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Financing deal will put GM on more solid ground

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Financing deal will put GM on more solid ground

Automotive News -- August 2, 2010 - 12:01 am ET

Critics who don't understand the automobile business were quick to blast General Motors Co. for planning to buy AmeriCredit Corp. The way they see it, an automaker owned in part by the government shouldn't be acquiring a publicly traded financial institution.

But those are mostly the same ideologues who opposed government support for GM and Chrysler last year. They were wrong then, and they're wrong now.

A little more than a year after GM and Chrysler emerged from government-engineered bankruptcies, both companies seem to be moving toward full recovery. Their situations are different, but in each case management is doing what needs to be done.

At GM, that has meant finding a reliable source of subprime and lease financing so that in this tight credit market GM's dealers can arrange retail financing for more customers, which means selling more cars and trucks.

Media reports say GM likely will file its registration for an initial public stock offering the week of Aug. 16. An IPO is the next logical step toward becoming an independent company again.

Ironically, with a good source of financing, GM stock will be worth a lot more for the IPO and subsequent stock market, making it easier for the government to recoup the tax dollars invested to keep GM in business.

At Chrysler, where Fiat has control and a 20 percent stake, an IPO seems unlikely until next year. Even so, we're in the middle of the political silly season, so more criticism is likely.

But the automakers and their stakeholders would be better served if naysayers would just stay out of the way for a while.

If the management teams at GM and Chrysler are given enough latitude to run their own businesses, the government "bailout" of those automakers probably won't have to cost the taxpayers a dime.

Read more: http://www.autonews.com/article/20100802/RETAIL02/308029974/1421#ixzz0vS8GIHtQ

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