The “Government Motors” stigma still isn’t fading
It has been nearly four years since General Motors Company (NYSE:GM) emerged from bankruptcy, but the hard feelings over GM’s taxpayer-funded bailout haven’t yet faded. I hear it from readers all the time: GM will never again compete with old rival Ford Motor Company (NYSE:F) in their eyes, because Ford was able to finance its own turnaround without government intervention.
That’s certainly true, and it doesn’t help that Ford Motor Company (NYSE:F)’s turnaround has been a shining success while GM continues to muddle through what seems like a never-ending overhaul.
So how can GM get past the “Government Motors” stigma? Making consistently great cars and trucks (like – I hate to say it – Ford Motor Company (NYSE:F) is doing) would certainly help, and although GM’s progress on that front hasn’t been unequivocal, GM’s best recent products really are excellent. With a slew of new models on the way over the next couple of years, General Motors Company (NYSE:GM) should – should – be able to regain more of its former customers.
But I think GM will need to do more to bring its “Government Motors” chapter to a close.
Will GM step up and really pay taxpayers back?
At current prices, the Treasury’s remaining shares are worth a bit less than $8 billion – a long way from the $20 billion that remains unpaid from the bailout.
The Treasury is expected to have sold the last of its GM shares about a year from now, in March of 2014. At that point, GM’s remaining “debt” to taxpayers could become a big issue, a PR thorn in GM’s side.
GM had $26.1 billion in cash on hand at the end of 2012. Writing a big check to the Treasury to square accounts once and for all would put a sizable dent in that cash hoard – but it could end up being the right thing to do to help restore General Motors Company (NYSE:GM)’s reputation. Will GM CEO Dan Akerson decide to go there? Stay tuned.
The article Will GM Ever Repay Taxpayers? originally appeared on Fool.com and is written by John Rosevear.
Fool contributor John Rosevear owns shares of General Motors and Ford. Follow him on Twitter at @jrosevear. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford and General Motors.
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