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NADA Headlines (Nov. 19, 2010)

Wall Street Payday for a New GM

Some Critics Now See Value of U.S. Bailout; Others Unmoved.

Seventeen months after its old shares were made worthless in bankruptcy court, General Motors Co. made a dramatic return to the stock market following a government-led turnaround that proved far more successful than many had expected. In their first day of trading Thursday, GM shares opened at $35, two dollars above the price investors paid for them in the company's initial public offering Wednesday. In trading, they climbed to as high as $35.99 before closing at $34.19. The first-day price gain of 3.6% over the IPO price was far below the 9.7% average for the previous 10 largest U.S. IPOs, according to Thomson Reuters, which tracks new issues. And the small gain came as the overall stock market rose broadly. The sale will return up to $13.6 billion to the U.S. government, which put $49.5 billion into GM last year as part of its bailout of the auto maker. "Today, one of the toughest tales of the recession took another big step toward becoming a success story," President Barack Obama said at a news conference. "What's more, American taxpayers are now positioned to recover more than my administration's investment in GM." Read more from The Wall Street Journal.

So How Big is GM’s IPO?

The answer depends on what you measure. If you measure the value of the common stock, the largest IPO in U.S. history is Visa’s $17.9 billion offering in March 2008. To compare, GM offered 478 million shares of common stock, worth $33 each, for a total of $15.8 billion. Second place. But both companies offered extra common shares to meet demand, called an overallotment. With those shares, Visa’s offering totaled $19.7 billion. GM is likely to sell all its overallotment in the allowable 30-day period, which would take its offering to $18.1 billion. Still second place. Read more from the Detroit Free Press.

Former Obama Car Czar Steven Rattner Charged in Pay-for-Play Scheme

State and federal authorities on Thursday charged former Obama administration car czar Steven Rattner with participating in a "pay-for-play" scheme to win business from New York state's pension fund, and sought more than $30 million in penalties. New York Attorney General Andrew Cuomo sued Rattner for $26 million and sought to ban him from working on Wall Street permanently. Rattner, meanwhile, agreed to settle a suit brought by the Securities and Exchange Commission by paying $6.2 million and accepting a two-year ban from Wall Street. Rattner was accused of paying kickbacks and orchestrating a DVD distribution deal for a C-list movie, "Chooch," to win tens of millions of dollars in business from the $135 billion state pension fund. The allegations, part of a broad investigation into corruption at the fund, are a painful comeuppance for Rattner, 58, who had a meteoric rise through the worlds of journalism, finance and politics before being implicated in the New York state pension fund scandal. Read more from The Washington Post.

Senate Votes on Tax-Cut Extensions Likely in December

Senate Majority Leader Harry Reid, D-Nev., will force votes on dueling proposals to extend the 2001 and 2003 Bush income tax cuts immediately after the Senate returns from its Thanksgiving recess, Reid announced Thursday, a step Senate aides on both sides of the aisle said is most likely to result in defeat of both proposals and further negotiations. Reid said he will force separate votes on extending tax cuts for families who earn less than $250,000 and individuals who earn less than $200,000 as Democrats propose, and also give Republicans a chance to vote to extend all of the tax cuts permanently, as proposed by Minority Leader Mitch McConnell, R-Ky. Reid said his goal is to create a public contrast between the Democratic and Republican positions on extending the cuts. The two votes would pit what Democrats call their desire to protect middle-class tax cuts while avoiding excessive debt against GOP hopes to extend all the cuts regardless of the cost. “We want the opportunity to vote, once, twice, whatever it takes, to show the American people that we support the middle class,” Reid said. Read more from National Journal.

Volkswagen to Spend $71 Billion to Help Leapfrog Toyota

Volkswagen AG said it will invest about 51.6 billion euros (nearly $71 billion) in its automotive division in the next five years as it aims to pass Toyota Motor Corp. as the No. 1 global automaker in sales and profitability by 2018. “These investments underline Volkswagen's goal of becoming the leading automobile manufacturer for its customers, employees and shareholders," VW CEO Martin Winterkorn said in a statement after the automaker's supervisory board today approved investment plans for 2011 to 2015. "We are systematically pursuing the goals of our Strategy 2018 to further increase our profitability and to make Volkswagen the world's most future-proof automotive group," Winterkorn added. The main focus will be on new vehicles, successor models and derivatives in almost all vehicle classes based on the company's new modular architecture, VW said. "This will allow the Volkswagen Group to systematically continue its model rollout with a view to tapping new markets and segments," the company said. Read more from Automotive News.

