**GM preparing for bankruptcy**

[vztrt]

http://news.theage.com.au/breaking-n...0422-t99p.html

GM has repaid all government loans: CEO
April 22, 2010 - 5:59AM

AFP

General Motors has repaid its government loans ahead of schedule and is making "great progress," says the automaker's chief executive.

"GM's ability to pay back our loans ahead of schedule is a sign that our plan is working and that we're on the right track," Ed Whitacre said at a press conference on Wednesday.

"It's also an important step toward allowing our stockholders to reduce their equity investments in the company."

Whitacre noted that the repayment was five years ahead of the original loan schedule and two months ahead of a target announced earlier this year.

The final $US5.8 billion ($A6.23 billion) repayment does not cover loans made to the "old" General Motors which is being slowly wound down through the bankruptcy process.

The US government, which provided about $US50 billion ($A53.68 billion) in emergency loans, holds a 60.8 per cent stake in the new company. The Canadian government and a retiree health care trust also hold significant stakes.

GM has said it will launch a public stock offering as soon as is practical - perhaps as early as the second half of this year - but it will likely take years for the US government to wind down its massive stake.

"We are able to repay the taxpayers ahead of schedule because we are designing, building and selling the best cars and trucks GM has ever produced," Whitacre said.

"Yes, we still have a lot of hard work ahead of us even with the repayment of the loan," Whitacre acknowledged, adding that "we're making a lot of progress - great progress."

A GM spokesman contacted by AFP said the final payment of $US8.4 billion ($A9.02 billion) in government loans were repaid on Tuesday.

General Motors reported a post-bankruptcy 2009 net loss of $US4.3 billion ($A4.62 billion) on April 7, but said it was encouraged by the results and hoped to achieve profitability in 2010. It is expected to report first quarter results next month.

© 2010 AFP

[Sprint XR8]

GM Money Game

General Motors will make a big splash in the news today by announcing that the automaker will repay several billion dollars loans from the federal government earlier than expected. But it's not really coming out of the GM wallet.

The issue came up yesterday at a hearing with the special watchdog on the Wall Street Bailout, Neil Barofsky, who was asked several times about the GM repayment by Sen. Tom Carper (D-DE), who was looking for answers on how much money the feds might make from the controversial Wall Street Bailout.

"It's good news in that they're reducing their debt," Barofsky said of the accelerated GM payments, "but they're doing it by taking other available TARP money."

In other words, GM is taking money from the Wall Street Bailout - the TARP money - and using that to pay off their loans ahead of schedule.

"It sounds like it's kind of like taking money out of one pocket and putting in the other," said Carper, who got a nod of agreement from Barofsky.

"The way that payment is going to be made is by drawing down on an equity facility of other TARP money."

Translated - they are using bailout funds from the feds to pay off their loans.

For you and me, that might be like using one credit card to pay off another, eh?

"When do you think we'll have really good news from GM?" Carper asked.

"I don't have a crystal ball on that Senator," Barofsky replied.

Most of Uncle Sam's bailout money that was given to GM has now been turned into stock in the U.S. automaker.

"The assumption is that, over time, hopefully the value of the stock will appreciate," said Carper.

Long term that could prove to be a money-making investment for the feds - or if things go the wrong way for General Motors - a big, fat loss for Uncle Sam.

http://wsbradio.com/blogs/jamie_dupr...oney-game.html

[Chilliman]

Originally Posted by CoupeXB

GM Money Game


http://wsbradio.com/blogs/jamie_dupr...oney-game.html

I bet that the US Govt is puuting the pressure on GM to paint the rosiest picture possible; afterall they want to get as much back of that $50Billion in Equity funding when GM is refloated.

[Luke Plaizier]

Diabolical !


Lukeyson

[burnz]

http://www.youtube.com/watch?v=SSNPF...layer_embedded
differant take.

[Falc'man]

Hey Burnz, that's just an advertisement. Does it refute the following?

"It sounds like it's kind of like taking money out of one pocket and putting in the other," said Carper, who got a nod of agreement from Barofsky.

If not, then it's a false advertisement - that is not one of GM's characteristics, is it?

[Sprint XR8]

GM Could Be in Hot Water With FTC Over Truth in Advertising

General Motors is running ads on all the major networks this week claiming it has repaid its bailout from the taxpayers "in full." But the claim isn't standing up to scrutiny from lawmakers and government watchdogs who have found that the automaker was able to repay the bailout money only by dipping into a separate pot of bailout funds.

