General Motors Co., the largest U.S. automaker, will repay $6.7 billion of the $49.9 billion in aid it received from the federal government starting next month, more than five years sooner than required, a person familiar with the company's plans said.
GM intends to make a payment of $1 billion a quarter, with the first installment Dec. 31, said the person, who requested not to be identified because the transaction hasn't been announced publicly. The Treasury Department is unlikely to recover all of the aid it provided, a congressional oversight panel said in a report Sept. 9.
Detroit-based GM is working to overhaul its operations and return to a profit after filing for Chapter 11 protection June 1 in the wake of $88 billion in losses since 2004. The company is able to start repaying aid because it has a stronger financial position than anticipated, according to the person.
"GM's sales in North America and China, especially, are doing quite well," said Masatoshi Nishimoto, a Tokyo-based analyst at auto consulting company CSM Worldwide. "The company may finally be seeing some light at the end of the tunnel."
GM isn't obligated to make a payment until July 20, 2015, the person said. At $1 billion a quarter, the $6.7 billion would be repaid by the second quarter of 2011.
The carmaker plans to release third-quarter preliminary results later today. GM spokesman Greg Martin declined to comment on repayment plans.
October Sales
GM Chairman Ed Whitacre said in an interview Nov. 10 that "it's conceivable" the automaker could repay some of the government aid this year.
The Obama administration named Whitacre, the former chief executive officer and chairman of Dallas-based AT&T Inc., to lead the board after the U.S. bailout gave the government a 61 percent ownership stake.
The automaker is trying to build on its results in October, when its monthly U.S. sales rose for the first time since January 2008 and market share topped 20 percent. GM sales of cars and trucks rose 6.6 percent in October.
Earlier this month, GM's board agreed to keep full ownership of the Adam Opel GmbH division rather than proceed with the sale of a 55 percent stake to Aurora, Ontario-based Magna International Inc., Canada's largest car-parts maker, and Russian partner OAO Sberbank.
"GM's decision to keep Opel is also a sign that the new GM is performing better than earlier expected," CSM's Nishimoto said.
GM is cutting its U.S. brands from eight to four as part of the government restructuring. The automaker is retaining Chevrolet, Cadillac, Buick and GMC.
