Will General Motors Company (GM) Be “Government Motors” Forever?

Moreover, pickups inspire especially high user loyalty. This could be good or bad for General Motors Company (NYSE:GM). If loyalty to GM trucks overcomes distaste for the auto bailouts among most “conflicted” buyers (i.e. Chevy and GMC owners who opposed the bailout), it will sharply mitigate the damage to GM. On the other hand, if those same individuals switch to Ford or Ram trucks, they could be lost to GM for life, making the bailout especially costly.

Lastly, truck buyers do have other good options. Ram refreshed its truck lineup last year, and Ford is planning to debut a new full-size pickup next year, which is expected to offer major fuel efficiency improvements over today’s pickups. GM can’t just cruise home in the truck and SUV markets. It needs to find a way to appease disaffected customers; simply getting the government to sell its stake (at a big loss, no less) will not get the job done.

Foolish bottom line
As long as President Obama is in office — which will be until early 2017 — the auto bailouts will remain fresh in the minds of many conservatives. Bailout stigma could therefore follow GM long after the Treasury sells the last of its GM shares next year. GM will feel the impact primarily in the high-margin full-size pickup and SUV markets, where most buyers are Republicans.

Investors should therefore watch the launch of GM’s new truck and full-size SUV platform closely. If GM can pick up market share over the next 12 months (when it will have a brand-new pickup platform and top rival Ford will have an outgoing model), it should ease concerns about any continuing “Government Motors” stigma.

On the other hand, if Ford continues to pick up market share or GM resorts to high-incentive spending to drive sales volume, investors should be worried. GM faces a formidable competitor in Ford in the truck and SUV markets. The company will have to deliver a stellar product to keep pace from a performance perspective. However, General Motors Company (NYSE:GM) doesn’t have a chance in this competition if a significant proportion of truck and SUV buyers won’t consider a Chevy or GMC for political reasons.

The article Will GM Be “Government Motors” Forever? originally appeared on Fool.com and is written by Adam Levine-Weinberg.

Fool contributor Adam Levine-Weinberg has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.