U.S. lawmakers seem confident that General Motors Company and Chrysler LLC are on the road to repaying the American taxpayers’ $64 billion loan. House Speaker, Nancy Pelosi (D-CA) and a group of government officials toured the North American International Auto Show in Detroit this week and were impressed by what they saw.
Pelosi stated, “It’s a rebirth of the American auto industry. Not only has Detroit turned a corner, it’s really on a whole different path.”
Last year the federal government began pouring billions in bailout funds into GM and Chrysler, oversaw their bankruptcy proceedings, fired the CEO of GM and enacted newer, stricter fuel efficiency laws as a condition of receiving aid. Now the lawmakers are speaking of industry-wide recovery and trying out the latest in hybrid technology.
Representative Steny Hoyer (D-MD) said, “It’s clear that America and the automobile industry have gotten a wakeup call.” He also feels that touring the auto show raised his level of optimism that the taxpayers will be repaid.
So far, GM has repaid $1 billion to the U.S. Treasury and $192 million of the financial assistance it received from the Canadian government. The company is trying to repay the loans by this summer, which is the goal recently set by the company’s chairman and acting CEO, Ed Whiteacre.
Speaker Pelosi didn’t say that all the money would be repaid; however, she did say this regarding complete repayment of the taxpayers, “Mr. Whiteacre says we will. He says he’s a taxpayer and he wants his money back.”
Transportation Secretary Ray LaHood also spoke at the auto show this week. “GM is coming back about as strongly, more strongly than anybody ever anticipated,” he said. “The fact that they’re starting to pay the money back is as strong a signal to taxpayers that the money will be paid back.”
The Congressional Oversight Panel reports the taxpayers’ net investment in the industry to be $81 million. The Government Accountability Office estimates that approximately $30.4 billion of that will be lost.
David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan said that the fund repayment is “going to happen” but there is no way to know when, because there is no date set for the Initial Public Offering.
Cole noted that GM cut costs by $5,000-$6,000 per vehicle during restructuring, and said they’d never seen a number like that. “I urge a little bit of patience,” he said, “they’ll get there.”
Fiat run Chrysler Group plans to repay all of its loans by 2014, which is three years early. CEO Sergio Marchionne told reporters that the company is “slightly ahead” of its cash target at the end of 2009. His goal is to break even in 2010.
Senator Debbie Stabenow (D-MI) says, “I really do think we are going to see a repayment” from GM and Chrysler. She noted that repayment will be accomplished in stages, with Chrysler taking longer than GM. Stabenow says, “It really creates a win-win for all taxpayers.”