a net loss of $21.3 billion.

GM and its domestic rivals, Chrysler and Ford, are all pursuing several strategies to lower their breakeven points, so they can make a profit at lower production volumes. Through bankruptcy, GM and Chrysler have washed their hands of billions of dollars in debt. All three are drastically cutting costs, including job cuts and production cuts.

Year to date, GM cut its North American production 51 percent versus the year-ago period, to 1.3 million. Worldwide, GM production was down 30 percent to 4.6 million.

A crucial difference is that GM has also cut its inventory of unsold cars and trucks. In the past, unsold inventory has forced the Detroit Big Three to resort to big discounts in the form of customer rebates and other incentives.

For instance, U.S. inventory in October was about 444,000 units, down 49 percent from December 2008, the company said.

"The focus here is inventory management, and when we do that, we can favorably impact the level of retail incentives," Henderson said in a conference call today with auto industry analysts.