GM's Payback A Start, But An End Still Far Off

The news that General Motors repaid some of its loan last week was hailed by the White House and others. But the picture is not that rosy. Guest host Jacki Lyden talks with Micheline Maynard, senior business correspondent for The New York Times.

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JACKI LYDEN, host:

This is WEEKEND EDITION from NPR News. I'm Jacki Lyden.

The American auto industry is showing signs of revival. The question is how that's being played. Chrysler posted improved quarterly results this past week, and sales to auto fleets have surged. But some are saying that General Motors CEO Ed Whitaker went too far with television ads that have been playing constantly this week.

In the spots, Whitaker is seen walking through a spiffy GM facility, making this announcement:

(Soundbite of ad)

Mr. ED WHITAKER (CEO, General Motors): We want to make this a company all Americans can be proud of again. That's why I'm here to announce we have repaid our government loan in full, with interest, five years ahead of the original schedule.

LYDEN: The White House says this is a sign its multibillion-dollar bailout plan is working. Others are not convinced. For more, Micheline Maynard is back with us. She's a senior business correspondent for the New York Times and author of the book, "The Selling of the American Economy." And she joins us from the studios of WUOM in Ann Arbor, Michigan. Thanks for being back here.

Ms. MICHELINE MAYNARD (Senior Business Correspondent, New York Times, Author, "The Selling of the American Economy"): Thank you so much, Jacki.

LYDEN: So, that's quite a claim Ed Whitaker is making. Paid back with interest?

Ms. MAYNARD: Technically, he's only talking about a loan which was made to General Motors when it came out of bankruptcy. We're not talking about the $60 billion that General Motors got from the Treasury Department.

And I guess one way to think about it would be a student who graduates from college and is sort of flat on their back after paying off, you know, all their loans and says to their parents, can you help me get set up? And the parents buy them a condo and say, well, you'll need some operating money. And you know, we'd like to have about half the operating money back but you can have five years to pay us back.

So the student comes forward a year later and says, hey mom and dad, here's a check for half the money. Well, they haven't paid off the condo, and they haven't given back the other half of the money. But we're probably months - if not a year or more away - from seeing GM go public again and be able to pay back some of what it owes the government.

LYDEN: So, to sum this up in the simplest way possible: GM still owes a heck of a lot of money.

Ms. MAYNARD: Yes. I guess I should say that it was the money that GM was given by the government because there were no strings attached to the largest sum. Only that smaller number - it's about $8 billion from the U.S. and Canada - was considered to be a loan that had to be repaid.

LYDEN: What's the White House saying about GM's claims? Is the administration challenging this at all?

Ms. MAYNARD: No, not at all, and I think it's to the administration's benefit to be seen as sort of the savior of General Motors and the savior of the American automobile industry at large. Because if you listen to what the administration says about jobs that were preserved because of federal actions, General Motors and Chrysler make up the largest amount of those jobs. So the White House, I believe, would like to make it look as positive as possible.

LYDEN: You've lived in Washington. I think they call that spin.

Ms. MAYNARD: It's spin in Detroit, too. Kind of any way you cut it.

LYDEN: Well, how is the largest American automaker doing? How is GM doing?

Ms. MAYNARD: General Motors has gone through an entire restructuring process. If you think back about a year ago, there were eight different brands at General Motors. Four of them, you can no longer go and buy: Pontiac, Saturn, Saab and Hummer. So, they're half the size that they were in the showroom. Their top management, a lot of it is gone.

Mr. Whitaker came to General Motors as part of the effort by the Treasury to revive the company. He's brought in new top advisers from Wall Street, from Microsoft. And so you're seeing people at the top of the General Motors that never would have run the company in the past.

LYDEN: I guess even if you change the upper management, give back money you haven't spent, and make it look like you've paid off a loan, you still have come up with a product people want to buy. Is GM doing that?

Ms. MAYNARD: The big test for General Motors is coming up at the end of the year, when a vehicle called the Chevrolet Volt comes out. This is a plug-in hybrid vehicle that GM is sort of selling as an electric vehicle, and they say that it's the future of General Motors. So really, product wise, their future starts around the beginning of 2011, and only then will we really know whether all of this effort has paid off.

LYDEN: Micheline Maynard is a senior business correspondent for the New York Times, and she joined us from the studios of WUOM in Ann Arbor, Michigan. And thank you very much for being with us.

Ms. MAYNARD: My pleasure, Jacki.

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