The TV spot may land GM in hot water with the Federal Trade Commission over its truth-in-advertising laws, which prohibit ads that are "likely to mislead consumers."

"We have repaid our government loans in full — with interest — five years ahead of the original schedule," says Ed Whitacre, chairman and CEO of General Motors Company, asking Americans to give the bankrupt company another look.

But a top Senate Republican has accused GM of misleading taxpayers about the loan repayment, saying the struggling auto giant was able to repay a $6.7 billion bailout loan only by using other bailout funds in a special escrow account.

Iowa Sen. Chuck Grassley's charge was backed up by the inspector general for the bailout — also known as the Trouble Asset Relief Program, or TARP. Watchdog Neil Barofsky told Fox News, as well as the Senate Finance Committee, that General Motors used bailout money to pay back the federal government.

"It appears to be nothing more than an elaborate TARP money shuffle," Grassley, the ranking Republican on the Senate Finance Committee, said in a letter Thursday to Treasury Secretary Timothy Geithner.

The FTC said it could not provide any comment on the ad or whether it had received any complaints or inquiries about GM's claims from the public or from government officials.

The FTC has a division of advertising practices that investigates possible false claims, but specific investigations are not made public. If the FTC determines that truth-in-advertising laws have been violated, the agency files complaints against the organizations in violation.

GM announced Wednesday that it had paid back the $8.1 billion in loans it received from the U.S. and Canadian governments in 2009. Of that, $6.7 billion went to the U.S. Treasury.

"A lot of Americans didn't agree with giving GM a second chance," Whitacre said in the 60-second ad. "We invite you to take a look at the new GM."

Well, meet the new GM. Same as the old GM. The company is still majority-owned by the federal government, which has a 60 percent stake in the Detroit titan; the Canadian government owns another 12 percent.

GM is not yet solvent, continues to be racked by debt and is still unable to turn a profit — something that has eluded the company since 2004. GM filed for bankruptcy in 2009 but was saved from collapse by a $52 billion infusion from the federal government.

But the company says the repaid TARP loan is a "good start," a signal that the company is emerging from its debts and moving back into the black.

"I think any way you look at it, that we're giving (loans) back with interest before we had to should be taken as a positive sign," said GM spokesman Greg Martin.

Martin said GM has not received any communications from the FTC or complaints from federal officials, and said that public feedback has been positive.

But Senator Grassley has called on Treasury Secretary Geithner to provide more information about why the company was allowed to use bailout money to repay bailout money, and how much of the remaining escrow money GM would be allowed to keep.

"The bottom line seems to be that the TARP loans were 'repaid' with other TARP funds in a Treasury escrow account. The TARP loans were not repaid from money GM is earning selling cars, as GM and the administration have claimed in their speeches, press releases and television commercials," he wrote.

But Barofsky told Fox News that while it's "somewhat good news," there's a big catch.

"I think the one thing that a lot of people overlook with this is where they got the money to pay back the loan. And it isn't from earnings. ... It's actually from another pool of TARP money that they've already received," he said Wednesday. "I don't think we should exaggerate it too much. Remember that the source of this money is just other TARP money."

Barofsky told the Senate Finance Committee the same thing Tuesday, and said the main way for the federal government to earn money out of GM would be through "a liquidation of its ownership interest."

Grassley criticized this scenario in his letter.

"The taxpayers are still on the hook, and whether TARP funds are ultimately recovered depends entirely on the government's ability to sell GM stock in the future. Treasury has merely exchanged a legal right to repayment for an uncertain hope of sharing in the future growth of GM. A debt-for-equity swap is not a repayment," Grassley wrote.

http://www.foxnews.com/politics/2010...h-advertising/

[Falc'man]

Good finds CoupeXB.

Sad to see GM scraping the very bottom of the barrel. I wonder if they'll be made to run new ads indicating the truth of the matter? If not then they've succeeded in their aim to paint a nice picture of themselves, when in fact they're still screwed.

So in the end the VE wasn't the only thing GM took on board from holden.

[Fordman1]

Originally Posted by burnz

http://www.youtube.com/watch?v=SSNPF...layer_embedded
differant take.

FAIL !

[vztrt]

http://www.autoblog.com/2010/04/30/b...ks-gm-success/

Bob Lutz says farewell, talks GM success

by Zach Bowman (RSS feed) on Apr 30th 2010 at 7:57PM

Today is Bob Lutz' last day at General Motors, and as such, the industry's iconic car guy has written out a long farewell to his readers over at the company's Fastlane Blog. In his final post, Lutz says he's confident that the company he helped usher back from life support is on the right path. Why? Because he says that each of the GM brands now has a solid product line up under its belt that's capable of competing against the best the auto world has to offer.

