GM's Comeback Continues

US News

There's more good news for U.S. automakers.

[Cars Unveiled at the New York Auto Show]

In the latest annual car-quality rankings from J.D. Power & Associates, General Motors showed improvement across all four of its brands--Cadillac, GMC, Chevrolet and Buick--while Cadillac ranked fourth overall, up from ninth in 2011. The Chevy Malibu sedan and Buick Enclave crossover were rated the top vehicles in their class. Those sorts of honors were rare for GM during the dark days leading up to its 2009 bankruptcy filing.

GM's improved showing is a small vindication for the automaker, as well as for the Obama administration, which engineered the 2009 taxpayer bailout that kept GM alive. Republican presidential frontrunner Mitt Romney opposed the bailout, a stance that will factor into this year's elections in key battleground states like Ohio and Michigan, which benefited from a rescue that preserved thousand of auto-worker jobs.

Chrysler, which also got a bailout, fared worse in the Power rankings. Its turnaround is taking longer, and it was one of five automakers whose quality rankings slipped from 2011 to 2012. (The others were Ford, Mercedes-Benz, Subaru, and Mini.) Chrysler's Fiat and Dodge divisions came in near the bottom, and no Chrysler vehicles topped their category.

Although Ford slipped and came in below the industry average, that was most likely because of Ford's "Sync" system for managing entertainment and phone features, which many drivers have found confusing and overcomplicated. Ford has since made changes to address those complaints. Meanwhile, Ford's Taurus sedan and Mustang sports car won best-in-class awards, and the automaker's Lincoln division improved. And new models, such as the Escape crossover and forthcoming Fusion sedan, should further energize a rennaisance that has brought Ford back from its own troubled era.

[See why Mitt Romney's stance on GM would cost taxpayers.]

Lexus was the top-ranked brand in the Power survey for the 14th time since the division debuted in 1990. In general, the survey shows that the quality of cars is improving significantly, a boon for consumers.

GM has been eager to prove its mettle since the controversial government rescue. The automaker has paid back $23.1 billion of the $49.5 billion the U.S. government invested in it. But for now, the government seems stuck owning about one-third of the company. If it sold those shares at current prices, taxpayers would lose about $15 billion, adding to criticism of the bailout.

For the government to break even, it would have to sell at a share price of about $52. The government can hold onto its stake as long as it wants, but neither GM nor the Obama administration relishes the idea of long-term government ownership of the nation's biggest automaker.

[See a defense of the Chevy Volt.]

Romney, has said he'd sell the government's stake, even if it means a taxpayer loss. The whole debate is an ongoing embarrassment for GM, which wants consumers to focus on its cars, not its majority shareholder.

It's not out of the question that GM stock could hit the magic threshold of $52 someday. But for that to happen, overall car sales would have to pick up significantly, and GM would probably have to gain market share, too--plus, earn a lot more quality awards.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.



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