GM Outlook Improves Despite Q3 Losses
Early this week, General Motors stated that while it is still experiencing losses, it has stabilized itself enough so that the company can begin returning some of the $50 billion in assistance the federal government has provided since late December 2008. Even though GM reported a $1.2 billion loss in the third quarter, its balance sheet, cash reserves, and production levels have improved.
A New York Times article reported today that GM’s CEO Fritz Henderson said the company is in a position to begin paying back government loans next month, and could potentially return $6.7 billion to the federal government by June. However, Henderson declined to predict when the company would become profitable again. Some industry observers have stated that paying back government loans does not mean a full return to health for GM, noting that paybacks will include government-provided rainy day funds that were not be needed.
At the moment, GM has $42.6 billion in cash and securities, including $17.4 billion in assistance from the U.S. and Canadian governments.
Based on CRFB calculations at Stimulus.org, the federal government has provided $50.5 billion in assistance to GM, at a total estimated cost of around $36 billion. Currently, the federal government owns 60 percent of GM.
Below is a chart of government support for auto companies provided through the Auto Industry Financing Program of TARP.