Moments ago GM impressed everyone once again when it reported that in the month of July it sold 272,512 cars in the US, or a 6.4% jump compared to a year earlier. This was an impressive beat to consensus expectations of just a 0.6% increase.
What caused this jump?
On one hand the relentless surge in reckless debt-financing for car purchases continues to be a major factor, and as Housing Wire reports (what we have covered extensively in the past) "auto debt accounted for 81% of the increase in overall non-mortgage debt among mortgage holders over the past 4 years."
But at this point it isn't just government-funded loans to subprime car purchasers. At this point it is the government itself which is buying GM cars hand over fist, thereby engaging in yet another indirect bailout of the formerly bankrupt automaker, which was bailed out by none other than the US government. To wit from GM's monthly sales report:
Fleet deliveries in July were down 20 percent year over year, as the company continues to execute its plan to reduce sales to rental customers and grow commercial and government deliveries. Government sales were up 38 percent, with deliveries to state and local governments up 59 percent. Commercial deliveries were up year over year for the 21st consecutive month. Rental deliveries were down 36 percent.
So fleet and rental deliveries plunging but who stepped up? Why the US government itself.
In other words, after bailing out the company's balance sheet in 2009, Obama has taken it upon himself to next bail out the income statement of the government-rescued company which is trading over $1 under its IPO price.
Of course, all of this will be for nothing if GM's Chinese auto sales - far more important for the bottom line - plunge in the coming months as they most likley will in the aftermath of the most turbulent month for domestic consumer sentiment since the great financial crisis.