I'm not too surprised that the offer price for GM shares is heading up. The analysts can argue over the company's future prospects, dissecting company strategy (or lack of it) till the cows come home, but a conversation I had earlier this week sums up what many potential investors are believing.

If a leaner and restructured General Motors is in profit with a US market at under 12m units, won't it be generating tons of money when the US market recovers back over 14m units – getting 'back to normal'  - in 2-3 years' time when economic recovery is much more firmly established?

Add in the fact that GM is well-placed in China (2m units so far this year including JVs), that Chevrolet is now very well established as a global value brand just waiting for markets to recover (the product range overhauled and in good shape), that the possibly game-changing Volt/Ampera range-extender electric vehicle is about to lift-off (the initial R&D/development spend behind it) and the plusses column isn't looking too shabby.

And if SAIC wants a slice of the IPO action, well, maybe that serves to reinforce a strengthening China connection.

Perhaps the only real cloud in the cheery blue sky for GM is continued losses in Europe, but GM is not alone in finding Europe tough. Nick Reilly has said that GM in Europe has its manufacturing footprint about right with Antwerp going, so it's not too clear how it can improve profitability – beyond the general hope that the European car market will come back reasonably strongly in the second half of next year and 2012.

Do potential investors care about the problems for GM in Europe? They care about anything that holds back profit, but they won't lose too much sleep if it's manageable with the GM bottom line well in the black due to higher profits from Asia and North America. GM has rocked the boat with Opel and Germany before and it perhaps won't want to stir that up again unless it really has to. So, it's therefore simply a case of keeping a lid on things in Europe, waiting for the market tide to rise and enjoying rising profits in North America?

In this rosy scenario, 2009 becomes a kind of 'year zero' for GM, the slate wiped clean.

And can we confidently assume that all is fixed on the product front in North America, that consumers have forgotten all about 'bad old GM' that was perceived as low on quality and had to continually discount heavily to move the metal and keep plants stuffed with overpaid UAW workers in business? Not to mention the oft-cited criticism that GM was ingrained with a complacent management culture and unwieldy internal organisation that hastened its decline, climaxing in bankruptcy, bailout and the pejorative moniker 'Government Motors'.

People wouldn't confuse all that bad stuff with this new company would they? Not if they're counting dividends on a rising share price.

US: GM raises stock offering price range

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