A year and a half after falling into bankruptcy, a revamped and slimmed-down General Motors saw its stock price soar as it began to sell shares in the new company. It is a huge turnaround for the firm that needed $50 billion worth of emergency loans from the U.S. and other governments to survive the economic downturn and its own missteps.
Investors who once shunned the auto company snapped up shares in the new General Motors, pushing the price up from $33 to about $36 in the first hour of trading.
The company went from losing billions of dollars a year to making more than $4 billion so far this year.
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In bankruptcy, the company drastically cut its costs by slashing its wages, workforce, and debts. It also got rid of half of its eight auto brands.
Chief executive officer Dan Akerson says the new General Motors has learned from its mistakes and is building new, smaller, more fuel-efficient cars that win awards and sell well.
"You know, we are going to have to continue to prove ourselves," said Akerson. "At the end of the day, the quality of the product, the design of the product will rule in the marketplace."
Akerson said GM will never forget those who stood by the firm, including the taxpayers of the United States and Canada.
The emergency financial support meant that governments became the owner of more than 60 percent of the company. Some critics of the firm joked that GM stood for Government Motors.
This initial sale of stock will repay much of that government aid, and may cut the government ownership to less than one-third. Officials plan to sell those shares in future and hope the price will rise high enough that they can recover all the money used to rescue General Motors.
GM Chief Financial Officer Chris Liddell says the battered North American auto industry is in the best financial health in a generation, but cautions, the struggle is not over.
"I think we have a lot to do," said Liddell. "This is still a work in progress and we are the first to admit that. A huge amount has been done over the last few years and we are in as good as possible shape as you could expect. But we still have a lot to do and a lot of expectations on us now."
General Motors unveiled its newest cars at an auto show this week. Car buyers who said they never considered GM during the bailout are now giving the company a chance.
"They were an unstable company, and I would be worried about my investment in a vehicle," said car shopper Kathleen Kimberly. "[But] I am shopping here now, so I am not worried about it."
President Barack Obama says it took some tough decisions to support American auto companies like General Motors. He says the action ultimately saved an industry and many jobs.
Stock in Revamped GM Soars as Company Recovers
