Is GM Any Closer to Becoming the Company It Once Was?
The signs that General Motors (NYSE:GM) has gotten its business back on solid footing are mounting. Even though the automaker reported weaker-than expected quarterly profit on Thursday, shares had advanced close to 45 percent in the six-month period ahead of its fourth quarter earnings release, and the automobile industry has shown itself to be on stable ground, with GM predicting industry-wide growth of 7 percent for the year.
On Thursday, GM gave another indication that the it was slowly transforming itself back into the company it was once.
Chief Financial officer Dan Ammann told reporters from Reuters that the Detroit company had completed its repurchase of a 1 percent stake in Shanghai GM, a deal that the Chinese government consented to last year…
When GM was attempting to avoid bankrupt in 2009, the company relinquished 1 percent of its 50 percent stake in its joint venture with Shanghai Automotive Industry Corp in return for a much-needed loan. Last September, GM spent $119 million to buy back its one percent share, and now that the deal has been finalized, Shanghai GM is once again split evenly between the U.S. automaker and its Chinese partner SAIC.
In return for giving SAIC a controlling interest back in 2009, GM received $84.5 million and help in obtaining a $400 million line of credit that the company put towards the rescue of its South Korean operations.
But this is not to say GM’s struggles are over. Separately, GM announced that its 2012 market share decreased in North America, the United States, and globally. Its global share of vehicle sales fell from 11.9 percent to 11.5 percent; in the North America region, sales dropped from 18.4 percent to 16.9 percent; and sales slipped from 19.2 percent to 17.5 percent in the United States.
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