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GM Is Paying Off Government Loans Ahead Of Schedule
By John Vinson
Expert Author
Article Date: 2010-04-22
The buzzword in 2009 was 'bailout'. You couldn't turn a TV on without someone uttering the word. One of the controversial bailout topics was for the auto industry. Two of the Big Three American auto companies were in desperate need of funds, General Motors and Chrysler. A Washington Post poll found that only 41% of Americans supported the auto bailout. The final amount of bailout funds afforded to the auto industry sat around $130 billion.
Fast forward to the present, and it looks like GM is making a slow but steady rebound. The latest news is their repayment plan is ahead of schedule. They're paying back the American and Canadian governments $8.1 billion, being five years ahead of schedule.
The Obama administration has released comments in regards to GM paying off it's debts, starting with White house economic adviser Larry Summers, "This turnaround wasn't an accident of history. It was the result of considered and politically difficult decisions made by President Obama to provide GM and Chrysler - and indeed the auto industry - a lifeline, if they could demonstrate the will to reshape their businesses."
The ability to pay off the government has resulted from GM's restructuring, which cut massive costs by lowering debt and laying off workers. The company is still losing money, and is 70 percent owned by the government but the recovery process is making slow but steady progress.
GM CEO Ed Whitacre has explained much of the company's restructuring and how the plans are being rolled out. GM's current focus will be to release more efficient midsize cars, and will be investing $1.5 billion in 20 plants across the country.
With the US government still owning a sizable portion of GM, the company will be relying on a public stock offering to allow for the remaining US investment to be paid off. The same will go for the Canadian government as well.
Other positive numbers for GM were their sales in the first quarter, as they rose by 16.8 percent. Which is ahead of total US car and truck sales which are also increasing at 15.5 percent. Along with sales, it appears that American's confidence in domestic automobiles is rising. A recent poll showed 38 percent of Americans stated that US vehicles were the best made, with 33 percent preferring Asian companies. This is a drastic turnaround from 2006, where 46 percent preferred Asian built cars and only 29 percent preferred American.
Taking all of this information in, it's still hard to tell whether GM is a good investment. Ford's rebound was stimulated by it's financial security, and their stock soared after the economic fallout. With GM being able to pay off debt ahead of schedule, things are looking better. As with all investments, take the information for what you will.
About the Author:
John is a staff writer for WebProNews.
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