General Motors Company (GM): Why “Government Motors” Still Owes You

GM isn’t the world’s greatest automaker, at least not yet. Its profits still trail those of its two biggest rivals, Volkswagen and Toyota Motor Corporation (ADR) (NYSE:TM), by a wide margin. But it is doing well, thanks to much-improved products, management that is working to resolve the company’s remaining issues — and the new lease on life it received from American taxpayers in 2009.

So will GM pay us back?
General Motors Company (NYSE:GM), like rival Ford Motor Company (NYSE:F), holds a big cash reserve as a sort of insurance policy — $26.1 billion as of the end of last quarter. The cash allows the company to continue funding product development in the event of a tough recession that crushes profits. The hope is to emerge — as Ford did from the economic crisis, thanks to cash it had borrowed beforehand — with strong new products to drive sales as the economy recovers.

Right now, the U.S. economy is in decent shape — at least decent enough that GM is making money. GM can probably afford to spend some of that cash to make taxpayers whole. Will it? We’ll find out.

The article Why “Government Motors” Still Owes You originally appeared on Fool.com and is written by John Rosevear.

Fool contributor John Rosevear owns shares of General Motors and Ford. Follow him on Twitter at @jrosevear. The Motley Fool recommends General Motors.

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