General Motors Repays Their Bailout Debt

Well color me pleasantly surprised.  I want to make this crystal clear...I am politically conservative.  I am not at all in favor of government bailouts.  I don't subscribe to the premise that some companies or institutions or banks are too large to let them fail, no matter how many jobs are at stake.  I believe unions have crippled many industries in this country and are NOT a necessary evil.  They were needed and useful back when they were first introduced to this country, but now they are nothing more than a breeding ground for lazy workers and an anchor dragging down big business.  Ok I'm done ranting.

GM Chairman Ed Whitacre made the announcement today that they have fully paid back their $5.8 billion  government loans to the US and Canada years ahead a schedule and with interest.  He said they used the funds to "restructure GM, invest in plants and people, create jobs and bring outstanding, award winning vehicles."  In the same press conference he announced a huge investment in the new Chevy Malibu, and based on my experience driving the Malibu for a month, that's a REALLY smart move.

My very first car was a GM car, and I couldn't have possibly loved it more.  The summer before my senior year in college I took a job with ExxonMobil in New Jersey and I needed my own car to get there every day.  I had saved up enough for a decent down payment and the job paid enough (a LOT) to cover the montly payments beyond the summer job and through my unemployed senior year.  After shopping around for good used cars, somehow I settled on a brand new Saturn.  In the showroom at the Saturn dealer in West Chester, PA, there sat a completely wrecked Saturn, with the story of how a teenage girl had lost control and flipped end over end multiple times...and walked away unscathed.  It explained how it was designed for safety...features I can't exactly recall now.  I was engaged to be married the following year and planned to have kids soon after, so even as a student in college the safety of my future kids was in my mind.  (This is a perfect example of what kind of planner I am.)

Buying that Saturn was thrilling for me.  It was my money, and my first very big purchase.  And the sales people treated me, a young college kid (with parents in tow) with respect.  The day I picked up the car it was sitting on the showroom floor and they spend a solid 45 minutes going through every last detail, including how to check and add oil and how to change a tire.  And then the entire staff clapped as I drove it off the showroom floor.  Now THAT is customer service.  That Saturn never failed me and I was happy with it...until my husband wrecked it a few years later.  We had it repaired but when I got my first REALLY big promotion, I upgraded to a Nissan Maxima.  After watching my husband's two Ford's need endless expensive repairs, I became a Japanese car convert.  I have always hated Chryslers and now I hated Fords, so I became convinced that American cars were simply substandard. Now we own a Honda minivan and the same Nissan Maxima...neither of which have given us trouble.

BUT then came all the recalls.  Toyota recalls and people dying from crazy accelorator and brake issues.  Dirty secrets coming out about how Toyota has cut corners and compromised quality, especially in their American manufacturing operations (surprise?).  And finally...my Honda minivan was recalled.  Brake issues.  Granted I haven't heard of anyone actually getting into accidents due to these issues but still.  Honda is handling it pretty well, I think.

And then I was selected as a Chevy Girl on the Go to test drive the Malibu for a month.  And it is beautiful, luxurious, and smart.  Still not sure about the transmission...I think it shifts gears a bit harder than my Japanese cars, which has always been my beef with Chryslers.  But it has better gas mileage than the comprable Ford, Honda or Toyota! Not to mention how affordable it is.  Under $25K!  And it's a GM...all else being equal I WANT to buy an American car. 

It's not in the cards for me to buy a sedan right now, but my opinion has turned 180 degrees on Chevrolet and I'm working on changing my husband's opinion too.  Now I have a vested interest in seeing GM succeed and today's news about their debt repayment makes me really happy.


running42k said...

I disagree with the need for unions, they play a huge role, even today, especially as American and Canadian manufacturing is decimated and the jobs going to China. End of my rebuttal.

Was good to read about the Saturn. The guy I commute with has owned three and he loves them.

Nice to see you enjoying the sedan. I have enjoyed the video clips as well.

Pammer said...

