The Detroit Free Press recently conducted a study of what kind of returns the US government can expect from saving Chrysler, General Motors, and GMAC (now known as Ally financial). The analysis concluded that of the $84 billion paid out to the companies, US taxpayers might get back $74 billion. Currently, $18.3 billion has been paid back, which includes interest, debt, and dividends. The likelihood of the repayment has been increased due to the rebounding car sales, in addition to the companies’ increased profits.
Currently, the US government owns approximately 60.8 percent of General Motors, which is valued at approximately $51 billion as of Monday – this makes the government’s stake worth $26.3 billion. Add the $7 billion that has been paid back and the $2.1 billion that the government owns in preferred shares, the total investment in GM is $35.5 billion, equaling a loss of $14.6 billion.
The government’s investment in Chrysler is significantly smaller compared to GM, valued at $12.8 billion. Of that, $2.5 billion has been paid back and the government owns $7.14 billion of Chrysler debt. With the company expected to be worth $13.6 billion a year from now, the government’s 9.9 percent stake in Chrysler, all of the above numbers, and some complicated math, the total loss could equal $2.4 billion.
I say that’s a pretty decent return on investment – saving millions of jobs and helping preserve the country’s manufacturing base – dare I say that the government actually made a good decision?? I’m not one to promote such intervention, but this seems like a worthwhile endeavor.
Check out the analysis by the Detroit Free Press.
Tags: Ally, Ally Financial, bailout, billion, business, Chrysler, Detroit, Detroit Free Press, Ford, General Motors, GM, GMAC, Government, intervention, investment, pay back, payback, Taxpayers, Toyota, US