Lutz says that GM has finally let its designers out from under the corporate thumb, and that move is beginning to pay dividends in the look of vehicles like the Buick LaCrosse, Chevrolet Malibu and Equinox. Combine that with ever-improving quality and lower-than ever inventories, and on the whole, Lutz says his company is beginning to get its legs back under it.

Yes, it does appear GM is on the mend, but the company and the industry as a whole is going to be a lot less interesting without Lutz around. You can read the full piece here.

[Source: Fastlane Blog]

[Bossxr8]

There'll be a whole lot more thruth and a whole lot less bulls##t in the industry with Lutz gone too. He talked non stop crap.

[phillyc]

Originally Posted by Bossxr8

There'll be a whole lot more thruth and a whole lot less bulls##t in the industry with Lutz gone too. He talked non stop crap.

But where will GMHolden get their 'huge' announcement, 'quiet' cancellation / refute, 'huge' announcement, 'quiet' cancellation / refute etc when Lutz is gone?

PS When I say 'huge' / 'quiet' i'm talking the general media.

[vztrt]

http://www.autoblog.com/2010/05/12/f...f-gm-chrysler/

Former Car Czar impressed with progress of GM, Chrysler

by Jonathon Ramsey (RSS feed) on May 12th 2010 at 5:31PM

Steven Rattner, the man who headed the Auto Task Force, saved Michigan from bankruptcy, shepherded the still-contentious resurrections of General Motors and Chrysler and will soon have a book on his time in the trenches, has said his little lambs are doing better than he expected they would a year ago. Not only are they outstripping the targets set for them, but he thinks the government could get $40 billion of the $50 billion it threw at GM last year.

Ratter wouldn't be surprised if GM posts a profit this quarter, but that assessment is "based on public statements by GM executives," and it's probably better to wait for the slightly harder fact of the bottom line than to expect some gravy. More solid might be Rattner's belief, based on the price of old GM's bonds, that the government could get back $40 billion of the $50 billion it threw at the company last year, once GM begins selling stock.

[Source: Automotive News – Sub. Req'd | Image: Neilson Barnard/Getty]

[Luke Plaizier]

Well, going by how the last lot of investors were treated, I bags not buying any of those puppies.


Lukeyson

[vztrt]

GM makes a profit.

http://www.caradvice.com.au/67955/ge...fits-of-0-9bn/

General Motors reports first quarter profit of $0.9bn
By George Skentzos | May 18th, 2010

This is certainly a headline no one expected to be reading anytime soon, but General Motors has just announced a first-quarter profit of $865 million for 2010.

This is a substantial improvement over its loss of nearly $6 billion for the first quarter of 2009, spurred on by the sale of Saab to Spyker Cars NV which GM reports as a gain of $123 million.

Revenue increased to $31.5 billion compared to just $22.4 billion in 2009, with GM also reporting an operating income of $1.2 billion.

GM’s first quarter adjusted earnings before interest and tax (EBIT) totalling $1.7 billion, up from a loss of $3.4 billion in the fourth quarter 2009.

“We’re pleased with our first quarter performance, in particular achieving profitability,” said Chris Liddell, vice chairman and chief financial officer. “In North America we are adding production to keep up with strong demand for new products in our four brands. We’re also steadily growing in emerging markets, keeping our costs under control, generating positive cash flow and maintaining a strong balance sheet. These are all important steps as we lay the foundation for a successful GM.”

GM anticipates that it will return to becoming a publicly traded company by the end of the year, with the government expected to relinquish its ownership inherited from its $50 billion in bailout financing.

The transition into profitability was not without casualties, having to lay off some 27,000 employees as well as the Hummer, Pontiac, Saturn and Saab brands.

[vztrt]

http://www.autoblog.com/2010/05/17/g...n-three-years/

GM earns $865M first quarter profit, first in three years

by Zach Bowman (RSS feed) on May 17th 2010 at 10:30AM

General Motors has just posted its first quarterly profit in three years, and it's not exactly chump change. The General just announced it managed to rake in a net income of $865 million during the first quarter of 2010. According to The Detroit News, the change in direction is thanks largely to GM's rebound here in North America. The company's domestic operation pulled down a $1.2 billion profit for the first three months of the year thanks to a slimmer debt load and the sale of Saab to Spyker. During the fourth-quarter of 2009, GM posted a $3.4 billion loss.