I thought I read the gov't still was an owner in GM, though? That GM was hopefully some of their new "owners" would lesser their equity position, but that hadn't changed yet?

I love GM, too, but I was saddened to see they put the unions in front of their creditors, etc.

If GM can get the gov't out of their business, I'd seriously consider buying one again. (I had an Acadia that I loved)

Mainline Mom said...

You're right Pam, the government still does hold an equity stake in GM...they said they can't do anything about that until an upcoming IPO.

Susie said...

I was pleasantly surprised and impressed at hearing about the repayment, too. I drive a 12-year-old Saturn, and would buy another one when I'm done with this one in the next year or two, if they weren't going out of business.

Christopher said...

I just wanted to say thank you to all of you - Sarah for writing this post, and to each of you who commented as well.

Yesterday's news was a big step for us - but let's be clear, it was only one step. You're right that there is still equity stake in GM from the US & Canadian governments; what we paid back yesterday was the cash loans we still had outstanding.

Next up, when our business and the markets are ready, will be the IPO that Sarah mentioned -- the profits from which will go to the US and Canadian Treasuries. So while we're proud of yesterday's step, we know we're not done.

We have much work still to do, and please don't think that we don't understand that. Trust me, the past couple of years have made crystal clear to us that... well, I want to choose my words carefully here because I don't want them to just seem like platitudes -- but the bottom line is that we understand that there won't be any third chances. There will not need to be any more.

I appreciate and respect the discomfort that many felt about the actions taken last year. All we can do now is design, build & sell the best vehicles in the world, and EARN people's business back. We believe we are doing that now, though we will always want to improve.

(Personally, I could not have stayed with the company if I did not believe that the company I represent is on the right financial road and is making the best vehicles coming into the market now. Yeah, it sounds like a PR guy's line, but to be credible in the online world I need to have walk behind my talk, so if the goods weren't there I couldn't be out here asking to be taken seriously.)

So thank you, Susie, for your business as a Saturn owner - and to the guy 42k commutes with for his business as well. Thank you, Pam, for your business as an Acadia owner. I hope that in the coming months that what you see from us is enough to convince you to give us another try.

I'm thrilled that we're earning you back, Sarah, with the quality of the Malibu. I hope we'll continue to impress you with the other vehicles we're coming out with. I personally appreciate your willingness to let us try to earn you back.

Thanks for letting me write too much on your blog. :-)

Christopher Barger
Director, Global Social Media
General Motors

Mike said...

yeah, except they they didn't really pay it back. They borrowed more TARP money to pay back the loans. It's like paying off your Visa card with your Mastercard. Then to suggest you are suddenly out of debt is laughable.

Mike said...

And BTW, if you recall, I used to own a GM car. Every time it rained it lost power and I could only do about 35 mph. Great car.

Megan said...

I remember your Saturn! That was back when I drove my Dad's old CRX... I also remember you driving that really big sedan in high school - it was your Dad's. Can't remember what it was other than it was big (or seemed that way to me :) )

Mainline Mom said...

Megan, my Dad's car that I learned to drive on was a 1985 Buick LeSabre...and it was HUUUUUUGE! We called it the tank.

Victoria said...

I hate to burst your bubble but there's a lot of spin happening here: GM is "loaned" $50 billion. It is allowed to "convert" $43.3B to an equity investment. This leaves a loan of $6.7B which it "repaid" with part of the $43.3B. Great we(the taypayer) were repaid with our own money.

teri said...

I was particularly scared that if we didn't bail out some of the banks, the US economy would collapse. Now I'm not an economist, so I have no idea if that would happen but I'm also thrilled that a few of the banks have paid all their loans back, as well.

As far as cars, it seems they are realizing that the American people deserve better, all around. Ford did not take a bailout but the CEO took a $1 pay for the year, stepped down and hired another CEO to turn the company around and they are doing so much better. Now that's the way to run a business.

And I LOVE Saturn and am so sad to see them go. If I'm ever in the market for another car, I would definitely look at Ford or one of the other dealers. I just hate the way the salesmen are. They need to retrain them.

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