Can GM Become Competitive?

The other day I was at an event with a representative from a foreign car company, who pointed out that with all the explicit and implicit subsidies from the bailout and bankruptcy, GM and Chrysler were getting a major market advantage handed to them.  "How can we compete?" the car exec asked rhetorically.  Everyone else in the room responded, nearly in unison, "You make better cars."

Still, at some price point, the GM/Chrysler cost advantage gives them a compelling value proposition.  Have the various subsidies gotten them to that point?  Well, I kind of doubt it.  On the other hand, their sales are apparently doing surprisingly well in bankruptcy. 

One of the biggest fears of a GM bankruptcy filing -- a collapse of revenue -- appears to not be as prominent an issue as originally thought.

Car buyers appear undaunted by GM's bankruptcy, assuaging one of the auto maker's biggest fears heading into Chapter 11. Early signs point to stable demand for GM cars and trucks since the company filed for Chapter 11.

Mr. Henderson said June retail sales are tracking higher than May. "June sales are moving along just fine," Mr. Henderson told reporters at a summit in Detroit. Sales to rental and other fleets are down from last month, he said. "We're very gratified for the support of dealers and customers that we've received through this."

Perhaps people are taking their patriotic duty to go out and buy an American car seriously.