GM CEO says taxpayers will profit, as China becomes world’s largest auto market

GM CEO tells reports government investment will turn out good, China becomes the biggest auto market in the world with 13.6 million vehicles sold

GM Chairman and CEO Ed Whitacre made a bold statement today, telling reporters at the Detroit auto show that he expected American taxpayers to profit from the $6.7 billion emergency Treasury loans.

He went on to say that it wouldn’t be “too long,” and that it would be a good investment for the American government and people.

GM is forecasting a full-year profit in 2010, where the last full-year fiscal profit was five years ago.

The comments were made just as China became the world’s largest auto market in the world, edging out the U.S., as its sales increased significantly by 46-percent (to 13.6 million vehicles) year over year. U.S. sales decreased by 21-percent (10.4 million vehicles sold) in the same period.

We firstly reported that GM had announced it would begin to repay the government issued loans (from both the U.S. Treasury and the Canadian government loans) on December 18, 2009, when the announcement was first announced.

GM to date has repaid $1 billion to the U.S. Treasury, on time as expected part of the plan to repay the entire principal and marginal interest payments.

The American government currently has a 61-percent total stake in the company with more than $50 billion invested.

It is unclear if GM will be able to actually repay all of the government investment, at least not by the end of the year. The repayment of the investment will be contingent on a new GM IPO, with the market cap to be near $70 billion (a very significant amount above the recent value GM shares were trading at).

The annual Detroit auto show kicked-off today with opening remarks from the U.S. Transportation Secretary Ray LaHood, and will wrap up with closing remarks from the U.S. House Speaker Nancy Pelosi on the last day.


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Peggy holds a Bachelor Arts degree with honors in Economics from York University in Toronto, Canada. She is a Certified Management Accountant (CMA). She has also passed Level I of the Chartered Financial Analyst (CFA) Program. She is also a realtor. Write to peggy@business2press.com
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    The China Association of Automobile Manufacturers said 13.6 million vehicles were sold within the country last year.That compares with just over 10 million vehicles in the US, which was previously the world's largest market.

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