It’s not over until the heavier-than-normal lady sings, but it appears both GM and Chrysler are staying on script for their respective comeback stories.

At the very least we can say that they have yet to fall off the stage.

The “new” General Motors made big headlines last April when it made a TV commercial announcing it had paid back “government loans in full, and ahead of schedule.”

Further scrutiny revealed the wording was probably misleading.

GM had paid back a $5.8 billion (US) operating loan ahead of a timetable set by the respective U.S. and Canadian governments. But some of the money came from another pot of government subsidies, and the major money that allowed GM to reorganize itself in a new and solvent entity was still at issue; money than sits in equity positions. As such, the U.S and Canadian governments continued to own significant portions of GM (60 and 11.7 percent, respectively).

This publicity seemed only to emphasize that while things were going good at the moment, the turnaround, if and when it came, would be more than just the repayment of some monies.

To get their money back, the respective governments need to sell their shares. And they sold some, in GM’s much publicized and very successful IPO (Initial Public Offering) last November. The U.S. sold more of its stock than Canada, and Ken Lewenza, president of the Canadian Auto Workers (CAW) Union, feels Canada should not be too quick about letting the rest go. “For one thing I don’t think they should sell it at a loss,” says Lewenza. “If the price gets to 56 bucks a share, then the Canadian government will be paid in full. (GM stock is currently trading around $36.) For another, it might be in Canada’s interest to stay part owners of the auto companies, similar to the situation with VW in Germany.”

The concept of a Health Care Trust was crucial to the formation of the new GM and Chrysler companies. It essentially got the health care obligations the companies have for retired workers “off the books” and allowed them to be on more even footing with automakers that have less onerous retiree obligations. It helps retirees as well — if the companies go down the respective trusts can’t be touched.

Lewenza says the retiree issue is a “huge one” moving forward. “In Canada we have 30,000 retirees and less than 10,000 actives. And that gap is only going to grow.”

He adds that currently only Chrysler retirees have agreed to move ahead with its Health Care Trust. The GM retirees are still deciding.
 
With its debt wiped out, lots of new and exciting product, the painful transition to a four-brand company completed, and a very successful IPO behind them, Lewenza says the pressure is now on GM to perform.
 
“This is their time,” says Lewenza.

Auto analyst Dennis DesRosiers actually likes Chrysler’s product pipeline better than GM’s. He argues that Chrysler will soon feature more new models, and be less reliant on truck sales. He lauded Fiat and Chrysler president, Sergio Marchionne’s decision to undergo medium-term pain for long-term gain, as Marchionne did little for the newest member of the Fiat family for the first 18 months — except work on developing new product. Why fine-tune anything else until or unless there is great product to sell?

Chrysler would love to file an IPO this year, but needs to have a better-looking balance sheet. Unlike GM, it lost money in 2010, and still has a lot of high-interest government debt on its books. Chrysler is seeking to convert those loans to lower-interest bank loans and/or bonds.

Chrysler’s bailout package was predicated on it finding a global partner, which ultimately became Fiat. The Italy-based automaker currently owns 25 percent of Chrysler and has hit some pre-determined benchmarks that could take ownership to 35 percent. Fiat can take a 51 percent stake if it hits more benchmarks, including repaying its loans to the U.S. government. Marchionne was quoted earlier this year at an industry conference, describing the 51 percent stake as a “Christmas Day wish.”

Some of the benchmarks concern technology transfer, and Chrysler’s announced product plans already include lots of Fiat-developed models for North America, and lots of Chrysler-developed products for Europe.

“The first test of this interaction is a plant in Europe, which will build the new Grand Cherokee,” noted Lewenza. “This inter-twining of technology is something we’re going to be watching closely. What do we get in return?”

There is no shortage of things to watch closely, as these companies continue on their respective recovery plans.

DesRosiers says the labour negotiations with the UAW this fall and the CAW in 2012 will be critical.

Carlos Gomez, who watches the auto industry for Scoitabank, notes that sales in 2011 are expected to be okay, but not outstanding. “In the U.S. we should see sales of 12.7 million in 2011, which is up from the 11.6 million total in 2010, but we’re still far behind the average for the last decade, which is about 16 million.”

Industry watchers are also not sure what to make of GM’s continuous churn of top executives. The latest development is Dan Ammann replacing Chris Liddell as CFO on April 1, 2011. Liddell was at GM just over a year, and oversaw GM’s successful IPO. He was touted to be a possible CEO and now he’s gone.

But the industry is still buzzing over the positive consumer feedback from Chrysler’s Super Bowl TV spot, featuring rapper Eminem, and the now-famous “Imported from Detroit” tagline. It’s obvious people like the idea of successful Detroit automakers. But is that the same thing as consumers buying their vehicles in quantities that will make them successful over the long run? It’s a compelling storyline that will continue to keep everyone at the edge of his or her seats — right up to when that gravity-rich lady does her thing.