GM hopes payback puts it back on track
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Kai Ryssdal: Great news, fellow GM shareholders. General Motors lost almost $1.2 billion in the first two-and-a-half months after it got out of bankruptcy this past July. No, not exactly a rip-roaring reversal of fortune. But it was a whole lot better than anybody expected. For comparison’s sake, GM lost $6 billion the first three months of this year.
And in fact, the company is feeling so much better about things that it plans to start repaying the billions it owes American taxpayers next month. Marketplace’s John Dimsdale reports from Washington.
JOHN DIMSDALE: Bankruptcy was good for GM. Before entering Chapter 11 in June, the company was staggering under a $95-billion debt. It emerged six weeks later with all but $17 billion wiped clean. That $17 billion includes the loan from the government.
But Chief Executive Fritz Henderson says it’ll be paid back as quickly as possible.
FRITZ HENDERSON: It’s a personal commitment. It’s a commitment of the entire leadership team of the company to repay the taxpayer. First and foremost.
GM is using income from cars that are selling, including Silverado pickups and Chevy Impalas, to reimburse the government. Some analysts see a risk in the company using its meager assets to pay off a loan that isn’t due for another five years.
But Jim Henry with the business Web site BNET.com, says Henderson has learned a valuable PR lesson from the first car CEO to get a government bailout: Chrysler’s Lee Iacocca.
JIM HENRY: Repaying the loans early made Iacocca a hero. That’s what everybody remembers about Iacocca. They don’t remember that Chrysler needed the money in the first place.
In addition to shedding debt, GM got rid of unprofitable brands, dealers and workers. Henry says GM’s decision two weeks ago to keep its international brand, Opel, shows the company is stronger.
HENRY: Since they’re hanging on to Opel and since they’re repaying the debt, it seems to me as if now they’re starting to look a little bit beyond the end of their noses.
The company is projecting modest sales growth next year. Not a recovery, says CEO Henderson but stabilization.
In Washington, I’m John Dimsdale for Marketplace.
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