Likewise, things are looking up internationally. The Detroit-based automaker also returned a $1.2 billion profit from its global efforts as well. That marks a $500 million increase compared to the fourth quarter of 2009. This is all good news for those eying when the fresh-from-bankruptcy manufacturer will start selling stock once again. Currently, GM is shooting for an IPO late this year or early in 2011. Tax payers and investors can't wait. Hit the jump for the press release.

[Source: General Motors, The Detroit News | Image: Scott Olson/Getty]

[Gaz]

It's GM - there's gonna be some funny accounting going on. EG the 'we have repaid our loans' campaign.

[Joe5619]

Originally Posted by Gaz

It's GM - there's gonna be some funny accounting going on. EG the 'we have repaid our loans' campaign.

Technically that is funny marketing & not funny accounting!!


Good news for GM.. Let’s hope Holden contributed to this profit

[EgoFG]

They openly acknowledge that they are not accounting to the Security commission's standard.
So this figure is useless, and cannot be compared to previous figures that were prepared according to standard.

[phillyc]

Wow, just imagine what they would've done if the $60B USD of debt that was discarded during bankruptcy and $50B USD of loans (by way of temporary investment by US Gov't) was actually still around their necks... Oh, at 6% interest rates (similar to what Ford is charged IIRC but actually paying back) then GM would've lost money again. Another couple of hundred million USD.

But, they were bailed so to see a profit is a good sign. The problem being that as mentioned it wasn't to the Securities Commision standard so the reporting is somewhat useless and 'should be used as a guide only'.

[vztrt]

http://www.goauto.com.au/mellor/mell...2577280025EA97

GM powers back to profit

Good Q1 result sparks speculation of General Motors public stock sell-off

19 May 2010

By RON HAMMERTON

GENERAL Motors has recorded its first quarterly profit since its near-death experience in the global financial crisis, prompting speculation that the American giant might launch a public stock offering within the year to begin paying back United States and Canadian taxpayers who own a combined slice of more than 70 per cent of the ‘New GM’.

The $US865 million ($A1.01m) profit in the January-March quarter marked a dramatic turnaround on the first quarter of 2009 when a massive $US6 billion ($A7b) loss tipped America’s biggest motor company over the edge into Chapter 11 bankruptcy.

Coming off a $US4.3 billion ($A5b) operating loss for its first six months as a newly formed company to December 31, GM’s latest result also lifted the mood at its Detroit headquarters, as reflected in a speech by GM North America president Mark Reuss who told a fleet conference in Detroit this week: “We have turned a profit, we are financially stronger and we have the best balance sheet we’ve had in as long as anybody can remember.

“It’s cleaner than a maternity ward.”

And while GM says it has paid back its US government loans, with interest, it still needs to restore its ownership to public hands.

Under the terms of the rescue package last July, the US treasury took a 60.8 per cent share of the New GM stockholding in return for $60 billion in financing.

The remaining chunk of the company was shared by the United Auto Workers union (17.5 per cent), the Canadian government (11.7 per cent) and GM bondholders (10 per cent).

But the arrangement was made on the proviso that the government stockholdings would be sold off into public hands at the earliest opportunity.

Reports from the US suggest work has already started on plans for an ‘initial public offering’ of shares, but that is unlikely to be made public until GM has recorded at least two quarters of solid profits.

First-quarter revenues were up 40 per cent to $US31.5 billion, thanks to the improving car market in the US and abroad, especially Asia.

Europe remains the problem child, with the Opel/Vauxhall operation losing more than $500 million for the quarter.

However, GM ended the first quarter with $35.7 billion in cash and marketable securities.

GM vice chairman and chief financial officer Chris Liddell said GM was adding production to keep up with strong demand for new products in the company’s four brands in North America.

“We’re also steadily growing in emerging markets, keeping our costs under control, generating positive cash flow and maintaining a strong balance sheet,” he said. “These are all important steps as we lay the foundation for a successful GM.”

While GM is bouncing back, across-town rival Ford is also kicking goals, gaining a credit rating upgrade from investment agency Moody’s on its $65 billion in borrowings.

The rating for Ford Motor Co and Ford Credit was raised to B1 – the fourth level below investment grade – after sustained growth in sales this year, a full-year profit and large cuts in costs.

Ford has cut its workforce almost by half in the past five years under the reign of CEO Alan Mulally.

[EgoFG]

Whoops, my mistake
This is apparently prepared according to GAAP (Standard accounting practise).
But apparently it is still not comparable to Ford, or Old GM because it is a 'start of accounts' statement.

