General Motors, the American car giant driven to bankruptcy by the global recession, will begin paying back bailout money from the US government as early as next month.
The company said it lost $1.2bn in the period from July, when it emerged from bankruptcy protection, to the end of September – but it was a figure that delighted investors and prompted some fighting talk from management. Forecasts laid out in bankruptcy court had promised a much worse figure.
The Government Accountability Office in Congress said earlier this month that the US taxpayer was never likely to recoup its investment in GM, but Mr Henderson used yesterday's results announcements to say: "It is my mission to disprove the GAO." And he told the Bloomberg news agency: "I've been asked probably a hundred times, 'When are you going to start paying back the taxpayer?' The answer is now."
Analysts pointed out that the summer months covered by GM's first post-bankruptcy results coincided with the US government's $3bn cash-for-clunkers rebate scheme, which subsidised new car purchases by drivers who traded in less fuel-efficient vehicles. And the money to buy back the government-owned bonds is coming from an escrow account set up using taxpayer money in the first place. GM has not needed to dip into these contingency reserves to the extent first predicted, because it has needed to bail out fewer of its suppliers than it forecast.
The US government owns $6.7bn of GM bonds, while the Canadian authorities – which also participated in the bailout to protect manufacturing plants in the country – have $1.4bn of bonds outstanding. Mr Henderson said he would put $1.2bn per quarter towards paying back those bonds, and could even accelerate repayment if economic conditions continue to improve, so that the company has no taxpayer debt by next year.
GM is still pencilling in an initial public offering of shares in the second half of 2010, he said, which would allow the US government to cash in some of its equity stake. Chairman Ed Whitacre has signalled that repaying government loans is a higher priority. The US government converted a first tranche of bailout loans into equity and now owns 61 per cent of GM.
The results laid out by GM yesterday underline how its international operations have been growing in importance. Mr Henderson said that China, where it is the largest vehicle manufacturer thanks to a series of local alliances, was "throwing off cash". It sold 478,000 vehicles in China in the third quarter, up 6 per cent on the previous three months.
The European operations, which include the Opel and Vauxhall brands that GM had intended to sell before performing a U-turn earlier this month, lost $400m in the period. The core US business lost $651m.