Is GM Ready to Pay a Dividend?

REPLAY VIDEO
Your next video will start in
Pause

Recommended Videos

  • Info

  • Comments

  • VIDEO TEXT

Dec. 17 (Bloomberg) -- Harry Wilson, former senior advisor to the U.S. Treasury Secretary, discusses his outlook for GM on Bloomberg Television's "In The Loop." (Source: Bloomberg)

Rapid pace that gm has recovered from bankruptcy.

Are they ready to pay a dividend?

I think they are.

One of the things they have improve upon is their capital allocation.

Huge amount of cash flow, going forward.

There is still plenty of room for share repurchase or dividend.

When you look at the turnaround, what do you see, looking back, and what made it possible?

Two things.

The company had to have an improved product suite.

That was in the works before we showed up.

It was always identified as one of the problems.

That is a critical part of the success of gm.

The other part was dramatically changing the cost structure so that you could compete effectively in a more competitive world.

That is what we did with the management team.

Those were the two things.

Better products and better cost truck sure that they can better compete on price.

What was it about the cost structure that you see now which was not clear before the turnaround started?

Everyone was aware of the problem but no one was willing to make changes.

Precrisis, they broke even at a ceos at -- seasonally annually adjusted rate of sales.

Now post crisis, they are closer to $10 million.

Like any cyclical business, they should be able to break even at the trough and make money at the peak.

Those are the kinds of adjustment that were made.

It was suggested at his press conference by one of the reporters that the treasury did lose money on the gm bailout.

With all of this extra cash, so to speak, that gm is now generating, should some of that be paid back to the u.s. treasury?

Basically, the breakeven point of the u.s. treasury $43 a share.

As of yesterday, it was at $41 a share.

The reason the treasury lost money, they effectively sold early.

And they left $10 billion on the table.

That was a conscious decision by the government to get out.

They were looking to get out as soon as possible is this stabilized.

When you compare the loss on the investment versus the benefit to the industry and the economy as a whole, it ended up being a successful intervention.

When you look across the landscape, i wonder if you see that competitive threshold remaining where it is with gm, as it competes with other carmakers around the world?

Is the competition really staying the same, or is that evolving?

The global auto industry is the most competitive it has been, probably in my lifetime.

Almost every major player producing tremendous products.

For a long time, the u.s. were seen to produce inferior products, the europeans, mixed quality, but now you have every major oem, including hyundai, making great products and being a great competitor.

It is amazing.

Ford will have a record lineup for next year.

It is amazing how they have all bounced back and are producing so many different brands out there.

Marry barra, name the first woman ceo of any company in the u.s. -- car company in the u.s., did you know her, did you work with her?

I spent a little bit of time with her in 2009, certainly knew that she was well-regarded internally.

A good appointment.

One of the good things about her appointment, which has been lost in the discussion around her, she has a deep background of manufacturing and product development.

She understands the business side of the car business in a very good and important way.

That is important as gm needs to improve its product portfolio.

She is a car girl.

Thank you, harry wilson.

Coming up, the fed, the budget deal, the outlook for next year.

We will talk about that with pimco's mohamed el-erian.

?

This text has been automatically generated. It may not be 100% accurate.

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change