April 21, 2010— -- General Motors today $8.1 billion in government loans repaid, five years ahead of schedule and nine months after the troubled auto giant declared bankruptcy, signaling that the auto maker may be on the path to profitability.
"As of today, GM has repaid in full and interest," said GM CEO Ed Whitacre to a crowd assembled on floor of a GM plant in Kansas City, Kan.
To smiles and applause from workers, Whitacre also announced GM's plan to invest $257 million in that plant and another in Detroit to ramp up production of the Chevy Malibu.
Cheering on the floor of a GM factory would have been unthinkable a year ago, when the company was on a downward spiral towards its bankruptcy in June 2009.
When it emerged from restructuring last year, GM had converted most of the $52 billion in federal bailout funds into company stock, leaving a $6.7 billion outstanding loan from the U.S. Treasury. The Canadian government lent the company an additional $1.4 billion.
With ownership of 61 percent of GM's shares, American taxpayers still have billions invested in the auto maker, but analysts say there's reason to believe that investment could now pay off. If the government can sell its stake in GM for more than $45 billion, then taxpayers could actually make a profit.
"It would look awfully good if the Democrats could say, 'We saved a bunch of jobs, we got a successful company, and they taxpayers got paid back,'" said John Wolkonowicz, a senior analyst at HIS Global Insight. "That would be huge."
Bankruptcy offered GM a chance to shed unprofitable product lines and expensive legacy costs, including large union pensions. Along with a management shakeup that came with the bailout, a line of well-reviewed vehicles is now catching on with the public.
"General Motors has undergone a revolution in top management," said Micheline Maynard, an auto writer for the New York Times. "Because they don't have loyalties to the past, they can go in with fresh ideas."
Although GM still lost $3.4 billion in the fourth quarter of 2009, analysts expect that the company will start turning a profit this year and could follow with a public offering of GM stock.
The Obama administration was already taking credit for the bailout's success today, noting in a report that the turnaround of GM and Chrysler saved an estimated 1 million jobs from elimination last year.
"This turnaround wasn't an accident of history," wrote White House economic adviser Larry Summers on the White House Web page. "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."
Treasury Secretary Tim Geithner echoed Summers, saying in a statement: "This continued progress is a positive sign for our auto investment -- not only more funds recovered for the taxpayer but also countless jobs saved and the successful stabilization of a vital industry for our country."
FAQs
Is GM still owned by the government? GM was NEVER owned by the government. The government may not own a publicly-traded Corporation.
Did GM repay the government? ›
The U.S., Canadian, and Ontario governments, as part of the launch of the new GM, provided loans of $8.4 billion and took equity stakes in the new company. Today's payment of $5.8 billion ($4.7 billion to the U.S. Treasury and $C1. 1 billion to Export Development Canada) completes the payback of these loans.
How much money does General Motors owe? ›
Total debt on the balance sheet as of June 2024 : $126.43 B
According to General Motors's latest financial reports the company's total debt is $126.43 B. A company's total debt is the sum of all current and non-current debts.
What year did GM get bailed out? ›
On this day in 2008, a week after Senate Republicans killed a Democratic-sponsored bailout bill, asserting it failed to impose sufficient wage cuts on autoworkers, President George W. Bush announced a $17.4 billion bailout to General Motors and Chrysler, of which $13.4 billion would be extended immediately.
How much of General Motors is owned by China? ›
SAIC General Motors Sales Co., Ltd., a national sales company. GM China has a 49 percent stake and SAIC a 51 percent stake.
Who owns most of General Motors? ›
Approximately 82.13% of the company's stock is owned by Institutional Investors, 6.95% is owned by Insiders and 10.92% is owned by Public Companies and Individual Investors. The ownership structure of General Motors (GM) stock is a mix of institutional, retail and individual investors.
Did the US lose money on GM bailout? ›
The most tangible loss is money. Between Obama and Bush, the U.S. spent about $80 billion to rescue GM, Chrysler, and their auto-part suppliers. With all the government-held shares sold, Uncle Sam booked a $10.5 billion loss on its GM investment. The U.S. lost another $1.2 billion on Chrysler.
How much did the GM bailout cost taxpayers? ›
Vilified for turning his back on America's autoworkers, Romney lost the argument, Barack Obama won the election, General Motors got its way, and U.S. taxpayers got stuck with an $11.2 billion bill to keep the company alive.
Why didn't Ford take bailout money? ›
Though GM and Chrysler eventually did get a bailout — Ford did not need help because it had fortuitously secured a large amount of financing shortly before the crisis — it was not all sweetness and light.
Is GM doing well financially? ›
GM recently reported stronger-than-expected Q2 2024 results, with revenue rising by 7.2% year-over-year to $48 billion, marking a record for the quarter.
Ford took $6B government loan in 2009 — and debt still haunts company. More than a decade after the last economic crisis, Ford Motor Company is still paying down a fat government loan created by Congress at the start of the Great Recession to aid automakers with factory projects.
Was the GM bailout worth it? ›
Taxpayers lost nearly $12 billion on the government's aid to the two companies. Eventually, however, the bailout allowed both GM and Chrysler to become successful and hire tens of thousands of workers. It also saved suppliers' jobs. Allowing the companies to fail would have been far more expensive for taxpayers.
Does the US government still own GM? ›
GM filed for bankruptcy during the financial crisis of 2009 and became largely owned by the U.S. government. The company recovered and relaunched in 2010 with an initial public offering of new GM stocks. As of April 2023, the top shareholders of the company were Mary Barra, Mark Reuss, Douglas L.
What caused GM to fail? ›
During the '80s and more so in the '90s, the push towards fuel efficiency crippled GM in another way. Because the company was accustomed to making the biggest profit on its larger, less fuel efficient models, it failed to innovate on the product development front and was left behind.
Which president bailed out the car companies? ›
On December 19, 2008, President Bush used his executive authority to declare that TARP funds may be spent on any program he personally deems necessary to avert the financial crisis, and declared Section 102 to be nonbinding. The federal loan would prevent General Motors from going into immediate bankruptcy.
Is GM owned by the government? ›
Like any public company with a stock offering, General Motors is owned by shareholders. In the past, the U.S. government was a majority shareholder in the company (after the 2008 bailouts). However, in 2010 GM broke free from the government's yoke and was reborn in its current incarnation.
Where does GM make most of its money? ›
GM earns the majority of its revenue and profit from vehicle sales but also from its financing arm called GM Financial.
What percent of the US is government owned? ›
The federal government manages about 640 million acres (2.6 million km2) of land in the United States, which is about 28% of the total land area of 2.27 billion acres (9.2 million km2).
How much did the government lose on the GM bailout? ›
WASHINGTON (Reuters) - The U.S. government lost $11.2 billion on its bailout of General Motors Co , more than the $10.3 billion the Treasury Department estimated when it sold its remaining GM shares in December, according to a government report released on Wednesday.
