General Motors Co. is now free from all American taxpayer ownership after nearly five years after receiving its first government bailout.
The move underscores the turnaround of the domestic auto industry, which witnessed its deepest slump since the Great Depression.
“This marks one of the final chapters in the administration’s efforts to protect the broader economy by providing support for the automobile industry,” Jacob J. Lew, the Treasury Secretary, told reporters on the 9th of December.
The Treasury Department’s sale of its final GM shares heralds the end of U.S. Government involvement and a tumultuous chapter of the American auto industry after providing emergency funding back in 2008.
Bailouts from both the G. W. Bush and Obama administrations meant GM avoided liquidation, and was able to reorganise during a 2009 bankruptcy that has given new life to the company.
Buoyed by the consequent lowering of debt, and reduced labor costs, new life was breathed into the company.
A renewed, sleeker focus meant the manufacturer only pushed its strongest brands, and saw GM become an emblem for the renewed car industry.
Some of the most celebrated products of its entire output have come out this year, with a total of 18 new or refurbished cars entering the market in 2013 – and a further 14 planned for 2014.
Now on track to beat its previous record sales month (way back in 2007), the final sale in what was once a 60% stake by the Government means the path is clear for a new influx of investor money – including interest from Warren Buffett outfit Berkshire Hathaway.
“Detroit is back,” noted Dallas hedge fund Hayman Capital, “and GM could lead the way forward on the equity front.”
While the American Government has stated it lost around USD 10.5 billion on an investment of USD 49.5 billion, GM closed at a record high of USD 40.90 on the 9th of December.
The year included many other milestones and achievements for the company, having first being returned to investment grade status by ratings agency Moody’s in September and re-entering the Standard and Poor’s 500 index after being removed at signs of bankruptcy.
“This has been a long, hard road,” president of GM North America Mark Reuss, told reporters yesterday.
In terms of investment from outsider parties, he noted “I think probably some people will begin to consider us right away, maybe the next day.”