The United States government has sold its remaining stock in General Motors, Treasury Secretary Jacob Lew announced Monday.
This means the government no longer owns any part of the automaker.
“The U.S. Treasury’s ownership exit closes just one chapter in GM’s ongoing turnaround story. We will always be grateful for the second chance extended to us and we are doing our best to make the most of it,” General Motors Chairman and CEO Dan Akerson said in a statement. “Our work continues uninterrupted, and we will keep our sights squarely on our customers and transforming the way we do business.”
The Treasury sell-off also means the federal government will post a $10.5 billion loss on its $49.5 billion taxpayer-backed bailout of GM. Treasury managed to recover roughly $39 billion of its investment.
Lew acknowledged the financial loss but explained bailing out the car maker was necessary to save approximately one million jobs.
“The President’s leadership in responding to the financial crisis helped stabilize the auto industry, and prevent another Great Depression. With the final sale of GM stock, this important chapter in our nation’s history is now closed,” Lew said in a statement.
“As a result of his efforts, which built on those of the previous Administration, more than 370,000 new auto jobs have been created, and all three U.S. automakers are profitable, competitive, and growing,” he added.
President Barack Obama also hailed the sell-0ff, saying it marks an important moment in the country’s ongoing “recovery.”
“When things looked darkest for our most iconic industry, we bet on what was true: the ingenuity and resilience of the proud, hardworking men and women who make this country strong,” the president said in a statement. “Today, that bet has paid off. The American auto industry is back.”
The federal government took on about 912 million GM shares (i.e. a 60 percent stake) in exchange for bailout cash in 2008 and 2009, the Associated Press reported. Washington started selling off its shares after GM launched its initial public offering in 2010.
GM’s shares rose with Treasury’s announcement Monday. Shares peaked at around $41.17, which is the highest they’ve been since GM’s 2010 IPO:
Top GM executives, including GM’s North American President Mark Reuss, have said in the past that the government bailout and the resulting “Government Motors” moniker hurt the company’s image with certain demographics. GM hopes today’s sell-off will help it shake its association with Washington and boost sales, especially in the pickup truck market.
But if a recent consumer survey on the continued influence of the bailouts on consumer brand preference proves accurate, the company may have a long way to go.
Indeed, after surveying roughly 500 Texas truck buyers, a survey by the National Legal and Policy Center found that the auto bailouts continue to influence consumer preferences.
More than 60 percent of survey respondents said the bailouts would influence their purchasing decisions. Forty percent of respondents said the bailout would “absolutely” influence their purchasing decisions, 11.75 percent said “very likely,” and 10.60 percent said very “likely.”
Of course, Akerson has put on a brave face through some of GM’s bigger truck woes and recently said in a company earnings call that “the launches of the new Chevrolet Silverado and GMC Sierra have been nearly textbook perfect.”
But, again, this doesn’t exactly appear to be the case.
True, GM has remained mostly profitably since emerging from bankruptcy, posting approximately $20 billion in net income on sales in both North America and China. The company has also invested roughly $8.8 billion in facilities in the U.S. and claims it has brought on about 3,000 new workers. The company is even currently sitting on about $26.8 billion in cash.
But the issue of winning back certain groups that are upset over the bailouts (and probably will stay that way unless the $10 billion is repaid) will likely remain a problem for the company.
To this end, it appears GM is trying to woo back these consumers with conservative-themed messaging.
Winning back disaffected consumers is probably what prompted the company to get involved in a “free enterprise” tour with the U.S. Chamber of Commerce. Winning back disaffected consumers is probably what prompted the company to take out ads in “American Rifleman” magazine.
Only time will if these ads are successful. But in the meantime, GM’s inventory issues should keep it on its feet, thinking of ways to win back the truck-buying population.
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