Hyundai Unveils New Elantra

LOS ANGELES—Hyundai Motor Co. on Thursday took the wraps off a new fuel-efficient compact car in a bid to spur even faster sales in the U.S. market. The Korean car maker said its redesigned Elantra model boasts a highway fuel efficiency rating of 40 miles per gallon, among the best in its class. The 1.8 liter engine compact, priced to start at $14,830, will be made at the company's factory in Montgomery, Ala. The Elantra is Hyundai's third U.S.-made model. The debut of the car, which took place at the Los Angeles Auto Show, caps what Hyundai expects will be a record year for its U.S. sales. "We've bucked the trend by growing our retail volume," said John Krafcik, Hyundai's U.S. chief, speaking at a press conference on the floor of the auto show. Read more from The Wall Street Journal.

Toyota Seeks to Dismiss Acceleration Lawsuits

SANTA ANA, Calif. -- A federal judge in California will consider a motion by Toyota Motor Corp. to dismiss lawsuits that claim there are sudden acceleration defects in its cars. U.S. District Judge James Selna will hear arguments Friday about whether he should throw out some of the hundreds of lawsuits filed since the automaker starting recalling millions of vehicles because of acceleration problems in several models and brake defects with the Prius hybrid. Toyota argues the plaintiffs have been unable to prove that a design defect, namely its electronic throttle control system, is responsible for vehicles surging unexpectedly. "Plaintiffs infer negligence and strict liability on the part of Toyota based on unsubstantiated circumstantial information," Vincent Galvin, an attorney for Toyota, said in court documents. "Unless and until plaintiffs can provide factual allegations of a specific defect in the (electronic throttle control system) that caused the subject vehicle to experience a sudden unintended acceleration event, plaintiffs' product liability and negligence claims should be dismissed," he said. Read more from The Associated Press.

Opinion: Auto Show Electrifies LA

By Los Angeles Mayor Antonio Villaraigosa

Cruisin' in fast and strong, the Auto Show makes its 103rd annual pit stop to Los Angeles this week, bringing along energy, technology, and, most importantly, opportunity to our city. The automotive industry has always been linked to our City's economic health. Oh, and the dealerships employ about 5,200 hard-working Angelenos. But now the auto industry can be linked to our city's sustainability as well. This year, the Auto Show presents a unique moment of opportunity for us: we're standing at the forefront of the electric vehicle revolution, and it's time to transform LA from the car capital of the world, into the electric car capital of the world. Read more from the Huffington Post.

Committed to Community: New Jersey Dealer Honored for Supporting Cancer Survivor Group

GLADSTONE, N.J. – Auto dealer Bill Vince and his wife, Eleanor, were recently recognized for their generous support of sharingVillage’s “Driving for Surviving” program, which enables young survivors of serious illnesses to drive miniature horse and pony drawn carriages and care for the animals in a therapeutic environment. The program, offered at no cost, helps children and their families confront life-threatening diseases and provides the tools to understand and cope with the challenges of living with an illness. “Sharing their success with those less fortunate and giving back to the community have always been guiding principles for Bill and Eleanor Vince,” said Shelley Zlotkin, co-founder of sharingVillage Survivor Groups. “When Bill and Eleanor learned about the program, they wanted to help. They have been tireless and generous in giving much needed funds, helping to raise additional funds and spreading the word about sharingVillage.” Vince has been a dealer for nearly 50 years. He owns VIP Honda in North Plainfield, N.J., and Bridgewater Acura in Bridgewater, N.J. His dealerships have earned numerous awards for excellence in sales, operations and community service. Read more from VIP Honda.

Editor's Note: If you have a story about involvement in your community, send it to publicaffairs@nada.org.