Was Saving the Chevy Cruze Worth $10 Billion?

The Treasury gets ready to take a $10 billion loss on its General Motors investment.

The Treasury Department said in a statement that it plans to sell the last of its remaining General Motors Co. stock by the end of the year, at least if current trading volumes stay steady. The government poured $51 billion worth of Troubled Asset Relief Program funds into the ailing automaker back in 2009; so far, it has gotten $38.4 billion of that back. If it sells the remaining shares at today's price of about $38.85, it will recoup another $1.2 billion, locking in a loss of roughly $10 billion.

Was it worth it? Well, the company has shown solid profits, beating estimates consistently, if not hugely, in recent quarters. It still employs tens of thousands of people in the U.S., and its suppliers employ many more. The bankruptcy has allowed GM to become more competitive on costs.

On the other hand, the company's market share is still slipping, and it is still struggling to pare back the use of "cash on the hood" -- incentives such as cheap financing and rebates -- to move cars. GM has clearly conquered its cost problem. But it has not yet conquered its brand problem or its management problem. GM spent years building a reputation for making giant, gas-guzzling cars of dubious reliability. A lot of those decisions were driven not by management idiocy, but rather by the need to make cars at margins that could absorb their extremely high labor costs. Which meant, first, large cars that people paid a lot of money for, and second, small cars that had lower-quality components than their competitors.

Now that GM's labor costs are closer to industry averages, it can afford to put better components in its cars. But a reputation for middling quality and design is not undone overnight. As management professor James Schrager told me, Japanese companies spent years "in the trenches," building a reputation for making safe, reliable cars. If GM wants a similar reputation, that may take the better part of a decade.

Alternatively, GM could try to make sexy, fun cars like BMW does. But I'm not sure those are appellations I'd put on any of the cars in GM's current lineup.

Overall, I'm not betting on another bankruptcy anytime soon. Is that enough? Did America want to spend $10 billion to save the Chevy Cruze? That's almost $200,000 for every worker still on GM's assembly line. For that kind of money, you'd better like the cars an awful lot.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.