Time to put the past to rest?
Will next year provide a big boost in auto sales? The kind of boost that can turn losses into profits for much of the US auto industry? The kind of sales that could make a GM IPO at the end of 2010 enticing to investors?
Probably not according to a forecast from Fitch Ratings. While there should be a small bump upwards in US sales - around 11.1 million total unit sales - it probably won't be big enough to result in the cash flow needed to fix GM's balance sheet.
But, could the Chevy Volt be a wild card in that forecast?
What better way to head into an IPO than with positive buzz, especially the kind of green and foreign-oil fighting buzz that only the official release of the Chevy Volt can provide? It's unique. It's next gen technology. It's green and it's ready to launch 'at the end of 2010'.
It won't even matter if GM doesn't sell many Volts at first, even ever, relatively speaking. It doesn't matter because GM will be selling Volts - the first major automaker to sell a legitimately mass-marketable plug-in vehicle in the US.
The Prius, for comparison, still casts quite a halo over Toyota's less efficient vehicles and guzzlers. The Volt's green-hallow could be even greater.
Sales or profits aren't really the issue, for now. Besides, most interested in plug-in vehicles aren't really interested in buying one before huge price reductions. It's just the fact that GM is selling a plug-in. That's enough. It was for the Prius, and it will be for the Volt.
And, aside from an IPO, if GM can build a vehicle like the Volt before Toyota or any other major automaker, that has to mean something about GM innovation and quality, right? Even if a plug-in hybrid, much like the upcoming plug-in Prius, is better than the Volt, cheaper than the Volt, or more cost-effective than the Volt. It still won't matter. GM was first.
Inevitably, the Volt will drive show room traffic. And while most gawkers won't buy a Volt, a few non-GM buyers might just consider an alternative GM vehicle because of the Volt.
Confidence in GM will brighten.
So, while Fitch can quantify GM's profits and losses, it simply can't predict the psychological effect that a big green wave of buzz could generate for GM's initial public offering. No one can.
Sure, after several years Volt buzz might wear off to some extent as consumers realize that it will probably be decades before most of us drive a plug-in vehicle - regardless of manufacturer - barring some huge technological breakthrough that significantly drops costs.
Nonetheless, GM will have a solid player in the green game. The first player in an important segment. And, minimally, the Volt will earn its keep via PR and marketing.
In the short term, however, the Volt's green buzz - barring any long term double dip recession - could be a difference maker in GM's IPO and short term success. Hopefully, however, it doesn't make GM's IPO too enticing for China.
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