I started to poke through, and found GM have included as an asset a Goodwill Figure of $44,177 million whereas Ford have $197 million.

Interestingly
Fords Assets and Liabilities net to -5.5 billion
GM net to +31 billion
But when you take off the strange valuation of goodwill GM then net to -13 billion.

I do not really know what conclusion to draw on a Bankrupted company coming away with basically the same goodwill valuation as before bankruptcy, and one significantly higher than its nearest competitor (actually 230 times as big).

[phillyc]

Originally Posted by EgoFG

Whoops, my mistake
This is apparently prepared according to GAAP (Standard accounting practise).
But apparently it is still not comparable to Ford, or Old GM because it is a 'start of accounts' statement.

I started to poke through, and found GM have included as an asset a Goodwill Figure of $44,177 million whereas Ford have $197 million.

Interestingly
Fords Assets and Liabilities net to -5.5 billion
GM net to +31 billion
But when you take off the strange valuation of goodwill GM then net to -13 billion.

I do not really know what conclusion to draw on a Bankrupted company coming away with basically the same goodwill valuation as before bankruptcy, and one significantly higher than its nearest competitor (actually 230 times as big).

That is a HUGE variation. I would've thought the goodwill for both would be in the $5B range.

Hopefully Fords net A&L is in the positive by years end!

[EgoFG]

There was yet another error - I need slower fingers and a faster mind.

The goodwill figure was only 30,487 million compared to 242 million for the old GM a year ago.
Source: http://media.gm.com/content/Pages/ne...%20and%203.doc
and Google finance for the 10Qs

[vztrt]

http://www.autoblog.com/2010/05/31/r...al-motors-ipo/

Report: U.S. hires lead bank for General Motors IPO

by Sam Abuelsamid (RSS feed) on May 31st 2010 at 11:01AM

The government of the United States may be actively avoiding any direct involvement in the day-to-day management of General Motors, but that doesn't mean it won't have a say when the time comes for the automaker to go public again. According to The Detroit News, the U.S. Department of the Treasury has hired investment bank Lazard Frères & Co. to provide it with advice on the initial public offering process.

While both General Motors and the Treasury would obviously both like the latter to unload the majority stake it owns in the automaker as soon as possible, that process needs to be done carefully. Political and public perception considerations point to an early IPO, but that may not be the smartest thing to do from a business perspective. Selling before its clear that GM's recovery is well underway could lead to getting too low a share price. The bank will reportedly also look at other options for disposing of the 61 percent shareholding.

According to the report, Lazard Frères & Co. will get paid $500,000 a month for the first year and $250,000 per month after that if the sale hasn't yet been completed. Estimates from various sources are that the treasury will face losses of $25-30 billion on the bailouts of GM, Chrysler and GMAC.


[Source: The Detroit News | Image: Stan Honda/Getty]

[vztrt]

http://www.autoblog.com/2010/06/05/l...ge-of-product/

Latest GM management shuffle puts Whitacre in charge of product planning

by Sam Abuelsamid (RSS feed) on Jun 5th 2010 at 9:31PM

A year after entering bankruptcy protection, the executive shuffling is still ongoing down at General Motors. The latest moves come in the wake of the creation of GM's new venture capital unit, which will be headed up by Jon Laukner, whose previous job was vice president in charge of product planning and program management.

Product planning responsibility will now fall to Steve Carlisle, formerly VP of U.S. sales. One of the main goals of the changes made by CEO Ed Whitacre since taking over has been flattening the organization and removing layers of management. To that end, Carlisle will now be a direct report to Whitacre, who will henceforth have the final say in future product planning at GM. Previously, Laukner reported to vice chairman Tom Stephens, who retains control over all product development activities.

Many executives we've spoken to at GM in recent months say that while an increasing number of people are reporting to Whitacre, the ex AT&T man is not micromanaging. Instead, they argue, Whitacre is trying to put the right people in place and then relying on them to do the job. Still, the move to put someone with no previous auto industry experience in charge of product planning at GM has some pundits deeply concerned.

Is this a good move or a bad one? Check out the full slate of executive changes in the links below, then have your say in the comments.

[Sources: AutoWeek, Inside Line | Image: Bill Pugliano/Getty]

[Luke Plaizier]

Er, anyone heard of a non-automotive guy called Allan Mullaly?


