Italian automaker Fiat purchased the U.S government’s remaining holdings in Chrysler today. Fiat paid $560 million to the Treasury Department for the government’s 98,000 shares.

Fiat has run Chrysler since the American automaker emerged from bankruptcy protection in June 2009. The U.S government provided a total of $12.5 billion to Chrysler with the funds coming from the government’s $700 billion bank bailout fund. $11.2 billion has been repaid to the Treasury and Chrysler repaid $5.1 billion in loans from the government in May. The Treasury has stated that it likely won’t recover the remaining $1.3 billion. With Fiat’s payment to the government, the Italian automaker now has 52 percent ownership of Chrysler. Fiat will likely own 57 percent of Chrysler before the end of 2011 when Chrysler begins producing a 40 mpg small car in the U.S.

U.S. Assistant Secretary for Financial Stability Tim Massad released this statement: “With today’s closing, the US government has exited its investment in Chrysler at least six years earlier than expected. This is a major accomplishment and further evidence of the success of the Administration’s actions to assist the US auto industry, which helped save a million jobs during the worst economic crisis since the Great Depression.”

[Source: Washington Post]

General Motors CEO Dan Akerson is looking forward to the day when he can relax on his yacht, sipping Mai Tais on the deck…and knowing full well that the federal government has finally sold its stake in GM, and has completely divulged itself from the company as it did with Chrysler.

But it’s still a long way until the government can recoup its shares from taxpayers, acknowledged Akerson. GM has technically already repaid its debt to the Treasury Department: the $50 billion it received in 2009 came in the form of equity stakes, which were held by the Department. But according to a recent report by the White House National Economic Council, the government will have to write off about $14 billion of the $80 billion total bailout—money that was supplied by taxpaying Americans.

GM’s executives are “doing our level best” to recover this amount, said Akerson. The company has made five consecutive quarterly profits and managed to earn $4.7 billion last year, and if things go well the Treasury can sell its shares as soon as August.

[Source: New York Times]

A statement released today by the White House seemed to take credit for the resurgence of the American auto industry, with President Obama’s bailout plan credited as the driving force behind it.

“When President Obama took office, the American automobile industry was on the brink of collapse,” said the National Economic Council, in a prepared statement. ”Two years later, the American auto industry is mounting a comeback.” The statement comes as the 2012 Presidential election looms closer, and the statement went on to claim that 400,000 jobs in 2008 were lost, and the number could have been closer to 1 million if no action was taken.

The report was released on the two year anniversary of General Motors’ bailout. The Big Three domestic automakers have all reported profits in the first quarter of 2011, but taxpayers are still expected to be on the hook for billions of dollars in losses. The United States treasury is expected to write down as much as 20 percent of the bailout as losses.

[Source: Automotive News]

Two years after a government bailout and rescue by Italian automaker Fiat and Chrysler has announced detailed plans to repay its government loans.

A new $3 billion term loan, combined with $3.2 billion in bonds and a $1.3 billion hand out from Fiat will be used to pay off the $7.5 billion it borrowed from the U.S and Canadian governments to stay afloat during the recession.

The refinancing arrangement is expected to be completed on May 24th.

Under the control of Fiat, in just two short years Chrysler has introduced several all new models (including the 300, Jeep Grand Cherokee and Dodge Durango), while delivering significant updates on nearly every other product it offers.

Chrysler is preparing to pay back $6.6 billion on government loans, but the company will do so not from its own cash but by re-financing existing debt.

Current terms of the government loans have Chrysler paying 12 percent interest per year. While Chrysler would not be out of debt, they would theoretically free themselves from the high interest rates and no longer owe money to both the Canadian and U.S. governments. An official announcement regarding the re-financing is expected later today.

[Source: USA Today]

Fiat is looking to up their stake in Chrysler from 20 percent to over 50 percent, according to reports in the Detroit News. Fiat was awarded a 20 percent stake in the company as part of Chrysler’s bankruptcy proceedings in 2009, and can increase its ownership as it passes a series of milestones. Marchionne also hinted that a Chrysler IPO may come in the second half of 2010.

The company can own another 15 percent upon building engines in North America, marketing an American made car that can hit 40 mpg and meets sales targets for export markets. Paying back government loans before 2013 will also give the company an option to another 16 percent of Chrysler.

[Source: Detroit News]

Steven Rattner, the man appointed by President Obama to oversee the auto industry bailout, claims that internal GM documents that were analyzed in the early days of the bailout pegged the cost of producing a Chevrolet Volt at $40,000 per car.

