GM Repays Loan While Chrysler's Results Improve
DETROIT — General Motors repaid a government loan and Chrysler posted improved quarterly results on Wednesday — proof, the companies said, that they were turning their operations around, reported The New York Times.
Reacting to the automakers’ progress, the Obama administration issued a report projecting that taxpayers would lose significantly less than previously forecast from the billions of dollars in government loans that bailed out the companies last year.
Officials would not give a specific forecast on Wednesday, but the Treasury estimated in December that it could lose about $30 billion of the $82 billion in aid given to the auto industry since December 2009, including $62 billion to GM and Chrysler.
The report also said 45,000 jobs had been created by the auto industry since GM emerged from bankruptcy protection last summer. It was the strongest nine-month period of growth in the industry since 2000, the report said, but it noted that it followed the loss of 400,000 jobs in 2008.
Chrysler said on Wednesday that it lost $3.8 billion in 2009 after emerging from bankruptcy in June, and posted a loss of $197 million for its first quarter this year. But excluding one-time items, mostly interest payments, it earned $143 million. Executives said the company had increased its cash reserves by $1.5 billion since January and that its operations were on track to break even or earn a profit this year.
Meanwhile, GM said it finished repaying the $8.2 billion loan plus interest that it owed the American and Canadian governments. It began showing a new television commercial telling consumers the money had been paid back and urging shoppers to “take a look at the new GM.”
About $43 billion that G.M. borrowed from the Treasury has not been repaid because it was converted to a 61 percent equity stake in the company. That money can be recovered only through a public stock sale, which is expected no sooner than the fourth quarter.
Chrysler’s results provided the first official look at the automaker’s finances since it came out of bankruptcy June 10 under the control of the Italian automaker, Fiat.
The company, which is 8 percent owned by the Treasury, reported first-quarter revenue of $9.7 billion, 58 percent more than projected by Brian Johnson, an analyst at Barclays Capital. The $197 million loss compared with a loss of $2.5 billion in the fourth quarter of last year.
Chrysler also said it had $7.4 billion in cash on hand as of March 31, up from $5.9 billion at the end of 2009. The figures were released during a presentation in Italy of the Fiat Group’s five-year business plan, which includes a spinoff of its automotive unit.
Fiat reported a first-quarter net loss of 25 million euros ($34 million), significantly narrower than the 410 million euros it lost a year earlier. But many analysts had expected a small profit. Sales rose to 12.9 billion euros, from 11.3 billion euros.
Executives said that Fiat and Chrysler expected their partnership to reduce engineering costs by 600 million euros ($803 million).
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