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Don't look for General Motors Co. to shed the nickname "Government Motors" anytime soon even though billionaire Warren Buffett has taken a serious liking to the stock. Buffett's Berkshire Hathaway disclosed in a filing it bought $256.6 million in GM stock, 10 million shares. The U.S. Treasury still owns about 500 million shares three years after the $49.5 million bailout.
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GM, which is selling Buicks and Chevys like rice cakes in China, may be posting nice profits four years after its bankruptcy, but the Treasury still owns a 26 percent stake in the company and is in no hurry to part with it.
"Our perspective is that the company had made real progress, but the market hasn't given them as much credit for that as it might," Assistant Treasury Secretary Tim Massad, who oversees what remains of the Troubled Asset Relief Program, said in an interview with The Detroit News.
The News said the government would lose more than $15 billion of its investment if it sold its shares in GM at current prices. GM stock, which closed at $21.18 on Friday, would have to sell for $53 a share for Treasury to break even.
Administration officials told the News Treasury will not sell any GM stock before the fall election.
"We have to balance maximizing recovery for the taxpayers with the speed of exit," said Massad.
GM cut back its presence on Facebook before the social media Web site's initial public offering last week, saying it would save the $10 million it spent on paid advertising on social media because the ads were not generating sales.
The Wall Street Journal said GM spent $10 million for ads on Facebook and $30 million more on its Facebook fan pages -- a drop in the bucket of GM's $4 billion annual advertising budget.
GM still spends more than $1.1 billion a year on television advertising and a mere $270 million on the Internet.
"We regularly review our overall media spend and make adjustments as needed," a GM spokesman said. "This happens as a regular course of business and it's not unusual for us to move our spending around various media outlets -- especially with the growth of multiple social and digital media outlets. In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers."
Hyundai's growing pains
A foreign carmaker faces growing pains as it struggles to keep up with skyrocketing demand for a few popular models.
Sound familiar?
This time the company is South Korea's Hyundai.
South Korea's Ministry of Land, Transport & Maritime Affairs last week began investigating a complaint of sudden unintended acceleration involving a Hyundai Sonata in the city of Daegu.
A video posted on YouTube taken from inside the car show it suddenly speeding at up to 80 mph before slamming into the rear of a car stopped at a red light. At least 17 people were injured in the chain-reaction collision.
Hyundai said the accident was under investigation and the Sonata was being inspected by the Korean National Forensic Service.
Also last week, the U.S. National Highway Traffic Safety Administration opened a preliminary investigation of concerns that air bags could suddenly deploy on 123,000 Hyundai Elantra compacts, Hyundai's most popular vehicle.
"The evaluation is in the very early stages; neither Hyundai nor NHTSA [the National Highway Traffic Safety Administration] have had the opportunity to inspect the 2012 Elantra that is the subject of this evaluation," a Hyundai spokesman told The Detroit News.
In 2009, Toyota was forced to recall millions of vehicles because of incidents of sudden unintended acceleration but an investigation found no mechanical or electronic faults in the cars.
Honda wins hybrid mileage lawsuit
Honda still faces at least 36 small-claims court cases involving mileage claims for its Civic hybrid, but the Japanese automaker won't have to pay a California woman nearly $10,000 because her car did not deliver the advertised mileage.
A Los Angeles County judge hearing an appeal of the case reversed the small-claims judgment awarded hybrid owner Heather Peters. Peters, a lawyer, had turned down a proposed class-action settlement that would have paid Civic hybrid owns $100 to $200 each and given them rebates on the purchase of a new Honda vehicle.
"Of course I'm disappointed," Peters told the Los Angeles Times, "but I'm still glad that I raised awareness that Honda is no longer the great brand that it used to be. They used to go the extra mile in customer service; now they go the extra mile fighting customers in court."
Peters had argued her 2006 Honda hybrid delivered disappointing fuel economy far less than Honda's EPA-estimated mileage of 50 miles per gallon. She said the mileage got worse after Honda updated software to lengthen the hybrid's battery life.
In his ruling, Los Angeles Superior Court Judge Dudley Gray II wrote, "Federal regulations control the fuel-economy ratings posted on vehicles and advertising claims related to those fuel-economy ratings."
German imports rule the luxury roost
Audi, BMW and Mercedes-Benz are firmly at the top of the heap in the luxury vehicle market followed by the Japanese with U.S. premium cars losing ground.
Sales of the once venerable Cadillac brand are down near 24 percent this year and sales of Lincoln are stagnant.
Industry analysts say U.S. luxury car brands fell behind because of a lack of investment during the economic downturn. Sales of Toyota's Lexus are up 2.6 percent, Acura sales were flat and Infinity sales dipped 3.6 percent.
"Japanese brands are seen as cosmetically enhanced versions of mass-production cars," TrueCar.com pricing specialist Jesse Toprak told The Detroit News. "BMW and Mercedes are only in the business of making luxury cars."
