A car loan repaid

There was much ballyhoo last week — and deservedly so — when General Motors announced the repayment of $8.1 billion in loans from the governments of the United States and Canada. The loans are being repaid five years ahead of schedule. Not bad for an automaker that, little more than a year ago, looked about as likely to make its loan repayments on time as a teenager with a brand new diesel pickup and no job.

The Daily Sentinel was among the many critics last year of the decision to bailout GM and Chrysler with government money. We argued that allowing the two auto companies to simply go through bankruptcy and stand or fail on their own was much better than putting U.S. taxpayers on the hook for bad product decisions and the costly union contracts.

In fact, both companies did go into bankruptcy and reorganize. And both came out stronger with the assistance of the government bailout money. Chrysler, which is now run by Fiat Group SpA, hasn’t done quite as well as GM, but it has still outperformed what was forecast for it.

The situation for General Motors was helped tremendously because it was able to shed massive amounts of debt and long-term personnel obligations with the government assistance.

Neither Chrysler nor GM is on such solid economic footing as Ford appears to be right now, but all three American companies have no doubt been helped by the problems that have struck Toyota of late. Americans’ loyalty is reportedly turning back to U.S. companies.

The $8.1 billion in debt represents only a portion of the assistance the carmaker received from the U.S. and Canadian governments. Much more assistance was given in the form of government purchase of 70 percent of the company’s stock. Furthermore, the company is still losing money, although not as rapidly as before the bailout.

GM won’t be able to claim it has fully recovered until it can consistently operate at a profit and can convince private investors to purchase the stock now owned by the two governments.

However, it’s difficult to argue, in the wake of last week’s loan repayment announcement, that the bailout was a disaster for taxpayers.


COMMENTS

Commenting is not available in this channel entry.


TOP JOBS
Search More Jobs





THE DAILY SENTINEL
734 S. Seventh St.
Grand Junction, CO 81501
970-242-5050
Editions
Subscribe to print edition
E-edition
Advertisers
Advertiser Tearsheet
Information

© 2015 Grand Junction Media, Inc.
By using this site you agree to the Visitor Agreement and the Privacy Policy