General Motors made a strange decision, immediately settling its government debts. That’s obviously good news for taxpayers, who’ll be seeing the billions of dollars loaned to the company again sooner than planned.
But you can’t help but wonder where those funds have so suddenly come from, funds that can set things right so quickly too.
A few analysts – as well as American politicians – may have the answer: GM has simply repaid its government debt… with government money. In concrete terms, the money comes from an emergency bailout fund set up by the Obama administration to help GM return to profitability. The currently intact fund would have been used to finance the swift repayment of the company’s loans.
Why? GM is cheerfully preparing for public stock offerings and needs to uphold the image of a company in full expansion. And what better image than that of a company that repays its loans ahead of schedule (the deadline is in June)?
GM also took the opportunity to announce with great fanfare that its sales have increased since the beginning of the year. Which is, again, absolutely correct – if you only take the four remaining banners into account.
But in reality, and according to Automotive News' calculations, GM’s total vehicle sales actually dropped 22% compared to the same time last year. You can’t give up so many models and banners without suffering any consequences, especially seeing as how this time last year, GM sales were booming because of attractive purchase incentives.
Is it safe to say that things aren’t as rosy as GM is making them out to be? Not at all. The company has managed its profitable assets well, is promising new products that should attract buyers and has even managed to turn existing products into success stories.
GM is on the right track, and should return to true profitability soon. But the automaker isn’t completely out of the woods yet. We should take off our rose-coloured glasses and take the executives’ declarations with a grain of salt: GM still has a long way to go to regain its former prestige.
But you can’t help but wonder where those funds have so suddenly come from, funds that can set things right so quickly too.
A few analysts – as well as American politicians – may have the answer: GM has simply repaid its government debt… with government money. In concrete terms, the money comes from an emergency bailout fund set up by the Obama administration to help GM return to profitability. The currently intact fund would have been used to finance the swift repayment of the company’s loans.
Why? GM is cheerfully preparing for public stock offerings and needs to uphold the image of a company in full expansion. And what better image than that of a company that repays its loans ahead of schedule (the deadline is in June)?
GM also took the opportunity to announce with great fanfare that its sales have increased since the beginning of the year. Which is, again, absolutely correct – if you only take the four remaining banners into account.
But in reality, and according to Automotive News' calculations, GM’s total vehicle sales actually dropped 22% compared to the same time last year. You can’t give up so many models and banners without suffering any consequences, especially seeing as how this time last year, GM sales were booming because of attractive purchase incentives.
Is it safe to say that things aren’t as rosy as GM is making them out to be? Not at all. The company has managed its profitable assets well, is promising new products that should attract buyers and has even managed to turn existing products into success stories.
GM is on the right track, and should return to true profitability soon. But the automaker isn’t completely out of the woods yet. We should take off our rose-coloured glasses and take the executives’ declarations with a grain of salt: GM still has a long way to go to regain its former prestige.