Lukeyson

[vztrt]

http://www.autoblog.com/2010/06/08/r...-ahead-of-ipo/

Report: Top GM execs awarded millions in stock ahead of IPO

by Jeremy Korzeniewski (RSS feed) on Jun 8th 2010 at 6:28PM

It pays to be an executive for General Motors. Actually, scratch that... it will soon pay to be an executive with General Motors, assuming that the automaker's upcoming Initial Public Offering takes place according to plan. According to our friends at TheDetroitBureau.com, a dozen top officials at the company could be looking at a payday totaling as much as $13 million or more, depending on the value of GM stock after the IPO.

According to filings submitted to the Securities and Exchange Commission, Chairman and CEO Ed Whitacre, Vice Chairman Tom Stephens, Chief Financial Officer Chris Liddell, Vice Chairman Chris Girsky and North American President Mark Reuss are all slated to get major stock deals.

After GM received its $50 billion bailout from the U.S. government, Kenneth Feinberg, Treasury's special master on pay, set up pay restrictions for officials at the automaker that capped salaries at specified levels, oftentimes to no more than $500,000 per year. Naturally, the stock deals awarded to the aforementioned executives after the company's expected IPO should more than help make up for any perceived monetary deficiencies.

[Source: TheDetroitBureau.com]

[vztrt]

http://www.autoblog.com/2010/06/17/r...from-lobbying/

Report: Chrysler, GM could be banned from lobbying

by Zach Bowman (RSS feed) on Jun 17th 2010 at 6:32PM

The House Oversight and Government Reform Committee is moving to prevent General Motors and Chrysler from lobbying while the federal government owns a stake in each company. Representative Darrell Issa (R, Calif.) is set to introduce the measure on behalf of the committee today. The ban isn't anything new for other bailed out companies. According to Automotive News, Fannie Mae and Freddie Mac are both currently under similar bans after receiving government aid last year.

Not surprisingly, that hasn't stopped General Motors from saying that it would oppose the legislation. Like most large corporations, the automaker employs a significant lobbying effort. AN says that from the time that it declared bankruptcy last year until March of 2010, GM has spent $4.3 million lobbying congress, and Chrysler has forked over $2.3 million doing the same.

Representative Issa has said that he hopes to bar any company that the government owns five percent of or more from lobbying at all. The move seems more than fair, and may act as a proper deterrent for companies looking for easy cash at the expense of tax payers.

[Source: Automotive News | Image: House of Representatives]

[vztrt]

http://www.theage.com.au/business/gm...0624-z01p.html

GM readies IPO, in car loan talks: sources
June 24, 2010

General Motors is planning to file a statement outlining its plan for a public offering of its stock in July for a listing that could raise up to $US20 billion, a person with knowledge of the preparations said on Wednesday.

In addition, GM is in talks with JPMorgan Chase and Wells Fargo on deals aimed at providing improved access to consumers for auto loans at its US dealerships, two people with knowledge of those talks said.

The sources were not authorised to discuss the still-confidential negotiations and asked not to be named.

GM now expects to raise $US15 billion to $US20 billion in its IPO, according to one of those with knowledge of the early-stage work ahead of a filing with US securities regulators.

That projected range reflects stronger anticipated investor demand for the restructured automaker, the person said.

GM chief executive Ed Whitacre and other executives have said they favour an IPO as early as this year. Bankers had expected a stock listing to raise between $US10 billion to $US20 billion by selling part of the US government's 60.8 per cent stake in GM to investors.

Lining up banks

GM is also looking to boost auto sales by lining up banks and other financial institutions to make loans and lease deals for buyers with poor credit.

The talks lessen the likelihood of GM trying to buy the auto finance business from Ally Financial, its main lender.

They also make it less likely that GM would start its own auto financing unit. GM considered both options earlier in the year because Ally was reluctant to fund loan and lease deals to buyers with subprime credit.

About 16 per cent of loans for new cars and trucks went to subprime buyers in the fourth quarter of last year, but because of Ally’s reluctance to lend to them, GM was unable to tap that market.

Subprime buyers are customers with credit scores below 620 on a 300-to-850-point scale.

‘‘We are developing relationships with other financial sources on a selective basis for specialised financing needs, such as leasing and subprime financing.’’ GM spokeswoman Renee Rashid-Merem said on Wednesday.

GM continues to work with Ally, which used to be GMAC Financial Services, and it already has relationships with many banks and credit unions, Rashid-Merem said.

The automaker’s sales are up about 15 per cent through the first five months of the year, but they trail the increase for the overall US industry by more than 2 per cent.

Reuters, AP