Representative from United States Treasury Department made this announcement and said that they are going to sell thirty million shares in the coming times. It is going to leave them with another paltry fifteen percent stake. This decision comes after a long four years of rescuing GM from financial ruin, along with other major automotive company Chrysler Group.
General Motors recently returned to S & P 500 Index after a long time following their bankruptcy in 2009. Shareholders of the company are waiting expectantly to hear more of this news at their annual meeting waiting to happen in Detroit.
Senior economist George Magliano, who is with New York IHS Automotive, said in this regard, “The auto industry is alive and well and today one of the leading industries in the recovery, though it’s a rather lackluster recovery, is the auto industry.”
According to the Commerce Department, US automakers contributed substantially in this recovery. Their contribution is fourteen percent of over two percent of growth rate of GDP and is a part of the resurgence process that started in the 3rd quarter of the year 2009. From 2007 onwards, the recent auto sales are showing a marked rise. All major automobile companies, including Chrysler, General Motors, and Ford Motors gained market shares. The figures are for January-May period. This is something, which has not happened for the last 18 years!
One cannot deny the contribution of the federal government in bailing out the auto industry and sounding its resurgence in the recent times. It spent over 80 billion dollars for making this recovery possible. Out of this eighty billion, 63 billion dollars were for Chrysler and GM alone. No wonder taxpayers have to endure this spending spree from the government coffers. According to Treasury estimates on March 31, American citizens have to pay over 20 billion dollars in taxes during the coming times.
Investors are showing confidence in General Motors shares after this US Treasury announcement. This is a part of the government’s plan of spreading out their stakes in the company across many months until it does away with their total holdings with minimal pressures on stock market.
