GM released from US taxpayers' hands
General Motors, nearly five years after first receiving government aid, is free from US taxpayer ownership after the Department of the Treasury sold off its remaining stake in the nation's largest carmaker.
The sale marks the end of "Government Motors", as GM was derisively labelled by some critics after the US government stepped in with emergency funding in 2008. Bailouts from the George W. Bush and Barack Obama administrations helped GM avoid liquidation and reorganise in a 2009 bankruptcy that has given new life to the company.
The US lost about US$11 billion on its investment of about US$50 billion in GM, which was the largest piece of an industry bailout that became a centrepiece of Obama's first term. With lower labour costs, less debt and only its strongest brands, GM has been poised to take advantage of the best US industry sales since 2007.
"This marks one of the final chapters in the administration's efforts to protect the broader economy by providing support for the automobile industry," Secretary of the Treasury Jacob Lew said yesterday.
A total vehicle industry shutdown from a liquidation of GM and Chrysler would have cut 2.63 million jobs from the US economy in 2009, according to a study by the Centre for Automotive Research. The bailout saved or avoided the loss of US$105 billion in transfer payments and the loss of personal and social insurance tax collection in 2009 and 2010, according to the centre.
The vehicle bailout will rank as "one of the most important interventions, maybe the most important, in US economic history," said Sean McAlinden, the research centre's chief economist, who led the analysis.
Without it, "the upper Midwest would still be a gaping, double-digit unemployment hole in the economy, and 600,000 retirees would've lost their pensions", McAlinden said.
GM's recovery is being helped by some of its best products in a generation. It is bringing out 18 new or refreshed cars and trucks this year and 14 next year.
It is part of GM's effort to transform its catalogue into one of the industry's newest from among the oldest.
Those new products are winning some rave reviews. The Chevrolet Impala was the first US car chosen as the best car on the market by Consumer Reports, a first in at least 20 years, and the Cadillac CTS was picked as Motor Trend's car of the year.