P&A Providers & Administrators
MenuMENU
SearchSEARCH

Weighing New GM's Resale Value

October 29, 2010
3 min to read


DETROIT — General Motors Co. has made progress tidying up its balance sheet ahead of a planned initial public stock offering next month, but there's still a big question it has to answer for potential investors: Is GM fixed?


The automaker said it will return another $2.1 billion of the nearly $50 billion in bailout funds it got from U.S. taxpayers, The Wall Street Journal reported. The repayment was one of a series of moves GM, which is majority owned by the federal government, announced to reduce its liabilities and show financial strength ahead of the IPO.

Ad Loading...


GM said it will repay the money by buying back 83.9 million preferred shares owned by the U.S. Treasury. In a separate move, it said it will immediately pay $2.8 billion to reduce the amount it owes to a trust fund that covers the cost of health care for retired workers.


After the IPO, the auto maker plans to cut its liabilities further by contributing $4 billion in cash and $2 billion in stock to employee pension funds.


All told, the moves will use $10.9 billion, but will save about $500 million a year in interest payments. GM will be left with $24 billion in liquidity, including a backup $5 billion revolving credit line, which company executives believe is enough to keep it moving forward, especially now that it is making money again.


The stock buyback from the Treasury is significant because the Obama administration is seeking to recoup the entire $49.5 billion that taxpayers poured into GM, starting in the final days of the George W. Bush administration. With Thursday's deal, GM will have returned about $9.5 billion of that money, through loan repayments, interest charges and dividends, the Treasury said.


During a stay in bankruptcy court last year, GM slashed its debt and costs, halved the number of brands it sells and swept out its entrenched leadership in favor of aggressive newcomers.

Ad Loading...


Bolstered by a new, lower-cost union contract, some strong-selling models and an improving economy, GM reported a $2.2 billion profit for this year's first half, a sharp turnaround after losing nearly $90 billion between 2005 and its bankruptcy filing in June 2009. GM's U.S. sales rose 6.8% in the first nine months of 2010.


But, as for whether GM is fixed, the answer is yes—but not completely. Many problems linger.


GM's U.S. market share slipped 2.8 percentage points this year through September as overall car sales recovered. One reason is the company still doesn't make enough models that appeal to a broad spectrum of Americans, particularly young, urban drivers and those on both coasts.


GM faces intense competition from a resurgent Ford Motor Co. and newer rivals such as Korea's Hyundai Motor Co., as well as Toyota Motor Corp., which remains a formidable competitor despite its safety recalls. In Europe, GM has racked up years of losses at its Adam Opel GmbH unit.

More Industry

Orange electric vehicle charging station.
Industry•by Lauren Lawrence•October 20, 2026

Charger Network Growth Slows

Despite a projected increase in public EV chargers in 2026, charging infrastructure remains a top concern for consumers as the gap between the most and least EV-friendly places remains substantial.

Read More →
Fan of $100 bills atop a white envelope
Industry•by Hannah Mitchell•October 13, 2026

Lenders, Consumers Take on More Auto Loan Risk

September records loosened credit access the most in over a decade as buyers took advantage of the conditions to afford trading, though loan applications fell.

Read More →
Red type R Honda civic parked on road.
Industry•by Lauren Lawrence•October 13, 2026

Next-Gen Hybrids in Sight

Dealerships can expect to see revamped hybrids from Honda next year as the company rolls out a new system and model lineup.

Read More →
Ad Loading...
Dodge ram emblem on orange vehicle exterior
Industry•by Hannah Mitchell•October 6, 2026

Gem State Stores Change Hands

A larger auto group founded in the industry’s early years sold two franchises to a neighbor group that's on a growth spurt.

Read More →
Graphic of model car driving on fake road.
Industry•by Lauren Lawrence•October 6, 2026

Charging In Motion

Honda has been researching wireless in-motion charging for electric vehicles since 2025, and new technology developments have put it a step closer to a final product.

Read More →
front grill of a Ford truck with blue Ford emblem
Industry•by Lauren Lawrence•September 30, 2026

Twin Cities Stores Sell

Minnesota-based Walser Automotive Group made what it called the most significant acquisition in its history with a three-rooftop deal in Minneapolis.

Read More →
Ad Loading...
Diesel engine on a production line in a factory
Industry•by Hannah Mitchell•September 29, 2026

U.S. Auto Sales Still Below Prepandemic Levels

Mobility Global industry observers don’t expect the market to return to the higher volumes that became routine before Covid but to stay well below its potential.

Read More →
Front of red tesla car.
Industry•by Lauren Lawrence•September 22, 2026

The Powertrain Shift

Electric-vehicle owners are backpedaling, according to new data, with product availability driving many to shift back to gas-powered engines.

Read More →
White BMW SUV driving on road.
Industry•by Hannah Mitchell•September 15, 2026

Achromatic Autos

The shades that dominate the U.S. car market don’t call attention to themselves, though grayscale may have plateaued after a 30-year upswing, research shows.

Read More →
Ad Loading...
Line of eclipse SUVs in parking lot.
Industry•by Lauren Lawrence•September 15, 2026

Used-Vehicle Affordability Worsens

Listing prices in August defied seasonal trends, rising above $27,000 for the second time this year.

Read More →