“At least in the early years, each Volt would cost around $40,000 to manufacture (development costs not included),” said Rattner. While GM declined to comment on the actual cost of the Volt’s production, Rattner said that he supported the move, since it meant a qualitative advantage for General Motors in the area of alternative fuel vehicles.

The Volt retails for $41,000 before government subsidies, which leaves little profit for GM, although the company arguably derives significant indirect benefits from marketing the vehicle.

[Source: New York Times]

General Motors long awaited IPO began trading on Thursday, and was up approximately $2 as of 12 noon, Thursday. Listed at $33 a share, the stock price quickly climbed to $35 a share, as GM’s CEO Dan Akerson rang the opening bell at the New York Stock Exchange.

IPO’s are often volatile, with new startup Tesla Motors stock price dipping to around $15 over the summer, and now trading at over $30. The original GM stock was once one of the world’s most popular stocks before GM was forced into bankruptcy in 2009. With the IPO, the United States Treasury was able to unload 75% of their shares and recoup $12 billion of taxpayer money. GM stock would need to rise to $41 a share for the government to break even on its bailout.

[Source: Left Lane News]

Steve Rattner, who oversaw President Obama’s auto industry bailout, told Bloomberg News that GM’s Initial Public Offering share price was undervalued.

“There is definitely a greater level of confidence in the ability of the carmakers to perform,” Rattner said at an Automotive Press Association event in Detroit. “That’s because of the profit numbers.”

According to Bloomberg sources, GM is expecting to be able to sell shares for over $30 each, with Rattner claiming that $35 to $40 a share is expected.

Rattner also criticised GM’s managment structure, stating that the roles of CEO and President must be separated, as GM’s rotation of four CEOs in 18 months reflected poorly on the company.

[Source: Bloomberg]

General Motors will buy $2.1 billion worth of preferred stock as part of a move to pay off its $49.5 billion in federal bailout loans.  GM will also launch a series of measures to reduce its debt by $11 billion.

GM will make contributions to the UAW pension fund, to the tune of $6 billion, and secure a $5 billion line of credit from a series of banks, which should help reduce its total debt obligations by a total of $11 billion.

“These actions will bring down our leverage by $11 billion by reducing debt and improving our pension funding position,” GM CFO Chris Liddell said in a statement.

[Source: Automotive News]

General Motors CEO Ed Whitacre is expected to announce today that the automaker has already paid off all of its $6.7 billion in loans to the U.S. and Canadian governments. Back in November, GM announced it would begin paying back the loans and today Whitacre is scheduled to make the announcement that the remaining $5.8 billion has now been returned to the taxpayers that supported the American auto giant when it was in trouble.

A press conference is set for later today at GM’s Fairfax, Kan. assembly plant, where Whitacre is also expected to announce the expansion of production facilities there. Currently the plant builds the Chevrolet Malibu and Buick LaCrosse.

This payback is, however, just a small potion of the almost $50 billion in taxpayer dollars used to support GM through its bankruptcy. As a result of that, the U.S. government still holds a 61 percent stake in the automaker. This news, however, is a sign that GM’s recovery is happening more quickly than expected. The U.S. Treasury had said it would agree to sell off its shares in GM once the debut is reduced to $3 billion – so expect an announcement of that nature to follow.

[Source: AutoNews]

Earlier this week General Motors produced its last Pontiac for the U.S. market, ending the brand’s 82 year run. The final vehicle to roll off the assembly line at 12:45 p.m. on Wednesday, November 25th at the Orion Township plant was a rather unspectacular white G6 sedan which is scheduled to be sold to a fleet. It’s hardly the sort of send-off one might expect for a brand that has produced such memorable legends as the GTO and Firebird.

There was no pomp and circumstance as the last 100 vehicles rolled off the line and no GM executive was on hand.

The Pontiac brand was highlighted for elimination on April 27, as a part of General Motors’ viability plan. GM agreed to kill-off Pontiac and try and find buyers for Saab, Saturn and Hummer in exchange for a bailout by the U.S. and Canadian governments. To date, both the Saab and Saturn deals have fallen through, leading to the scheduled elimination of Saturn with the same fate likely for Saab. The sale of Hummer to Chinese heavy machinery company Sichuan Tengzhon is still pending.

Watching the Pontiac brand come to an end isn’t an unfamiliar event for may of the plant workers, as many of them were building Oldsmobiles when GM decided to retire than brand in 2000. For workers there is a glimmer of hope as GM has announced that in 18 months it will begin producing a new small car at the same facility.

In the mean time, the plant will stay open as it wraps up final production of the Pontiac G3 Wave, which is sold in Canada.

Since the brand’s inception in 1926 it is estimated to have sold as many as 41 million cars.

[Source: TheDetroitNews]