WASHINGTON — Fallen giant General Motors accelerated toward recovery Wednesday, announcing the repayment of $8.1 billion in U.S. and Canadian government loans five years ahead of schedule.
The Obama administration crowed about the “turnaround” at GM and fellow bailout recipient Chrysler, saying the unpopular rescue of automakers is paying off.
Much of the improvement comes from GM slashing its debt load and workforce as part of its bankruptcy reorganization last year. But the automaker is still losing money — $3.4 billion in last year’s fourth quarter.
And while car and truck sales are up this year, that’s primarily due to car-rental companies and other fleet buyers.
Chrysler, now run by Italy’s Fiat Group, said Wednesday that it lost almost $200 million in the first quarter. But it boosted cash reserves by $1.5 billion, reducing the likelihood that it will need more government aid.
“This turnaround . . . was the result of considered and politically difficult decisions made by President (Barack) Obama to provide GM and Chrysler, and indeed the auto industry, a lifeline, if they could demonstrate the will to reshape their businesses,” said White House adviser Larry Summers.
GM lost $88 billion between 2004 and last year when it declared bankruptcy. It endured years of painful restructuring, closing 14 factories and shedding more than 65,000 U.S. blue-collar jobs through buyouts, early-retirement offers and layoffs.
GM received $52 billion from the U.S. government and $9.5 billion from the Canadian and Ontario governments starting in 2008.
During bankruptcy, the U.S. government reduced the loan to $6.7 billion and converted the rest to stock that gave it a 61 percent control. Canadian governments converted part of their debt to shares, reducing their loan balance to $1.4 billion. The final installments on those loans were repaid Tuesday.
