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Is GM ready for the auction block?

The General Motors Company world headquarters building is shown in Detroit, Mich.

TEXT OF INTERVIEW

KAI RYSSDAL: In the past 54 years, only two American car companies have gone public. So for today's Marketplace pop quiz, let's see if you can name them.

The most recent one was -- and this is kind of a trick question, I grant you that -- it was Tesla, the electric carmaker this past June. The other one was Ford Motor Company back in 1956. At the time the biggest American initial stock offering ever.

That record fell today when GM filed for its IPO, a subject that should be of interest to most of us since we own GM right now. Megan McArdle writes about the new GM in the latest issue of The Atlantic Magazine. Megan, good to talk to you.

MEGAN MCARDLE:Thanks for having me.

RYSSDAL: Let's get the dollars and cents out of the way here. How much does the government have to make to get its money back? How well does GM's stock have to do?

MCARDLE: Well we gave GM about $50 billion, which they've paid back a few. So we need to get back about $43 billion. In order to do that -- with the government's 60 percent stake in the company -- basically the company would have to be worth around $70 billion. Unfortunately today it priced at $50 billion, so it doesn't look like the government's going to get its money back out.

RYSSDAL: So you did this piece in The Atlantic this month. You went to Detroit, you had to look around. I won't say that you revisited your opinion on the bailout, but you came away thinking it was something we sort of are going to get out of in the long run.

MCARDLE: We're going to get something out of it in the long run. It certainly wasn't as bad as I had feared at the time of the bailout. In the past, the way they responded to their legacy costs and their labor problems was they paid for that by pulling features out of the cars. And so, now that they've gotten rid of a lot of their debt and legacy costs, they can start putting those features back in. So that's all of the good. It looks like we do have a viable firm here. That said, it never looked all that probable that the government was going to get its money out and it looks even less probably now that we know where they're pricing the IPO.

RYSSDAL: You talked to some analysts before you went out to Detroit, asked about the stock sale and the machinations of how it might go. The answers you got basically were they're pushing this a little fast; it's going a little too quickly.

MCARDLE: It is going too quickly. If you're going to take a company this size public, what you would like to have ideally is a lot of good quarters under your belt to show that, hey, we've turned the quarter. GM had a lot of issues. They have a severely damaged brand. Turning around a damaged brand takes a long time, it's really hard to do. GM needs to send a credible signal, not only have they shed some debt, but they're going to get Americans excited about buying cars again.

RYSSDAL: You've quoted some people connected with the government and how the government went about handling General Motors, and you pointed out that the government was far more business-oriented in its approach than anybody really would have thought.

MCARDLE: Yes. The government definitely took a more business-oriented approach than many people had feared, including me. They definitely pushed harder on the UAW than a number of critics had expected. There are some people who argue that, in fact, there was too much of a finance orientation rather than a manufacturing orientation. Obama famously sat down in one of the early meetings and according to Steve Rattner, who was the car czar, said, 'Why can't they make a Corolla?' And I think the drive to push them towards being just like a Japanese car company, a lot of people thought that had gone too far.

RYSSDAL: Last thing that has to happen for General Motors to work is that it has to make cars that Americans want to buy in some incredibly large numbers. Are they there yet?

MCARDLE: Well there are two parts to this question. The first part is that with GM's historical cost structure, they couldn't make small cars that Americans wanted to buy. Now that they've managed to shed a lot of that debt and a lot of that legacy cost, yes they can make a better small car than they were capable of doing before. The second question is: Do they have kind of the management creativity and do they have the customer perception to actually get those cars sold? And that is very much up in the air.

RYSSDAL: Megan McArdle, she's the business editor at The Atlantic Magazine, which is where she has written recently about the new General Motors. She's also an occasional Friday regular for us in our Weekly Wrap. Megan, thanks a lot.

MCARDLE: Thank you for having me.

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